DETROIT — Ride sharing services like Uber and Lyft will continue to soar. Meanwhile, consulting firm AlixPartners forecasts lower U.S. automotive sales with 16.9 million units this year and a low of 15.2 million units by 2019. The announcement was made on Tuesday afternoon at an Automotive Press Association meeting in Detroit.
The AlixPartners analysis showed that ride sharing is expected to increase by 24 percent over the next year. Of the Millennials surveyed, 9 percent said ride sharing has allowed them to postpone or avoid getting a driver’s license all together.
“Ride sharing is five times more likely to be a top transportation mode than car sharing,” said Mark Wakefield, global co-head of the automotive and industrial practice at AlixPartners. “Ride sharing is really taking over. Not only they’ve taken quite a cut out of car sharing but taxis itself. Ride sharing is about 25 percent to 50 percent cheaper on average in these markets. It’s not the cost, at least in the responses that we got, not the main factors that people really liked. It was more about the convenience.”
More than 50 major companies are now working on autonomous vehicles or fully autonomous-vehicle systems, the report also indicated. AlixPartners said there will be just a handful of big winners and a lot of disappointed investors.
“There are going to be major changes in who is on top and who is not on top,” said John Hoeffecker, global vice chairman at AlixPartners. “Between now and 2020, Level 4 autonomous, we believe, will be prevalent. By 2025, electrics will likely have parody with the internal combustion engine.”
China is taking the lead in terms of vehicle electrification. Of the 103 EVs coming to the market by 2020, 49 of them will come from Chinese-based automakers. China is looking to become the home of two-thirds of the world’s manufacturing capability for lithium-ion batteries by 2021.
“If you look at what Tesla’s done by bringing out electric and branding that electric has created unbelievable value in that,” Hoeffecker added. “Tesla built a 17-inch iPad touchscreen into their car and put $1,500 into each one. It was seen as, by most other competitors, as almost crazy that they would do that. The satisfaction they had was double anybody else out there. They came out with that in 2012 and no one has been able to copy that in all of those years.”
The AlixPartners report signals bad news for hybrid vehicle sales in the U.S. Hybrid sales have slowed from 3.2 percent of the market share in 2013 to just 2.1 percent so far in 2017.
Overall, AlixPartners forecasts a downturn in U.S. vehicle sales. The consulting firm predicts that 16.9 million units will be sold in 2017, 16.4 million units in 2018 and a low of 15.2 million units in 2019. The report indicates that sales should start to pick up between 2020-2022.
“We have a fairly mild downturn,” Wakefield explained. “We believe that vehicle prices will continue to fall. Loan terms have been tightening for the last 12 months. Interest rates, slower than expected, is expected to increase.”
A used car “time bomb” is expected to hit the market, according to the report. The consulting firm says that 500,000 or more off-lease vehicle returns will be flooding dealerships this year. That is expected to cost automaker financing companies up to $5 billion. Cheaper used car prices are likely to increase lease payments on new vehicles with higher residual rates and tighter credit.
A total of 2,000 U.S. adult consumers were surveyed online between May 19-25, 2017. Of those surveyed, 1,000 were polled from the top 10 large markets where car sharing and ride sharing are popular (Austin, Boston, Chicago, Los Angeles, Miami, New York, Portland, Seattle, San Francisco-Oakland and Washington, D.C.).
For more information about the AlixPartners report, visit https://www.alixpartners.com/insights-impact/the-fast-changing-new-automotive-ecosystem-is-leaving-many-players-behind/#sm.001wu5xjq1bz6d3tqp61x94hahx4x