Report: The Future of the Automotive Industry 2025 and beyond

The UK automotive industry is currently estimated to be worth £100 billion [1], with early 2025 data indicating a continued growth, including a 6.4% rise in new car sales during the first quarter compared to the same period in 2024.

However, with rapid advancements reshaping the sector, the future of the automotive industry could look significantly different to ever before. Interest in ‘technology for cars’ has soared by 517% over the past year [2], indicating growing public interest in the automotive sector and the major changes ahead.

In this report, we will explore the key transformations set to define the global automotive landscape, with expert insight from Keith Hawes, Director at Nationwide Vehicle Contracts. We’ll examine the forces driving change, from emerging markets and rising car brands to the accelerating shift toward electric vehicles (EVs).

The key areas that this report will discuss are: 

With new and emerging markets such as China and India, UK manufacturers must respond to remain a key player in the automotive industry and maintain their image as industry leaders in the future.

China is the world’s largest market for vehicles as of 2025, with units totalling over 26 million, accounting for 31% of the global 85 million units [3]. Due to limited fossil fuel resources, China has heavily invested in EV technology and possesses the raw materials needed to develop batteries [4].

They are currently the largest producer of electric vehicles (EVs), with approximately 200 brands, most of which are relatively unknown outside of China [5]. However, they are starting to enter international markets, highlighting their expansive approach to the industry.

While some countries have considered tariffs to protect their domestic auto industries, so far, there is no evidence that the UK Government will follow suit, opting for trade negotiations and policy adjustments instead. As a result, Chinese brands will likely continue gaining market share in the UK, and it’s up to traditional OEMs to improve their offerings in response.

Despite its large population, India does not yet have the same level of dominance in automotive development. However, many manufacturers are already well-established in the country, making India the third-largest automotive market globally, behind the USA [6]. 

As India's economy grows, it is likely to develop its auto industry and expand into export markets, much like China. However, building a strong domestic manufacturing base will take time.

Keith Hawes, Director at Nationwide Vehicle Contracts, comments: “My view is that the UK will likely welcome these new entrants while also needing government investment to protect its existing automotive industry. Hopefully, these new lower-priced players will enable UK buyers to access sensibly priced EVs to meet the country’s goal of 80% electrification by 2030”.

Both China and India are key growth markets due to their large populations and lack of natural resources for fossil fuel production. According to Hawes, “Air quality is another major factor, since China began transitioning to electric transport, it has significantly improved air quality in its largest cities. I expect that India will also address this issue in due course.”

Other densely populated countries will inevitably follow suit, such as Brazil, with a population of around 212 million, which stands as the sixth-largest car market globally, behind Germany [7]. While Brazil introduced plant-based fuels years ago, it will inevitably push towards zero emissions.

Hawes explains: “Other highly populated countries, such as Japan, Mexico, and South Korea, are expected to follow a similar path alongside more established markets like Canada, Germany, and France.  

“The key to growth in car ownership will be influenced by political and economic conditions. Asia Pacific is the largest region for vehicle sales, accounting for 40% of the global volume. With rapidly growing economies and increasing personal wealth, countries such as Vietnam and Indonesia will present significant opportunities.” 

Europe is the second-largest global market [8], despite the rapid push towards electrification, overall volumes are expected to remain stable as population growth and economies stabilise.  

The North American market is the third-largest market globally [8], but like Europe, it is a mature market, meaning significant growth in vehicle volumes is unlikely. However, South America is currently the fourth-largest market and, depending on economic success, has the potential for substantial growth.

As of 2025, there are over 200 car brands manufactured in China, many of which remain largely unknown outside the country [5]. 

Hawes shares his thoughts on leading auto brands, stating: “I would certainly include Chinese brands such as BYD, Geely (which also owns Lynk & Co, Volvo, Polestar) Dongfeng Motor (manufacturer for Nissan, Honda, and Renault),  FAW (produces the Hongqi brand and manufactures for European OEMs) and SAIC Motor (owns MG and Maxus and manufactures for Volkswagen).

