Is the global automotive industry experiencing an economic downturn? High inflation rates and raw material price increases recorded throughout 2022 and 2023 have challenged the industry, impacting consumers’ purchasing power and manufacturers’ production costs and profits. However, while global automobile sales slowed in 2022 due to the impact of the automotive semiconductor shortage, the market has been growing since the pandemic, and is forecast to move closer to its pre-pandemic level in 2023.
Passenger cars made up the largest share of motor vehicle sales worldwide, representing around 70.4 percent of sales. China and the United States were the largest markets for this segment in 2022, partly due to a culture of mass-motorization prevalent in the United States. China was one of the markets where passenger vehicle sales bounced back from their 2020 drop, with the country’s 2022 sales volume some 9.9 percent above 2019 sales. As China focuses on becoming an export hub for manufacturers, its exports also come under increased scrutiny, such as the European Union’s anti-subsidy investigation on Chinese electric vehicles, launched in 2023.
While these developments do not suggest a downturn, the automotive industry must contend with these changes.
Production is slower to increase
The automotive manufacturing industry generated approximately 2.52 trillion U.S. dollars in revenue in 2022, a decrease from 2021. However, this market size is expected to grow in 2023. While global sales started to recover in 2021, global motor vehicle production was slower to pick back up due to the chip shortage and raw material price increase. Heavy commercial vehicles were the most affected as the only segment reporting a production decrease in 2022, though most segments such as passenger cars and light commercial vehicles were also still behind the output recorded in 2019, despite their growth. China was the leading car producer worldwide, with over 23.8 million units manufactured in 2022. This was over threefold the production of Japan, which came second in the ranking.
While Japan was behind China in car output, the Japanese Toyota was the best-selling automotive brand worldwide in 2022, holding some 11.5 percent of the global market. It was followed by Germany-based Volkswagen, which held 6.7 percent of the market. The Volkswagen Group and Toyota Motor are in tight competition to lead the market. While Toyota was the best-selling brand of 2022, the Volkswagen Group reported the highest revenue that year, at around 293.5 billion U.S. dollars. The Volkswagen Group was also the manufacturer investing the most in research and development in 2022, at about 18.9 billion euros. Most of these expenses were research into alternative drive systems and life cycle engineering and recycling.
Innovation brings new market challenges
Prompted by global initiatives such as the Paris Agreement, several countries have started enacting stricter emissions controls on new vehicle models. As such, automakers are beginning to expand their business into the electric mobility sector. Global automotive research and development spending has been steadily increasing between 2020 and 2022, boosted by a soaring plug-in electric light vehicle (PEV) market, which increased by 56.9 percent year-over-year in 2022. China and the United States are among the market leaders in this sector, with new electric vehicle registrations growing by 82 percent year-over-year in China in 2022.
On an automaker level, Volkswagen’s investment in research and development led to it being among the five best-selling PEV brands in the first half of 2023. However, the Chinese brand BYD and U.S.-based Tesla were the market leaders, with BYD overtaking Tesla in sales volume in 2022.
Electric vehicles are one of many market developments in the automotive industry. Increased environmental consciousness led consumers to rethink their mobility options. In 2022, passenger cars and vans made up around 48 percent of carbon dioxide emissions produced by the transportation sector worldwide. With the addition of buses, and medium- and heavy-duty trucks, this share grows to 79 percent. This increased awareness contributes to the rising interest in mobility services, while autonomous vehicles are also set to stir up another automotive sector revolution in particular as interest in artificial intelligence grows among manufacturers and consumers alike.
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FAQs
The automotive industry includes industries associated with the production, wholesaling, retailing, and maintenance of motor vehicles.
Why is the automotive industry so important? ›
Additionally, it plays a vital role in developing roads, fuel stations, and transportation systems, which contribute to growth in other regions. The automobile industry is evolving globally, with advancing technologies and newly designed eco-friendly vehicles leading the way.
