Skip to main content
  • login
  • contact
  • language
    • English
    • Français
    • Español
    • Português
    • Deutsch
    • 简体中文
    • 日本語
  • search
X
GEP Logo GEP Logo
  • Company
    • Leadership
    • Customers
    • Partners
    • Sustainability at GEP
    • News
    • Events
    • Culture
    • Mission & Vision
    • Awards & Recognition
  • Solutions
    • Strategy
      • Procurement Consulting  
        • Procurement Transformation
        • Digital Procurement Transformation
        • Opportunity Assessment
        • M & A Services
        • Strategic Cost Management
        • Supply Risk Management
      • Supply Chain Consulting  
        • Environmental, Social and Governance
        • Socially Responsible Sourcing
        • Supply Chain Strategy
        • Supply Chain Diagnostics
        • Inventory Optimization
        • Network Optimization
      Software
      • GEP SMART  
        • Procurement Software
        • Direct Procurement Software
        • Indirect Procurement Software
        • Digital Procurement Transformation
        • Master Data Management
        • AP Automation
        • Spend Management
        • SMART S2P Technology
      • GEP NEXXE  
        • Supply Chain Visibility and Execution
        • Supply Chain Planning
        • Supply Chain Collaboration
        • Supply Chain Control Tower
        • Should-Cost Modeling
        • Inventory and Warehouse Management
      • GEP CLICK  
      • GEP MINERVA  
      Managed Services
      • Procurement Outsourcing  
        • Source-to-Contract
          • Spend Analysis
          • Strategic Sourcing
          • Category Management
          • Supply Market Intelligence
          • Tail-Spend Management
          • Procurement Support Services
        • Procure-to-Pay
          • Cost Recovery & Invoice Auditing
          • Accounts Payable
      • Supply Chain Outsourcing  
        • Planning & Forecasting
        • Inventory Management
        • Logistics Management
        • Supply Chain Data Management
        • Supply Chain Risk Management
  • Industries
    • Automotive
    • Chemicals
    • Consumer Packaged Goods
    • Energy & Utilities
    • Financial Services
    • Government & Nonprofit
    • Industrial Manufacturing
    • Life Sciences
    • Oil & Gas
    • Retail
    • Telecommunications, Media & Technology
    • High-Tech
    • Media & Entertainment
    • Software, Social & Platforms
    • Telecom
    • Travel & Hospitality
  • Knowledge Bank
    • Digital Transformation
    • Software & Technology
    • Strategy & Planning
    • Operations
    • Procurement
    • Sustainability
    • Insights From the Top
    • COVID-19 Resource Center
    • Inflation Strategies
  • Careers
    • Join Us
    • GEP Per Se
    • Campus Connect
  • Partners
   
