Unpredictable, unprecedented: 5 auto trends impacting 2024

First came COVID and all the havoc it wreaked. In its wake were supply chain snarls and microchip shortages, inflation and geopolitical turmoil.

This year started out feeling a bit like a stabilization year, where the automotive industry would—finally—begin to find its way back to a pre-pandemic kind of normal.

And in many ways, 2023 was exactly that. But it ended with a historic United Auto Workers strike that shook it yet again and is likely to leave some suppliers reeling.

Here's a look at five trends and story lines that emerged in 2023.

Electric vehicles are coming. They are.

Just not as quickly as the industry originally anticipated.

The aim was for 80 percent of the American auto market to be made up of EVs by 2050. It's a vision AutoForecast Solutions L.L.C.'s Casey Selecman called "radical."

"Radical like never been done before, never heard of before," he said during the Rubber in Automotive Conference.

AutoForecast Solutions is a bit more conservative, projecting electrified light vehicle sales accounting for maybe 60 percent of the North American market by 2030—about 7 million EVs and 3.3 million hybrids. It pinpoints 2028 as the EV tipping point.

But EV sales are already slowing, even as auto makers churn out more electrified models.

A big reason for the slow down—particularly in North America? Consumers aren't ready.

The supply is there, the demand just isn't.

"That's related to range anxiety and cost," said Lance Iserman, CEO of Morrie's Automotive Group. "As the early adopters have adopted, the average consumer is not willing to pay a premium for an electric vehicle with a range of only 300 miles or below."

Another key component to slowdown in adoption is the enormous divide among states' infrastructure investments.

States that invest in EV charging infrastructure and offer incentives have higher adoption rates, according to Elizabeth Krear, vice president of the electric vehicle practice at J.D. Power.

This means states such as California, Colorado, Massachusetts, Washington, Oregon and Maryland are seeing much higher adoption rates than Southern and Mid-Western states with large rural areas.

Consumer Reports recently found that EVs also are coming with their fair share of technical problems—79 percent more than ICE counterparts. The research firm chalked it up to growing pains associated with the new powertrains as well as technological features that consumers expect.

Plug-in hybrids didn't fare any better. It was far worse, in fact, with 146 percent more problems reported than ICE vehicles.

But EV technology has proven itself over time.

"The longer a vehicle or a technology is in production, the more the bugs are worked out," Jake Fisher, senior director of auto testing at Consumer Reports, told Automotive News. "The auto makers that have produced EVs earlier, they're improving the reliability."

Case-in-point: Hybrids reported 26 percent fewer problems than gas-powered vehicles.

All of that technology is making electric vehicles—and honestly, any new vehicle—smarter. And it's offering the experience drivers want by seamlessly syncing and aligning with technology they use daily, namely their phones.

But it also leads to larger price tags.

Last year, Edmunds noted that the average monthly payment for a new car rose $81 year-over-year to $678. And used vehicles didn't fare much better, with the average costs rising $77 year-over-year to $555 per month.

So the affordability of mobility raises brand new questions—particularly around the equity of mobility, Guillaume Puiseux, chief strategy and marketing officer for Michelin Mobility Intelligence, said during the Rubber in Automotive Conference.

And that connectivity is important because it allows for greater safety, in driver assist systems and beyond.

"I have to say that, within the connected mobility landscape, the deployment of the technology is kind of slow," Puiseux said. "I think we have seen the average age of the car parc at 12 years, right? … So the technology is here, and the deployment is low (because) there is an equity and affordability challenge that we need to overcome."

The union's historic 41-day strike hit all three of the Detroit-based auto makers—Ford, General Motors and Stellantis—simultaneously. And it was the first time the union took on all three at once.

UAW President Shawn Fain's strategy was simple, even if unpredictable at times. To encourage "good faith bargaining" he withheld targeted strike expansions. When he felt negotiations went south, he called on UAW members to "stand up" and walk out.

