FRM 2025: Sector Report Automotive Industry KPMG in Germany
The chip shortage is proving to be costly for the industry with many auto manufacturers shutting down plants due to low supply. The global automotive parts market has been steadily growing for the past twenty years. Increasing battery efficiency as well as EV charging infrastructure can speed up adoption. As climate change concerns intensify, automakers […]
The chip shortage is proving to be costly for the industry with many auto manufacturers shutting down plants due to low supply. The global automotive parts market has been steadily growing for the past twenty years. Increasing battery efficiency as well as EV charging infrastructure can speed up adoption. As climate change concerns intensify, automakers are increasingly pressured to reduce emissions, lower their environmental footprint, and embrace green technologies. Digital twins—virtual replicas of physical systems—are gaining traction, enabling manufacturers to simulate scenarios and predict outcomes in real-time. Predictive maintenance powered by AI minimizes machine failures, while IoT networks provide detailed insights into factory operations.
How is the rise of shared mobility changing the automotive industry?
Hybrid vehicles are becoming increasingly popular—they combine electric power with the reliability of a combustion engine. Compared to EVs, they don’t require charging, but at the same time reduce carbon emissions. However, it’s estimated that there will be 33 million autonomous vehicles on the road by 2040. Consumer trends in the automotive industry reveal that short videos are more effective than text in converting leads into customers in the automotive industry. Dealerships can take advantage of various videos, such as how-to videos, car highlights, and customer testimonials. The modernized vehicles available in the market have opened an opportunity for the firms that supply and also manufacture the parts.
- Also, the Customer Acceptance Index improves design validation by offering instant customer feedback.
- AI and predictive analytics enhance demand forecasting, risk detection, and sourcing optimization.
- The control system includes safeguards like automatic overheating prevention, battery depletion protection, and real-time torque and speed calibration for optimal performance on challenging terrains.
- The AV industry itself is just in its infancy, as there are only 17,000 self-driving cars on the road in the US today.
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Explore competitors’ website traffic stats, discover growth points, and expand your market share. The company already has 50 Level 4 autonomous trucks operating in the Southwestern United States. One of the most promising companies in the autonomous trucking ecosystem is TuSimple. The number of autonomous trucks on the road was expected to increase from roughly 150 in 2020 to over 2000 in 2021. It’s expected that the $800 billion trucking industry could benefit from a significant reduction in the 4900 trucking-related deaths that occur each year if only Level 3 or 4 autonomy would gain traction. As of the end of 2023, over 1 billion miles have been driven with Tesla Autopilot enables.
Top 10 Emerging Automotive Industry Trends 2025 and Beyond
Further, this also offers software solutions for fleet and asset tracking as well as connected cars. AI is also transforming automotive manufacturing by speeding up production and cutting costs. Factories equipped with IoT-enabled devices and machine learning capabilities are emerging as the backbone of next-generation automotive production. These facilities use data-driven insights to optimise processes, reduce energy consumption, and increase operational efficiency. In 2024, the automotive industry experienced significant transformations, with advancements in electric vehicles (EVs), autonomous driving technologies, and shifts in global markets. The auto manufacturers who rely on the older versions of chips which are not advanced and powerful will disrupt the growth of the automotive industry.
Vehicle-to-Everything (V2X): V2X Prevents 80% of Non-impaired Driver Crashes
In 2024, hybrids saw a YoY growth of almost 19%, which is expected to grow to over 23% by 2025. Italian startup Moi combines thermosetting composite materials and 3D printing to manufacture high-performance parts for the automotive industry. Moi uses continuous fiber manufacturing (CFM) technology, robotic intelligence, and digital fabrication to deposit fibers. As a result, the solution is easily scalable for producing composites for panels, frames, and interior components. The startup also serves other industries, such as aerospace, construction, and biomedical. Additionally, blockchain is instrumental in verifying the supply chain of automotive parts, ensuring that materials and components are sourced from legal and trustworthy suppliers.
Q) What are the predictions for the automotive industry?
- These tools enable dealerships to handle inquiries efficiently, freeing time for other tasks.
