Environment-friendly and Cost-effective Microcars to Witness Widespread Adoption
The automotive sector continues to experience waves of innovations at a consistent pace. Regulatory pressure pertaining to carbon emissions in automotive vehicles has paved the way for a range of innovative concepts that aim to reduce air pollution. At present, hybrid and full-electric cars are gaining immense popularity around the world, as automotive companies are increasingly focusing on launching electric vehicles to establish a solid footing in the automotive sector. As the popularity of electric vehicles continues to head in the upward direction, microcars are gradually making a solid presence around global markets. Current trends in the automotive sector indicate a growing interest in micro-mobility due to which, the demand for microcars is growing at a steady pace particularly in East Asia and Europe.
Sensing the growing interest in microcars, a broad spectrum of automotive companies are increasingly diversifying their product offerings to launch energy-efficient, eco-friendly, and cost-effective microcars. In addition, government bodies around the world are promoting the production of electric vehicles by offering lucrative incentives and tax subsidies due to which, the overall production of microcars is projected to grow at a rapid pace during the forecast period. Several original equipment manufacturers (OEMs) have initiated the development of their own microcar concepts– a trend that is expected to set the wheels running for the microcars market in the assessment period.
At the back of these factors, along with advancements in technology, the global microcars market is expected to reach ~US$ 12.7 Bn by the end of 2030.
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License-free Driving and Environmental Concerns to Augment Sales
Governments across several key regions continue to put forward stringent regulations pertaining to environment safety and carbon emissions. The automotive sector, thereby, is required to comply with these regulations due to which, hybrid and electric cars are being developed. Microcars are likely to provide consumers the convenience of a four-wheeler and mobility of two or three-wheeled vehicles – both these factors are expected to play a key role in augmenting the sales of microcars in the upcoming years.
In several nations around the world, a driving license is not mandatory to drive a microcar- another factor that is expected to play a major role in influencing consumers to opt for microcars during the forecast period. The soaring demand for electric microcars coupled with growing interest in artificial intelligence-based autonomous vehicles is projected to play a key role in the overall development of the microcars market.
China to Remain Frontrunner in Production, Automotive Companies Eye Launch of New Microcars
The automotive sector is highly competitive wherein companies are striving hard to survive the cutthroat competition. Automotive companies are increasingly investing in new technologies and concepts to roll out eco-friendly microcars. At present, China is a major manufacturer of microcars due to the presence of over 400 microcar developers in the nation. Although there are no concrete guidelines and regulations related to the usage of microcars, government bodies are gradually stepping toward that direction by putting forward guidelines that are likely to improve on-road safety.
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Several automotive brands are launching new models of electric microcars to gain an advantage in the microcars market. For instance, Sunning Logistics and Baidu Apollo revealed a newly developed microcar equipped with the self-driving technology. Companies further revealed their plans of mass-producing unmanned delivery vehicles– a trend that is likely to be witnessed during the forecast period. Several startups in various parts of the world have entered the microcars market, due to which the competition continues to grow.
Sales to Drop amid COVID-19 Pandemic
The onset of the COVID-19 pandemic is expected to deeply impact the automotive sector. The initial lockdown in the first quarter of 2020 in China has created major disruptions in the supply chain of various automotive components. In addition, as China is projected to control a dominant share of the global supply chain in the automotive sector, the lockdown of the industrial sector in the first quarter of 2020 is expected to hinder the growth of the microcars market in 2020.
Restrictions on transportation and cross-border trade coupled with the ongoing political tension between China and the U.S. are likely to influence the growth of the microcars market. The demand for microcars is expected to remain sluggish in 2020 amid the ongoing COVID-19 event. However, the trend is likely to change over the last quarter of 2024, as the demand is expected to gain momentum.
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Microcars Market: Overview
- The global microcars market is anticipated to expand at a CAGR of ~15% during the forecast period, owing to the rise in production and sales of vehicles across the globe that has led to the increase in consumption and hence, is expected to boost the microcars market. Increasing demand for electric vehicles across the globe due to the enactment of stringent rules and regulations regarding vehicle emission is likely to increase the demand for electric microcars, which, in turn, is anticipated to propel the microcars market during the forecast period.
