To say that the car industry is experiencing some diesel fueled turmoil would be an understatement of monumental proportions. Public scandals might attract huge amounts of attention. But still, it is more telling to look at the deep and broad processes that shape an industry’s future landscape.
Which is why our Economic Outlook, titled the Auto Market – Live Wire, focused on the automotive sector (original publication date, Aug 5, 2015). [more]
Things, it seems, are going amazingly (too) fast in today’s world of disruption. The collaborative consumer is king. The Sharing or On-Demand economy and digital transformation – simply the tip of the iceberg – are just a few of the developments that are knocking traditional industries off course.
NATU (Netflix, Airbnb, Tesla and Uber) are overtaking the GAFA (Google, Amazon, Facebook and Apple), with regulators, tax specialists and policy-makers not knowing which way to turn. Emerging El Dorados seem to be reaping the advantages of backwardness while rejecting a conventional form of industrial revolution and skipping straight to the latest technological breakthrough.
And how does that impact the automotive sector? Although the industry as a whole is on the road to recovery, car manufacturers could be in for a rough ride.
In our report we do show that the new phenomena – green, connected and shared cars – are marginal (at least for now). The pace in the auto sector is being set by the usual factors: growth and household purchasing power, industrial policy, investment and (incremental) innovation.
China, for instance, is now the world’s biggest car market ahead of the U.S., and is serving as an amplifier of losses and gains. Markets with considerable growth potential, such as Brazil and Russia, are collapsing, and it is hard to see what will be the next Promised Land for American SUVs, Japanese compact cars and French or German sedans.
The industry has a lot riding on Iran, but the opening-up of the Iranian market will be a lengthy and complicated process; the situations in Venezuela, Nigeria and Thailand are sore reminders that the car market is highly political.
As the epitome of middle class comfort, the car as a means of mobility is seen as a basic need (even though Maslow did not include it in his hierarchy of needs). No matter the state of the roads, the decision to purchase a vehicle is a natural process when people have children or live too far away from their place of work.
The user society is not a new concept in the car market: rental services, carpooling, taxis (and cars with drivers) have already attempted to thwart the sector’s unrelenting drive forward. Yet somehow the growth engines always fire up.
“I will build a car for the great multitude […], after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one — and enjoy with his family the blessing of hours of pleasure in God's great open spaces.” – Henry Ford, My Life and Work
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