- China’s automotive sector underwent substantial changes, with battery electric vehicle (BEV) sales reaching 582,813 units in August 2024—a 20.8% increase from the previous month.
- Many OEM’s are already revisiting original forecasts and realigning through-put and production schedules accordingly.
- In 2024, hybrids saw a YoY growth of almost 19%, which is expected to grow to over 23% by 2025.
- Success will depend on manufacturers’ ability to balance technological advancement with practical implementation while meeting evolving consumer expectations.
Personalising the IVX will drive the need for AI agents, which is one reason why EDA tool vendor Synopsys is working with Sima.ai. Across in-vehicle infotainment (IVI) and advanced driver assistance systems (ADAS), there have been various OEM innovations in the past year, with AI models being integrated into these systems. For example, Mercedes-Benz is using Chat-GPT for intelligent virtual assistants within its vehicles.
This EV Just Set an Efficiency Record
- This approach enhances flexibility across its global operations, ensuring a rapid response to shifting market demands.
- The US market was worth $14 billion in 2021 and is expected to grow at a CAGR of 10.7% to reach more than $31 billion by 2028.
- As 2024 comes to a close, the automotive manufacturing industry continues to accelerate its transformation.
- The push toward electrification is reshaping the automotive manufacturing landscape.
- In terms of new car sales, Norway boasts the highest percentage of battery-electric vehicles in Europe.
- Partnerships between telecom providers and automakers, like Targa Telematics’ collaboration with Renault, are enhancing connectivity solutions, particularly for fleet management.
In the US, the AV market is expected to expand, rising from USD 22.6 billion in 2024 to USD 222.8 billion by 2033, with a CAGR of 28.92% starting in 2025. Regulatory frameworks like UNECE WP.29, effective from last year, mandate stringent cybersecurity measures to drive compliance-related investments. Moreover, Avvenire has a strategic agreement with Daymak International Inc., Canada’s leading LEV distributor. Daymak will assemble Avvenire’s vehicles and distribute them through its network of over 200 dealers in 25 countries. Further, as part of larger decarbonization efforts, the Intergovernmental Panel on Climate Change (IPCC) emphasizes the contribution of EVs to the reduction of greenhouse gas emissions. Europe is projected to reach a 20.4% market share, while the US is likely to reach 11.2%.
🌐 Trend 4: Global Supply Chain Resilience and Geopolitical Shifts
Companies focus on increasing energy best viewpoints to reach by car in Devon density to improve range and reduce charging times. The trends shaping automotive manufacturing in 2025 emphasize innovation, sustainability, and connectivity. As electric vehicles become mainstream, digitalization reshapes production, and mobility services redefine car ownership, the industry is set to transform how vehicles are manufactured and used.
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Meanwhile, Carlos Tarves, CEO of automaker Stellantis, has said the chip shortages will continue to plague his industry next year. Virtual car shopping is the new norm and will remain a significant car industry trend for years. The booming e-commerce industry is essential to the global online car buying demand. This is further fueled by increasing awareness of convenience and supported by rising digital literacy, internet accessibility, urbanization, and disposable income levels.
Aviva Links advances In-vehicle Connectivity
US-based startup MotionSafe provides AI-powered cybersecurity solutions that protect connected vehicles from data breaches and cyber threats. Vehicle cybersecurity drives one of the fastest-growing areas in the auto industry as connected vehicles multiply and cyber risks intensify. Analysts project the automotive cybersecurity market to increase from USD 5.24 billion in 2025 to approximately USD 18.88 billion by 2034, advancing at a CAGR of 15.3%. Geopolitical risks, regulatory frameworks, cost advantages, and compliance needs drive the auto industry toward supply chain resilience and nearshoring.
What are the future predictions for automotive industry innovations?
As for those who already use micromobility vehicles, 32% say they often or very often use it instead of a private car. Cox Automotive Industry Insights predicted total new-vehicle sales in 2022 of only 14.4 million units, a number that doesn’t even surpass 2020 sales volume. Semiconductor experts say manufacturers won’t see a return on investment if they build new foundries to meet the auto industry’s demand. In addition, the initiative will leverage the data collected by adding Google’s AI capabilities to Ford vehicles. Google and Ford recently announced a connected car partnership called Team Upshift. This type of vehicle is defined by its ability to communicate with other software systems and collect data from its surroundings.
