FRM 2025: Sector Report Automotive Industry KPMG in Germany

Its product range includes an electric modular chassis, the standard autonomous shuttle pod, and pods for other applications. The need for high-performance processors is also growing as a result of software-defined vehicles (SDVs), which rely on semiconductors for ongoing updates and subscription-based services. The global automotive semiconductor market is projected to grow from USD 53.57 billion in 2025 to USD 86.81 billion by 2033, with a CAGR of 6.22%. Join us today and access AMS’s wealth of global news, insights, intelligence and content, and to make valuable connections with your peers from across the automotive industry. Volkswagen is using digital twin technology at its Wolfsburg plant to simulate and optimise production processes for the Tayron SUV.

Methodology: How We Created the Automotive Trend Report

For instance, India’s eBus Sewa scheme deploys 10K electric buses to curb urban pollution. Further, it establishes local manufacturing facilities, which reduce supply chain dependency and generate employment and stimulate economic growth. Read on to explore each trend in depth – uncover key drivers, current market stats, cutting-edge innovations, and the 20 leading innovators shaping the future.

Industry 4.0

Here’s how TikTok unboxings and gaming are driving one of 2025’s top retail trends. Data from the past 10 years shows the sale of luxury vehicles making a steep climb in 2022. Toyota’s Mirai and Hyundai’s Nexo have been the two major players in the market since sales launched in 2016.

What are the expected effects of sustainability and environmental concerns on the automotive industry’s future trends?

This process enables us to identify the most impactful and innovative trends in the automotive industry. Volvo Cars has announced plans to adopt large aluminium castings for its next-generation electric vehicles, aiming to simplify production and enhance sustainability. Meanwhile, Toyota is reported to be cautiously evaluating the technology, balancing its benefits against potential risks. Sustainability has evolved from a competitive advantage to an existential necessity for the automotive industry.

Explore the Top 10 Automotive Trends & Innovations in 2025

This increases the regulatory push toward connected and safety-enhanced vehicles. General Intelligence strengthens the evolution of software-defined vehicles by aligning human-inspired learning with safety. It also advances autonomous driving by enabling adaptability across vehicle types and conditions. In addition, the unit supports multiple communication protocols, including CAN and FlexRay. It also works with Ethernet and LIN, enabling integration across passenger cars, buses, trucks, and autonomous vehicles. AI and ML solutions process multimodal sensor data to power autonomy, predictive maintenance, and personalization.

Automakers will continue to incorporate these systems into even more affordable models, making safety technologies more accessible to a broader range of consumers. By leveraging tech and sustainable practices, the automotive sector can meet the challenges of tomorrow while delivering exceptional value to consumers. As urban areas grow more congested, the focus is shifting from traditional car ownership to mobility-as-a-service (MaaS) models. Fleet-as-a-Service (FaaS) solutions, particularly autonomous fleets, are set to transform how people navigate cities. This digital transformation enhances scalability, a key driver in the competitive automotive sector.

🚧 Pitfalls to Avoid: Common Missteps in the Evolving Automotive Landscape

The drive towards electric and autonomous vehicles is further bolstered by progress in machine learning and IoT. Luxury car brands are experiencing growth due to increased tangible luxury offerings and rising disposable incomes. The demand for sustainable and eco-friendly transportation, like electric luxury vehicles, also drives market growth. The adoption of pre-owned luxury cars is increasing due to easy access to financing and lower entry prices. Manufacturers are investing in innovative mobility technologies, such as personal voice assistance, autonomous driving, and AI and ML, creating a positive market outlook.

IONT tech specializes in EV Charging Solutions

This will further usher the industry into a new era of smarter, more connected, and more efficient vehicles. The startup’s platform combines augmented reality (AR), smart camera, and surround-view monitoring to illuminate the route on turns, curves, slopes as well as complex junctions. This assists the drivers in keeping lanes, prevents collisions, and enables autonomous driving options.

