the future success of the automotive industry is in its workforce.

From the proliferation of electric vehicles (EVs) to the development of self-driving cars and increasingly stringent emissions standards, a number of trends are forcing automakers to not only redefine their business, but entirely rethink the concept of transportation.

The industry has also faced some distinct economic and commercial challenges in recent years, including a trend of declining sales that began in 2018, and the ongoing COVID-19 pandemic.

For businesses and workers in the automotive sector, succeeding in today's dynamic, demanding and unpredictable digital environment will require new skill sets and ways of working, which should be reflected in the approach you take to recruitment and workforce management.

a challenging time

Automakers and other companies in this industry have certainly had their fair share of obstacles to overcome and problems to solve in recent years. According to the International Energy Agency (IEA), total global car sales declined from 92 million in 2018 to 88 million in 2019. As the entire world felt the impact of COVID-19, this figure dropped to 73 million in 2020.

There have been specific regional trends emerging during this time. In Germany, for example, the effect of sluggish global auto sales on carmakers contributed to an economic contraction in the second quarter of 2019, while India suffered its worst month for 18 years in July 2019, which reportedly put one million jobs at risk. In the US, light vehicle sales fell from 17.2 million to less than 17 million between 2018 and 2019, before slumping to less than 14.5 million in 2020.

For businesses, market conditions like these will give rise to a number of urgent questions, many of which will relate to your workforce. When you're faced with a challenging industry environment and economic factors that are likely to hinder customer demand, you need to be sure you're doing everything you can to maximize cost efficiency in HR. 

Furthermore, it becomes more important than ever to optimize recruitment so you're acquiring high-quality talent and giving your business the best chance of succeeding in difficult conditions.

Consider steps you could take to raise your performance in key phases of your recruitment process, such as sourcing or interview stages, and ask what you might have to gain from accessing specialist talent in the contingent workforce.

looking to the future of the auto industry

Following the challenges of recent years, auto manufacturers and other businesses in this sector will be looking to the future and hoping for more positive developments.

Encouragingly, there have been forecasts of sales growth in 2021 and beyond. It's also likely that the industry will see ongoing expansion in the EV segment, as well as continued development of technologies and systems that could revolutionize business processes, particularly in areas like AI.

Trends such as these will provide exciting opportunities, and companies that have found their optimum approach to recruitment and acquired the right talent will be the best-placed to take full advantage of them. 

growth prospects

There have been various predictions suggesting that global auto sales will rebound in 2021, following the downturn experienced in 2020.

Forecasts from S&P Global suggest international light vehicle sales will increase by between 8% and 10% this year, rising to between 83 and 85 million units. The company stressed there are significant potential barriers to growth, such as shortages of electrical components, but demand 'remains sustained, particularly in China and the US'.

IHS Markit shared a similar projection, suggesting that new light vehicle sales would reach 83.4 million globally in 2021, up 9% from its 2020 prediction of 76.5 million.

Taking a more long-term view, McKinsey has said auto industry revenues could reach US$6.7 billion (€5.6 billion) by 2030. The company highlighted four tech-based trends that will be central to how the sector evolves in this time:

• Diverse mobility
• Autonomous driving
• Electrification
• Connectivity 

To stay relevant and ready to make the most of growth opportunities in the coming years, you will need people in your workforce who are tuned in to these trends and have the skills required to help you benefit from them.

the shift towards EVs

Another key trend in the automotive industry at the moment, which will give rise to new skills requirements for businesses, is the steady transition away from internal combustion engines and towards electric motors.

Countries including the UK and Norway, as well as the US state of California and the Canadian province of Quebec, have announced plans to eventually ban the sale of new gasoline-powered passenger vehicles.

Research by the IEA showed that global sales of electric cars exceeded 2.1 million in 2019, surpassing the previous record set in 2018. This growth boosted the total stock of electric cars to 7.2 million. The agency also forecast 'further strong growth' in the coming years, following an increase of 40% in EV adoption in 2020.

Fatih Birol, executive director of the IEA, said: 'While they can't do the job alone, electric vehicles have an indispensable role to play in reaching net-zero emissions worldwide. Current sales trends are very encouraging, but our shared climate and energy goals call for even faster market uptake.'

This shift away from petrol and diesel vehicles in favor of EVs will undoubtedly have an impact on automakers and their workforces. In Germany, for example, it has been suggested that job losses resulting from this trend could exceed the number of employees retiring in the coming years.

The UK's Institute of the Motor Industry has warned of a deficit in the number of workers with skills relevant to the EV segment.

It seems clear there will be a growing need to acquire talent that will help your business succeed and keep up with fast-moving trends in the EV space in the coming years. Recruitment will play a vital role in this, but it will also be important to focus on how reskilling your workforce will help you succeed by supporting your people as they progress in their careers.

the rise of AI

Effective talent acquisition and workforce skilling activities will also prove crucial for businesses that want to be on the right side of another key tech trend in the auto industry: the growth of AI.

Various sectors around the world are increasing their investment in this area, and starting to see the returns. The results of McKinsey's latest global survey on AI, published in November 2020, suggested that more organizations are using AI as a tool to generate value, including increased revenues. Half of the companies surveyed said they had adopted AI in at least one function, while 22% reported that at least 5% of their earnings before interest and tax was directly attributable to AI.

In the automotive sector, AI could prove to be 'one of the new keys to success' for businesses, according to Suzanne Tracy, high-performance computing portfolio marketing senior manager at Dell Technologies. Writing in CIO magazine, she noted that this area of innovation could support everything from the development of autonomous vehicles to the transformation of research, design and manufacturing processes.

As far as recruitment is concerned, the growing importance of AI across the industry will have a big influence on businesses' efforts to find and acquire people with very specific skills and capabilities. Targeting your hiring and taking a carefully considered approach to skills assessment will prove crucial if you want to generate value from these cutting-edge technologies.

Preparing the workforce for the onset of AI is just one key area of reskilling. As the industry becomes more automated and focused on quality, line workers are also expected to have more skills in robotics, data-driven systems and robotic process automation. At the same time, digitalization is transforming nearly every aspect of the average business, from customer-facing activities undertaken by sales and marketing, to back-office functions including HR, procurement and legal. This means, to continue to drive efficiency, the sector must reskill many of its workers to be high performers in a digital and highly connected business environment.

'Facing challenging times ahead, auto manufacturers more than ever will need to optimize their workforce to raise productivity, accelerate innovation and make their companies more competitive,' she said. 'That means human capital leaders need to consider how a more agile workforce, powered by an expanded use of flexible talent, can help them drive top-line growth while minimizing people costs.'

Accelerating the capabilities of the workforce should be a priority for the entire auto industry, and not just companies seeking to create electric or self-driving cars. Only through innovation and workforce agility will automakers survive and thrive amid dynamic market changes.

Find these insights useful? We've created a white paper about the leading HR trends in the automotive sector, including practical actions you can take to position your business for future success.