In the UK, we are already seeing significant growth from brands like MG, ORA, BYD, and Omoda, with more Chinese manufacturers expected to enter the market in the coming year.  However, some traditional brands have recognised that to survive and compete with the rise of Chinese brands, they need to transform.

We can’t write off the traditional European and North American auto groups, but to survive the growing influence of Chinese manufacturers, they will need to up their game in shared technology, platforms and manufacturing efficiency, particularly in the production of next-generation EVs.”

Car technologies are constantly transforming, and our data has revealed the most popular in-car technologies set to dominate the market over the next decade. 

1. In-car air purifier 

Car air purifiers are compact devices designed to improve air quality within vehicles by reducing pollutants, odours, and allergens through filtration systems. In 2025, demand for this technology has seen a significant increase, with online searches rising by 12,805% over the past 12 months [2].

The surge in interest is closely linked to the increased awareness of airborne diseases and allergens, therefore, driving demand for health-focused solutions that promote well-being.

According to market reports, the global car air purifier market size was valued at $1.72 billion in 2024 and is expected to grow to $6.40 billion by 2032, exhibiting a CAGR of 17.8% during the forecast period [9]. 

2. Heated steering wheels

Heated steering wheels were first introduced to the automotive market in 1962. Over six decades later, they continue to gain traction as a desirable feature in modern vehicles, with demand increasing by +85% over the past year [2].

This growth is largely driven by increasing consumer demand for comfort-enhancing features, as drivers place greater value on convenience, features such as heated steering wheels are becoming a standard consideration for both manufacturers and consumers.

As of 2024, the automotive heated steering wheel market was valued at $2.05 billion and is projected to grow to $3.87 billion by 2034, with a CAGR of around 6.57% during the forecast period [10].

3. Vehicle-to-everything

Vehicle-to-everything (V2X) refers to the in-car network of connected smart devices that allows vehicles to communicate with their surroundings by transmitting to their external surroundings. There are four key components to V2X:

• V2V (Vehicle-to-Vehicle): Communication between vehicles.
• V2I (Vehicle-to-Infrastructure): Communication between vehicles and road infrastructure, such as traffic lights or toll booths.
• V2P (Vehicle-to-Pedestrian): Communication between vehicles and pedestrians.
• V2N (Vehicle-to-Network): Communication between vehicles and networks. 

Searches for V2X have increased by +56% over the past year globally [2] and are primarily driven by increasing demand for improved traffic management, enhanced road safety, and the integration of advanced communication technologies within the automotive industry.

In 2023, the global V2X market was valued at $500 million. This figure is projected to reach $9.5 billion by 2030, representing a compound annual growth rate (CAGR) of 51.9% during the forecast period (2023–2030) [11].

Hawes shares: “Vehicle-to-everything (V2X) technology will potentially become the next important driving aid as it combines safety with efficiency. By incorporating features like pedestrian recognition and collision detection with other vehicles, these capabilities help reduce driver error and vulnerability, making journeys safer overall. 

“The ultimate goal is for all vehicles to communicate not just with each other but also with their surrounding environment. However, widespread adoption may take time, as every vehicle will need to be equipped with this technology”.

4. Heated seats

Though first introduced in 1966, the demand for heated seats continues to rise globally. As consumers become increasingly conscious of the technologies and comfort features available within their vehicles, heated seats are emerging as a popular addition, particularly in colder regions where driver comfort is a priority.

The market value stood at $2.76 billion in 2023 and is projected to reach $3.64 billion by 2028, with a compound annual growth rate (CAGR) of 5.72% [12]. The growth of this market projects a wider trend of in-car comfort technologies as manufacturers innovate to meet consumer demands.

5. Android Auto

Android Auto has seen the fifth-highest growth in demand globally, with searches increasing by +22% in the last year [2]. Android Auto is a platform developed by Google that allows Android users to connect their smartphones to their car's internal display. 

There are an estimated 3 billion Android users worldwide, with Android claiming 71.42% market share worldwide [13]. With the market dominated by Android, there is a growing demand for users to be able to extend their tech's functionality into their cars. 

