Farmington Hills, Mich. — The Automotive Press Association (APA) held a meeting about “Car Wars 2024-2027: Rise of Powertrain Conundrum and Return of Market Share Shifts” on Wednesday at the Bank of America building in Farmington Hills, Mich.
Car Wars assesses the strength of the automakers’ product pipelines in the United States. It discusses industry product trends which relates to our findings to investment decisions. There is a significant acceleration of electric vehicle (EV) launches, which provides greater uncertainty around new ICE (Internal Combustion Engine) launches. The next four plus years could be some of the most uncertain and volatile for product strategy ever.
John Murphy, head of automotive equity research at Bank of America, was the guest speaker and said that demand forecast reflects recovery. “Auto product was constrained in 2022, driven by ongoing supply chain issues. What we expect to happen is that supply is coming back. I think in despite what stocks will tell you and despite what a lot of people would say about macro and the industry in general, I do think we’re on a verge of some very great times,” says Murphy.
“On our graph of our demand forecast post covid, we had a pretty significant downturn, a lot of that was supply chain induced. Then we saw a great significant snapback. The reality is today we are running at 15.4 million units. What is happening is what we expected to happen next year. So next year, our forecast is 16.1 million units. The experts say supply is coming back.”
“Inventory is still tight, but recovered very well. Pricing remains elevated for new and used vehicles. We anticipate used vehicle prices will continue to soften, but don’t expect them to crash in the coming years,” added Murphy.
“Raw material costs have come down from a peak of 11.3 percent in April 2022 to 8.3 percent in May 2023. The number of new model launches from 2004-2023 is 41, while in 2024-2027 will be 61. Fifty-one percent of new volume will be Crossovers. Crossovers continue to spike. Automakers are aggressively pursuing CUVs particularly at luxury and premium pice levels.”
“With a probability of 90 percent, we are expecting a UAW strike on September 15, and most likely it will be Stellantis. I think likely it will be a one or two month strike. The new contract will result in ratification bonuses and increases in compensation of 25-30 percent by the end of the next four years.”
Stellantis, Honda and Nissan has the lowest end of losing market share. They may cut prices to support volume. Ford stands out at the higher end of the range. It appears that automakers are playing to their historical strengths to drive profit/cash flow to fund the future. Automakers are using cash from their ICE vehicles to fund their electric vehicles.
The EV powertrain has become the majority of vehicles to launch over the next four years. Two thirds of the market will be non-ICE. GM, Stellantis, VW and Korean OEM’s are pushing the most aggressively into EV’s. Startup EV automakers such as Rivian, Lucid, and Fisker are expected to launch new products. “Our projections indicate Tesla is set to lose significant share of the EV market while GM, Ford and Stellantis are set to gain,” said Murphy.
The ongoing industry mega-trends, namely the evolution towards vehicle electrification, autonomy and connectivity are substantially increasing investment burdens for the automotive value chain. “The key focus in the industry is greener,” added Murphy.
Star Crawford, Senior Vice President, Detroit Market Executive, introduced John Murphy and announced that he was inducted into the Automotive Hall of Fame.
Kalea Hall spoke about the upcoming event for the Automotive Press Association which is August 15 titled “Our Next Energy.”
For more information about the APA or to attend an upcoming event, visit their website at: https://www.automotivepressassociation.net
Kalea Hall from The Detroit News 
Star Crawford from Bank of America 
John Murphy is the head of automotive equity research at Bank of America 