The automotive industry is in the midst of big changes, from technology advances to evolving consumer preferences to tighter regulations. This transition is shifting the traditional business model, and the interconnected effects will touch every part of the automotive supply chain.

As a part of that chain, suppliers and manufacturers must anticipate upcoming automotive market trends and begin planning how to adapt and evolve. One important factor to consider going forward is your part traceability capabilities. Track and trace systems will play an even more important role in the coming years as global automotive supply chains become more complex and the need to share transparent, reliable part and product information grows exponentially.

While no one knows precisely what the auto industry will look like in the next 10, 20, or 30 years, we can prepare for the inevitable disruptions – those that can affect how, and how many, vehicles are being produced worldwide.

As the industry changes, so does the need for traceability, which will continue to expand and become even more vital in an increasingly technological, connected world.
 

5 Automotive Trends Driving Traceability:

1. Regulations and Automotive Recalls

   This is a trend we’ve been seeing in the auto industry for almost a decade, and it shows no signs of letting up any time soon. When you consider that automotive recalls have been climbing every year, topping 50 million in 2016, it’s impossible to ignore its impact on all supply chain players. Part traceability is essential to protect your company against liability.
   
   As supply chains become more complex, regulatory bodies, such as the National Highway Traffic Safety Administration (NHTSA), step in to set standards to protect consumers and manufacturers, while also motivating improved transparency and accountability throughout the supply chain.
   
   In 2000, NHTSA implemented the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act. As NHTSA put more pressure on automakers, big automotive brands put pressure on their suppliers. This increased scrutiny has resulted in several changes to how manufacturers negotiate supplier agreements, including requiring complete vehicle part traceability.
   
   With safety in the news and on the minds of consumers – especially as emerging technologies like autonomous vehicles continue to grow (more on this trend later) – regulations like the TREAD Act will continue to affect traceability of all vehicle parts, from airbags to wheels. Those companies that fail to follow the “early warning” requirements can find themselves facing costly recalls and even criminal liability.
   
   Streamlined traceability standards are also being pushed by industry associations. One is the Automotive Industry Action Group (AIAG), a not-for-profit association where groups of stakeholders, including retailers, suppliers, automakers, and manufacturers, work collaboratively to streamline industry processes. Their initiatives, such as part mark readability scales that grade part marks based on contrast and quality, work to provide even greater visibility throughout the global supply chain.
   
   A permanent part marking system offers many solutions to this challenge. Parts are marked with a unique 2D or 3D barcode. Rather than initiating a mass recall in the event of a failure, a traceability system allows companies to pinpoint the exact part that failed based on the individual data stored within the barcode. The results are faster response times, a significant reduction in the total number of recalled vehicles, and associated expenses.
   
   An effective track and trace system also delivers consistent, readable marks as per standards set by organizations like the AIAG.
    

2. Shifting Mobility Preferences

   Consumers’ mindsets around mobility are changing. In the next decade, experts predict a shift toward more shared vehicles (also known as e-hailing) and fit-for-purpose mobility solutions. In fact, experts predict that up to one in ten cars sold in 2030 may be a shared vehicle. Stricter regulations and technological advances are driving this change, which is already more prevalent in urban areas where private vehicle use is less common.
   
   Rather than using cars as all-purpose vehicles, drivers of the future may demand more flexibility. For example, say you’d rather use a fuel-efficient (or even battery-powered) compact car to drive to work, a mid-size car for weekend errands, and a family-size SUV for your beach trip. You would conveniently order your vehicle of choice on demand through your smartphone.
   
   This consumer preference for customization will increase the need to identify which parts are on which vehicles. Traceability makes this process much more efficient because individual part data can be tracked to specific VIN numbers.
   
   The future sounds promising, and driving trends are already moving in this direction. Annual car sharing in North America and Germany has increased about 30 percent over the last five years.
   
   The question is if the mobility shift will affect the total number of vehicles that manufacturers will be producing. The numbers show that, although global vehicle unit sales should continue to grow, sales will take a slight hit. By 2030, growth will come at a slightly lower rate of about 2 percent per year. Compare this to the over 3 percent annual growth rate we’ve seen since 2011. This is because the decline in sales of private vehicles will likely be offset by increased sales of shared vehicles, which need to be replaced more often due to greater wear and tear.
   
   Shorter life cycles are also the result of increased connectivity. With shared vehicles, consumers will always be aware of the latest technology advances. This may require upgradeable parts, especially software systems.
    

3. Electric Vehicles and Environmental Accountability

   Whether it’s hybrids, plug-in hybrids, battery electrics, or fuel-cells, electric vehicles (EVs) are a growing trend in the automotive field. Drivers are becoming more concerned with sustainability, considering that 22 percent of greenhouse gasses are emitted by the transportation sector, and EVs are a cleaner alternative.
   
   
   On the downside for manufacturers, the shift to EVs may mean less parts being produced. While a gasoline-powered vehicle has around 30,000 parts, an EV has only about 11,000 parts, many of which are high-tech. Another concern among manufacturers is the switch from combustion engines to batteries. However, according to McKinsey & Company, the internal combustion engine will remain relevant through 2030 since many of the EVs produced will be hybrid electrics. These rely on a combination of gasoline or diesel and electric power to increase fuel economy.
   
   While EVs may be a more fuel-efficient, eco-friendly solution, automakers are under pressure to use responsibly sourced materials, such as nickel and other minerals in EV parts. And when you consider that EVs are forecasted to account for 54% of new car sales by 2040, supply chain-wide traceability will be a big deal.
   
   Alloys made with nickel are harder and lighter than a material such as steel, which requires the use of different marking methods. More on this change in trend #4…
    

4. Lighter Vehicles

   In another effort to increase fuel efficiency, automakers are focusing on reducing vehicles’ overall weight. In the past, lighter materials meant weaker parts. However, manufacturers will be using more materials that are both light and strong. These include high-tensile steel, aluminum, and carbon fiber reinforced plastic (CFRP).
   
   CFRP, however, while one of the lightest materials, is significantly more expensive than the alternatives. According to Goldman Sachs, this means manufacturers can expect a push toward high-tensile steel, aluminum, and aluminum alloy parts used in vehicles in the coming years.
   
   Naturally, the harder the material (such as high-tensile steel, nickel alloys, etc.), the more powerful the machinery must be to mark it. High-powered laser marking equipment, such as fiber lasers, have the capabilities to mark on strong, hard surfaces. On the pin marking side, you would need a bigger, harder hitting stylus like that on a heavy-duty N-34 dot peen marking equipment that’s ideal for deep part marking applications.
    

5. Autonomous Driving

   Self-driving vehicles are already shaking up the scene in 2018. You can spot autonomous vehicles being tested on the roads in some cities today, including Miami, San Francisco, and MECCO’s hometown of Pittsburgh, recognizable by the large electronic systems mounted on their rooftops.
   
   But with this seemingly futuristic technology comes major concerns. There are constant conversations around the ethical implications and safety. The continued debate and need for technology refinement will stall the widespread adoption of fully autonomous vehicles, although we could see semi-autonomous versions on the roads within the next few years.
   
   With the increased need for safety electronics units in semi- and fully autonomous vehicles, component traceability throughout the manufacturing process becomes more critical. When accidents occur, marked parts can be quickly traced to their source, and any necessary remediation can be completed efficiently, minimizing any negative brand publicity.

It’s no doubt that traceability will play an even greater role in the coming years as the auto industry evolves. These trends could have potential effects on the materials used as well as vehicle production. As the industry becomes more global, the need for complete marking integration becomes even more important. Manufacturers should pay close attention to where the industry is trending to avoid being left in the dust.