The global in-car infotainment industry, which includes technologies like Apple CarPlay and Android Auto, was valued at approximately $37.35 billion in 2024. It is expected to grow significantly, reaching around $66.26 billion by 2032. This reflects a compound annual growth rate (CAGR) of 11.06% [14], making it one of the most valuable in-car technologies in the auto scene currently.

As we look forward to the technological advancements in the automotive industry, Hawes suggests some other in-car technologies that could surge to the forefront of the industry:

1. Head-up displays - “Head-up displays are becoming increasingly integrated into vehicles, as they help improve safety by allowing drivers to keep their eyes on the road and avoid distractions.”
2. Parking technologies - “Parking technologies like cameras, sensors, and automated parking aids are also growing in popularity, helping to reduce low-speed collision damage.”
3. Advanced safety features - “Advanced safety features such as pedestrian recognition (City Safety), overtaking warnings (Blind Spot Indication Systems), and automatic braking are already included in many modern vehicles. However, we can expect these to become standard as manufacturers continue to prioritise safety”.

Beyond 2025, we can expect to see a broad range of innovative in-car technologies come into play in the field. AI and AR-powered features are expected to dominate as brands look to develop the automotive experience beyond current limitations. 

1. Emotion-Adaptive Autonomous Driving - This technology is currently in the early research stage and refers to autonomous vehicles that will adjust driving style based on the driver’s emotional state [21]. This is in the early stages in 2025 due to the need for accurate emotion detection, real-time biometrics, and user trust and is currently being explored by MIT [21], Toyota Research Institute, and Honda R&D [23].
2. Holographic Windshields - Due to safety and financial challenges, holographic windshields are not yet ready for mainstream use in 2025 but are in the early to mid stages of development. These will be augmented reality (AR) displays that will cover the span of the windshield to show hazards, navigation instructions and real-time traffic. WayRay [24] and Hyundai [25] are currently leading development on these with the hopes of a limited roll-out between 2026 and 2028.
3. Self-Healing Materials - In an attempt to increase vehicle life span and decrease maintenance needs, self-healing materials are now in development. These include advanced polymers and coatings that will repair scratches and cracks independently [26]. Autonomic Materials and BASF are currently looking into the development of coating, and MIT, the University of Illinois, and KAIST are the leaders in dynamic-polymer-based materials. We expect to see a small rollout from premium auto brands as early as 2027-2030 [27].

The automotive industry’s rapid technological advancements have transformed vehicles from basic modes of transport into complex data-gathering systems. As the technology driving these cars evolves, so do concerns surrounding privacy and data security. 

Consumers are increasingly worried about the potential for privacy breaches, and automakers are under growing scrutiny to manage and protect the data collected from their vehicles.

It is expected that by 2030, upwards of 95% of new cars will have internet connectivity [15], which will enable them to collect a vast amount of data, including live location and personal information. These opportunities arise through modern in-car technologies, such as connected services like V2X and in-car infotainment, which are making vehicles more vulnerable to cyberattacks.  

As concerns over data privacy in vehicles are rising, Hawes advises: “To mitigate legal, financial, and reputational risks from data breaches and growing data privacy regulations, the automotive industry must implement robust data protection policies to safeguard customer data. 

“Automotive companies must provide access to hardware and software security throughout the entire lifecycle of a vehicle, from design and manufacturing to operation and retirement. Additionally, securing in-vehicle networks is paramount to protecting processed personal data. Furthermore, the secure implementation of cloud security services is just as vital.”

Due to growing concerns over the sheer volume of data collected by vehicles, the California Privacy Protection Agency (CPPA) [16] has begun to monitor automakers and vehicle technology companies, with a particular focus on those technologies that can track live location.

Hawes also shares: “In today’s world, the next major cybersecurity threat may not come from your computer or credit card; it may very well be the vehicle that gets you from point A to B.  Legislation on automotive cybersecurity and data privacy is evolving, becoming more stringent and tailored to address these risks. 

“While national regulations exist, OEMs must develop secure, privacy-conscious solutions that not only comply with individual market laws but also protect the millions of connected cars operating worldwide.”

