Automotive Industry Consulting Services Market Trends

Growth Drivers

• Expansion of automotive sector: The foremost driving force for growth in the automotive industry consulting services market is its expansion. By analysis of emerging trends, penetration into such markets necessitates expert consulting for automotive producers. It helps them adapt to regional regulatory environments, consumer preferences, and competitive landscapes. Moreover, consultancy companies are receiving increasing interest from clients in their services on devising strategies and optimizing their businesses. For instance, in May 2022, Bain & Company expanded its capacity to counsel clients on global supply chain challenges by acquiring procurement powerhouse Proxima.

• Rising inclination towards innovation and R&D: There seems to be growing interest in automobile manufacturers, which seek support in embedding new technologies into their portfolios. To cope with these advancements within the automobile sector, manufacturers are now investing more in R&D activities to diversify their expertise. For instance, in September 2021, Ford and SK Innovation intended to invest USD 11.4 billion in electric vehicles and cutting-edge lithium-ion batteries with two technologically and environmentally advanced campuses in Tennessee and Kentucky. It will manufacture the next generation of electric F-Series trucks as well as the batteries.

Challenges

• Skilled workforce shortage: Lack of proper skills to deliver effective solution design resulted in the failure of firms to provide services effectively. All the rapid technological advancements have led to an increase in the demand for specialized skills. For instance, in May 2023, according to 60% of companies polled for the Future of Jobs Report 2023, the biggest obstacle to revolutionizing their business is the inability to find the right skills locally. In addition, when a challenge strikes consulting firms, including McKinsey and Deloitte, skilled professionals are needed to overcome complexities in modern automotive projects. Thus, it reduces their competitiveness and reputation in the automotive industry consulting services market.

• Coping economic volatility: The global economy's inflation, consumer demand shifts, and geopolitical tensions can lead to business uncertainty, making automotive companies change their consulting needs. When an economy falls into recession, most companies reduce their budgets allocated to external consulting services while using internal cost-cutting measures instead. Owing to the economic pressures, companies experience a short-term drop in demand for consulting services.