  • GEP Strategy ›
    • GEP Strategy
    • ‹ Back
      • Procurement Consulting ›
        • Procurement Consulting
        • ‹ Back
          • Procurement Transformation ›
            • Procurement Transformation
            • ‹ Back
              • Procurement Strategy
              • Org. Design & Implementation
              • Capability Building
              • Change Management
              • Governance & Performance
              • Processes & Policies
              • S2P Operations
              • Sourcing & Category Management
              • Technology
          • Digital Procurement Transformation
          • Opportunity Assessment
          • M&A Services ›
            • M&A Services
            • ‹ Back
              • M&A Clean Room
          • Strategic Cost Management ›
            • Strategic Cost Management
            • ‹ Back
              • Zero-Based Budgeting
          • Supply Chain Risk Management
      • Supply Chain Consulting ›
        • Supply Chain Consulting
        • ‹ Back
          • SUSTAINABILITY AND RESILIENCE
          • Environmental, Social and Governance
          • Socially Responsible Sourcing
          • Scope 3
          • PLAN
          • Digital Planning, S&OP, S&OE
          • Collaborative Planning
          • PROCURE
          • Source To Contract
          • Procure To Pay
          • MAKE
          • Inventory Strategy & Management
          • Operations & Manufacturing Excellence
          • DELIVER
          • Network Strategy & Optimization
          • Warehousing & Transportation Management
  • GEP Software ›
    • GEP Software
    • ‹ Back
      • GEP SMART ›
        • GEP SMART
        • ‹ Back
          • Procurement Software
          • Direct Procurement Software ›
            • Direct Procurement Software
            • ‹ Back
              • Bill of Materials Management
              • Data Analytics & Reporting
              • Inventory Management
              • Master Data Management
              • Quality Management
              • Supplier Collaboration Portal
              • Supply Chain Operations
          • Indirect Procurement Software ›
            • Indirect Procurement Software
            • ‹ Back
              • Source-to-Contract
              • Spend Analysis
              • Savings Project Management
              • Category Management
              • Contract Management
              • Savings Tracking
              • Sourcing
              • Supplier Management
              • Procure-to-Pay
              • Guided Buying
              • Procurement Portal
              • Catalog Management
              • Order Processing
              • Invoice Management
          • Digital Procurement Transformation
          • Master Data Management
          • Product Accessibility
          • AP Automation
          • Spend Management
          • SMART S2P Technology
      • GEP NEXXE ›
        • GEP NEXXE
        • ‹ Back
          • Supply Chain Visibility and Execution ›
            • Supply Chain Visibility and Execution
            • ‹ Back
              • Inventory and Warehouse Management
              • Logistics Visibility
              • Control Tower
          • Supply Chain Planning ›
            • Supply Chain Planning
            • ‹ Back
              • Supply Chain Control Tower
              • Should-Cost Modeling
              • Demand Planning
              • Supply Chain Bill of Materials
              • Supply Chain Direct Sourcing
              • Supply Planning
          • Supply Chain Collaboration ›
            • Supply Chain Collaboration
            • ‹ Back
              • Forecast Collaboration
              • Purchase Order Collaboration
              • Quality Collaboration
              • Capacity Collaboration
              • Quality Management Software
          • Supply Chain Control Tower
          • Should-Cost Modeling
          • Inventory and Warehouse Management
      • GEP CLICK
      • GEP MINERVA
      • Innovation ›
        • Innovation
        • ‹ Back
          • Emerging Technologies
          • Native to Cloud
          • Native to Mobile
          • One Unified Platform
          • Security
          • User-Centric Design
  • GEP Managed Services ›
    • GEP Managed Services
    • ‹ Back
      • Procurement Outsourcing ›
        • Procurement Outsourcing
        • ‹ Back
          • Source-to-Contract
          • Spend Analysis
          • Strategic Sourcing ›
            • Strategic Sourcing
            • ‹ Back
              • MRO
              • CAPEX
              • Logistics
              • Packaging
              • IT & Telecom
              • Energy
              • Direct Materials
          • Category Management ›
            • Category Management
            • ‹ Back
              • Contract Management
              • Supplier Performance Management
              • Savings & Compliance Tracking
          • Supply Market Intelligence
          • Tail-Spend Management
          • Procurement Support Services ›
            • Procurement Support Services
            • ‹ Back
              • eSourcing
              • Supplier Performance Management
              • Savings & Compliance Tracking
              • Sourcing Support
          • Procure-to-Pay
          • Cost Recovery & Invoice Auditing
          • Accounts Payable
      • Supply Chain Outsourcing ›
        • Supply Chain Outsourcing
        • ‹ Back
          • Planning & Forecasting
          • Inventory Management
          • Logistics Management
          • Supply Chain Data Management
          • Supply Risk Management
  • Industries ›
    • Industries
    • ‹ Back
      • Automotive
      • Chemicals
      • Consumer Packaged Goods
      • Energy & Utilities
      • Financial Services
      • Government & Nonprofit
      • Industrial Manufacturing
      • Life Sciences
      • Oil & Gas
      • Retail
      • Telecommunications, Media & Technology
      • High-Tech
      • Media & Entertainment
      • Software, Social & Platforms
      • Telecom
      • Travel & Hospitality
  • Knowledge Bank ›
    • Knowledge Bank
    • ‹ Back
      • Digital Transformation
      • Operations
      • Procurement
      • Software & Technology
      • Strategy & Planning
      • Sustainability
      • Podcasts
      • Insights from the Top
      • COVID-19 Resource Center
      • Inflation Strategies
  • Company ›
    • Company
    • ‹ Back
      • Leadership
      • Customers
      • Partners
      • Sustainability at GEP
      • News
      • Events
      • Culture ›
        • Culture
        • ‹ Back
          • GEP Core Values
          • Women@GEP
          • Diversity
          • GEP Cares
      • Mission & Vision
      • Awards & Recognition
      • Contact Us
  • Global Presence ›
    • Global Presence
    • ‹ Back
      • Americas ›
        • Americas
        • ‹ Back
          • English
          • Español
          • Portugués
      • Europe ›
        • Europe
        • ‹ Back
          • English
          • Deutsch
      • Asia-Pacific ›
        • Asia-Pacific
        • ‹ Back
          • English
          • 中文
      • Middle East ›
        • Middle East
        • ‹ Back
          • English
          • العربية
  • Contact Us
  • Careers ›
    • Careers
    • ‹ Back
      • Join Us
      • GEP Per Se
      • Campus Connect
  • Language ›
    • Language
    • ‹ Back
      • English
      • Français
      • Español
      • Deutsch
      • Português
      • 简体中文
      • 日本語
  • Rapid Response from GEP
  • BLOGS
  • Strategy
  • Technology
  • MIND
Contact Us
  •  
  •  
  •  
  •  
  •  
  •  
  •  

