3 Challenges Facing the Automotive Industry in 2021



To say that 2020 was a year of disruption would be an understatement. We saw many drastic changes in 2020 and we should start to see some of these trends solidify this year. Every part of the automotive industry is set to face strong headwinds coming into 2021 and will have to adapt to new market realities. There are also other needs that go beyond the global crisis that will need to be addressed. Let’s take a look at some of the challenges facing the automotive industry in 2021.


New Regulations

China is now the world’s biggest market for automobiles if we go by unit number. The challenge for automakers here will be whether they should consider entering the market and trying to compete. There is increased pressure for pollution reduction in the country, and the automotive market is extremely competitive there. Not to mention the sometimes impromptu and arbitrary tariffs that can be imposed at any time. Carmakers will have to decide if the risk is worth it or if they should concentrate on domestic demand.


More Demand for Independent Traders

We can also expect to see demand increase for independent motor traders. While 2020 saw a bigger demand than expected for new vehicles, we should see some contraction in the market this year. This would also be a perfect time to start a business as an independent car retailer.

Those who want to take that path would be wise to start looking at the overheads, especially insurance. If you want to prevent the chances of getting hit with higher premiums on motor trade insurance, we would suggest you check out Quotezone. It will allow you to get a quick snapshot of the best motor trade insurance policies available and compare prices and features. The site then allows you to get the coverage instantly without having to deal with an intermediary.


Alternative Fuel Vehicles

Carmakers cannot afford to ignore alternative fuels anymore and will need to make concrete efforts to meet the demand not only for fuel-efficient vehicles, but vehicles that aren’t using fuel at all. There is a torrent of information being released every day both on new automotive technology and the impact of fossil fuels on the planet. This debate is not going away anytime soon and will keep increasing in the next decade.

The issue, however, is the lack of options. Biofuels are not produced at a mass scale yet. Solar infrastructure is not robust enough to fulfil the needs of all and make solar power cars a mainstream reality. And we’re not talking about emerging economies yet. The industry will have to face the increasing demand and the limitations of implementing AFVs along with mounting pressure from the public.

These are some of the top trends and challenges that will be facing the automotive sector this year and beyond. While no one can predict the future, some of these will surely materialise and could change the industry as we know it forever.