FRM 2025: Sector Report Automotive Industry KPMG in Germany

Automotive Topics and Trends

Success will depend on manufacturers’ ability to balance technological advancement with practical implementation while meeting evolving consumer expectations. The transformation of the automotive sector is far from complete, but the direction is clear – towards a more sustainable, connected and intelligent future of mobility. Traditional internal combustion engine (ICE) vehicles are steadily losing ground as governments worldwide implement stricter regulations, including the EU’s upcoming ban on new ICE vehicle sales by 2035. This regulatory advancement, combined with growing environmental awareness, is accelerating the shift towards electric mobility. Canadian startup Aadhya Navik designs software solutions that improve safety, comfort, and traffic efficiency in autonomous driving.

Autonomous Vehicles (Self-Driving Cars)

Central to this evolution is the growing demand for electric vehicles and software-defined vehicles. British startup Cube Intelligence develops a blockchain-based security platform for autonomous vehicles. The startup’s technology utilizes hash codes to block malicious attacks or hacking attempts on autonomous cars and connected cars. Additionally, Cube Intelligence offers ride-hailing and valet parking services for AVs, as well as smart parking management systems.

GenAI offers potential for advanced applications like predictive maintenance, where AI could assist in analyzing vehicle data and forecast potential failures before they occur. This would mark a critical shift toward an era of personalized vehicle recommendations and optimized repair services. By addressing issues proactively, manufacturers and service providers can further reduce breakdowns, enhance vehicle reliability, and improve overall customer satisfaction.

Discover all Automotive Trends, Technologies & Startups

General Intelligence strengthens the evolution of software-defined vehicles by aligning human-inspired learning with safety. It also advances autonomous driving by enabling adaptability across vehicle types and conditions. In addition, the unit supports multiple communication protocols, including CAN and FlexRay. It also works with Ethernet and LIN, enabling integration across passenger cars, buses, trucks, and autonomous vehicles. Chinese startup Move-X Autonomous Driving offers Level 4 autonomous driving through integrated vehicle platforms designed for commercial deployment. TeraDAR strengthens sensor fusion by providing high-resolution, all-weather imaging that improves vehicle perception and increases safety.

Charge Your Porsche Cayenne Electric Like an iPhone

The scale established by these six stages is essential for comprehending and characterizing self-driving technologies, which span from complete human driving to complete vehicle autonomy. Through V2X, vehicles can share information about road conditions, accidents, and traffic patterns, allowing for real-time decision-making. This communication system is crucial for the safe deployment of autonomous vehicles, as it will enable them to “talk” to other vehicles and infrastructure, reducing the risk of accidents. The integration of Industry 4.0 technologies is revolutionizing automotive manufacturing. IoT, AI, and digital twins are becoming essential tools for improving efficiency, reducing downtime, and optimizing production processes.

What are Automotive Industry Trends?

And it is projected to widen to 45% by 2030 due to lower labor and freight costs. The startup enables automakers to reduce waste, optimize design processes, and advance sustainable manufacturing strategies. Also, advanced composites and recycled inputs reduce reliance on virgin resources.

In 2024, the automotive industry is increasingly integrating cutting-edge technologies into its operations. Key automotive industry trends include a significant rise in electric vehicle production, a growing market for pre-owned vehicles, and an uptick in digital car sales. Alongside established technologies like AI and big data analytics, the industry is also embracing the Internet of Things (IoT) and blockchain for diverse applications. This technological evolution is reshaping the automotive landscape, driving innovation and efficiency.

This EV Just Set an Efficiency Record

Despite this, 2025 is guaranteed to be pivotal, with potential breakthroughs in autonomous driving technology along with a stronger push toward hybridization and sustainability. Simultaneously, many automakers embrace vertical integration strategies, taking control of the software stack from chip development to application integration. This approach equips them to differentiate their offerings, with software being the key to creating compelling customer experiences.

  • Trends span sustainable manufacturing, EV expansion, supply chain nearshoring, vehicle cybersecurity, automotive semiconductors, sensor fusion, autonomous driving, subscription models, SDVs, and V2X.
  • The startup’s technology allows these pods to adapt across industries, enhancing efficiency and safety in transporting people and goods.
  • The automotive manufacturing industry is evolving rapidly as manufacturers respond to technological advancements, consumer preferences, and regulatory changes.
  • It builds connected EV models that operate reliably on diverse terrains and promotes sustainable mobility solutions for the region.
  • Automotive suppliers are renegotiating their vendor/supplier contracts to align with these new predictions.
  • Further, Jaguar Land Rover is pioneering a closed-loop recycling process for seat foam, turning waste from old vehicles into high-quality material for new ones.
  • This technological evolution is reshaping the automotive landscape, driving innovation and efficiency.