In the end, it worked. Union members ratified record contracts in November, agreements the Detroit 3 say pays their factory workers better than 70 percent of other U.S. jobs—in all fields.

The deals give immediate $5,000 bonuses and push top wages above $40 an hour in 2028.

Ford said the strike ultimately cost it $1.7 billion, and the subsequent work stoppages reduced the auto maker's production by about 100,000 vehicles.

The new contract is expected to cost Ford about $9.8 billion overall, or an average of about $900 per vehicle by 2028.

General Motors, meanwhile, said new labor contracts are expected to increase costs by about $9.3 billion, or about $575 per vehicle in North America. In all, the strike cost the auto maker about $1.1 billion.

North American nonunion auto makers felt the pressure of the record UAW contracts. In the weeks that followed the union's contract ratifications, Volkswagen Group, Honda Motor Co., Toyota Motor Co. and Nissan Motor Co. raised wages for U.S. factory workers, some by double-digit percentages.

Hyundai Motor Co. said it would increase nonunion wages for production workers in Alabama and Georgia by 25 percent over the coming four years.

Still, the UAW has its sights set on those nonunion shops, pledging to help workers at BMW, Honda, Hyundai, Lucid, Mazda, Mercedes-Benz, Nissan, Rivian, Subaru, Tesla, Toyota, Volkswagen and Volvo organize.

In a sort of Dickensian way, the UAW strike somehow simultaneously had the best and worst possible outcomes.

It all really depends on where you stand.

Because Fain's targeted strike approach spared many of the Detroit 3's highest profile vehicles, that amounted to good news for some auto suppliers, particularly those with diversified product portfolios or numerous OE contracts.

Companies like Dana Inc. and Cooper-Standard Automotive Inc. took hits, but were able to manage the damage.

The timing of the strike—stretching from the end of one quarter into the start of another—helped tremendously as well, Jon Banas, Cooper-Standard executive vice president and chief financial officer, told investors during third-quarter financials call.

"The way the strike rolled out, it impacted us, but to a minor extent—less than $5 million in revenue for September," Banas said. "… We have full labor in the plants, and we are ready to deliver product to our customers as soon as they are ready to take it."

Tire makers probably also fared fairly well, even if the impacts were significant in a destocking year where OE fitments were the silver lining.

Small suppliers who took bigger hits.

Take BRC Rubber & Plastics Inc., a midsized family-owned supplier of custom molded parts. Roughly 60 percent of the company's sales are Tier 1 direct, and the Detroit 3 are among the company's biggest clients. During the strike, sales plummeted by 40 percent, according to Brad Chaffee, BRC vice president of sales and marketing.

So BRC managed this moment as it has other difficult times—be it COVID-19 or recessions. With planning and patience.

"While short-term profits would be affected, BRC felt the continued commitment to its valued employees and the communities in which it does business was more important," Chaffee said. "We are pleased that we did not have to lay off anyone during the strike, and automotive sales are beginning to ramp up to normal levels."

Others were not so lucky.

Unique Fabricating, a maker of plastic, rubber and foam components, filed for Chapter 8 liquidation, prompting Stellantis, Adient P.L.C. and Yanfeng Automotive Interior Systems to take over tooling assets to ensure vehicle production wasn't compromised.

It could be the first of other closures to come.

MEMA, an association representing original equipment and aftermarket automotive parts suppliers in the U.S., found that about 40 percent of suppliers surveyed were forced to lay off some workers during the strike.

For those that were struggling to find their footing in the wake of the automotive slowdowns that came with the COVID-19 pandemic and subsequent microchip shortages, the implications could be even worse.

"The longer-term implication for suppliers is that this, unfortunately, is probably going to mean some suppliers probably aren't going to make it through," Laurie Harbour, an industry analyst and CEO of Harbour Results Inc., said during an October webinar. "Even though we ended the strike, there is tremendous vulnerability in the supply chain."