16 January 2024

What does 2024 hold for the motor industry?

By Road Runner

After another off-kilter year for the car world where the backlog in orders for new cars and parts remained a frustrating issue for dealers, mechanics, and consumers, are we in a position to forecast a clearer road ahead for the car market in 2024? What’s the latest regulations for the electric vehicle market, and who are some of the players and disruptors making waves? We’ll motor through some of the key components and offer a few predictions for the motor industry in the year ahead.

Sales growth still on the up

The last twelve months was a good one for light vehicles, with a notable bounce back after the “Covid years”, when sales plummeted and supply chains were a series of broken links. The market was also hampered by the ghost town inhabited by around 3 million “lost cars” that never materialised due to the pandemic.

In 2023 global sales figures rose by around eight percent – which is expected to be a bit less of a “high-five” in 2024, and more of a gentle wave of 2-3 percent growth for the major players of Europe, the US, and China. Some say this is a controlled movement, allowing purchase demand and production supply to even out after several years of imbalance. Most are optimistic about the return of the “push” model where reasonable finance options and tasty discounts will help boost sales.

But before we break out the modest bunting, there is a need for caution and pragmatism. Ongoing conflicts and instability in various corners of the globe mean that supply chain disruption isn’t going to disappear any time soon, the cost-of-living crisis is ongoing, and consumer confidence has seen better times, which can all make a significant dent in the purchasing market.

Used car boom time

There is a more confident outlook for used cars though. While demand has grown exponentially for used considering the lack of fresh ones, there will be a bumper crop available in 2024, with the most popular ones being the nearly new (up to a year old) increasing around 32.5 percent.

According to Auto Trade, the prediction is an increase to 7.24 million sales; an uplift from the 7.17 million in 2023.

The stilted pace of electrification

In terms of who’s got most control of the electrical power source currently, of the big three, it’s China that’s got their finger on the switch with EV sales topping 30 percent in 2023. On European home turf, the dual force of battery electric vehicle (BEV) and plug-in hybrid electric vehicles (PHEV) was 23 percent of total car sales for the first nine months of the financial year – which wasn’t quite as high as many data analysts predicted. The more sluggish order rate for new EV drivers has been generally aligned to the rising cost of finance, as many EVs are purchased on a leasing contract. The other contributing factors are still the lack of charging places – especially adapting for home charging, and people playing the long game, anticipating that more affordable models will soon be released.

What the motor industry is therefore facing in the EV area is a bit of a plateau. The early adaptors have done just that and aren’t looking to upgrade, while the rest of the potential market are keeping their power dry. What’s required in the coming year is a tangible incentive that will move the EV sector into a move higher gear. The answer in 2024 could be found as battery prices are enjoying a welcome fall, competition between EVs amplifies, and more cars find their way off the production line and into the showrooms.

Ultimately, legislation for car manufacturers means that upping the EV ante is no longer optional. The government proposal in 2023 that for this year at least 22 per cent of new sold cars need to by electric or face a fine of £15,000 per car of target missed, may sound like tough love, but it may be the only way to pull the industry forward.

Supplying the answers to future technology

One of the changes to keep an eye on this year is that those that make cars and parts are also facing a period of change, with factory floor and production line strategy bound to have an affect on the supply chain down the line. This may be the technological methods of manufacturing, cuts or changes to labour, and where and when cars are produced, but each of these elements will impact the bottom line and what we can expect to see on the road in the coming years. And it doesn’t take a huge leap of logic to know that continued electrification remains the game changer. The wider impacts will of course be how our fuel industry gets to grips with this, retraining of workers, and as previously mentioned, the availability of charging sources and battery runtimes. And in reference to this, we need to keep at least one eye on the European Commission’s Critical Raw Materials Act, which will govern and regulate all the changes to production.

Further down the decade we’re likely to see big leaps in autonomous driving and much-need advances in the world of solid-state batteries, but it’s unlikely that these two things will transform much more in 2024.

And the new cars for the new year?

We couldn’t pass by the opportunity to mention a few of the new motors entering the market in the coming months- all of which put the ‘e’ in electric. We’ll return specifically to this with a deeper dive, but as a little taster, we can name-drop the Audi Q6 e-tron with its mahoosive 100kw battery giving a charging life of 375 miles. There’s also the much more affordable Citroen e-C3, which zips along nicely for 125 miles before needing a boost. Fiat, Ford, and Hyundai are also putting out some new e-vehicles in everything from the jacked-up hatchback models to the mightier SUVs (Hyundai’s scene-stealing Sante Fe).

As with all predictions, they’re only as good as the data suggests right now.

We’re not relying on crystal balls or sticking a wet finger in the wind; economic climates can shift, and the variables can go askew. Our advice is that whether it’s you in the market for a new motor, you’re looking to restock a showroom, or thinking ahead as to what cars your repair shop may be fixing, keep an eye on the trade press and more general news.

One constant though is your insurance. To ensure you and your business are fully covered, give us a call today on 03301 00 87 20 or get a quote here. We look forward to talking to you.