Breadcrumb

  1. HOME
  2. BLOG
  3. MIND
  4. WHATS PUTTING THE BRAKES ON THE GLOBAL AUTOMOBILE INDUSTRY
Blog Image

What’s Putting the Brakes on the Global Automobile Industry?

October 25, 2019 | Market Intelligence Blogs

The global automobile sector is taking its biggest hit since the 2008 economic slowdown. According to a report from Germany’s Center for Automotive Research (CAR), car sales are likely to dip by 4 million units in 2019 and the sector is not likely to recover until 2022. Car and commercial transport vehicle sales across the globe are in a state of decline.

While the US automobile industry reported a 2.4% drop in sales for the first half of 2019, sales data from the European Union car industry has similarly shown a steady decline since September 2018 with annual car sales dropping by about 7%. Meanwhile, Chinese automobile manufacturers have witnessed declining car sales for the last 14 consecutive months, with China registering a 3% drop in passenger car sales for the first time in the last 20 years. The Indian car market is in an even worse condition, showing a 41% decline in annual sales in August 2019. The global slowdown in automobile sales has emerged from a complex interplay of causes. Geopolitical factors, regulatory pressure, and changes in consumer behavior have combined to put the brakes on the global automobile industry.

The US-China Trade War

One of the biggest causes behind the global slowdown in car sales has been the trade war between the two biggest automotive manufacturers in the world. The United States government under President Trump imposed taxes up to 27.5% on cars and car parts imported into the U.S. from China. In response, China increased tariffs on vehicles manufactured in the United States from 15% to 40%. Although the move was temporary and revoked later, this and other constant exchanges of trade policy salvos between the two largest economies in the world have directly impacted the global automobile industry.

Changing Global Emission Norms

Countries that are major automobile manufacturing and sales hubs — such as China and India — have started imposing a series of new and stringent emission regulations on automakers. China’s new 6a emission standard will be one of the most stringent anti-pollution norms in the world and Chinese light vehicles will need to comply with these new standards by Jul. 1, 2020. In a similar move, the Indian government has also set an April 2020 deadline for original equipment manufacturers to comply with the new Indian BS6 emission standards. These deadlines have put automobile and other original equipment manufacturers under immense strain in both countries as they scramble to ensure that they are ready to start producing vehicles that meet these new standards.

Meanwhile, countries across Europe have started banning the use of diesel cars on the road. Because of this ban, the European car industry has been in a state of severe decline. Since 1980, Europe has been the world’s biggest market for diesel cars. However, the popularity of diesel cars has been in decline across the continent, as more people have become aware of the threats diesel-powered engines pose to the environment and public health due to the high emission of toxic pollutants and following the Volkswagen emission scandal of 2015.

