The past few years have proved challenging for the car industry. Recovery from the pandemic is still taking its toll on production, and the war in Ukraine also presents uncertainty – plus, the cost of living crisis isn’t set to end anytime soon.
Last year, the sector overall saw marginal growth, although it still has some way to go before we get back to pre-pandemic output and sales. Despite these challenges, the industry is bringing consumers more technology and advancements than ever. In addition, the rise in electric vehicle interest is spurring a revolution of greener motoring in the run-up to the 2030 deadline.
So, what are the experts predicting will influence the sector in 2023? Let’s delve in:
Increase in electric vehicles
Ok, so this may be an obvious one. But with the rise in market share and new vehicle registrations over the past few years – electric vehicles are ramping up in popularity.
EV sales are growing, and in December 2022, figures show they accounted for nearly a third of all new cars purchased. Last year also saw electric cars surpass diesel sales for the first time. Consumer purchasing behaviour is changing. This could be due to rising fuel costs or a more conscious approach to driving. No emissions means better air quality.
It’s not just the average Joe making the switch. Businesses and fleets made up around two-thirds of new EV registrations. Lower running costs and low BiK rates make driving an electric vehicle appealing to business users.
The predictions for the EV market remain for increasing growth, with the SMMT suggesting a rise of 28% compared to 2022. Market share also increases with sales, and predictions highlight a rise to 18.5% from 16.6% last year. In addition, electric variations such as plug-in hybrids and hybrid vehicles are also forecast to increase sales and market share.
A step closer to autonomous vehicles
While self-driving cars won’t be hitting UK roads this year, government plans could set the wheels in motion to implement this technology from 2025.
With £100 million funding to back them, there are plans to bring some vehicles such as coaches, lorries and cars into the mix to improve road safety and connect communities.
Driver assistance features are already available in many modern cars. However, this next step takes motoring a leap further. Experts have expressed concern over the possible risks involved with this technology. However, some of the first stages of funding will support development in the safety and legalisation surrounding autonomous vehicles.
It’s suggested that this technology could provide shopping, deliveries and public transportation in the near future.
Improved connectivity
You may have already experienced the impressive connectivity in modern vehicles. From pairing your smartphone to your car and controlling the music to even charging your EV – apps are a part of daily life.
However, as technology advances, 2023 could see the introduction of improved connectivity. This means not only connecting your car to your phone but also interlinking your vehicle to external infrastructure while you drive.
An example of this is Connected Car Technology. In essence, most connected cars already have many features that link to external infrastructure. But this technology is set to go further. These features improve vehicle security, provide vehicle-to-vehicle connectivity and real-time traffic monitoring and alerts.
This type of connectivity will also move to join the growing 5G network and expand as the infrastructure grows.
Car leasing continues to be a popular choice
Despite the cost of living crisis and economic uncertainty, leasing a vehicle is still an affordable way to own a brand-new car. Figures from the Finance & Leasing Association highlight growth of 4% in new business in October 2022 compared to the previous year. The used car finance market also increased in the same period.
While the industry is also facing challenges with the supply of new vehicles, 2023 is predicted to see further uptake of leasing deals. The market still falls short of pre-pandemic levels, but steady growth is swinging the balance.
The commercial side of leasing is also forecast to experience a stronger increase in demand. Short-term hires provide additional flexibility for businesses looking at budgets closely. Although meeting the demand may prove challenging, as a report conducted by the BVRLA suggests, industry insiders believe supply won’t recover until 2024 or beyond. Some think it may never recover to pre-pandemic levels.
On a more positive note, when supply starts to increase, consumers will see better deals on new vehicles offering more options in the market.
More companies switching to an electric fleet
In 2023, the move to electric is predicted to push forward significantly within business fleets. Organisations are seeing the benefits of moving to EVs, such as lower running costs and reduced carbon footprint. Government funding is still available for workplaces looking to install charge points at sites. This also encourages employees to take advantage of charging an EV at work.
In addition, more companies are introducing salary sacrifice options for employees looking to drive an EV. This provides a positive perk for staff and improves morale. It also provides tax advantages for employees as Benefit in Kind rates are lower for zero-emission vehicles. Employers also get benefits from offering this scheme, such as savings through lower national insurance contributions.
More to come from the auto sector in 2023
The car industry is constantly evolving, and a significant factor in how trends and predictions pan out comes down to economic upturn. There are hints that markets are growing, but there is still uncertainty due to rising costs and supply issues.
That said, the EV market is likely to see further growth, and numerous new electric models are in the pipeline for 2023. For example, Austrian brand Fisker is set to hit the UK market with competition to Tesla in the form of its Ocean model. Kia is also upping the ante with the EV4 and EV9, and the VW ID. Aero will be the brand’s all-electric sibling to the much-loved Passat.
So, with all the above and more set to come in 2023, we’re eager to see where the year progresses.
