What can we expect from the auto industry in 2023? | Automotive World (2023)

Randy Miller predicts coming developments around vehicle sales and industry megatrends

Global automotive sales were hit hard by the pandemic; the market lost confidence and buyers remained understandably cautious, even when COVID-19-related restrictions began to lift. Light vehicle (LV) sales eventually started to rally in 2021 and thankfully moved up a gear in 2022—for the past 12 months, global LV sales are expected to show a 3.5% year-on-year growth. Interestingly, electric vehicles (EVs) and hybrids are where the industry has seen the most movement.

According to the latest EY research, EV sales are expected to outpace the market, with growth of around 48% in 2022 set to reach 9.4 million units globally. More importantly, what does 2023 hold in store?

The good news is that projected sales for the upcoming 12-month period look set to return to pre-pandemic levels with a growth of around 9%. Once again, EVs and hybrids provide a highlight; the sector is expected to grow by 29% year-on-year in 2023, to reach an estimated 12.1 million units globally. However, the threat of an impending recession and ongoing supply chain issues could cast a shadow over the personal vehicle market.

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Challenging conditions on the road to recovery

It’s clear that the automotive industry will need to find ways of navigating the supply chain disruptions caused by the pandemic, and new approaches will be required to tackle worsening bottlenecks, which have been exacerbated by the war in Ukraine. As a result, automakers are expected to shift from “just-in-time” to “inventory banking” strategies to increase supplies, despite the additional inventory costs. To protect themselves from further supply chain disruptions, automakers are increasingly likely to consider vertically integrated business models, particularly in the battery value chain, with localised battery manufacturing rather than importing cells from one or two large suppliers. We will see increasing examples of a blended strategy here.

What can we expect from the auto industry in 2023? | Automotive World (1)

Significantly, the energy crisis has severely hit automakers’ profit margins. This is likely to continue well into 2023 and many automakers are expected to pass the costs on to customers. However, EY research suggests that the supply chain challenges will start to ease, enhancing capacity in vehicle production. Consumer demand remains strong and there’s good reason to be optimistic about EV sales in 2023. But certain regional variations are expected to emerge.

The US light vehicle market is projected to grow by around 10% to12% in 2023, with total sales of more than 14.5 million vehicles. However, macroeconomic issues and geopolitical uncertainties present a significant risk to this anticipated growth number. EVs are forecast to have 61% growth, with around 1.5 million in sales; a market share of 10%, up from 7% in 2022. The European LV market is also expected to experience double-digit growth during 2023 with overall sales exceeding 13 million vehicles. EVs are projected to register more than 50% growth, delivering around 2.8 million in sales; a market share of 22%, up from 16% in 2022.

However, things don’t look as promising in China, where sales are expected to be flat for much of 2023. Nonetheless, anticipated sales will total more than 26 million vehicles with the EV segment seeing a 20% growth, with around 6.2 million in sales—a market share of 23%, up from 19% in 2022. Potential COVID-19 outbreaks and shutdown strategies are wildcards for China and could impact volumes significantly depending on the direction.

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EVs are on the charge

While the automotive industry faces several challenges, EVs are leading the charge with growing global interest. The EY Mobility Consumer Index revealed that 52% of the intended car buyers globally favor either a fully electric (EV), plug-in hybrid (PHEV) or hybrid vehicle. There is a three-fold growth in preference for fully electric cars, up from 7% in 2020 to 20% in 2022.

The move toward electrification is therefore expected to gain additional momentum in 2023, on the back of regulatory push along with stringent timelines and targets for bans on some types of internal combustion engine (ICE) vehicles. As a result, and if trends continue, 50% EV penetration, battery electric and plug-in hybrid (BEV+PHEV) is expected to be achieved in Europe by 2027 and in the US and China by 2032

What can we expect from the auto industry in 2023? | Automotive World (2)

A major growth contributor is the waning range anxiety. The increasing availability of long-range EVs, continuous improvement in battery technology and evolving charging infrastructure are making consumers less anxious of range. Increasing experience with EVs in personal environments will further alleviate consumer concerns.

The smart way to drive

Modern EVs are increasingly becoming cutting-edge pieces of technology, loaded with smartphone-like connectivity and infotainment systems, with features that appeal to younger consumers. Consequently, automakers are accelerating their plans to deploy technologies, such as advanced driver assistance systems, in vehicles to attract young drivers. Plans for full autonomy have been delayed, partly because of growing technical and regulatory complexities.

