ISMR February 2023 | Page 28

INDUSTRY REPORT

North American market
Mordor Intelligence values the North American automotive market at US $ 713.07 billion and expects it to record a CAGR of 6.63 %, in terms of revenue , from 2023-2028 .
“ Over the medium term , demand in the market is expected to be driven by rising electric mobility across major countries in the North American region . In addition , growing government support in the form of favourable initiatives and policies is expected to drive demand in the market . The growing consumer inclination towards safety and comfort features in vehicles is accommodated by the latest technologies like ADAS ,” explained the analyst .
“ However , growing adoption of rental and used cars may hinder the players operating in the market . The demand for commercial vehicles is strongly influenced by growing logistics and delivery services , coupled with the fleet expansion of vehicles by key e-commerce giants like Amazon . Developments in engine technology are progressing significantly , accompanying the rising emission standards across the world . These factors are likely to boost the growth of the automotive market in the region ,” it added .
The United States is expected to hold significant market share in the region , followed by Canada and Mexico . The country is home to major automotive OEMs and is influenced positively by large supportive infrastructure and the electric vehicle policies of the U . S . government . The growing preference of young people for luxury and premium vehicles is also expected to offer lucrative opportunities to the market .
Challenges and hurdles
With the EU car market shrinking last year , compared to pre-pandemic 2019 levels , the European Automobile Manufacturers ’ Association ( ACEA ) is calling for a policy framework that enables the market to both recover and make the shift to zero-emissions . These include greater resilience in Europe ’ s supply chains , an EU Critical Raw Materials Act that ensures strategic access to the raw materials needed for e-mobility and an accelerated roll-out of charging infrastructure .
“ The last years have been marked by major events like Brexit , the coronavirus pandemic , semiconductor supply bottlenecks and the war in Ukraine , with its impact on prices and availability of energy ,” it said . “ All of these things underline how quickly , how profoundly and how unpredictably our world is changing . This applies not least in the geopolitical context – where there are direct consequences for our
globally interconnected industry and its close-knit value chains .”
The impact of these challenges is reflected in recent EU car sales figures . Eight months into 2022 , overall volumes contracted by almost 12 % to reach some six million new cars sold . So far , the market was only constrained on the supply side as ongoing component shortages constrained production volumes . However , demand may also suffer over the coming months due to inflation and fears of recession .
“ Due to growing consumer awareness on vehicle emissions , the adoption of electric vehicles has led to a decrease in the sale of equipment that is compatible with conventional internal combustion engines ,” commented Precedence Research , which also highlighted the effect of the COVID-19 pandemic on the industry .
“[ The pandemic led to ] an increase in skilled labour costs as many people were not available for work and component manufacturers faced a shortage of workers . Followed by raw material , manpower is the second biggest cost for the manufacturing companies . The pandemic also highlighted the need for sanitisation which led to production cost increases . The availability of manpower has now become a major challenge . Disrupted supply chains for raw materials has also led to manufacturing delays . As economies collapsed and prices rose , buying a car was nobody ' s priority during the pandemic , leading to a drop in vehicle sales ,” it added .
An eye on energy
The spike in energy prices has also deeply affected automotive markets . Mike Hawes , Chief Executive , SMMT ( The Society of Motor Manufacturers and Traders ) in the UK , highlighted this :
“ A new energy support scheme to help all businesses next winter is welcome . Energy remains the second largest automotive manufacturing input cost and UK businesses already face the highest electricity costs in Europe . However , automotive will not qualify for the additional higherlevel support afforded energy-intensive sectors , despite being one of the UK ’ s largest exporters and trade intensive sectors and facing energy bills that cripple its competitiveness . The forthcoming [ UK ] Budget should go further , therefore , allowing vehicle producers and suppliers to qualify for additional measures in line with energy-intensive industries , ensure climate change agreements are maintained and energy-efficient capital investments are incentivised ,” he said .
“ Stringent emission regulations are boosting the growth of the
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