What is your understanding of the automotive industry? ›
The automotive industry comprises a wide range of companies and organizations involved in the design, development, manufacturing, marketing, selling, repairing, and modification of motor vehicles. It is one of the world's largest industries by revenue (from 16% such as in France up to 40% to countries like Slovakia).
How big is the automotive industry globally? ›
Automotive Market Report Overview
The global automotive market size was USD 2738387.98 million in 2021 and is projected to touch USD 3577110.64 million by 2031, exhibiting a CAGR of 3.01% during the forecast period.
What is the main purpose of automotive? ›
An automobile is a usually four-wheeled vehicle designed primarily for passenger transportation and commonly propelled by an internal-combustion engine using a volatile fuel.
What is the most important factor in automobile industry? ›
Product Quality ranks above other factors. The Industry Demands Product Excellence Ask people in the Automotive industry what leads to success and you'll hear that product quality has a major impact.
What is the biggest challenge facing the auto industry? ›
Key challenges for the automotive industry in 2024
- Staying up-to-date with digital innovation: ...
- Supply-chain issues after chip shortage for manufacturers. ...
- Car prices due to drop. ...
- Online vehicle sales. ...
- Aritifical Intelligence assistants. ...
- Everybody wants a used car.
Auto manufacturing drives more than $1 trillion into the economy each year through the sales and servicing of autos and flows through the economy, from revenue to parts suppliers to paychecks for assembly plant workers, from income for auto-related small business to revenue for government.
What is automotive in simple words? ›
: of, relating to, or concerned with self-propelled vehicles or machines.
What is a key focus of the automotive industry for the future? ›
Connected technology is set to revolutionize the automotive industry with 5G and satellite connectivity standards. The total addressable market (TAM) for connected vehicle technologies is forecasted to surge from USD 0.8 billion in 2023 to USD 568 billion by 2035 as per a latest study by Markets and Markets.
What Will I Learn in an Automotive Mechanics Course?
- automatic transmissions.
- automotive brakes.
- automotive diagnostics and repair.
- automotive electrical systems.
- diesel engines.
- fuel and fuel systems.
- heating and air conditioning.
- hybrid, electric, and alternative fuel vehicles.
In addition, the industry is a huge consumer of goods and services from many other sectors and contributes to a net employment impact in the U.S. economy of nearly 8 million jobs. Approximately 4.5 percent of all U.S. jobs are supported by the strong presence of the auto industry in the U.S. economy.
What is the value of the automotive industry? ›
Revenue - automobile manufacturing industry worldwide 2019-2023. The global automotive manufacturing market was worth about 2.86 trillion U.S. dollars in 2021. The market is projected to grow to some 2.95 trillion U.S. dollars in 2022. This growth is a slow recovery, still under the industry's 2019 market size.
How is the automotive industry growing? ›
As such, automakers are beginning to expand their business into the electric mobility sector. Global automotive research and development spending has been steadily increasing between 2020 and 2022, boosted by a soaring plug-in electric light vehicle (PEV) market, which increased by 56.9 percent year-over-year in 2022.
What is the summary of automotive technology? ›
Automotive technology is the study of how self-propelled vehicles move and refers to the creation or design of vehicle technology and the remediation or repairs required. This can involve the engine and other systems, engineering, mechanics and computer technology.
What is the professional summary of auto mechanic? ›
Profile. Knowledgeable auto mechanic with 12+ years' experience servicing, repairing and performing diagnostics on cars and trucks. Excellent technical knowledge of domestic and imported vehicles. Focused on adhering to safety compliance protocols while achieving quick turnarounds.
What is the status of the automotive industry? ›
Automotive sales in the United States are slumping and prices are on the rise. Many expected the auto industry to mount a post-pandemic rebound in 2021, but that didn't happen. In the first quarter of 2022, sales fell to the lowest first-quarter volume in the past decade.
What makes up the US automotive industry? ›
Since the first automobile, auto manufacturing has grown to become a substantial contributor to the U.S. economy with General Motors, Ford, and Fiat Chrysler rounding out the big three. Ford is well known for creating the first automobile and the process of manufacturing through the assembly line.
