growth prospects

Experts predict that global auto sales will need 1 to 3 more years to rebound from the pandemic, economic challenges and the fuel crisis. Forecasts from the Economist Intelligence Unit (EIU) suggest that sales of new vehicles will increase by 0.9% in 2023. However, since sales of commercial vehicles are expected to drop by 1.3%, overall sales will remain largely unchanged from 2022. The EIU cited continuing supply chain issues and global fuel challenges, as well as diminished demand due to inflation and an anticipated European recession.

LMC Auto shared a slightly more optimistic projection, suggesting that light vehicle sales would increase slightly in 2023. The firm predicts that the semiconductor shortage and low inventory levels will ease over the course of the year, which may help bring down prices. However, LMC Auto's forecasters don't expect a return to pre-pandemic sales levels until 2024 or later.

Taking a more long-term view, McKinsey has said the auto industry should recover fully by the middle of the decade, led by China and India. The company believes that increased interest in clean mobility and advancements in electric vehicles will disrupt the industry across the world. Autonomous driving is also expected to create shifts in the market by 2030 as costs drop and the technology becomes more sophisticated.

To make the most of growth opportunities in the coming years, you will need to optimise your workforce by moving talent into, within and out of your organisation. It is important to manage these transitions thoughtfully and empathetically by offering outplacement services – and protect your employer brand (which in turns protects your ability to hire great talent).

the shift towards EVs

Another key trend in the automotive industry is the steady transition away from internal combustion engines and towards electric motors. The shift to EVs will give rise to new skills requirements for businesses.

The EU is planning to force auto manufacturers to reduce emissions completely by 2035, effectively prohibiting the sale of new gas-powered vehicles. Canada and some U.S. states are making similar moves, indicating that the future of automotive manufacturing is electric.

Research by the IEA shows that electric vehicle sales grew to 6.6 million in 2021. Growth was particularly significant in Europe, where sales grew by 65%, and China, which saw EV sales triple. In 2022, the IEA expects EVs to account for about 13% of all vehicle sales. Thanks to EV-friendly policy changes and changes in carmaker line ups, this growth is expected to continue — though it may be tempered by high lithium prices, lockdowns in China and the effects of the Russian invasion in Ukraine.

Fatih Birol, executive director of the IEA, said, 'Few areas of the new global energy economy are as dynamic as electric vehicles. The success of the sector in setting new sales records is extremely encouraging, but there is no room for complacency.'

This shift away from petrol and diesel vehicles in favor of EVs will undoubtedly have an impact on automakers and their workforces.

The German auto industry, which has long been anchored by the internal combustion engine, has been slow to respond. As a result, the ifo Institute predicts that the ensuing job losses will outstrip the number of retiring baby boomers.

In the United Kingdom, the Social Market Foundation predicts that Britain will have a shortfall of 25,000 EV mechanics by 2030.

As EV production and adoption accelerates, auto industry businesses will need to acquire talent with relevant skills. Companies need employees who can design, produce, test and evaluate new products in the fast-moving electric market. Recruitment will play a vital role in the transition, but given the global labour shortage, it's also important to consider reskilling your workforce. Company-sponsored training can ease hiring pressures and help your business meet new market demands, all while boosting employee morale and job satisfaction.

the rise of AI

As AI becomes more sophisticated and affordable, it's certain to play a key role in the future of the automotive industry. The technology's rapid growth is yet another impetus for businesses to invest now in reskilling and effective talent acquisition.

Various sectors around the world are increasing their investment in this area, and starting to see the returns. In 2021, corporations around the world spent $94 billion (€84.4 billion) on AI. The results of McKinsey's latest global survey on AI, published in December 2021, found that AI adoption rose by 6% to 56% between 2020 and 2021. Emerging markets saw a 12% increase in the same period of time.

Of the respondents to the survey, 27% reported that at least 5% of their earnings before interest and tax was directly attributable to AI. Companies found the biggest AI-driven cost savings in service operations, risk, human resources and supply chain management.

As new regulations emerge, corporate interest is expanding. In the second quarter of 2022, mentions of AI rose by 31% in auto industry filings, ESG reports and annual reports.

In the automotive sector, AI could prove to be 'one of the new keys to success' for businesses, according to Suzanne Tracy, high-performance computing portfolio marketing senior manager at Dell Technologies. Writing in CIO magazine, she noted that this area of innovation could support everything from the development of autonomous vehicles to the transformation of research, design and manufacturing processes.

AI also plays a key role in emerging automotive technologies, including driver monitoring systems and self-driving vehicles. Tesla uses AI in its Dojo supercomputer to improve autonomous driving algorithms and train its neural networks with video footage. Companies are also investigating AI paired with the Internet of Things to streamline everything from maintenance to personalisation and safety.

As far as recruitment is concerned, the growing importance of AI across the industry will have a big influence on businesses' efforts to find and acquire employees with specific skills and capabilities. Targeting your hiring and upskilling your workforce will prove crucial if you want to generate value from these cutting-edge technologies.

Yvette Rogier, a Randstad senior vice president focused on the automotive sector, says preparing the workforce for the onset of AI is just one key area of reskilling. As the industry becomes more automated and focused on quality, line workers are also expected to have more skills in robotics, data-driven systems and robotic process automation. At the same time, digitisation is transforming nearly every aspect of the average business, from customer-facing activities undertaken by sales and marketing to back-office functions including HR, procurement and legal. To continue to drive efficiency, the sector must reskill many of its workers to be high performers in a digital and highly connected business environment.

'Facing challenging times ahead, auto manufacturers more than ever will need to optimise their workforce to raise productivity, accelerate innovation and make their companies more competitive,' she said. 'That means human capital leaders need to consider how a more agile workforce, powered by an expanded use of flexible talent, can help them drive top-line growth while minimising people costs.'

proactive steps for the future of automotive manufacturing

Accelerating the capabilities of the workforce should be a priority for the entire auto industry — not just companies seeking to create electric or self-driving cars. Only through innovation and workforce agility will automakers survive and thrive amid dynamic market changes.

We've developed a trend report for the automotive industry to help you anticipate and respond to the coming market shifts. Find actionable steps you can take today to prepare your operations and your workforce for success.

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