Along with all the talk of self-driving vehicles, ride sharing and vehicle sharing, many are predicting a woeful sales drop in new vehicle sales. There is no doubt that new trends in consumer mobility will affect the auto industry, but any rumors of its death are premature.
Changing trends in traditional vehicle ownership, some experts say, will lead to fewer people owning cars and trucks and cause a massive drop in overall vehicle sales. According to Daron Gifford, automotive industry consultant at Plante Moran in Detroit, the experts may be right on the first point, but they are wrong on the second.
He claims that the dire auto industry projections are mostly the product of Wall Street or Silicon Valley analysts. They believe that each time an auto manufacturer announces a plant closing of layoff it represents a planned pivot to decreased sales.
Gifford agrees that the trends affecting the naysayers’ notions are real — the future of the auto industry is electric, self-driving and highly dependent on vehicle and ride sharing. As a result, auto manufacturers, suppliers and consumers are preparing for a change in automaking and marketing that will likely be very different from the past.
But Gifford disagrees when the prognosticators say all of that will lead to a drop in vehicle sales. He, like I, believe that while consumer trends may change and who buys cars will differ, we will still need cars in the future — lots of them.
He agrees with me that predictions of an auto industry downfall are not only exaggerated, but they are actually just plain wrong. Here’s why: This view of the auto industry is largely driven by investment analysts who are missing a key point. They predict the number of vehicles in operation will plummet as autonomous vehicles hit the market and ride/vehicle sharing gain popularity. That is a valid point. As more people change driving/ownership behavior, it will follow that the number of vehicles in operation will decrease.
However, Gifford (and I) think that the predictors of doom shouldn’t be counting vehicles — they should be counting miles.
In today’s transportation model, the average vehicle is driven very little in a given day. You take them to work, school or the grocery store, but in between runs, they sit. Most cars and trucks spend more time sitting in a parking lot or in a garage at home than they do on the road.
That won’t be the case with autonomous and shared automobiles. They will operate 10 or more hours per day, racking up around 100,000 miles annually as compared to the current 10,000 mile average.
So, regardless who is doing the future automobile buying, those vehicles are going to wear out faster than ever and be replaced sooner and more often than before. Vehicles tallying 100,000 miles per year will wear out in two to four years instead of the current 15-year average.
Soon, Gifford predicts, all new vehicles will be manufactured, purchased and run to end-of-life within four years.
On top of that, those cars will be more often replaced with new cars. That’s because the used-vehicle market will shrink due to many of them having a buyer-discouraging 300,000-plus miles.
It’s likely that changes are looming for the auto industry. Maybe some of the industry analysts will soon realize that those changes are for the better, not the worse.
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