automobile industry swot analysis

Automobile Industry SWOT Analysis 2024 With Key Insights

In ‘80, the top hp in cars was 300. But you already know this generation of cars’ capacity has increased by 5X. It happened for a long time, with constant effort and innovative minds behind the back of the while, pushing the industry harder to grow and expand.

After hundreds of years of effort, today, we have reached a phase where cars can reach three to four more hundred miles of speed within a few seconds. Cars have become more of a necessity than a luxury and part of our daily life. With new world opportunities and problems, the industry is growing beyond, and we will get to know more about this automobile industry SWOT analysis.

Automobile Industry Overview

Around 800 years ago, an English philosopher named Roger Bacon said that “Cars can be made so that without animals,” and 646 years later, the “Motorwagen” was invented. But the modern car industry started in 1886 with only 35 HP.

Today, in 2023, there are cars with 1,479 HP, and the power will extend beyond imagination in the coming days, with a $2.9 T revenue market and a strong innovation team behind the companies. Besides, a 3.1% global growth rate will push the boundary to grow more to bring new ideas to the world.

Competitors in Automobile Industry
Volkswagen AG | Toyota | Stellantis | Mercedes Benz AG | Ford Motor Company

Did You Know?

The first-ever car accident occurred in 1891. A guy named James Lambert was accountable for that, although the accident led the companies to improve the safety features for the drivers.

Strengths – Automobile Industry SWOT Analysis

strengths of automobile industry

Stable Growth: If we look at the data, we can see the demand for automobiles has been growing ever since, and now it has become one of the largest industries with a $2.9 T value in 2022. The forecasted growth rate stands at 3.71%, and it is promising that the industry will grow even more at the end of this decade with new products.

Strong R&D: The entire industry’s future depends on how much innovation the entire can put together yearly. As a result, there are now cars that can even fly, which happened because of R&D efforts. And that came at a total of $48.4 B in this wing. And, with constant investment, the industry with growing even further.

Economy Vehicle: Once, even regular cars were a luxury product, which eventually became a necessity. It has come to that point where the middle class can even afford economy or commercial cars. As a result, the demand for these commercial cars has increased worldwide, especially in Asia.

Decreasing Production Cost: The production cost in the automobile industry has reduced significantly, thanks to the cheap labor cost in many countries, as well as effective tech and efficient use of inventory. That’s why most automobile products have happened in China because of these factors and hold a large market.

Demand for Luxury & E-cars: The demand for electric and luxury cars has always been rising. The study shows that the demand for electric vehicles will rise because of environmental concerns and might end up at $457.60 B in 2023. As for luxury cars, the demand growth rate stands at 2.63% and will grow even more.

Weaknesses – Automobile Industry SWOT Analysis

weaknesses of automobile industry

Parts Cost Increase: The parts of cars have been rising, and the stats show that in the last four decades, the price has increased by 141.56%. And that’s just the global stat. Even on some continents, the price increase rate has reached the roof because of the rising worldwide inflation and raw material inadequacy.

Buyer’s Bargaining Power: When there are too many suppliers of a single product, the bargaining power of the customer is high. As for the latest stat, there are 157 major global and hundreds of other local car brands worldwide, and because of that, the buyer has the upper hand to choose from wherever they want to, which makes their bargaining power higher.

High Carbon Emissions: Global warming, climate change, and carbon emissions have been hot topics for decades, and the world is concerned about that. Even though carbon emissions have dropped by 25.4% in the last 15 years in the automobile industry, the total amount is still high, six gigatons.

Recalled Products: The recalled cars have been an issue for the entire industry. Whether it’s a government rule or regulation, registration issue, tax-related issue, or an internal parts or system problem issue, these are doubtful to be solved. As a result, there have been 25M cars recalled in the USA alone in 2022, not to mention the result is higher globally.

Opportunities – Automobile Industry SWOT Analysis

opportunities for automobile industry

Market Expansion: Because of the economic growth of many countries, there are now many countries that have the developing and developed country status, and the number is growing exponentially. As a result, we can see that the Asian markets, with a 7.1% of growth rate potential, have become one of the major markets worldwide.

Economic Growth: The world’s economic growth has been increasing ever since and now stands at 4.4%. Because of that, there are now 152 developing countries in the world right now with potential growth markets. The automobile industry has affected a country’s economy, which will also affect the developing country’s economy.

Standardized OEM: The demand and market for electronic cars have been increasing, and prioritizing the standard OEM process has become more important now than ever. To grow the industry more, collaboration among the authorities of the companies, along with regulation bodies from the countries, including several investors, is more crucial than ever.

Strategic Partnership: The need for strategic partnership among suppliers and companies are more important. Strategic planning can benefit companies through innovative new vehicles and effective and efficient tech and bring something new to the industry to grow beyond. As for the effort, Renault and Nissan recently joined together to bring more innovative electric cars.

Threats – Automobile Industry SWOT Analysis

threats to automobile industry

Global Recession: During the 2008 economic recession, the automobile industry fell off a cliff with a 40% sales drop and a 45% employment cut. As there are clear signs of a coming recession in the coming days, the automobile industry might face another drop in sales after a year of recovery from the pandemic.

Increasing Fuel Price: The worldwide fuel price has been rising for the last few months, and 2023 is going to be a critical year for the automobile industry. As per the data, the fuel index stands at 259.86, and even the price has risen around 70% in a few months, disrupting the entire supply chain of raw materials and parts of the automobile industry.

Expensive R&D: The expense of the R&D wing in the automobile industry is rising significantly. They spend more than $48M alone in the USA market, and the global investment in this wing has been increasing yearly. But, with the rising material prices and other factors included, the expenditure has been growing and becoming difficult for the companies.

High Inflation Rate: The global inflation rate is on the rise and affecting those countries that are directly connected and can heavily impact the automobile industry, like Russia, the USA, India, the UK, and many more. Because of that, it will directly hit the overall economy of these countries, the prices of the products will rise, and automobile sales will drop.

[Bonus Infographic] SWOT Analysis of Automobile Industry

automobile industry swot analysis infographic template

Recommendations for Automobile Industry

The automobile industry has changed a lot in the past several decades overcoming many challenges and adopting new techs and developments. Here are some recommendations for the automobile industry in the upcoming years.

  • The companies need to start developing new market expansion on the developing, especially the Asian market, and plan on utilizing them.
  • It is high time to work on standardizing OEM and maintaining a smooth collaboration among all the stakeholders in the industry.
  • The strategic partnerships could bring some innovative products that are more efficient on the milage and have fewer carbon emissions.
  • Taking precautions and plans for inflation and recession could to effective during those hard times.
  • Effective financial planning on the R&D wing and prioritizing those are necessary these days for the industry.

Frequently Asked Questions (FAQs)

The total revenue of the automobile industry in 2021 was $2.86 T.

The world leaders in the automobile industry are Volkswagen AG, Toyota Motor Corp., Stellantis, Mercedes Benz AG, and Ford Motor Co.

Final Words on Automobile Industry SWOT Analysis

That was everything on this topic. The industry has become one of the largest and most expensive industries in the world, overcoming many challenges in the past years. With stable growth, effective planning on decreasing production costs and efficient R&D made it possible for the industry to grow and beyond. But now, the industry has been facing new world problems such as inflation, recessions, rising fuel prices, and expensive materials; hopefully, it will overcome these and grow more in the following years.


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