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Automakers are instead expected to focus more on providing customised in-vehicle experiences; digital cockpits, biometrics, voice-enabled services, while display screens are expected to shift from touch controls to haptic feedback and voice commands with artificial intelligence-based digital assistants. Chinese manufacturers are leading the charge when it comes to EV adoption, and the development of enhanced 5G is expected to unlock advanced connected car capabilities, which are expected to have strong growth in 2023. There’s also talk about using augmented reality (AR), virtual reality (VR) and the metaverse to enhance the customer experience.

To bring these features to realisation, automakers will need to balance in-house software development with established technology partners to leverage their software expertise to deliver best in class software-defined features to customers.

What can we expect from the auto industry in 2023? | Automotive World (3)

Bridging the skills gap

One of the biggest gaps the automotive industry currently faces is a scarcity of skills. With the advent of megatrends such as electrification, the demand for tech talent has increased, while several roles have become redundant, including traditional engine assembly and service technicians. There is therefore a real need to reskill the existing workforce, which will require a significant investment, as hiring new talent will not always be an option due to the industry’s inability to offer the types of remuneration packages available in the tech sector.

Equally, growing regulatory scrutiny for decarbonisation will continue to push automakers to take concrete actions toward long-term sustainability goals. But they will need to find a balance between their business objectives and meeting green demands.

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The end of the ICE?

To move to green mobility, automakers will have to strike the right balance between optimising today’s business, while simultaneously investing in the vehicles of tomorrow. It’s already starting to happen—80% of the key auto markets are aiming to phase out ICE vehicles by 2035, a move that is being accelerated by the rapid expansion of clean air or low-emission zones. There are also growing concerns about battery recycling, with steps being taken in the EU to help ensure the proper infrastructure is in place to facilitate it.

Potential COVID-19 outbreaks and shutdown strategies are wildcards for China and could impact volumes significantly

Automakers are therefore expected to sharpen their focus on sustainable operations, including the end-of-life processing of vehicles, including EV batteries, sustainable sourcing of parts and increased use of recyclable materials in the overall design.

What is abundantly clear is that 2023 is going to be a year of substantial change. Old “box on wheels” technologies will be supplanted by new smart vehicle technologies. The switch to EVs is rapidly reaching critical mass and the influence of environmental demands will further hasten the move to greener personal transport. Bringing this all together against a backdrop of supply chain uncertainty and a burgeoning energy crisis will be hard work but the consumer demand is there so a route through will be found.

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The ICE car park is still extensive and will remain very large even with the targets mentioned above. One of the key questions remains: What do we do with the existing ICE vehicles?

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.

About the author: Randy Miller is Global Advanced Manufacturing & Mobility Leader at EY


What is the automotive forecast for 2023? ›

The January 2023 auto sales pace, or seasonally adjusted annual rate (SAAR), is expected to finish near 15.6 million, a large increase from December's 13.3 million pace, according to a forecast released today by Cox Automotive.

What is the future of automotive industry? ›

With the demand for greater connectivity set to soar, 5G-enabled connected cars are earmarked to become the future of the automotive industry. Benefits of connected cars include: Access to a variety of entertainment services on the go. High-tech navigation systems through third-party apps.

What will the automotive industry look like in 2025? ›

By 2025, 25% of cars sold will have electric engines, up from 5% today. But most of those will be hybrids, and 95% of cars will still rely on fossil fuels for at least part of their power. That means automakers will need to make internal combustion engines more efficient to comply with new standards.

What can we expect to see in the automotive industry in 2030? ›

By 2030, the automotive ecosystem can expect to see major market consolidations and partnerships. With OEMs shifting their focus to electric and autonomous cars, suppliers and dealers will likely follow a similar path.

Will new car prices come down in 2023? ›

Expert Advice: With Rates So High, Is a High-Yield Savings Account a Better Bet Than the Stock Market? There is good news on the horizon in 2023, however. J.P. Morgan estimates that prices for both new and used vehicles are set to decrease as supply chain issues abate and inflation is poised to keep easing.

Should I wait until 2023 to buy a car? ›

Americans planning to shop for a new car in 2023 might find slightly better prices than during the past two years, though auto industry analysts say it is likely better to wait until the fall. Since mid-2021, car buyers have been frustrated by rising prices, skimpy selection and long waits for deliveries.

What is the future of automated vehicles? ›

The autonomous vehicle of the future will have a heavier reliance on camera technology, especially since new camera technology such as wide-baseline stereo vision can generate direct 3D measurements at long range—and since future platforms will be strongly driven by both safety and cost considerations.

What will the automotive industry look like in 2050? ›

By 2050, there will be about 3 billion light-duty vehicles on the road worldwide, up from 1 billion now. At least half of them will be powered by internal combustion engines (ICE), using petroleum-based fuels.

