OEM Trends Driving the Future of Manufacturing

The OEMs stand poised on the standpoint of a vast transition, heralding a new age of opportunities in innovation, sustainability, and technology. Cutting-edge developments and strategic shifts will redefine the whole manufacturing landscape by 2025 and beyond. In this article, I explore the OEM trends that are set to revolutionaize the manufacturing sector, and discuss how to navigate the challenges and take on the opportunities.

1. The Electrification Surge

We know that big automotive OEMs are now realigning their businesses towards electrification due to the global movement towards green transportation and the aftereffects of the COVID-19 pandemic. Governments across the continents have enacted strict policies targeting greenhouse gas emissions, doing away with fossil fuels and putting sustainability at the core of every OEM.

For instance, the COP-21 agreement in Paris, held annually in December, has globally standardized decarbonization with at least 195 parties from the EU, including testing zero-tailpipe emission targets. It thus triggered the formulation of necessary policies across the USA and the EU. Now, emission reduction has become the priority.

Governments view the post-COVID era as not taking a step backward in low-GHG growth robustness but as reinvigorated momentum towards sustainable means. Exponential boosted EV sales are expected to see 2030 as the tipping point.

2. The Data-Driven Transformation

Software is becoming the core of driving by most automakers, custom-built proprietary in-car operating systems, and most importantly, enabling frequent, large-scale feature updates. Data analytics and software are taking center stage for innovation by OEMs.

The new plans from Mercedes-Benz, for instance, announced in Feb 2023, have unveiled the progress of its plans to release MB.OS, its architecture, and the new MMA platform (Mercedes Modular Architecture) are linked to the mid-decade design.

Tesla, generally regarded as an organization for software and data rather than car manufacturing, has had a head start with software integration compared to others, with the additional benefit of high-quality data at unmatched volumes.

3. Workforce Challenges and the Rise of Gen Z

The labor shortage has stretched across different sectors, and OEMs have learned to use their imaginative strategies in recruiting and retaining talents, especially those from the incoming Gen Z workforce.

By 2025, Gen Z is believed to represent nearly a quarter of employees worldwide. OEMS must understand and adjust their employment benefits with these young and vital motivators at their very core in mind.

These days, Gen Z is powered by the motivation of leading a purposeful and sustainable life, preferring more socially responsible companies. In this way, OEMs must demonstrate their commitment to corporate citizenship, sustainability, and community engagement.

4. Supply Chain Resilience

Digital transformation is the new industry standard that is setting new OEM trends. Organizations are digitizing their supply chains with the help of automation and business intelligence—the focus on data-driven decision-making results in cost savings, better accuracy, and quicker processing.

Sustainability is the most important factor nowadays because OEMs must consider environmental, social, and governance issues directly in their supply chain, from raw material sourcing to product delivery. Compliance with fresh ESG regulations has now become a critical requirement.

To ensure resilience and reduce the impact of possible future disruptions, OEMs are diversifying supplier networks with tools that have visibility within the supply chain and alternative modes of transport.

5. Evolving Customer Expectations

The significant contributor to a buying decision today is sustainability for every generation as it brings more consumers to the purchasing table of companies that see to their environmental and social values.

Customer expectations have shifted entirely due to a boost in e-commerce. The construction equipment industry is going through a similar kind of digital transformation. Even if the human part is utterly essential to the equipment transaction, the OEMs should reflect their offerings and capabilities through a digital presence, whether through websites or a social media platform.

6. Alternative Power Solutions

Against this global push for decarbonization, the OEM industry is looking at the possibilities of various alternative power solutions to reduce the carbon footprint of their products.

Diesel, which accounts for 98% of U.S. construction energy use, is under increasing pressure to reduce its effects. OEMs are exploring opportunities such as replacing conventional diesel engines or varying fuels to have a lower carbon footprint or optimizing diesel engine efficiency, therefore achieving better use of diesel in practice.

In this sense, electric power comes with zero emissions, low noise, and force similar to diesel, though runtime per charge and recharging time are two obstacles to adoption. Hydrogen, which is quickly becoming a practical alternative for larger machines, has prototypes of construction equipment already using hydrogen in either a fuel cell or as a power source for an internal combustion engine.

What Statistics Show about OEM Trends?

There will be an upsurge in the OEM industry in a few years. This is made more apparent with the following stats:

• 2024 is the year marked with $39.3 billion in OEM market share, which, though expected to grow at 4.5%, will hit nearly $69.6 billion in 2037.
• The ICE cars segment is expected to have a high capture of the OEM market with a staggering 53.1% share from 2025 to 2037.
• The key players in the OEM market would be Volkswagen Group, Ford Motor Company, BMW, Magna International, Stellantis NV, etc.

What Lies Ahead?

Adopting dynamism, innovative culture, and strategic partnerships is the key way OEMs must adapt to get on top of current challenges and opportunities surrounding them. For OEMs to succeed as they move toward the dawn of a new age, they must ride high over technology flavor waves of consumer preferences and actively build a robust supply chain and pool of industrial talent.

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