The global electric vehicle (EV) market is projected to attain a market value of $784.2 billion by the end of 2025, with China anticipated to be the largest contributor, with $377 billion in revenue by the same period. The global market value is expected to reach $990.4 billion by 2029 due to a steady annual growth rate (CAGR 2025-2029) of 6.01% [17].

With the goal of 80% electrification by 2030, allowing hybrid vehicles to be sold up until 2035, it means EVs will become the only option for consumers and manufacturers. 

Widespread adoption of these vehicles could face some challenges, primarily their cost. New EVs have a high upfront cost, with an average price of £54,324.61 [18], whereas the average petrol vehicle costs £27,649, with an 80.84% markup percentage [19] and rising cost of living, this may be a barrier for many.

Hawes explains: “The key role EVs will play within the next decade will be undeniable, as they will be the only practical transport option available to new vehicle buyers and users. While the adoption of battery electric vehicles (BEVs) in the corporate market is progressing well, thanks to significant tax incentives and salary sacrifice schemes, the uptake in the private market is behind. At the current rate, it is unlikely to meet the 2030 targets.”

With widespread adoption being a primary challenge in the transition to EVs, we have examined the UK Government’s current approach to encouraging EV uptake among private buyers, and outlined additional incentives that could further support adoption, including:

1. Support for used EVs to maintain strong residuals - If used EVs hold their value better than petrol vehicles, finance companies can set higher RVs (residual value). This would give funders confidence in setting realistic RVs for newly financed vehicles and help maintain lower lease and rental costs. 

2. Reintroducing subsidies - Private buyers are often more financially conscious than corporate fleets, therefore, reintroducing subsidies could play a crucial role in adoption. Subsidies such as home chargers, the Plug-in Car Grant and reducing VAT on roadside will help alleviate high costs and provide an incentive for adoption.

3. Expanding the high-speed charging network - One of the drivers' largest fears when it comes to EVs is range anxiety- the fear of running out of charge during a journey. By expanding the high-speed charging network, these fears would be significantly reduced and would excel especially in rural areas of the county.

4. Raising the 'high value' threshold for EVs -  In the UK, EVs that are currently priced over £40k are subject to a Vehicle Excise Duty (VED), an additional subcharge also known as ‘premium car tax’. The majority of EVs are currently priced below £40,000. Therefore, if the threshold for higher road fund licence (RFL) costs were raised from £40,000 to around £60,000, the industry could avoid discouraging EV adoption due to high RFL charges [20]. 

If the UK government were to implement the above measures, it would, in turn, help aid the widespread adoption of EV vehicles across the country to alleviate the transition from the sale of petrol vehicles and ensure the UK meets its transition goals by 2030.

The target of 80% electrification of vehicles made post-2030 is expected to significantly disrupt the automotive industry. However, if the industry adapts effectively to the growth of electric vehicles (EVs), there is a strong possibility that the government will successfully process the transition to drive widespread adoption.

Hawes highlights: “In practice, I don’t believe there will be much reshaping of the market over the next 10 years, as it will simply adapt to EVs. The fundamental design of vehicles will remain largely unchanged, and only the method of propulsion will differ.  

“However, in the longer term, the traditional automotive network will inevitably need to evolve. Key factors driving this change include lower maintenance requirements for EVs, reduced demand for replacement parts and the elimination of consumables like oil and other sundries. As a result, businesses built around servicing and maintaining internal combustion engine (ICE) vehicles will need to adapt to remain viable.”

The UK's EV charging infrastructure faces considerable challenges, and unless these are addressed well before 2030, the network will not be adequately prepared. 

Therefore, Government intervention is crucial to ensure consistency and accessibility. Hawes shares, “If the UK government were to address these issues, it would enable it to help the initiative of the 2030 ban and create a reliable and accessible EV charging infrastructure that supports the UK's transition to electric vehicles.”