Is the future of the auto industry electric? ›

Though electric vehicles currently make up a sliver of auto sales, automakers have seen enough to know the future is, indeed, electric.

How much will the automotive industry expand by 2024? ›

New Research: Auto Care Industry Expected to Grow 8.5% in 2022, Reach $514 Billion in 2024.

What will happen to car mechanics in the future? ›

By 2040, the state projects that nearly 32,000 auto mechanics jobs will be lost in California, since electric vehicles need far less maintenance and repair than conventional combustion engines.

What does the future look like for auto mechanics? ›

They will require acquiring more technologically advanced tools, equipment, and machines. In addition, many auto repair technicians will have to be retrained to ensure they have the right skill set to handle the changing auto repair needs in 2023 and beyond.

Is the automotive industry expected to grow? ›

The automotive manufacturing industry generated approximately 2.86 trillion U.S. dollars in revenue in 2021, a market size expected to grow in 2022.

What will happen to used car prices after 2030? ›

As 2030 approaches, the value of petrol cars is expected to plummet as manufacturers still offering new models for sale are likely to discount heavily.

Will car prices ever go back to normal? ›

Car shoppers have faced sky-high prices for more than a year in part because of high demand and tight inventory. But 2023 may finally bring some relief. As demand stabilizes and inventory improves, prices are expected to ease.

How long will auto prices stay high? ›

Used car prices have likely peaked, but new car prices are set to remain elevated through end-2022. In 2023, prices are expected to decline by 2.5% to 5% for new cars and by 10% to 20% for used cars.

Will new car prices ever go back to normal? ›

It's worth noting that prices may never return to a pre-pandemic “normal.” Several automakers have said they plan to keep inventories lower indefinitely, maintaining high prices. But our analysts tell us that new car shoppers are better off waiting for discounts to kick in in the second half of 2023.

Should I wait until the end of the year to buy a car? ›

The best time to buy a car is usually around the end of the year since salespeople will be trying to meet their quotas and may offer steep discounts. However, you should also consider holidays — like Black Friday — and the beginning of the week.

Are car prices expected to drop? ›

Cheaper prices compared to 2022

As demand for used cars wanes, prices should continue to drop. According to J.P. Morgan Research, prices for used cars could fall as much as 10% to 20% in 2023. If the Fed continues to raise interest rates, vehicle prices will likely keep their downward trend.

Do car prices go down in a recession? ›

Historically, it may be reasonable to expect car prices to drop in a recession. However, there may be other factors that could significantly affect your ability to get a deal on the car you want.

What is next in car technology? ›

Intel subsidiary Mobileye announced plans to bring a new supercomputer to market designed to give passenger cars, trucks and SUVs autonomous driving powers. The company introduced at the 2022 CES tech trade show a new system on chip called EyeQ Ultra that is purpose-built for autonomous driving.

Will all cars be automatic in the future? ›

With the average lifespan of a car around 14 years2, the last new combustion engine cars sold in 2029 will likely be scrapped by 2043, meaning that the last 17-year-olds learning to drive in a manual gearbox car will be born at some point during 2027.

Will all vehicles be electric in the future? ›

By 2040, roughly half of the vehicles on the road will still be powered by fossil fuels, but all new vehicles sold will be EVs.

How long will gas cars last? ›

Cars last around 15 years, so it will take us to 2050 before we get rid of most of the gasoline-powered cars. “Drivers will be willing to wait 10 to 15 minutes to charge their cars so they can drive 200 more miles. But if they have to wait much longer, they will not be happy.”

How long will gas cars be legal? ›

California made it official last week — the state will ban sales of gasoline-powered new cars after 2035. Gov. Gavin Newsom, who issued the executive order leading to the Air Resources Board's adoption of the ban, issued his characteristic boast about California being out front.

Will gas cars still be around in 2050? ›

Credit: EV Volumes

Unfortunately, despite projections of EVs dominating new car sales very soon, gasoline cars are expected to hold onto their lead, even in 2050. Even if you're an environmental champion, changing vehicles takes some thought.

Will electric cars take over gas cars? ›

New gasoline-powered cars will be banned in California beginning with 2035 models under a new groundbreaking regulation unanimously approved today to force car owners to switch to zero-emission vehicles.

What will happen to gas cars after 2035? ›

Under the CARB mandate, there will be a tapering of sales of gas-powered cars over the next 13 years: 35% of new autos must be zero emission by 2026, 68% by 2030 and 100% by 2035.

