Rapid Industry Changes Could Leave Auto Heavyweights in the Dust

Innovations in production have allowed countless auto manufacturing processes such as the validation of first parts in the production part-approval process to be completed with more efficiency and accuracy. However, that doesn’t mean everything is fine in the auto industry. Despite positive signs, some heavyweight manufacturers are getting desperate.

With a little help from steady economic recovery, low interest rates, and depressed gas prices, 2015 set an all-time record in auto sales for the first time in 15 years.

In short, the economic market of 2015 was any car maker’s dream come true.

However, for auto manufacturing giants like Ford, General Motors, Honda, and Toyota, that dream come true may come crumbling down in the next few years.

While auto sales form 2016 are set to break another record, a long term look shows the true extent of the potentially disastrous conditions.

These auto giants are falling behind in terms of current trends, and as a result, they’re resorting to some desperate measures.

In a segment on “Last Week Tonight,” John Oliver provided a bit of insight into the future downfall of these big companies.

He spoke about auto lending companies, and that while many of their offers are scams, the amount that isn’t a scam is still extremely corrupt.

“The news that used car dealers are predatory is clearly not new,” Oliver explained. “But it seems these days market pressures are forcing them to be more aggressive and take more risks.”

Because of those market pressures and the higher likelihood of auto companies to take more extreme risks, the auto lending industry is in danger of a financial crisis.

Surprisingly, Tesla Motors may be the agent of destruction for the giants in this industry.

Since releasing its first car — the Tesla Roadster — in 2008, the company has continued to wow customers around the world with a range of fully electric vehicles, each more sleek and functional than the last.

“Tesla will absolutely have a huge impact” on the traditional auto industry, according to Ale Resnik, CEO and co-founder of the online automotive marketplace Beepi.

Other manufacturers have come out with electric vehicles, but the issue is that they’re simply not as functional as Tesla’s.

“The auto industry doesn’t have time to ignore its true innovators, and traditional automakers must absolutely invest in, and seek solutions to, this phenomenon we call the ‘clockspeed dilemma’ or they risk becoming obsolete very quickly,” said Gary Silberg, a partner and national automotive leader at KPMG in Chicago.

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