10 Critical Focus Areas for Automakers in the Immediate Future

Automakers are facing a multitude of challenges that are putting them under immense pressure. Governments around the world are pushing for a transition to electric vehicles, which is adding to the stress. The dearth of components like semiconductors is also hampering the manufacturing process. Furthermore, the lack of proper technologies to manage data is another issue that automakers are grappling with.  

In this blog, we will discuss the top 10 priorities that automakers need to focus on in the near-term to overcome these challenges and emerge stronger. By prioritising these areas, automakers can ensure that they are well-equipped to tackle the challenges of the future and stay ahead of the curve. 

#1 Electric Vehicle (EV) adoption 

Governments around the world are pushing for a transition to electric vehicles, which is adding to the stress on automakers. According to a report by Forbes, every international automaker is introducing battery cars, and plug-in hybrid options are increasingly part of model lines. However, this transition is not without its challenges. As per an article by IEEE Spectrum, EVs require automakers and their suppliers to reinvent their supply chains, hire employees with new software, battery, and mechatronic skill sets, and retrain or else lay off workers whose outdated skills are no longer needed. To stay ahead of the curve, automakers need to prioritise the development and production of EVs. According to a report by Reuters, the world’s top automakers are planning an extraordinary level of spending to develop and produce millions of electric vehicles, along with the batteries and raw materials to support that production, over the next eight years. Investment in R&D is yielding innovative solutions to improve battery performance and sustainability. Solid-state battery technology is one such area attracting significant investment, projected to grow into an $8 billion industry by 2030. By combining financial incentives, infrastructure development, awareness campaigns, and regulatory support, the government can foster a favourable environment for widespread electric mobility adoption. 

#2 Supply chain management 

The shortage of semiconductors has been a major challenge for the automotive industry, with production being hampered due to the lack of necessary components. According to a report by S&P Global Mobility, more than 9.5 million units of global light-vehicle production were lost in 2021 due to the dearth of supply of semiconductor chips, with the third quarter of 2021 experiencing the largest impact with an estimated volume loss of 3.5 million units. 

A Merit expert adds, “To ensure a steady supply of components, automakers need to focus on building resilient supply chains that can withstand disruptions. This can be achieved by implementing dual or multiple sourcing strategies for critical materials, moving from global to regional networks, and digitising supply chain operations.” 

Additionally, companies should improve visibility to minimise blind spots in the supply chain, identify potential shocks and evaluate which ones are most likely and most disruptive, and create contingency plans and buffers for the most critical, vulnerable portions of the supply chain. 

#3 Data management 

The lack of proper technologies to manage data is another issue that automakers are grappling with. The industry is struggling to handle the vast amounts of data generated by connected cars, autonomous vehicles, and other emerging technologies. To overcome this challenge, automakers need to prioritise the development of data management systems that can handle large volumes of data and provide real-time insights. The use of big data analytics can help automakers to gain insights into customer behaviour, marketing spend management, global supply chain management, and predictive analytics. Automakers can also use big data from dealer management systems (DMS), customer relationship management (CRM), and customer-satisfaction surveys to improve their products. Aside from these, automakers can implement data governance policies, create data management teams, and invest in data management tools and technologies.

#4 Sustainability 

With the world becoming increasingly conscious of the impact of climate change, automakers need to prioritise sustainability. They can adopt a range of strategies to reduce their carbon footprint. These include investing in electric vehicles (EVs), improving fuel efficiency, and using alternative fuels such as hydrogen. Automakers can also adopt sustainable manufacturing practices such as using recycled materials, reducing waste, and improving energy efficiency. 

Investing in renewable energy is another key strategy for automakers to prioritise sustainability. According to a report by Automotive Dive, automakers have increasingly set social and environmental targets and implemented initiatives related to greenhouse gas emissions, water conservation, responsible sourcing, and equal pay. By adopting these measures, automakers can reduce their carbon footprint, improve their environmental performance, and contribute to a more sustainable future. 

#5 Customer experience 

In today’s competitive market, customer experience is key. Automakers need to prioritise the development of innovative features and technologies that can enhance the driving experience and provide customers with greater value for their money.