What year will cars go electric? ›

The automaker announced that all newly launched vehicle platforms will be electric-only from 2025 onward and that it's preparing for new cars to be electric-only by the end of the decade, with the important caveat “where market conditions allow.”

Will mechanics be replaced by robots? ›

Our visitors have voted that there is a small chance this occupation will be replaced by robots/AI. However, the automation risk level we have generated suggests a higher chance of automation: a 55% chance of automation.

What will happen to mechanics 2035? ›

June 1, 2022—California's efforts to phase out new gas-powered cars by 2035 could prove to make things complicated for individuals in the automotive repair field. According to Times of San Diego, California has projected that almost 32,000 automotive mechanic jobs will be lost by 2040 across the state.

What will happen to cars after 2030? ›

When will diesel and petrol cars be banned? The ban on sales of new models is due to come into place in 2030, with new hybrids being given a stay of execution until 2035 on the condition their zero-emission-mode can cover a significant distance, although this distance hasn't been set by the government yet.

What is the future of auto dealerships? ›

Companies will have to begin engaging with car buyers online. And because EVs require fewer repairs and less servicing, dealers will also have to develop new revenue streams. Dealerships that learn to skillfully navigate this new go-to-market landscape will emerge as the winners in the years ahead.

Does automobile engineering have a future? ›

Ans. Automotive Engineering is a great career for those who have a deep interest in vehicles and technology. This field offers remarkable career opportunities, especially for graduate students. In India, there is a huge demand for automotive engineers due to advancements in technology.

Is there a future in automotive engineering? ›

Tech developments are nearing to support the automotive engineering. It is becoming increasingly evident that some specific technologies will be used to improve the efficiency of vehicles. This is not only applicable to cars but also to trucks, motorbike, planes and maritime vehicle like boat, ships and submarine.

Will you be able to drive a diesel car after 2030? ›

Yes! As this ban will only affect new cars, you will still be able to drive a used petrol or diesel car after 2030. There will not be a requirement for you to scrap or sell your car straight away and move to hybrid or electric cars. Instead, you will only need to change to an alternative fuel car when you're ready.

Will used car prices continue to rise in 2023? ›

The good news for consumers is that used car prices are declining and experts expect the trend to continue in 2023. Unfortunately, the drop won't come close to wiping out the massive surge in values that stretched from the spring of 2020 to the beginning of last year.

Can you still drive petrol cars after 2040? ›

What happens to cars after 2040? You will still be able to drive a petrol or diesel car following the ban in 2040. The restriction only affects new cars registered after that date. Cars registered after 2040 will have to be 0 emissions vehicles.

Will used-car prices continue to rise in 2023? ›

The good news for consumers is that used car prices are declining and experts expect the trend to continue in 2023. Unfortunately, the drop won't come close to wiping out the massive surge in values that stretched from the spring of 2020 to the beginning of last year.

Will car prices go down in the near future? ›

Used car prices have likely peaked, but new car prices are set to remain elevated through end-2022. In 2023, prices are expected to decline by 2.5% to 5% for new cars and by 10% to 20% for used cars.

Are new vehicle prices going to come down? ›

Unfortunately, while used car prices are starting to go down, the price of a new car is still going up. In December 2022, the average new car sold for a record-high $49,507. For some perspective, note that in July 2021, the average new vehicle cost $43,355, according to Cox Automotive.

Will vehicle prices go down? ›

Used vehicle prices are expected to come down further this year amid rising interest rates and improved availability of new cars and trucks, according to Cox Automotive. The firm expects wholesale used vehicle prices to end the year down 4.3% from December 2022.

What will happen to second hand car prices in 2023? ›

What does 2023 hold? Overall, all the dealers we spoke with were optimistic about used car sales in 2023. In the short term, they all agree that whilst the production and delivery of new cars continues to stall, used car demand and prices should remain strong as motorists search for good quality cars to buy.

What cars will be worth alot in future? ›

Here's a list of the more likely cars to become collectible vehicles in the next ten years:
  • 2009 Nissan GT-R. This car is not a cheap shot, but it's worth the cost. ...
  • 1998 Lotus Esprit. ...
  • BMW 1 Series M Coupe. ...
  • Aston Martin Vantage AMR Manual. ...
  • 1984-1991 Ferrari Testarossa. ...
  • Volvo 850R. ...
  • Ford Focus RS. ...
  • Alfa Romeo 4C.
Apr 29, 2022

Will used car prices fall in 2023? ›

As demand for used cars wanes, prices should continue to drop. According to J.P. Morgan Research, prices for used cars could fall as much as 10% to 20% in 2023.


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