- Expansion of the automotive industry, rise in income level, increase in consumer demand for small vehicles, and innovative engineering solutions such as rear-mid-engine are primary factors driving the global microcars market. Rise in demand for lightweight vehicles, owing to enhanced fuel efficiency of the vehicle is projected to boost the microcars market during the forecast period.
Microcars Market: Drivers
- Rising urbanization and demand for smart cities around the world has propelled the usage of passenger cars and light commercial vehicles significantly, which is likely to augment the microcars market during the forecast period
- Vehicle manufacturers, especially engine manufacturers, are anticipated to invest heavily in research & development to design and develop new and technologically advanced vehicles, including autonomous vehicles and connected vehicles. This is estimated to boost the microcars market during the forecast period.
- Decline in vehicle loan interest rates, easy availability of finance with customized financial schemes, and increase in per capita income of consumers are key factors leading to the increase in sales and production of vehicles. Furthermore, expansion of the construction industry and rising development through rapid industrialization are anticipated to drive the production and sales of commercial vehicles, especially in developed regions, including China, the U.S. and Japan. This, in turn, is likely to propel the microcars market across the globe.
Microcars Market: Challenges
- Global vehicle sales are expected to decline by 2.5% in 2020 due to the Covid-19 pandemic; however, presently, they are more likely to decline between 6% and 8% this year, with knock-on effects into 2021. Currently, people are not keen to use public transport, which is likely to boost interest to own cars. This depends highly on the restriction period required to contain the global spread of the COVID-19 pandemic and assumes there would be no subsequent second global wave. Such a pandemic is projected to pose a major challenge to the microcars market across the globe.
- Changing consumer preference, scarcity of land for parking, growing safety concerns, rising clean air standards for automobiles, increasingly stringent regulatory standards, and volatile oil price may pose key challenges to the microcars market during the forecast the period.
Microcars Market: Segmentation
- Based on drive, the AWD segment dominated the global microcars market, as AWD helps increase fuel efficiency, enhance traction, and control of the vehicle. Rise in demand for small and lightweight passenger vehicles in order to increase the fuel-efficiency of the vehicle is projected to boost the microcars market across the globe.
- Based on fuel type, the electric segment dominated the market, as the demand for electric vehicles has been rising across the globe due to enactment of stringent rules and regulations regarding vehicle emission.
Microcars Market: Regional Analysis
- Based on region, the global microcars market has been segregated into North America, Asia Pacific, Europe, Latin America, and Middle East & Africa
- Asia Pacific and Europe are projected to be highly lucrative markets during the forecast period. This is primarily due to the presence of a prominent automotive industry in the U.S., China, Japan, and India. Consistent rise in vehicle production across Asia Pacific and Europe is anticipated to propel the microcars market during the forecast period.
Microcars Market: Competition Landscape
- Key players operating in the global microcars market include
- BMW AG.
- Mazda Motor Corporation
- Daihatsu Motor Co., Ltd.
- Daimler AG
- Group PSA
- Honda Motor Company
- LIGIER Group.
- Mahindra & Mahindra
- Tata Motors
- Toyota Motor Corporation
- Groupe Renault SA
- Daihatsu Motor Co. Ltd.
- Piaggio & C. Spa
- Subaru
- Suzuki Motor Corporation
- Key players at the global level are expanding their footprint by engaging in mergers and acquisitions with several players in the industry. In February 2019, Honda Automoveis do Brasil Ltda. (HAB), the Honda automobile production and sales subsidiary in Brazil, began operation at its new automobile plant in the city of Itirapina in the state of São Paulo. This new plant is projected to consolidate the company’s automobile business in the country. In May 2018, Mahindra & Mahindra signed two Memoranda of Understanding (MoUs) with the Government of Maharashtra (GoM), to further its next phase of expansion in electric vehicles (EVs) and achieve its vision of becoming completely electric ready. This is, in line, with the government’s pursuit for rapid adoption of EVs for private use as well as public (shared mobility).
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