To enhance the driving experience and provide customers with greater value for their money, automakers can prioritise the development of innovative features and technologies. For instance, digitising the car-buying and servicing journeys can make the experience seamless, omnichannel, and richer for buyers. Automakers can also identify and digitise key customer touchpoints, establish a closed-loop customer-feedback management process, and establish test-and-learn experiments to validate radical new customer experience ideas. By being present where the customer is and arming dealers with action-oriented insights based on customer journey data, automakers can facilitate a superior experience that keeps the customer coming back for more. 

#6 Cybersecurity

As the use of connected technologies in vehicles increases, cybersecurity is becoming a top priority for automakers. To ensure vehicle security and safety, automakers can take several steps to improve vehicle security. One approach is to integrate security into the design of all vehicle components, including hardware, software, and communication networks. Another approach is to establish a multi-layered cybersecurity solution that includes in-vehicle, IT network, and cloud-based security defences. Automakers can also build vehicle security operations centres that monitor, detect, and quickly respond to cyber incidents to protect vehicles, services, fleets, and road users. These measures can help enhance the safety of vehicles, preserve the integrity of data, and support regulatory compliance. 

#7 Autonomous driving 

Autonomous driving is the future of the automotive industry. To stay ahead of the curve, automakers need to prioritise the development of autonomous driving technologies. This includes investing in research and development to improve the safety and reliability of autonomous vehicles. One approach is to integrate safety into the design of all vehicle components, including hardware, software, and communication networks. This can be achieved by conducting rigorous testing and validation of autonomous driving systems, including simulation testing, real-world testing, and data analysis.  

Automakers can also leverage artificial intelligence and machine learning to improve the safety and reliability of autonomous vehicles. For instance, AI can be used to detect and respond to potential safety hazards, predict maintenance needs, and optimise vehicle performance. By prioritising safety and reliability, automakers can build trust with customers and regulators, and accelerate the adoption of autonomous driving technologies. 

#8 Collaboration 

Collaboration is a crucial factor in the automotive industry. With the advent of Connected, Autonomous, Shared & Electric (CASE) mobility trends, automakers are redefining their businesses across all dimensions, including product definition, engineering, manufacturing, supply chains, and business models. Collaborating with other automakers and suppliers can help them share knowledge, leverage complementary skills, and foster innovative solutions. For instance, Toyota and Suzuki Motors signed a capital alliance in 2019 to establish and promote long-term co-operation in new fields of electrification & autonomous driving. Similarly, Volkswagen and Ford announced a broader alliance in 2023 to develop medium pick-up trucks for worldwide sale by both automakers. Such collaborations can help automakers create new markets, accelerate growth, and share costs and technologies for new product strategies. 

#9 Innovation 

Innovation is the lifeblood of the automotive industry. Automakers need to prioritise innovation to stay ahead of the competition. This includes investing in research and development to develop new technologies and features that can enhance the driving experience. For instance, Tesla’s Autopilot system uses advanced sensors, cameras, and machine learning algorithms to enable semi-autonomous driving. Similarly, BMW’s iDrive system offers a seamless and intuitive interface for controlling various vehicle functions. Such innovations can help automakers differentiate themselves from competitors, improve customer satisfaction, and drive growth. 

#10 Customer engagement

In today’s competitive market, customer engagement is key. Automakers need to prioritise customer engagement to build brand loyalty and drive sales. This includes developing innovative marketing strategies and providing exceptional customer service. 

Merit’s Expertise in Data Aggregation & Harvesting for the Global Automotive Sector 

Merit Data and Technology excels in aggregating and harvesting automotive data using AI, ML, and human expertise. Our capabilities include: 

• Crafting end-to-end data pipelines and scalable data warehouses 
• Designing compliant governance solutions for seamless integration 
• Utilising high-volume, high-velocity data tools for nuanced insights 
• Extracting retail product attributes and audience data 
• Aggregating industry-specific data points for informed decision-making 

Trusted by leading automotive brands, Merit drives innovation and efficiency by delivering refined, actionable insights.

Key Takeaways 

• EV Transition and Innovation: Prioritise electric vehicle development to meet government mandates, invest in innovation, and adapt supply chains for sustainability.
• Resilient Operations: Build resilient supply chains by addressing semiconductor shortages, embracing dual sourcing, regional networks, and digitising operations. 
• Data Management and Analytics: Develop robust data management systems, utilise big data analytics for insights, and implement cybersecurity measures for connected technologies. 
• Sustainability and Customer Focus: Adopt sustainable practices, invest in autonomous driving technologies, and prioritise customer experience through digital solutions and exceptional service.