MARKET REPORT Transportation and Automotive Sector
Opportunities on the move
In this series of features we look at industry verticals the Channel is currently serving with a view to
determining opportunities, challenges and market movements which are impacting – in this case the
Transportation and Automotive sector
You only have to watch the
BBC, and in particular
their Click program, to see
where all the mainstream
media attention is being placed
in the transport and automotive
sector – it’s driverless cars, AI and
machine learning – all subjects
at the leading edge of the market
and mostly concept based at this
stage.
Elsewhere, i.e. stu you
can buy today, subjects
such as reducing carbon
footprints come into play
alongside established stalwarts
such as telematics and eet
management.
However, the UK automotive
sector has suered its most
severe downturn in business
conditions for six-and-a-half
years between April and May,
according to a survey published
by NatWest and IHS Markit
today.
e NatWest UK Automotive
PMI report is based on
responses from UK automotive
sector manufacturers and
benchmarked against equivalent
indices for Europe and the rest
of the world and found that the
headline seasonally adjusted UK
Automobiles & Auto Parts PMI
registered 43.5 last month.
It is the second month
running that the single gure
measure of developments in
manufacturing conditions has
registered below the crucial 50.0
no-change threshold and its
decline from 48.9 in April and
signalled the sharpest downturn
in business conditions across
the UK automotive sector since
late 2012.
Stephen Blackman, NatWest’s
principal economist, comments,
“Across the world, the
automotive industry is facing
e sector is growing fast but suers from drive range anxiety
a range of distinct headwinds,
each of which is weakening
consumer demand for cars.”
“In addition to ‘dieselgate’
there was the introduction of a
more rigorous emission testing
procedure plus growing unease
about the direction of the global
economy.
An unhelpful combination
sowing further consumer
confusion about their outlook
for personal nances and the
future of cars.
Because adding to these
‘one-o’ or cyclical factors,
the sector is also undergoing a
period of profound structural
change, driven by developments
in automotive technology,
automation and shifts in
consumer preferences.”
In what some observers could
class as the perfect storm for
the sector Blackman adds that
while vehicle production and
sales are down with only a little
relief appearing in the form of
registrations for Electric and
Alternative Fuel Vehicles which
increased by 13.8% in the year
to May, reaching a 6% market
share.
And while 72% of us now
drive, more than ever before,
we’re driving less (1,400 fewer
miles each year on average)
compared with 2003.
However, the value of this
sector to the UK economy
should not be underestimated
with Blackman pointing out
that automotive jobs created
£51 for every hour worked in
Q4 2018, almost £16 more than
the average of all sectors. In fact
few industries outside Finance,
IT and heavy industry add
more value per hour.
The Big Touch Point
With the majority of the UK
population now driving the
biggest touch point for this
sector revolves around the car
whether that is purchasing or
servicing and according to Ben
Green Digital & Technology
Consultant for Focus Group,
this is a sector where change is
set to happen.
“ere is no doubt that the
Automotive sector is prime
real estate for both Digital and
underlying technology change.
Whilst the vehicle technology
continues to evolve at a rapid pace
from electrication through to
connect car, the retail network’s
processes and technology have
not followed suit with legacy
systems and processes hindering
advancement in this sector.
e current franchise model
causes tensions between the
now large, powerful retailers
and manufacturers concerning
ownership of the consumer.
Technology in this sector is made
up of point led solutions which
relate to specic Automotive
requirements that don’t connect
to each other leading to multiple
dashboards, logins and therefore
ineciency.
Unlike other sectors
Automotive has one main
advantage, to produce a vehicle
in an economically viable way
is no small thing. is leads to
consumers having to purchase
a vehicle within the antiquated
retail sales process as there are
no alternatives. Many hold up
Tesla’s entry into the market as
the model of change with a small
‘showcase’ retail outlet chain
and online buying as standard.
is in of itself is true however
they have experienced multiple
problems with production and
aftermarket issues, something the
traditional manufacturers have
dealt with previously.
As with all things these issues
36 | Comms Business Magazine | December 2019 www.commsbusiness.co.uk
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