Mobility

Lastly, MARV.Automotive is a configurable and extensible data management platform that reliably transmits data from the vehicle to the cloud. The US-based startup Launch Mobility develops a platform for a range of shared mobility solutions. The platform LM Mission ControlTM offers free-floating or station-based car sharing, advanced shuttle services, shared dockless scooters, keyless rental programs, and peer-to-peer shared mobility. Further, their drivers use out-of-the-box or white-labeled apps to manage reservations or remotely access vehicles.

Automotive trends for 2025

Top car brands and dealerships are embracing VR as part of their dealership photography strategies to improve the customer experience. As we look forward to 2025, RSM’s automotive professionals predict a slowdown overall in the growth of the industry as well as a reduction in overall margins and profitability. Many OEM’s are already revisiting original forecasts and realigning through-put and production schedules accordingly.

Launching of fuel cell EVs

• The startup’s sensors provide consistent performance by transmitting and interpreting signals effectively.
• Ransomware-related costs in the automotive industry skyrocketed from $74.7 million to $209.6 million in just the first half of 2023.
• Autonomous driving will continue progressing from Level 2+ driver-assist to Level 3 conditional autonomy in geo-fenced areas.
• Artificial Intelligence and Smart Factory technologies are no longer aspirational but integral to modern automotive manufacturing.
• What initially appeared to be a niche sector is now the foundation of the auto industry’s transition.
• Robust IoT (Internet of Things) security, regular software updates, and well-prepared incident response plans are the essential building blocks of a strong cyber security strategy.
• LiDAR provides high-resolution 3D mapping that allows vehicles to detect road geometry, obstacles, and pedestrians with centimeter-level accuracy.
• The rise of electric vehicles, autonomous driving, and innovative mobility solutions will redefine how we think about transportation.

From electrification to IoT connectivity, these shifts are changing the way cars are manufactured, sold, repaired, and driven. Shared micromobility vehicles are becoming a popular mode of transportation in cities where the pollution from cars and traffic congestion is particularly evident. Chip shortages have been causing myriad changes to trends that affect the automotive trends that are not all positive.

💻 Trend 2: The Rise of Software-Defined Vehicles (SDVs) – Cars as Computers

After the pandemic, we developed a habit of shifting all requirements to online methods, and so do goes with the automobile industry. Our new generation which is called millennials or Genz researches everything online before the actual purchase. Car dealerships are no exception, as recent auto trends reveal that customers prefer to experience a car or dealership before purchasing.

Transparency rules such as the EU’s Corporate Sustainability Due Diligence Directive and the US Uyghur Forced Labor Act add pressure for stricter supplier oversight. This transition offers shorter lead times, reduced tariff exposure, and a stronger crisis response. The startup employs the Perceived Quality Index to eliminate engineering bias by translating customer insights into measurable quality improvements. Cost savings also play a role, as recycled aluminum or bioplastics often return their investment in just over a year.

• Tesla already employs single inverter housings across its models, offering efficient integration of power electronics.
• The need for high-performance processors is also growing as a result of software-defined vehicles (SDVs), which rely on semiconductors for ongoing updates and subscription-based services.
• Statevolt’s decision to build its gigafactory in the UAE rather than Europe has been a talking point this year.
• In addition, the initiative will leverage the data collected by adding Google’s AI capabilities to Ford vehicles.
• These practices not only meet regulatory demands but also resonate with consumers increasingly drawn to environmentally responsible brands.
• In addition, the startup strengthens automotive cybersecurity with features such as real-time intrusion detection and automated containment protocols.
• Through V2X, vehicles can share information about road conditions, accidents, and traffic patterns, allowing for real-time decision-making.
• Its product range includes an electric modular chassis, the standard autonomous shuttle pod, and pods for other applications.

• The automotive industry is many things, but it is never idle; it thrives on the pulse of innovation, resilience in hard times, and mobility transformation.
• Self-driving taxis are already available in parts of China and several US cities.
• The platform enables visibility across the entire claims cycle and supports both OEM and aftermarket sourcing.
• The currently available infotainment systems can connect with smartphones, sensors, ADAS (advanced driver assistance systems) as well as other in-vehicle and external systems.
• The U.S. National Highway Traffic Safety Administration (NHTSA) plans to require automatic emergency braking (AEB) systems in all new light-duty vehicles by 2026.

