5 HR trends automotive firms need to follow.

The global automotive industry and its supply chain are going through a time of great change. To keep up, businesses will need to be agile, aware of fast-moving automotive industry trends and ready to make significant shifts in their operational and people practices.

In this article, we'll take an in-depth look at some of the most significant trends and challenges facing the industry. We'll also examine the implications for HR in automotive businesses and identify the workforce management strategies that will be necessary as the sector evolves.

global trends shaping the automotive industry

Automotive industry businesses are navigating a range of obstacles, from ongoing industry disruption to new challenges brought about by global economic forces and supply chain challenges. As you guide your company through this period of upheaval, your talent acquisition and management practices will prove critical in determining your success.

dealing with disruption

Technology will continue to disrupt the automotive sector in the coming years, but it's the workforce that will determine how the industry evolves.

The International Labour Organization (ILO) underlined this idea, pointing out that the sector has reached a turning point and "faces an increasingly uncertain future". Business will contend with issues including global trade tensions and restrictions, changing consumer preferences and increasing regulatory pressures. The industry is also facing an ongoing shortage of semiconductors, forcing OEMs to reduce production volume and rethink transparency along the supply chain.

In an environment with ever-changing challenges and opportunities, a talented workforce can create the adaptability you need to succeed.

sales volatility

One trend that has highlighted the difficulties facing businesses in the automotive sector is declining sales. According to the International Energy Agency (IEA), global car sales have been dropping since 2018. The industry lost 15 million sales between 2019 and 2020, and recovery has been slow. After a modest 4.5% increase in 2021, Scotiabank finds that sales have been flat overall in 2022.

Although car sales are expected to return to normal in the coming years, many businesses will continue to struggle with the lasting effects of the pandemic. These challenges are intensified by ongoing uncertainty in regional economies, commodity supplies and consumer demand.

Industry forecasters have offered conservative sales-growth estimates for 2023. The Economist Intelligence Unit predicts minimal growth. S&P Global Mobility downgraded its 2022 vehicle production expectations by 2.6 million to 88.5 million due to ongoing supply issues arising from China's ongoing COVID-19 restrictions and the Russian invasion in Ukraine.

Certain markets have a more optimistic outlook. In the U.S. the GM CEO, Mary Barra, predicted that sales of new vehicles will rebound in 2023. She also acknowledged the uncertainty in the market, saying that "No one really knows" what will happen in the economy.

growth of electric and autonomous vehicles

The escalating impact of new technologies is another key trend in the auto industry. Tech developments will have a particularly significant impact on the skills auto manufacturers and service providers need to succeed. This is evident in the growth of autonomous and electric vehicles (EVs) — a trend that will define the decade.

Figures from the IEA show that global electric vehicle (EV) sales are on the rise. There were 2 million EV sales in the first quarter of 2022, which was a 75% increase from Q1 of 2021.

At the end of 2021, IEA research showed 16.5 million EVs in service around the world. The organization predicts there could be as many as 300 million EVs on the road by 2030, if governments introduce stronger policies to reach their climate objectives. The private sector will play a key part in this trend as more companies make the transition to electric fleets.

Automakers are also investing heavily in autonomous vehicles. In May 2022, the Mercedes-Benz Drive Pilot became the first Level 3 autonomous system to receive full certification. McKinsey expects the technology to accelerate rapidly, suggesting that Level 4 autonomous vehicles could be a reality for consumers in the next 1 or 2 years.

Another noteworthy trend is the rising popularity of software-defined vehicles. These wirelessly connected cars enable manufacturers to offer a range of features, including remote updates, maintenance alerts and additional infotainment features. In 2021, 237 million vehicles on the road had some form of embedded connectivity. By 2030, these features will be available on 96% of cars.

Innovation is happening faster than ever before in the automotive sector, so your business needs to be prepared with the right HR and talent acquisition strategy to keep up.

5 key focuses for HR

As the latest trends in the automotive industry reshape the sector, employees will need to build new tech-oriented skills. Much of the burden will fall to the HR department; it's critical to determine your talent and workforce priorities now to ensure that your organization is positioned for success in the future.

1. future-proof talent acquisition

The tech-driven evolution of the automotive industry underscores the importance of hiring high-quality talent. Businesses will rely on the knowledge, skills and experience of employees to keep track of significant trends in the sector and determine how to benefit from them.

The industry is facing the worst skills gap in 20 years, according to the Institute of the Motor Industry, and many companies are falling short. The automotive software market was worth $19,123 million globally in 2021; forecasters suggest that by 2030, it will reach a value of $57,689 billion.

