The Automotive Industry: Steering Towards Success

The automotive industry is growing manufacturing and employment after a several-years long slowdown.

By Nora Caley
From the May / June 2024 Issue

 

There is a lot that goes into building a car, and much goes into establishing a robust automotive industry. After the pandemic-related slowdown in manufacturing and purchasing, the industry is poised to regain speed. Consumer interest in electric vehicles, technological advances, and other innovations are contributing to growth in domestic vehicle manufacturing.

According to the National Automobile Dealers Association (NADA), the nation’s 16,835 franchised light-vehicle dealerships sold 15.5 million light-duty vehicles in 2023. Total light-vehicle dealership sales topped $1.2 trillion. Electric vehicles are still generating interest, as emerging manufacturers enter the space and legacy companies launch EVs as new product lines. NADA also reported that in first quarter 2024, alternative-fuel vehicles represented 18% of all new vehicles sold. Conventional hybrids were 8.6% of new-vehicle sales during this period, gaining 2.4 percentage points year-over-year. Battery electric vehicles’ (BEVs) market share was 7.1%, an increase of 0.2 percentage points. Plug-in hybrid vehicles’ (PHEVs) market share was 2.3%, an increase of 0.8 percentage points.

Battery electric vehicles are the fastest growing segment in the automotive industry, according to McKinsey & Company. The firm projects that more than 200 new battery cell factories will be built by 2030 to meet this rising demand.

The trends are driving not only automotive manufacturing, but also manufacturing of components. Battery electric vehicles are the fastest growing segment in the automotive industry, according to McKinsey & Company. The firm projects that more than 200 new battery cell factories will be built by 2030 to meet this rising demand. Also, McKinsey expects the market for cell components such as cathodes and anodes, separators, electrolytes, and cell packaging to grow by 19% per year until 2030, reaching more than $250 billion.

Whether they are building EVs or gas-powered vehicles, automotive manufacturers are seeing increases in employment. According to the U.S. Bureau of Labor Statistics (BLS), employment in motor vehicles and parts manufacturing totaled nearly 1.07 million in March 2024, compared to 1.025 million in March 2023.

Manufacturers are building new facilities to keep up with consumer demand for shiny new sets of wheels. Here are some regions that are attracting these businesses.

Alabama: Accelerating Towards New Milestones

Need evidence that Alabama offers horsepower to the global auto industry? Consider this: Alabama last year became the nation’s No. 1 auto-exporting state, with international vehicle shipments surging past $11.2 billion to overtake long-time leader South Carolina, according to new trade data.

Alabama’s auto exports have climbed 45% in value since 2021, when they totaled $7.7 billion, according to figures from the Alabama Department of Commerce. That year, Alabama ranked No. 3 for auto exports.

The rising rankings are more impressive when considering that Alabama didn’t produce any vehicles before 1997.

“Alabama’s auto industry has become an exporting powerhouse, with vehicles produced in the state finding markets around the world,” said Ellen McNair, Secretary of the Alabama Department of Commerce. “This creates jobs in our state and solidifies the position of the Alabama auto assembly plants in a global business.”

automotive industry
Alabama’s auto exports have climbed 45% in value since 2021, when they totaled $7.7 billion, according to figures from the Alabama Department of Commerce. (Photo: Mercedes-Benz U.S. International)

 

While Alabama’s auto exports have been climbing, South Carolina’s have remained steady at just over $10 billion a year since 2021, the data indicate. Other top auto-exporting states include Michigan, California, and Texas.

Alabama auto exports landed in 78 countries in 2023, with major trading partners Germany, China, and Canada being the leading destinations, according to Alabama Department of Commerce data.

The Mercedes-Benz Tuscaloosa plant is the most prominent exporter in Alabama’s auto industry, with a significant portion of its production volume bound for overseas markets. Honda in Talladega County, Hyundai in Montgomery, and Mazda Toyota Manufacturing also export some of their Alabama-made vehicles.

“Exports of Alabama-built vehicles have a far-reaching impact on the state’s economy, creating new jobs and driving additional investment here at home,” said Christina Stimpson, Director of the Alabama Department of Commerce’s Office of International Trade. “In addition, the global demand for these high-profile products extends the ‘Made in Alabama’ brand, raising awareness of the state as the source for great products.”

Overall, Alabama’s exports have been rising in recent years, hitting $27.4 billion in 2023, the second straight year for a record annual total. Since 2020, the value of Alabama’s exports has jumped almost 43%.

Motor vehicles rank as Alabama’s No. 1 export category. The auto industry’s ascent has been rapid in Alabama. Automakers have assembled over 15 million vehicles in the state since the first Mercedes M-Class rolled down the line in February 1997. Combined production capacity at Alabama’s four auto assembly plants now tops 1.3 million vehicles annually, earning the state a Top 5 ranking in the U.S.

Visit madeinalabama.com/next for more information.

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