Further, their drivers use out-of-the-box or white-labeled apps to manage reservations or remotely access vehicles. Factories equipped with IoT-enabled devices and machine learning capabilities are emerging as the backbone of next-generation automotive production. These facilities use data-driven insights to optimise processes, reduce energy consumption, and increase operational efficiency. This trend is reshaping how manufacturers think about scalability and flexibility, particularly as the demand for electric vehicles continues to grow, and will continue to make itself felt throughout 2025. EV technology is the catalyst for transformation—it’s forcing OEMs to rethink vehicle architecture, supply chains, and customer engagement. Battery improvements reduce costs and increase range, making EVs more accessible.

The ongoing global semiconductor shortage continues to cast a shadow over manufacturing progress, particularly for industries such as automotive and electronics. While efforts are underway from many different automakers to expand fabrication capacity, lead times for chip production remain long with little sign of a solution in the near future. However, regulatory hurdles and the complexity of navigating diverse driving environments remain significant barriers. On the bright side, partnerships between automakers and tech companies are fuelling innovation and accelerating development, bringing their vision of safer, smarter transportation closer to reality.

Electric vehicle trends in 2025

US-based startup FlxTran develops a new transportation system using self-driving vehicles on abandoned railroad tracks to provide fast regional transport to connect smaller communities. The system uses an app to schedule rides on autonomous vehicles, cutting down trip times compared to the available commuting options. FlxTran’s approach improves connectivity and access to opportunities beyond major cities. Moreover, V2X communication systems allow vehicles to interact with each other and infrastructure, improving traffic flow and reducing accidents. These innovations collectively propel the industry towards safer, more efficient transportation. Consequently, the global autonomous vehicle market size is projected to reach USD 448.6 billion by 2035, growing at a CAGR of 22.2%.

5G connectivity unlocks ultra-low latency communication, enabling real-time vehicle-to-everything (V2X) interactions. This enhances autonomous driving capabilities, traffic management, and safety features. It also supports over-the-air (OTA) updates with larger data payloads and faster speeds, improving software reliability and feature rollout. For consumers, 5G means richer infotainment, seamless smartphone integration, and enhanced navigation services.

Mechatnom applies Automotive Software Modules

Automakers are responding by integrating carbon-neutral initiatives across their value chains. This includes upstream supply chains and downstream life cycle phases like recycling. Moreover, Asia-Pacific is the fastest-growing region, with a projected CAGR of 14.8%. This is fueled by increased vehicle production and sales in China, Japan, and South Korea. The AV market is projected to reach USD 1.73 trillion by 2033, growing at a CAGR of 31.85% from 2025 to 2033.

In 2025, the focus will be enhancing ADAS features, such as adaptive cruise control, lane-keeping assistance, automatic emergency braking, and more. While some regions already allow limited AV testing and deployment, 2025 will likely see a more transparent legal framework surrounding autonomous driving technology. This regulatory clarity will pave the way for broader AV adoption in cities, particularly in controlled environments like urban areas or designated autonomous vehicle lanes. As autonomous vehicles become more mainstream, governments and regulatory bodies will need to create new laws to ensure their safe deployment.

  • IoT solutions can offer numerous benefits to end-users by utilizing interconnected systems, such as better safety, driving assistance, and predictive maintenance.
  • The same report states that 68% of drivers believe car companies should collect personal data, but only 5% agree to unrestricted collection.
  • That’s no longer a distant future — it’s happening now, and it’s transforming everything from manufacturing floors to your driveway.
  • North America is commanding a 43% share as new-age OEMs focus on BEVs and software-driven architectures.
  • Additionally, Europe and the U.S. have sought to bolster their chip and semiconductor production with the ‘European Chips Act’ and the ‘CHIPS and Science Act’, respectively.
  • UK-based startup Electric Car Converts changes classic Land Rovers into EVs by replacing combustion engines with modern electric motors and battery packs.

This chiplet-based architecture integrates with automotive processors via PCIe Gen5 and UCIe interfaces, which allows customizable and cost-effective system enhancements. BOS Semiconductors focuses on high-performance, energy-efficient AI solutions to drive innovation in autonomous driving and enhance in-cabin experiences. US-based startup Avvenire develops LEVs for efficient and eco-friendly urban transportation. Its products include the Leggera, an all-electric vehicle for on-road and off-road use, and the Spiritus, a three-wheel electric car with optional autonomous driving, Wi-Fi connectivity, and solar panels. Younger buyers often prefer subscription models or shared mobility over ownership. The rise of online car buying and digital retail experiences is forcing dealerships and OEMs to innovate.

