Paddon can see there is now an over-supply of drivers at WRC level.
"At the end of the day any professional sport is like this - there are always people coming through," Paddon told The Herald.
"It was only a couple of years ago we were in that position.
"I think it is fair to say there are a lot of young guys coming through at once and that is exciting.
"It means that the support categories in the championship are working getting them into world rally cars and proving themselves straight away.
"The only problem now is we might have a shortage of seats - too many drivers and not enough cars even with four teams running three cars each.
"We need more teams coming in."
Paddon is contracted to Hyundai for 2018 and knows he needs a big year after a disappointing 2017 campaign where everything that could go wrong has gone wrong.
"We need to have a good, competitive year to prove ourselves," Paddon said.
"We have to keep improving ourselves. We have gained a lot of experience and we are continuing to do that and you just can't buy or get that experience easily.
"Granted we have had a very bad year this year. Thierry [title contender and Hyundai teammate Thierry Neuville] had a year like that a couple of years ago and now he is fighting for the championship.
"It is important we have a good year next year but that is regardless of whether there are talented drivers coming through or not."