Changes in Customer Taste and Behavior

With emission norms requiring cars to adhere to stricter regulations, government policies pushing for a ban on diesel cars and policymakers offering incentives for consumers who move toward clean automotive technology — such as hybrids and electric cars — customers across the world have decided to wait for new emission norms to kick in and to see how automobile technology progresses toward cleaner and more fuel-efficient cars, in the hope of lowering their overall ownership costs and buying superior products. This tendency by consumers is exacerbating the slowdown in car sales and is expected to continue to put the brakes in the automotive industry as the world approaches the deadlines of various new emission standards.

Another factor that has reduced the need for car ownership is the prevalence of ride-sharing applications such as Uber, Ola and Lyft. The Chinese ride-hailing market recorded an annual turnover around $53 billion, while the U.S. registered a turnover around $49 billion. India has also observed significant growth in the number of customers using ride-sharing platforms, increasing from 1 million rides per day in 2015 to 3.5 million rides per day in 2018. Over 30% of the population of China uses ride-sharing platforms to commute, with similar figures in the United States (20%) and the EU (18%). This change in customer behavior is expected to intensify in the coming years, as ride-sharing offers commuters the benefits of owning a car without the drawbacks of increasing acquisition and maintenance costs. Conversely, growth in the increase of the customer base of ride-sharing platforms is not expected to translate proportionately into automobile sales, as one car on a ride-share app can substitute the need for anywhere from 8 to 12 individually owned cars.

Conclusion

Many car manufacturers have responded to the slowdown by closing their manufacturing plants, either temporarily or permanently, sometimes on a regional level but also globally. Some of the car companies that have announced the closing of manufacturing plants in 2019 include Honda, Nissan and General Motors. Other automobile original equipment manufacturers are safeguarding against the slowdown in the automotive industry by investing heavily in new technologies, including cars powered by alternative fuels (electricity, biodiesel, hybrids) and cars that offer improved safety and emission norms. However, adopting these changes comes at a significant cost to the original equipment manufacturers and is putting immense strain on the profitability of the automotive sector.

 

Tags: manufacturing , Category trends

Add Comment +

FEATURED POST

...
Supply Chain Strategy Blogs

How to Effectively Monitor Scope 3 Emission Reporting From Your Supply Chain

...
Supply Chain Software Blogs

From Cost to Resiliency: How Supply Chain Priorities Have Changed

    BLOG CATEGORIES

  • Marketing Blogs
  • Professional Services Blogs
  • Pharma and Life Sciences Blogs
  • IT & Telecom Blogs
  • Logistics Blogs
  • Chemicals Blogs
  • Energy & Utilities Blogs
  • Market Intelligence Blogs
  • Oil and Gas Blogs
  • MRO Blogs
  • Facilities Management Blogs
  • Supply Chain Blogs
  • Human Resource Blogs
  • Procurement Process and Excellence Blogs
  • Agro Blogs
  • CAPEX Blogs
  • Direct Materials Blogs
  • Packaging Blogs
  • Automotives Blogs
  • Healthcare Blogs
  • Corporate Travel Blogs
  • Metals & Minerals Blogs
  • Technology Blogs
  • Awards and Events Blogs
  • Category Management Blogs

TAGS

sustainability
Procurement Software
supply chain strategy
Inflation
Russia-Ukraine War

By checking the box below, you consent to GEP using your personal information to send you thought leadership content – such as white papers, research reports, case studies – and other communications. GEP representatives may contact you to provide additional information or answer questions.

If at any point in time you decide to withdraw your consent, you may unsubscribe by emailing your request to us at privacy@gep.com.

Please refer to the GEP Privacy Statement to understand how we manage and protect your personal information.