McKinsey highlighted some best practices to optimize talent acquisition, management and retention. It recommended:

• Promoting collaboration between the CEO, CFO and chief HR officer to ensure the company's strategic, business and talent strategies are closely aligned
• Identifying the "critical 2%" of roles that generate the most value for the business and developing talent for these positions
• Boosting agility by creating small, cross-functional teams with a mix of capabilities to apply to specific tasks
• Utilizing new digital and analytical tools to improve vital processes such as workforce planning, talent identification, recruitment, onboarding, learning and performance management

2. preparing the workforce for automation and robotics

Automation and robotics are on course to play an increasingly important part in how the automotive industry functions.

According to IMARC Group, the global automotive robotics market has been experiencing steady growth. It was worth $8.69 billion (€8.19 billion) in 2021, and it's expected to grow to $17.34 billion (€16.35 billion) by 2027.

Automation has the potential to transform entire production lines. According to the ILO, "Digitalization is heralding a new era of advanced manufacturing in the automotive industry — elements of which have been described as 'Industry 4.0'. These technologies include the integration of advanced analytics, artificial intelligence, sensor technologies, the internet of things, cloud computing, blockchain, cyber-physical systems, machine learning, robotics and 3D printing."

As your company investigates automation of key processes, your employees may be concerned about job losses. If this situation arises, the HR department should focus on engaging with employees and sharing information about what changes are happening and why.

These discussions could focus on:

• Answering workers' most common questions
• Supplying information about any new systems and technologies the business is using
• Demonstrating how these processes could provide opportunities for workers to take on new responsibilities
• Introducing reskilling and upskilling programs that will help people acquire new abilities and boost their long-term employability
• Internal mobility efforts that can help you deliver a better employee experience and retain talent

3. safety, health and employee wellness

If you want to retain your most valuable employees and attract new talent, you must be able to show a commitment to protecting people's health and wellness. This is more important than ever post pandemic, as employers are under greater pressure to protect employees and minimize health risks in the workplace.

Automotive businesses must also consider the unique risks employees face in this industry. The ILO pointed out that the sector has seen significant improvements in worker protection and safety standards in recent years, but "remains hazardous". It highlighted specific risk factors such as:

• Exposure to noise
• Slips, trips and falls
• Fire
• Exposure to hazardous substances

Recognizing these dangers, and showing the targeted measures and safeguards you have in place to protect against them, will be essential if you want to build an employer brand that will help you attract new talent and retain current employees.

4. workforce diversity and inclusion

Diversity is a key driver for HR in the automotive industry, particularly in light of the persistent global labor shortage. When you expand recruitment to reach a wider range of applicants, you have a better chance of finding high-performing talent.

Business must innovate to succeed as technology dominates auto industry trends, and research has shown that diversity and inclusivity can fuel innovation. A study by Boston Consulting Group found that building more diverse leadership teams gives rise to higher standards of innovation and, ultimately, improves financial performance. Meanwhile, McKinsey found that companies with more gender-diverse executive teams were 25% more likely to have above-average profits than less-diverse competitors.

Many organizations in the automotive industry have clear challenges to overcome in this area. Company leaders are aware of the strategic importance of diversity, but from an operational perspective, staff shortages often take priority. This can make it difficult to maintain a commitment to diversity, equity and inclusion (DEI), creating a disconnect between operations and strategy.

So what practical measures can HR in automotive businesses implement to build a diverse workforce?

• Secure leadership buy-in for diversity and inclusion policies by making a clear business case and connecting this issue to the company's broader goals.
• Provide diversity training to raise awareness and promote discussion of this subject at every level, from senior management to junior staff.
• In your job descriptions, use inclusive language and tactics that will encourage a range of applicants. For example, you might limit job requirements to essential skills.
• Work with an HR solutions partner to plan a more tailored and targeted approach to recruitment.

5. learning and skills development

One way to combat the global labor shortage is to focus on nurturing skills and developing new competencies within your existing workforce. The ILO believes that business investment in skills and lifelong learning will be a crucial element of "advancing decent and sustainable work in the automotive industry, as well as ensuring a just transition to a future of work that contributes to sustainable development".

Reskilling and upskilling your employees is crucial as cutting-edge systems and technologies shape how automobiles are designed, manufactured and used. By cultivating key capabilities in your workforce, you can future-proof the business. Take electric vehicles, for example — technicians will need retraining to work safely with high-voltage systems.

Trends in the automotive industry will also create stiff competition for top talent, making development even more important. Our Employer Brand Research found that in 2022, employees cite career progression as a key factor in choosing an employer. A comprehensive training program can help you retain current workers and recruit new talent.

To succeed in this increasingly challenging environment, you will need to stay up to date with the latest and most relevant trends, both across the automotive industry as a whole and in the HR and talent management space.

As your company adapts to economic forces and new technologies, keep up with the latest developments by checking out our report on automotive industry trends.

This is an updated version of an article originally published on 1 November 2021.