As we delve into the second half of the year, they took a closer look at the key trends that have shaped the market so far. From the performance of the US economy to the surge in electric vehicles (EV) and the shifting dynamics of used vehicle prices and inventory, this report provides valuable insights into the ever-evolving automotive landscape. Check out CarGurus’ mid-year intelligence report to see the driving forces behind these trends and gain a deeper understanding of the industry’s current state!
5 Trends That Will Transform Auto In The Next 5 Years
In the next five years, the automotive industry is set to undergo a significant transformation that will revolutionize the driving experience. This transformation is driven by innovation in automotive software, and five key trends will shape the industry's future. Here are five trends that will transform the auto industry in the next five years.
Software-Defined Vehicles (SDVs)
In the near future, cars will be software-defined vehicles controlled by software. SDVs will be known for their user experience rather than their physical attributes, and software will create a direct connection between car manufacturers and customers. This connection will enable platform-driven auto businesses that seamlessly deliver personalized services to customers via their vehicles. In the future, the software in a vehicle will be as important as its logo.
Renewal and On-Demand Upgrades
SDVs that are connected to the web will evolve the same way as smartphones, with regular software updates. Many automakers are already experimenting with on-demand services that flow as software to users. BMW delivers downloadable updates via the MY BMW App or the SIM card built into the vehicle. Volvo offers customers over-the-air (OTA) software updates sent directly to their vehicles in two phases: a download phase when the car is in use and installation when the car is not in use. Some car companies are looking to monetize software upgrades, such as Mercedes, which introduced an annual subscription service to unlock enhanced performance in some of their cars.
Car Ownership for Gen Z
With the changing ways people live and work, owning a car may soon look very different, especially for Gen Z. Many Gen Zs want the convenience of a car without the traditional ownership model. The future of car ownership may involve paying for a vehicle only when you need one through a subscription model, car sharing, or peer-to-peer rental service. SDVs with on-demand and remote control features lend themselves to this type of service. Several car manufacturers are experimenting with car subscription models, including Audi, Lexus, Nissan, Porsche, and Volvo. Many third-party companies also offer subscription services, like car rental companies.
Predictive Maintenance
The connectivity built into cars will be used to transmit real-time vehicle diagnostics as part of the Internet of Things. This technology will be used to predict maintenance schedules and alert the dealership, mechanics, and manufacturers of potential issues before they occur. With feedback from advanced analytics powered by AI, the car will flag maintenance issues and share them with relevant parties. This way, the mechanics know ahead of time and can order the necessary parts. Data from individual cars will be aggregated into a manufacturer's errors and maintenance log, allowing them to more accurately spot trends and identify issues earlier in the lifecycle of a vehicle.
Hydrogen-Powered Electric Vehicles
Future electric vehicles may be fueled by hydrogen, providing a viable alternative to address the rising cost of EV batteries, long waiting times for cars and parts, and issues with scaling recharging infrastructure. Initial tests have shown promising results at Germany's DLR Institute for Vehicle Concepts, and it's a technology that could significantly reduce carbon emissions and improve sustainability.
The evolution of the software-defined vehicle is set to bring exciting changes to the automotive industry. From how cars are designed and built, to how individuals use and service them, and how they interact with the ever-expanding automotive ecosystem. The next five years are sure to be a transformative time for the auto industry.