UK-based startup Electric Car Converts changes classic Land Rovers into EVs by replacing combustion engines with modern electric motors and battery packs. Ultra-fast charging infrastructure minimizes downtime by offering hundreds of kilometers of range in just minutes. For example, BYD demonstrated a 1000 kW charging system that is capable of adding about 400 km of range in five minutes to its Han L and Tang L models under ideal conditions. Solid-state batteries increase energy density, shorten charging times, and give EVs longer ranges and greater convenience.

Stop Guessing, Start Growing 🚀

Reports from 2022 showed vehicle inventory was stagnant, sitting between 1 million and 1.1 million vehicles, for the first six months of the year. Sales of passenger cars were down 25% in the first half of 2022 compared to the same period in 2021. Many expected the auto industry to mount a post-pandemic rebound in 2021, but that didn’t happen. Search volume for “Infineon Technologies” has seen modest growth over the past 5 years. Infineon, the largest manufacturer of auto chips, is increasing its investment in production by nearly $1 billion euros in 2022.

  • In the UK, auto production surpassed one million units in 2023, marking a significant recovery.
  • Xiaomi’s foray into the electric vehicle market is exemplified by its state-of-the-art factory, capable of producing an electric car every 76 seconds.
  • Car dealerships are no exception, as recent auto trends reveal that customers prefer to experience a car or dealership before purchasing.
  • Cost savings also play a role, as recycled aluminum or bioplastics often return their investment in just over a year.
  • The automotive industry is transforming, fueled by evolving consumer demands, rapid technological advancements, and the urgency of addressing climate change.
  • The integrated powertrain segment is likely to hold ~60-65% of the total e-powertrain market in 2025.

Tree Map reveals the Impact of the Top 10 Automotive Industry Trends

Peugeot introduced groundbreaking technologies like the Hypersquare control system and steer-by-wire, marking a significant leap in electric vehicle design and user experience. These innovations represent the brand’s commitment to redefining driving dynamics in the EV era. Despite initial scepticism, the automotive industry is embracing enhanced connectivity by enabling real-time updates and post-production feature additions. Through our work with automotive innovators, we witness first-hand how rapidly this sector is evolving. From electrification and software integration to new mobility models, the industry faces unprecedented change.

While fully autonomous vehicles (AVs) are not yet standard on the roads, significant advancements are being made in 2025 toward realizing the vision of driverless cars. Companies like Tesla, Waymo, and others are working tirelessly to refine the technology, which includes machine learning, computer vision, and lidar (light detection and ranging) systems. The upcoming automotive industry trends refer to evolving changes in patterns within the sector that influence vehicle design, production, marketing, and usage. Technological advancements, along with changing consumer preferences, regulatory changes, and global economic conditions, are driving these trends.

  • They also facilitate the management of maintenance and repair appointments, streamlining dealership operations.
  • Examples are bikes, scooters, and mopeds, as well as the electric versions of these vehicles.
  • This article sheds light on how OEMs are embracing solar, wind, and hydrogen power to achieve sustainability goals.
  • For the eighth time, we asked managers and decision-makers in the automotive industry which trends and developments they are currently focusing on.
  • In the future, advanced integrated solutions will dominate, leading to lighter and more efficient electric powertrains and driving the next generation of high-performance and mass-market EVs.

🚦 Levels of Autonomy Explained: From Driver-Assist to Full Self-Driving

The platform features customizable work product templates, detailed instructions, and comprehensive checklists for self-assessment. It also provides streamlined audit management, structured frameworks for continuous improvement, and intuitive escalation processes. Companies like BYD are collaborating with TSMC and MediaTek to develop advanced chips for vehicle controllers and smart cockpits.

AI and machine learning (ML) support cyber defenses by enabling real-time anomaly detection and predictive monitoring. For instance, AI-driven intrusion detection systems adapt to new attack patterns and block breaches before they spread. Further, through its smart management app, it enables users to schedule charging, monitor consumption, and manage fleets from one platform. Moreover, the startup installs Tesla motors and Fellten battery systems, which provide up to 295 horsepower, enable flexible range options, and ensure authenticity through fully reversible conversions. Also, adoption rises quickly, with China reaching 50% EV penetration in 2024, and in India, over 18.8 lakh EVs are supported under FAME schemes till June 2025 by the government. Declining battery costs move EVs closer to price parity with combustion vehicles.

Make sure you stand out from your peers by focusing on every intricate detail through marketing and staying at the top of buyers’ minds. The future of automotive industry trends suggests that the automotive parts market will grow aggressively due to a growing demand for replacement parts and an increase in vehicle production. The segment’s sales will rise in the first six months of fiscal 2025, while the industry’s revenue will increase at the same pace to $33.8 billion.

