The start of summer is always going to be a busy time for the auto industry, but the news for June might spell big changes for everyone across the board. We’ll look at new reports, predictions, and buyer expectations and what it will mean for the rest of the year and beyond.
Disruption from China
Chinese automakers have been stepping up their game as of late, and the world is taking note. In just a few years, they went from the sixth largest exporter to number one, surpassing Japan for the first time. What’s more, they’re specializing in EVs, a market that’s showing no signs of slowing down in countries all over the world.
Recently, the global consulting firm AlixPartners highlighted their progress in their Global Automotive Outlook, and they advised automakers to stay on top of China’s latest changes. Because their auto brands are in a strong position to make waves, all professionals in the industry need to be prepared. The debut could shake up a business model that’s been in place for years.
Ford Lays Off Employees in US and Canada
Ford recently confirmed that they would be laying off employees in North America. Though they did not specify exactly how many people would lose their jobs, it’s expected to be at least 1,000. Spokesperson TR Reid said that the decision was made based on the loss of operating profits for its EV business this year.
The layoffs come less than a year after they cut 3,800 jobs across Europe. Those affected will range across teams, though it’s largely the engineers who will take the brunt of the cuts. Despite the strong growth in China, other sectors have not fared as well. This is despite more optimistic predictions about the overall recovery rate in the auto industry.
Chat GPT On the Rise
Chat GPT has captured the world’s attention, and not just for its nuanced answers to nuanced questions. While the programs undoubtedly have their downsides, the reality is they can provide a lot of helpful information without the need for a 24/7 staff.
If a driver has a question about an engine code or an auto shopper has a question about the best family car in the Midwest, they might not have to wait to get someone on the line for an answer. From CarGurus to Mercedes, sellers and manufacturers alike are either considering or implementing different AI tools, so their customers can get the most out of interaction with the company.
Declining Driver Satisfaction in 2023
JD Power surveyed 93,380 people who purchased or leased 2023 vehicle models, only to find that the drivers aren’t necessarily satisfied by all of the bells and whistles in their cars. All of the technological advancements may look flashy from the outside and impressive the first time drivers are told of their benefits. However, the reality is that they make vehicles more complex.
This combined with integration issues (particularly the audio systems) has caused drivers to generally see older cars as better made than their newer counterparts. It's possible that drivers are simply nostalgic for the past, but it's more likely that they're frustrated by the constant upheavals.
Global Pricing Wars with New Vs. Used Cars
United Buying Service recently estimated a 6% surplus in global car production, which would theoretically leave millions of vehicles left on the lots. While it’s likely that a price cut wouldn’t happen until closer to the end of the year, there have already been some notable disruptions to the prices in certain markets — particularly EV. In fact, UK shoppers can now pick up a base Tesla model for the same price as a Kia after Elon Musk slashed MSRPs there. Luxury cars are not expected to see the sting of this supply-demand mismatch as much as family car makers will.
At the same time, the industry may see an increase in used car prices, despite a general downward trend for the last two months. Even with prices coming down, rising interest rates and inflation have held many buyers back from pulling the trigger. To get the best deal, shoppers are being advised to mix up their strategies, which could include anything from traveling further for a better deal to buying a new car instead.
The auto news for June may have some lasting ramifications for the sector, so it pays to pay attention. If you want to stay ahead of the global trends in the auto industry, LINTEC Automotive can keep you in the loop.