While it is the benefit for the automobile industry, the clock speed pace of the pace of this industry may affect auto finance industry trends which in turn may disrupt money lending this year. The industry has always and is still showing huge potential to increase though it is often termed as a risk-averse industry. It is also criticized for several other factors such as:
- Its slow and defensive approach especially when it comes to responding to the customer trends
- Complex public policy and
- Approach towards macroeconomics.
It is said by the critics that the increase in the auto industry today is largely due to the Silicon Valley companies. Add to that, it is the technological advancement and capital that has also fueled the epic transformation of the automobile industry. Apart from that the world has also noticed significant changes in a few specific fields such as more investment in joint venture, research and development, battery cells and much more.
The changes witnessed
Over the past few years, the world has witnessed a growing affinity towards fifty-fifty joint venture among different major automobile industries. This is done with an intention to target the Fuel Cell System Manufacturing that will help in the fuel cell stack production in 2020.
These are not to be considered as a small move in the automotive industry because of several reasons such as:
- These business endeavors will bring niche vehicles to the market that will have niche propulsion systems.
- This will also warrant for partnerships with the suppliers as well as the OEMs alike.
In addition to that, if you follow the recent United States-Mexico-Canada Agreement, you will see the inclusion of R&D in the rules of origin calculations.
All these signifies that in the near future you can expect more such similar investments and business approach that will help the businesses to keep the advanced Research and Development programs close by the firstgeneration manufacturing.
Another significant change that has helped the automobile industry to flourish is the teaming up with different companies to develop better and more advanced modules and chemistry battery cells. This will help the automobile giants to commercialize the electrified vehicles in the future.
If this change works properly, the industry will see a lot of other changes as well such as:
- Lowering the risk associated with ramping up the production scale
- Bringing together the customers and packaging engineers to provide some of the best components of vehicle with the best powertrain calibration personnel.
All these tie-ups will in turn result in leveraging the engineering resources so that the current product line up is competitive. This will also help to reinvent and redesign the vehicle architecture, propulsion systems and other components for the future.
There are also several projects taken up by the automobile giants with intent to commercialize the autonomous vehicle technology. This is a brave world as well as too provincial at the same time. In terms of the product portfolio, it will open the door to development of a vehicle especially for the emerging global network.
As it is very evident, such partnerships can help both the companies as well as the technologies to go forward.
The funding aspect
This common trend of the major automobile manufacturers focusing on the future of automobiles has raised questions for traditional vehicle manufacturers. These are:
- They now face the common issue as to how they can raise funds to keep up with such changes given the fact that the lending and equity market is so skeptical.
- They also face another challenge which is driving enough free cash flow from their present business operations to run their business as well as fund such a massive development cost related to creating the new autonomous vehicles.
On the other hand, all the major automobile manufacturers and suppliers can easily control their outgoing investments with their corporate venture funds. This has also had distinct and worrying consequences as far as the traditional auto builders are concerned.
- This has resulted in the softening of other mobility services affecting their business as well as its operation on the whole.
- This means the traditional auto manufacturers will face a lot of difficulty to create corporate entities that will attract more private equity investments.
What it significant means is that the industry needs to reconsider such approaches by a separate segment of the auto industry so that the development is true in all respects including research and development, manufacturing process, and investment partnership mechanisms for both the traditional as well as other auto manufacturers.
This can only happen when the funding process and everything that is spread across the industry are institutionalized. Otherwise, these will not become a standard operating procedure and remain just as interesting examples.
Auto finance industry trends
Experts believe that such approaches by the giants will seriously affect the auto finance industry and will disrupt the money lending scenario in 2019. They say that more and more people will be interested in looking for debt relief and visit sites such as Nationaldebtreliefprograms.com and others instead of looking for loans to buy these costly autonomous vehicles.
This is a very worrisome fact for the entire auto finance industry which is at its developing stage. According to research and studies it is seen that:
- The sales figure has been steadily declining since 2017 even after having shown years of growth and
- This decline is predicted to become more severe through 2018 and will possibly show dramatic effects by mid-2019.
There are several reasons for such negative impact such as:
- Car owners tend to keep their vehicles for a long time
- The used car inventory will be high resulting in reduction in demand for new cars
- Urban dwellers prefer car-sharing more now
- The rise in interest rates will make people wary of taking out new debt.
This will result in development of new auto finance technology trends that will help the lenders to survive this challenge and completion. These are analyticsdriven portfolio optimization and cloudbased lending practices.