Companies focus on increasing energy density to improve range and reduce charging times. The trends shaping automotive manufacturing in 2025 emphasize innovation, sustainability, and connectivity. As electric vehicles become mainstream, digitalization reshapes production, and mobility services redefine car ownership, the industry is set to transform how vehicles are manufactured and used.

• Currently, there are about 750,000 public charging stations with a combined 28.7 GW of charging capacity.
• For example, Toyota plans a commercial rollout by 2027 to bring solid-state battery EVs into mass production.
• These advanced technologies are widely used across a great number of industries and the automotive domain is no exception.
• With consumers increasingly prioritizing environmental performance when purchasing vehicles, automakers must focus on reducing emissions and developing more sustainable transportation options.
• Its vehicle control system processes passenger comfort thresholds related to acceleration, deceleration, and jerk rate.
• It integrates templates, examples, and practices aligned with ISO/SAE 21434, Automotive SPICE for Cybersecurity, and VDA guidelines.
• Discover trends, forecasts, and global developments shaping the future of mobility.
• Younger buyers often prefer subscription models or shared mobility over ownership.

Tree Map reveals the Impact of the Top 10 Automotive Industry Trends

• These advancements are critical as manufacturers aim to balance efficiency, durability, and safety.
• Likewise, fleet operators strengthen defenses for telematics, routing data, and driver information against manipulation.
• Buyers check all the accessible platforms like your social media, website, videos, and more.
• The AI in Automotive industry in 2026 is evolving as AI, autonomous technologies, and software-defined vehicles reshape global mobility systems.
• On top of all the 2025 automotive trends there will be the impact of tariffs set by the US and Europe.
• Cross-industry collaboration is emerging as a key enabler, with automotive companies forming partnerships to develop and implement innovative material solutions.
• The goal is to enable cars to make decisions and navigate without human intervention.

It also provides validation services that ensure resilience against potential risks. German startup CARNIQ Technologies enhances vehicle cybersecurity through web-based and AI-powered tools that ensure compliance with automotive standards. The rapid rollout of software-defined vehicles, vehicle-to-everything (V2X) networks, and electrification pushes automakers to secure digital systems as rigorously as physical components. Moreover, the startup’s marketplace connects professionals in a secure environment. It provides exclusive access to vehicles and optimizes purchase decisions based on classic symbols of American motoring supply and demand trends. Also, digital twin technology builds virtual replicas of supply chains to simulate disruptions and optimize performance.

Kemet Automotive manufactures All-terrain Electric Vehicles

We expect to see the concept of Mobility-as-a-Service (MaaS) develop through 2025. Initial deployments focus on simpler, grid-like cities such as Phoenix in the USA, Milton Keynes in the UK, and Singapore. Soon, this will expand to more complex urban environments as vehicle access becomes increasingly prioritised over ownership among the driving masses. In addition, it adapts to applications across fleets, workplaces, airports, and multi-housing units.

❓ FAQ: Your Burning Questions About Automotive Trends Answered

BOS Semiconductors focuses on high-performance, energy-efficient AI solutions to drive innovation in autonomous driving and enhance in-cabin experiences. US-based startup Avvenire develops LEVs for efficient and eco-friendly urban transportation. Its products include the Leggera, an all-electric vehicle for on-road and off-road use, and the Spiritus, a three-wheel electric car with optional autonomous driving, Wi-Fi connectivity, and solar panels. Younger buyers often prefer subscription models or shared mobility over ownership.

As a result, vehicles become even more connected with each other and the infrastructure and provide drivers with more advanced opportunities. The future of automotive industry trends suggests that the automotive parts market will grow aggressively due to a growing demand for replacement parts and an increase in vehicle production. The segment’s sales will rise in the first six months of fiscal 2025, while the industry’s revenue will increase at the same pace to $33.8 billion. According to Globe News Wire, the entire market will grow at a CAGR of 5.5% from 2025 to 2033, logging USD 984 billion. Automakers and technology companies are forming partnerships due to vehicles’ constantly evolving tech requirements.