Ipsos Encyclopedia - Automotive

The traditional key players in the Automotive industry are Vehicle Manufacturers, Automotive Parts Suppliers, Automotive Finance and Leasing Institutes, Automotive Dealerships for car sales plus automotive independent workshops for services & after sales, Insurance companies as vehicles must be covered by insurances policies.

Ipsos Encyclopedia - Automotive

Definition

​The traditional key players in the Automotive industry are:

  • Vehicle Manufacturers (OEMs = Original Equipment Manufacturers), e.g. Volkswagen Group
  • Automotive Parts Suppliers (from wheels to battery technology), e.g. Robert Bosch Group
  • Automotive Finance and Leasing Institutes (owned by the vehicle manufacturers = captives; and independent banks); e.g. PSA Finance
  • Automotive Dealerships for car sales plus automotive independent workshops for services & after sales
  • Insurance companies as vehicles must be covered by insurances policies

Top 10 largest vehicle manufacturers:

2016

Vehicle sales

Global market share

Volkswagen Group

10,102m

11,1%

Toyota

9,947m

10,9%

Renault-Nissan Alliance

8,513m

9,4%

Hyundai-Kia

8,176m

9,0%

GM

7,972m

8,8%

Ford

6,295m

6,9%

Honda

4,907m

5,4%

FCA

4,864m

5,4%

PSA

3,248m

3,6%

Suzuki

3,06m

3,4%

 

Most vehicle manufacturers are globally active across many countries, but there are also a lot of local/regional vehicle manufactures. Especially in China consumers can select out of more than 100 (!) local car brands. In other Asian markets, e.g. in Malaysia, local brands are even dominating the car market -Perodua for example is owning a market share of 35% in Malaysia.

When taking about vehicles, this covers 2-wheelers, Passenger Cars, Pick-up Trucks, Light Commercial Vehicles (from Car Derived Vans to small transporter and shuttles below 3.5t) and Heavy trucks plus busses.

Those vehicles are sold as 'new cars' (= brand new, without any previous owners) and 'used cars' (= cars which were previously driven by other owners / pre-loved cars = second-hand cars).

Vehicles size is defined by segments. From micro/mini-cars (A), small cars (B), medium size cars (C) up to large cars (D) and executive cars (E). Different car manufacturers are all using their own segmentation (e.g. Volkswagen A000, A00, A0, A, B, …).

Beside the segments vehicles are defined by various body types:

  • hatchback sedan / hatch
  • notchback sedan / notch
  • estate (UK) / station wagon (US)
  • MPV (Multi-Purpose Vehicles) / City Vans
  • SUV (Sport Utility Vehicles) = Off-Road vehicle
  • CUV (Crossover Utility Vehicles)
  • Pick-up
  • Roadster / Coupe
  • Convertible
  • etc.

Most car manufacturers offer a variety of vehicle brands. Brands are categories from Budget brands (e.g. Dacia), to Economic brands (e.g. Kia), Volume brands (e.g. Volkswagen), Premium brands (e.g. BMW, Mercedes) up to Luxury brands (e.g. Lamborghini, Maserati).

Top 10 largest vehicle markets:

2016

Vehicle sales

Market share

China

27.977.217

30,4%

USA

17.471.283

19,1%

Japan

 4.860.973

  5,2%

Germany

 3.492.978

  3,9%

UK

 3.068.473

  3,3%

India

 3.025.682

  3,3%

France

 2.422.689

  2,6%

Brazil

 1.989.223

  2,2%

Italy

 1.964.566

  2,1%

Canada

 1.951.664

  2,1%

Global Auto Market - The top 100 countries ranking in 2016

Motorisation rates are different by country. It's huge in the USA (821 of 1000 inhabitants), high in Japan (641) and key European markets (Italy 706 / France 598 / Spain 595 / Germany 593 / UK 587), medium in LATAM (Argentina 316 / Brazil 206) and still low in developing countries (Africa average of 42 per 1000 inhabitants). In China the motorisation rate dramatically increased the last ten years from approx. 22 vehicles per 1000 inhabitants (in 2005) to 118 vehicles (2015), while the second largest country, India, still is on quite a low motorisation level of 22%.

