The Changing Automotive Industry

The invention of the automobile not only heralded an increase in mobility. It also radically changed the urban landscape – think wider roads, highway overpasses, crosswalks, and other asphalt creations. And of course, the increase in air pollution, noise pollution, as well as the stresses of commuting in traffic have made our relationship with the automotive industry more of a love-hate relationship. We buy a car for the status, sure – but many buy a car because they have to. Either they live in an area with bad public transportation, or they need a car for their work.

- Ong Xiang Hong

In many developed cities, young professionals are eschewing car ownership in favour of public transport. City governments are also actively discouraging car ownership by introducing congestion charging, tolled roads, and high parking rates.

The recent COVID-19 crisis also highlighted the idea of a renewable energy mix – one which doesn’t rely so much on fossil fuel. Tesla’s electric cars – with their technologically advanced brains and revolutionary electric motor – is selling not just cars, but a vision of future motoring.

With the vast majority of cars on the road running on polluting oil, what does the future hold for the automotive industry? And where does this leave SMEs?

A DIFFERENT SORT OF DISRUPTION

Tesla’s ‘disruption’ of the automotive industry is only one dimension of it. Instead, automakers are disrupting themselves from within.

The ‘disruption within’ isn't about cheap, small, fast. It's not about catching the industry off-balance and ill-prepared to respond. It is about big companies that have a lot of money recognizing that they can spend literally billions to attack a new business opportunity.

Automakers were already making their cars smaller and more fuel-efficient since the dawn of the millennium, but current leanings and consumer appetites are accelerating the trend. Compact, turbocharged engines (so fuel burns cleanly) are the order of the day, as are continuously-variable transmissions (CVT) that are far more fuel-efficient than conventional manual or automatic gearboxes. Even German luxury stalwarts Mercedes Benz and BMW are introducing thrifty V6 engines in their lineup, instead of thirstier, more traditional V8 or V12 powerplants.