It has been a tumultuous few years in the automotive industry with several external factors impacting the industry. The effects of many of these are still being felt while the situation is improving, which means that it is hard to predict what 2023 will look like. So, what can we expect from the auto industry this year?
Obviously, the economic situation is having a major impact on the auto industry. The cost-of-living crisis has resulted in demand (which was previously incredibly high) cooling off, which is finally starting to bring down the cost of new and used cars. While the cost-of-living crisis will continue to be an issue, it is thought that the situation could start to improve in the second half of the year, which could create more balance when it comes to supply and demand. Many are leasing instead of buying which can be smart, but you will want to make sure that you take out contract hire gap insurance for protection.
Speaking of supply, this has been another major issue in recent times. Since the pandemic, the industry has been hit hard by supply chain issues that brought the production of new cars to a halt. As a result of this, supply has not been able to keep up with demand and this is one reason why prices have been skyrocketing in the last dew years.
One of the primary supply chain issues has been the supply of semiconductors. The production of these computer chips that are vital in the creation of new cars (and many in-demand consumer products) was drastically slowed at the start of the pandemic and has not been able to get up and running to meet demand since – UK production fell 19.2% in the first half of 2022. While supply has improved, it is thought that the shortage will continue to slow production until 2024.
One of the biggest trends in the auto industry right now is electric cars. Although car sales have been plummeting, the sale of EVs have been rising and this will continue in 2023. The rising cost of fuel and cost-of-living crisis is leading many to make the switch now as this can help motorists to make huge long term savings. Additionally, many people are becoming eco-friendly and looking for ways to reduce their impact.
Battery Price Parity
Leading on from this, the cost of electric cars has been what has stopped many from switching and this is understandable. Slowly but surely, the price of electric vehicles is getting closer to that of internal combustion engine vehicles as a result of battery price parity. It is thought that parity will be achieved by 2025 but the fact that prices are getting closer will encourage more to switch.
These are a few predictions for the automative industry in 2023, which will hopefully be the start of the road to recovery.