Supply chain disruption and factory shutdowns due to the COVID-19 outbreak has caused global new vehicle sales to contract by an estimated 19 per cent in the first quarter of 2020. The automotive industry’s high dependence on brick-and-mortar retail sales facilities has not helped the situation either.
It is not just conventional automakers that have been hit by the slump. Studies show shipments of connected vehicles, and connected car platform subscription growth have also been equally affected. According to ABI Research, a global tech market advisory firm, new connected vehicles will drop at least 15 per cent globally in 2020. Their research also points to OEMs and suppliers being forced to reduce their expenditure on R&D, which will lead to industry consolidation and rationalisation of investment.
“In the short term, a few OEMs may temporarily postpone immediate projects that add additional value to customers to concentrate their efforts on actions to reduce costs of ownership and to make their supply chain resilient and agile. However, investments and adoption of connectivity packages should remain constant due to standard fitment, such as eCall,” explains Maite Bezerra, Smart Mobility and Automotive Analyst at ABI Research.
The study shows while OEMs with less liquidity will have to give preference to providers offering turnkey, low-cost solutions, larger OEMs with substantial investment in in-house solutions will be more willing to migrate to third party offerings and benefit from lower costs. When it comes to infotainment, off-the-shelf solutions from providers like Google and Amazon are expected to benefit from the distress of OEMs, as these companies may now be willing to lose a little bit of control over their systems to decrease costs.
“With the decrease in new vehicle sales, which was already in decline before the COVID-19 outbreak, automakers will have to find strategies to decrease the churn rate of connected services and maximize revenue from registered vehicles. Meanwhile, service providers should increasingly invest in lower-cost turnkey solutions that meet the industry-standard requirements but allow some customization on top and further upgrades,” Bezerra advises.
Cars to look forward to in 2020
There were plenty of exciting new models that came out in 2019 but many of those will come to our market only next year. And there will be many more revealed in 2020. Here’s a list of models we are looking forward to seeing — and driving...
January 01, 2020Mitsubishi previews plug-in hybrid electric vehicle concept
The GT-PHEV, which will feature a trio of electric motors, will have its official debut at the Paris motor show
September 14, 2016Fisker takes wraps off its new electric vehicle
Named EMotion, the saloon will have a top speed of nearly 260kph and will go over 640km on a single charge
November 01, 2016McLaren 650S boasts a new engine
The ‘720S’ will be almost as quick as some of the most powerful hypercars in the world
February 16, 2017The Czinger 21C hypercar will get a 1,250 horsepower hybrid powertrain
Teaser video released ahead of the all new brand's global debut in Geneva claims a 0-100kph time of just 1.9 seconds
February 18, 2020Dubai tuner Huber pays tribute to Lamborghini Aventador
ERA aftermarket aero package comprises carbon fibre front and rear bumpers
January 19, 2021FCA and PSA seal merger to become Stellantis
The world's fourth-largest auto group will focus on shift to electric mobility
January 17, 2021Kia unveils new logo and brand slogan
Korean carmaker ditches unremarkable old logo that was a bad fit for the brand’s current stature
January 07, 2021Classic Range Rover converted to electric powertrain enters production
Lunaz will create an initial run of 50 vehicles based on various models built between 1970 and 1994
December 29, 2020Dedicated Ferrari showroom previewed in Abu Dhabi
New facility in the capital city spans nearly 2,000 square metres, over two levels
December 22, 2020