Terms of Use | Privacy Statement

Contact Us

Ask Us

Send us your question(s)

RFP

Request for a business proposal

Feedback

Share your thoughts, comments and suggestions

Demo

Schedule a live demo of our software

Discover
STRATEGY
Strategy
  •   Procurement Consulting
  •   Digital Procurement Transformation
  •   Strategic Cost Management
  •   Opportunity Assessment
  •   Supply Chain Risk Management
  •   Supply Chain Consulting
  •   Supply Chain Strategy
  •   Supply Chain Diagnostics
  •   Inventory Optimization
  •   Procurement Transformation
  •   Sustainability and ESG Consulting
SOFTWARE
Software
  •   Procurement Software
  •   Supply Chain Software
  •   Source-to-Contract
  •   Procure-to-Pay
  •   Supply Chain Planning
  •   Supply Chain Collaboration
  •   Supply Chain Visibility & Execution
  •   Supply Chain Control Tower
  •   Should-Cost Modeling
  •   Inventory & Warehouse Management Software
  •   Source-To-Pay Software
MANAGED SERVICES
Managed Services
  •   Procurement Outsourcing
  •   Strategic Sourcing
  •   Tail-Spend Management
  •   Category Management
  •   Procurement Support Services
  •   Supply Chain Outsourcing
  •   Supply Chain Planning & Forecasting
  •   Inventory Management
  •   Logistics Management
COMPANY
Company
  •   About Us
  •   Leadership
  •   Customers
  •   Sustainability at GEP
  •   Careers
  •   News
  •   Awards
  •   Partners
  •   Contact Us

Fresh Insights, Now on Your Phone

  • Dowmload On The App Store Button
Stay Connected
  •  
  •  
  •  
  •  

Latest Tweets

  • Fun at work! Our Technology interns enjoyed a game of cricket, while the TSO CIT Launchpad campus new joiners got t… https://t.co/TrYYM3rfrv

  • Join #GEP experts to learn about key trends, risks and tips to improve bottom lines in #ProfessionalServices,… https://t.co/5veQICcMOe

  • #GEP's Ramachander Raja details ways that #CIOs need to create #sustainable IT, in @TechTarget. https://t.co/ANLfkeJGnq

  • A warm welcome to our new joiners who’ve been a part of the Tech Launchpad Program 2023. Best wishes for a rewardin… https://t.co/xhBfYYhEbu

  • We’re glad to welcome our new class of Technology interns who’ve joined through the GEP Internship Program 2023. He… https://t.co/jwJcZT1a6s

  • How can organizations track and report #ESG metrics accurately? #GEP shares a six-point framework to help leaders d… https://t.co/AdrBBSruH6

  • With #CAPEX continuing to be a top priority for #CFOs, how can companies mitigate #SupplyChain #inflation risks? So… https://t.co/4cSw24jmcq

  • The GEP African Ancestry Network is observing #BlackHistoryMonth with an information series, focused on how the Bla… https://t.co/MXdyHe6kI8

  • What effective real estate practices can financial firms adopt to reduce carbon emissions and succeed at #ESG trans… https://t.co/xx7Zrh5yrs

  • We are delighted to announce @SubhashMakhija1, #GEP #CEO and Co-Founder, as the newest member of the CNBC CEO Counc… https://t.co/MNJXch4Vte

  • #Procurement leaders must develop a spend category management plan to power them through 2023 and beyond. #GEP’s Ry… https://t.co/5JxFw1UbsY

  • How can #automotive companies get the EV transition right? Electric vehicles may be the right option, but it’s not… https://t.co/WmGNCK6sFw

  • Conquering 2023 Supply Chain Setback - 31 Jan 2023 https://t.co/wg0MdRATfh

  • On the occasion of Republic Day in India, GEP Hyderabad held an art competition and GEPpers showed their creativity… https://t.co/NSHrXILbiv

  • We're proud to announce the extension of our #procurement services agreement with @Macys's Inc. to help drive… https://t.co/Hgn4uaGbW0

  • The #SupplyChain and #procurement #software market is in flux amid #MnA. If your software provider gets acquired, w… https://t.co/orQlKUZB4X

  • #SupplyChain #disruptions are a reality in today's unpredictable world. Learn how @gepsoftware has helped #SGS resp… https://t.co/jA2GnbWIBg

  • What steps can companies take to achieve #ESG goals effectively? Well, they can start with #procurement. Learn how… https://t.co/HGEfNyGdeD

  • #ElectricVehicles are a key part of the auto industry's plan to become #NetZero by 2050. But EVs aren't enough on t… https://t.co/YlEoys6vTA

© Copyright GEP 2022. All rights reserved. Terms of Use | Privacy Statement | Cookie Policy |   | Quality Policy | GEP Logo