A list of all world vehicles in use

Sales & Service organisations

Car dealers

The dealers are the ones who directly interact with customers to sell and maintain the vehicles. The dealers obtain the right to sell from the OEMs on a defined territory for a certain brand.

The dealers are the ones who enable the delivery of a vehicle or service to customers. For this reason, the dealers' actions significantly impact the customer satisfaction and the repurchase of the OEM's products.

Vehicle sales activities have generally high revenue and low profit when service and parts deliver a much larger percentage of profit. In mature markets, a huge consolidation of dealerships has been seen and this  is not finished. Resulting huge dealer groups have the potential to reach more customers, to offer a larger selection of vehicles and vehicle brands over a much larger geographic area with resulting economies of scale.

None of the trends (Electrification and shared mobility) described below seem to be positive for dealers.

Independent workshops

These independent (from OEMs) repair shops service and repair vehicles that are generally no longer covered by the OEM warranty via the dealers. Customer take their vehicles to these workshops for different reasons usually centred on lower prices and more convenience.

Ipsos Point Of View

​Ipsos adheres to the point of view that traditional automotive industry will completely change during the coming years. Due to three key trends we are entering a new era of mobility:

  • Electrification
  • Digitalisation and Self-Driving / Autonomous vehicles
  • Shared Mobility / new Mobility services

The combination of these trends will lead towards totally new business modules, which could revolutionise the whole industry. Traditional vehicle manufacturers fear to be the 'next Nokia' and are afraid to disappear from the market, while new players (Google, Samsung, Apple, Microsoft, Tesla, UBER, Didi, Baidu, etc.) see future mobility as an interesting space.

Today traditional cars are used for Car-Sharing and Ride-Hailing services. The step towards the next generation of vehicles will lead to two possible scenarios:

  • Vehicles will be electrified and will have self-driving functions, but still will be individually owned (iO)
  • Or Mobility as a Service (MaaS) will be as comfortable and far cheaper than owning cars, thus new mobility concepts will fully change both the traditional public transport systems and the today's street scene (no cars parking in the streets – all vehicles will be autonomously floating around, less traffic jams, which nowadays were generated mainly by humans)

The implication of Future Mobility concepts can be massive.

  • Fully autonomous vehicles will 'democratise' mobility. Elderly and blind will be (again) full mobility. Driving-licences won't be requested anymore and children can be sent on their own in self-driven robo-shuttles into the schools and kindergartens.
  • Fully autonomous driving will lead to new services. As drivers don't need to watch the traffic anymore, in-car entertainment, in-car shopping, in-car consumption, in-car wellness etc. pp. will arise. New In-car service will impact also most non-mobility industries (FMCG, Alcohol, Media, Finance, Healthcare, etc.). CPG companies are already testing self-driving vending machines.
  • Electrification could hit the oil industry. Petrol stations, as we know them today, will disappear. The transition towards electrical charging stations, where consumers can shop while the vehicles are getting reloaded, will only be a business module, if cars will be still individually owned. Consumers won't need to charge any vehicle if they are using Mobility Shuttles.
  • In case a significant amount of consumers will change from individually owned cars (iO) towards using Mobility as a Service (MaaS), all the car dealerships, car finance institutes, car washing or car parking companies won't have any reason for exist.

Best reading

​IPSOS VIEWS - The Future of Mobility - On the road to driverless cars

Driving Mobility through Autonomy in India: Is India ready for driverless cars? – A thought piece from Ipsos Business Consulting

Connected Car – A new Ecosystem – A thought piece from Ipsos Business Consulting 

Access the full Encyclopedia

More insights about Automotive

Society