Driving opportunity: deploying growth mindset on the journey to 2030
from Grant Thornton
We are proud to partner with Cox Automotive for the fourth consecutive year in delivering our comprehensive analysis and outlook for the sector via the Insight Report. Looking back, 2020 saw dramatic changes from the first month to the last, affected by lockdowns and weak trading, while additional challenges on new vehicle supply have compounded the situation in 2021. As we predicted, the automotive sector has risen to the challenge. There may be questions ahead, but we look forward with positivity for the remainder of 2021 and into 2022.
Change in the automotive market remains on the horizon around technology, digitisation, and electrification, which have continued to gain momentum over the past 12 months. Electric vehicles have become more common on our roads, and this trend is expected to accelerate in the coming years as the automotive industry looks to meet the UK Government’s zero tail pipe emissions target by 2035. Such a move from internal combustion engines to electric vehicles has meant the automotive industry is once again looking to adapt, and we believe this will spawn new companies while others will evolve and become core players in this ever-growing market. Upstream, further consolidation is expected to gain economies of scale and reduce costs in the supply chain.
"At Grant Thornton, we believe planning and preparation are key for automotive companies to continue to evolve in an ever-changing market, and to align their expectations and costs to growth in 2022 and beyond."
The downstream automotive market is undergoing a structural change, with a shift towards the agency or direct sales model, and several national sales companies publicly indicating they are considering this process for at least new electric vehicles sales. Automotive manufacturing and its supply chain have also suffered due to COVID-19 with a shortage of semiconductors, rubber, and steel, which has led to a lack of the supply of new vehicles. A shortage of new vehicles has meant used vehicle stock is limited and the used car sector has seen unexpected strong price increases.
As we work through the final quarter of 2021, we look forward to 2022, when we believe that the supply of vehicles should return closer to pre-pandemic levels and the automotive market will start to grow again after a turbulent two years. At Grant Thornton, we believe planning and preparation are key for automotive companies to continue to evolve in an ever-changing market, and to align their expectations and costs to growth in 2022 and beyond.
As expected, the automotive industry has once again adapted against a difficult backdrop of COVID-19, supply constraints and rising raw materials costs. I hope that you find this fourth edition of the Cox Automotive Grant Thornton Insight Report insightful and informative, and a valuable foundation on which to build your future.
CEO, Grant Thornton UK LLP