In 2023, the automotive industry saw increased car prices, reduced inventory, high interest rates, an ongoing chip shortage, and a bigger desire for used vehicles. But it’s the start of a new year. With it are new possibilities on the horizon.
There are many predictions about the future of the automotive industry in 2024. Some are based on opinions, while others are based on surveys. You may have already read a few ideas, but we’ve compiled some of the best predictions in case you haven’t seen the automotive forecast. For insight into what the future of the automotive industry will look like this year, check out the four predictions below.
1. Vehicle Supply Will Increase, Helping Consumers
According to Cox Automotive, new-vehicle supply will rise, causing dealerships to offer discounts and more incentives. This prediction is good news for car buyers. The market may finally return to normal. In fact, Cox Automotive thinks there will be three times the number of vehicles available as there was during the chip shortage.
But for auto dealers, this prediction means transaction prices for new cars will likely decline. If dealerships offer more incentives and discounts, transaction prices won’t be as high as they were in 2023. However, they won’t be significantly low since the incentives are unlikely to exceed 10% of transaction prices, which was prevalent in 2019.
Also, auto dealers can expect sales to increase because car buyers will be attracted to the return to normalcy as well as the discounts and incentives. Admittedly, the sales increase will be small, but it’s better than nothing. The new-vehicle market will increase by less than 2%, reaching $15.7 million in sales.
Used vehicles will also get more attention from consumers, but the growth will be minimal. Cox Automotive thinks this particular market will grow by less than 1%, with dealerships selling 36.2 million used vehicles in 2024. Around 19.2 million of those vehicles are predicted to sell through retail channels.
2. Cybersecurity Will Become a Legal Requirement
In today’s digital world, cybersecurity is a popular topic in every industry. In 2024, however, the automotive market will put more attention towards beefing up its cybersecurity. Out of 200 c-suite executives recently surveyed, 64% believe the industry’s supply chain is vulnerable to a cyberattack. Forbes predicts the market will try thwarting attacks by consolidating computer networks into “super-computers owned, monitored, and maintained by the car manufacturers.” But what’s sure to make a difference, according to Wards Auto, is the UN Regulation No. 155 on cybersecurity.
In July 2024, the regulation will require the entire automotive value chain to have a cybersecurity management system if they want to participate in the EU’s car-buying market. That means everyone from sub-suppliers to suppliers to OEMs must implement a system that protects them in the digital landscape. This regulation will change the automotive industry significantly.
Currently, the market uses another framework to build a secure product, but they’re not required to do so. The framework is simply a standard, not a legal demand. But Regulation No. 155 changes things; it’s a non-negotiable for automakers and applies to software, IP components, and any relevant system. Fortunately, the auto industry can prepare for the new regulation by conducting a threat analysis and risk assessment.
3. Online Car Buying Will Include Amazon
Not only is Amazonification shifting the auto industry, but Amazon’s recent partnership with Hyundai is shifting the market, too. In 2023, the online retail giant and automaker became official partners to bring Hyundai vehicles to Amazon. Now, Hyundai dealerships can meet potential customers at the biggest online marketplace in the world.
The partnership is the first of its kind. No other dealership offers its customers this convenient option, so it’s bound to attract some car shoppers. However, the program will start small. It’ll only include 18 Hyundai dealerships, but a more extensive rollout will likely happen in the second half of 2024. Customers who buy from a participating dealership can either have their vehicle delivered or pick it up on the lot.
Auto dealers everywhere should pay attention to how this partnership and car sales unfold. With 163 million U.S. consumers subscribed to Amazon Prime and many product searches starting on Amazon, the online retailer could be an untapped market for other dealerships. As an article on CBT News puts it, “a third of all new car sales could originate on Amazon.com” in a few years.
4. Convenience Will Reign Post-Transaction
One of the things consumers want from dealerships is convenience. This is why things like online car buying and partnerships between Amazon and Hyundai exist. S&P Global Mobility even suggests that 64% of U.S. car shoppers bought a vehicle online in 2020 because of convenience. The pandemic is likely a reason for the high percentage, but its effects have remained.
People want an easy car-buying process every step of the way. From researching to test driving to financing, and finally, to legally owning a vehicle, consumers desire a straightforward route. However, the most difficult phase is the last one. Legally owning a vehicle is riddled with long wait times and paperwork because the post-transaction process has relied on outdated methods. Thankfully, in 2024, this will change.
In an effort to improve the last step, dealerships will increasingly look to private DMV services companies. These businesses provide DMV services so that sales teams don’t have to go through the DMV, which suffers from long wait times. At Barry Risk Management, we’re one of the best private DMV services companies. We help dealers all across the U.S. get their customers’ tags, titles, license plates, and registration. We also do it quickly because our online platform makes it easy to communicate and gather the appropriate documents to move things along.
More dealers will start to utilize private DMV services companies to increase their sales team’s productivity and offer the convenience car buyers seek. Those who start working with DMV services companies at the beginning of the year will also have a competitive advantage over dealers down the street and in their state.
The Automotive Forecast Predicts Sunshine
In general, the future of the automotive industry in 2024 looks promising. The new and used car markets will likely grow, even if it’s slow. Automakers will also enhance their cybersecurity if they want to participate in the EU car market. Additionally, dealers may have the opportunity to sell their vehicles on the biggest online marketplace. And they’ll score brownie points as they offer convenience at every stage of the car-buying process, including the post-transaction phase. With all these positives, automakers and dealers should look at the future with optimism.
To start 2024 off strong, call our team at 1-888-995-TAGS(8247) to learn how to offer your customers more convenience.