According to Hawes, these are the key areas that need attention in terms of EV charging:

• Fair Pricing: As of the current climate, EV owners with at-home chargers benefit from lower tariffs and reduced VAT, while those reliant on public chargers pay significantly more. A fairer pricing system is needed to meet the demand and encourage adoption.
• Expanding the Network: As range anxiety remains at the forefront of drivers' minds when considering the switch to EVs, high-speed chargers should be more readily available beyond high-traffic areas such as motorway service areas, and should improve coverage in rural and remote locations to make the ownership of an EV more inclusive.
• Managing Demand: ‘Charger rage’ is becoming commonly known as the EV equivalent of ‘road rage’ and refers to the frustration EV owners experience at charging points due to long wait times and inconsiderate driving behaviour.  By introducing a queuing system, "charger rage" could be effectively managed and, in turn, the demand for charging points.
• Urban Charging Solutions: People living in urban areas, such as city centres where apartments and flats are common, need better access to chargers, including pavement/cross-pavement charging and community high-speed chargers.  
• Simplified Access: At present, EV drivers are required to download multiple apps to be able to access various charging networks. A more unified, user-friendly system is essential to improve convenience for drivers.

There are three key disruptors that Hawes highlights:

1. Competition from China - “Aside from the challenges of achieving electrification, one of the biggest disruptors to the automotive industry will be competition from China. With around 200 domestic brands, Chinese automakers are increasingly entering international markets with competitively priced and technologically sophisticated electric and plug-in hybrid vehicles. We have yet to see the full impact of this, but it is likely to force traditional manufacturers to close factories, reduce model ranges, share technologies, and even merge to survive.”  
2. Battery production - “Battery production is also set to change, with large gigafactories continuing to supply multiple brands. As a result, standardisation of vehicle components across different models and brands, for example, offering different body shapes and branding, but sharing many of the same components.”  
3. Electric Vehicles (EVs) - “EVs will also require significantly less servicing and fewer parts, leading to a decline in service networks. Additionally, manufacturers will have greater access to vehicle software, allowing them to carry out remote repairs, collect real-time data, and manage a vehicle's entire lifecycle more efficiently.”

Hawes shares: “The car of the future will likely be hydrogen-powered, packed with advanced electronics and IT systems, and fully autonomous. Consumers will prioritise vehicles that fit their lifestyles and personal needs. While factors like range, safety, comfort, and connectivity will be expected as standard, individual preferences will play a key role in their choices.

I have witnessed the transformation of the car from evoking desire and aspiration to a highly technological, clean, safe and efficient means of getting from A to B - but perhaps with less personality and driving excitement!”

As the automotive industry undergoes significant transformation with new emerging industry leaders, in-car technologies redefining the driving experience, and EVs becoming the forefront of the sector, drivers are set to face widespread change. 

In the face of this evolving landscape, Nationwide Vehicle Contracts remains committed to adapting alongside its customers, promising the most convenient and trustworthy mode of leasing vehicles across the country, readily accessible at your fingertips.

[1] Value of UK auto market - SMMT
[2] Global search data over the past 12 months, data correct as of 21/05/2025 - KeywordTool.io
[3]China Car Sales - Statista
[4] Electric vehicle production in China - ITIF
[5] Number of Chinese Car Brands - WhatCar?
[6] India's automotive market ranking - SIAM
[7] Brazil's automotive market position - Statista
[8] Asia-Pacific vehicle sales - ABI Research
[9] Car Air Purifier Market - Automotive Electrical & Electronics
[10] Heated steering wheel market - Technavio
[11] V2X Market Value - Markets and Markets
[12] Heated Seats Market - Allied Market Research
[13] Android Market - Backlinko
[14] Android Auto Market - Data Bridge Market Research
[15] New cars with internet connectivity - McKinsey & Company
[16] Monitor automakers and vehicle technology - California Privacy Protection Agency (CPPA)
[17] EV Market - Statista
[18] Average EV Price - Book My Garage
[19] Average Petrol Vehicle Price - LeaseCar
[20] Raising the 'high value' threshold for EVs - Santander Consumer Finance
[21] Emotionally Adaptable - Brunel University
[22] MIT Research - New Atlas
[23] Honda R&D - Honda
[24] WayRay AR Development - WayRay
[25] Hyundai AR Development - PR Newswire UK
[26] Self-healing Materials - Grand View Research
[27] Self-healing adoption - MarkNtel