- Data-driven connectivity services and on-demand mobility will add up to $1.5 trillion to the automotive revenue pool by the year 2030.
- The automotive manufacturing industry is evolving rapidly as manufacturers respond to technological advancements, consumer preferences, and regulatory changes.
- FlxTran’s approach improves connectivity and access to opportunities beyond major cities.
- In some cases, car dealerships are charging huge markups on the inventory they do have.
- Most favour an opt-in approach (63%), and many are willing to share data for benefits, with 67% open to lower insurance rates, 43% for personalised features, and 36% for improved safety options.
- This design ensures durability, compact packaging, and flexible vehicle integration.
Jaguar Land Rover’s REALCAR project established a closed-loop recycling system that reclaims over 50K tonnes of aluminum scrap. The project avoids more than 500K tonnes of CO2 emissions by reducing the need for primary aluminum. Another instance is that of Michelin, which made a road-approved car tire with 45% sustainable materials. While the market for cars valued below $80k is expected to remain flat through 2031, the luxury car market is predicted to grow at up to 14% CAGR. While the past two years have been a challenge for most auto manufacturers, high-end luxury brands have experienced unexpected success.
Printing: Revolution in Automotive Manufacturing
Mercedes-Benz is also using generative AI to include conversational assistants for improving user experiences and redefining in-car interactions. Usage-based insurance (UBI) models use driving behavior data to provide customized premiums and are gaining popularity. From 2024 to 2029, the insurance telematics industry is projected to grow at a CAGR of 17.6%.
Electrified Vehicles Top 50% of Sales in China
They improve energy efficiency through wide-bandgap devices that extend EV range and minimize charging times. The semiconductors also enable infotainment, voice assistants, and AI-driven interfaces for a better user experience. Swedish startup Intended Future utilizes data-driven design benchmarking tools for the automotive industry. These advanced technologies are widely used across a great number of industries and the automotive domain is no exception. They are used by the automotive industry for car manufacturing, employee training as well as vehicle sales and marketing. However, although the Chinese EV market may take some time to adapt to the new subsidy-free scenario, the situation is optimistic.
The global automotive industry, responsible for 10% of the world’s carbon dioxide emissions, faces ongoing pressure to overhaul its practices. However, the landscape is proving difficult to steady with an intricate maze of regulations that differ by country or region and lack a unified benchmarking process for sustainability. In these regions, shared mobility options like vans, minibuses, and two- and three-wheelers are more common and often electrified due to their affordability.
Eloy provides Connected Car Solutions
Connected cars are vehicles that use wireless means to connect to the Internet of Things. They offer a safe, comfortable, and convenient multimedia experience with on-demand features that allow users to browse the web while in their vehicle. They provide various features such as remote diagnostics, vehicle health reports, 4G LTE Wi-Fi hotspots, turn-by-turn directions, and warnings of car health issues. The technology has already processed over a billion customer requests and is set to grow in 2025 with predictive intelligence and maintenance technology. Conversely, in Europe, regulations are scaling up in preparation for the EU ban on new ICE vehicles by 2035. Chinese EV automakers’ expansion into new markets, including Europe, other Asian countries, and Latin America as previously mentioned, could see a completely new global EV landscape.
Dodge Unleashes the Durango Hellcat, Everywhere
Looking ahead, there is no doubt that the automotive industry is on the brink of a paradigm shift driven by unprecedented technological advancements and a commitment to sustainability. While most of these concerns can be overcome, it will take some time, and this time will be the most challenging for the industry. Canadian startup KonnectShift provides IoT solutions to optimize fleet and asset management. The startup develops Konnect – GS01, an automatic electronic logging device (ELD) to continuously track vehicular health. Israeli startup DAV offers a decentralized autonomous vehicles platform based on blockchain technology.