  • This regulatory clarity will pave the way for broader AV adoption in cities, particularly in controlled environments like urban areas or designated autonomous vehicle lanes.
  • Specific components like silicon carbide (SiC) and gallium nitride (GaN) power devices are expected to see growth, offering up to 60% improved efficiency over traditional silicon components.
  • The project avoids more than 500K tonnes of CO2 emissions by reducing the need for primary aluminum.
  • This innovative, circular production approach supports sustainability goals by reducing landfill waste and advancing circular economy practices in automotive manufacturing.
  • To accommodate the rising demand for EVs and autonomous vehicles, major automakers such as BMW, Hyundai, and Stellantis are investing in EV battery plants and semiconductor-related facilities.
  • The massive rotation in the global vehicle fleet is predicted to take place in the 2030s.

It uses AI-powered damage recognition, estimation, and work distribution to streamline repair processes. Also, its platform manages claims and mechanical breakdowns across vehicle models from manufacturers. Digital replicas and simulations allow manufacturers to test efficiency improvements before implementation. For example, BMW’s San Luis Potosí facility applies digital replicas to reconfigure layouts and minimize waste.

Top 10 Automobile Industry Trends & Innovations (

Automotive Topics and Trends

Automotive industry trends refer to changes in patterns within the automotive sector that influence vehicle design, production, marketing, and usage. Technological advancements, changes in consumer preferences, regulatory changes, and global economic conditions drive these trends. The automotive industry is highly dynamic, and trends are subject to change over time. Monitoring and understanding these trends is crucial for automakers, suppliers, and other stakeholders to stay competitive. Due to the pandemic, the automotive sector is undoubtedly facing one of the most challenging periods and a massive slowdown for the last couple of years. This calls for a thorough analysis of recent trends in the automotive industry, So this blog brings you some of the significant car market trends in 2025 that you must know.

Key players like Bosch, Continental AG, and ZF Friedrichshafen AG are investing in technological advancements. They are focusing on lightweight materials and improved energy recovery efficiency. The automotive regenerative braking market is expected to reach USD 13.83 billion by 2029, growing at a CAGR of 15.8%. Usage-based insurance (UBI) models use driving behavior data to provide customized premiums and are gaining popularity. From 2024 to 2029, the insurance telematics industry is projected to grow at a CAGR of 17.6%.

Software-defined Vehicles (SDV): Market Set to Reach USD 3.3T by 2034

Automotive Topics and Trends

It builds connected EV models that operate reliably on diverse terrains and promotes sustainable mobility solutions for spotting signs of flood damage on a car the region. Artificial intelligence (AI), the Internet of Things (IoT), blockchain, and advanced semiconductors allow autonomous driving, predictive maintenance, and secure connectivity. These technologies enhance safety, efficiency, and user experience across vehicles. 2025 is no exception—automotive manufacturers are expected to continue implementing more and more advanced safety features in their vehicles. Last year, the European Union updated the General Safety Regulation (GSR) and establishes mandatory safety requirements for cars sold in the EU.

The startup also serves other industries, such as aerospace, construction, and biomedical. Indian startup RevitsOne offers AI-powered fleet-management software that is suitable for fleets of varying sizes. The startup’s vehicle management system provides insights into speed, running vitals, and health information. Drivers benefit from Voicera ID, a voice-based virtual assistant that helps them keep track of the information they need.

The Starkenn Brake Safe, a collision mitigation system features automatic emergency braking in critical scenarios. AI-powered semiconductors drive transformation in autonomous driving systems by enabling real-time communication with road infrastructure and enhancing safety features such as emergency braking systems. Tesla’s relentless drive to expand its global gigafactory network has been a defining feature of 2024.

Micromobility Presents a Potential Shift Among Consumers

Further, its Craidlr ATX-G gateways are integral to the surface temperature & vibration monitoring solution, catering to diverse automotive testing needs. These gateways, combined with advanced transducers, facilitate real-time data collection. The Global Startup Heat Map below highlights the global distribution of the 4800+ exemplary startups & scaleups that we analyzed for this research. Created through the StartUs Insights Discovery Platform, the Heat Map reveals high startup activity in the US, Europe, and India. Regenerative braking systems, crucial in EVs and hybrid cars (HEVs and PHEVs), contribute to energy recovery rates of 5% to 20%, depending on driving conditions.

Automakers are investing in cybersecurity technologies such as hardware security modules (HSMs), AI-based intrusion detection systems, and secure over-the-air (OTA) updates to address these challenges. Automotive Manufacturing Solutions (AMS) is the essential resource for automotive manufacturing professionals and suppliers globally. We invite you to revisit these top stories, share your perspectives, and stay tuned for more in-depth coverage of the trends shaping the automotive world.