Cleantech Market Intelligence
Detroit Auto Show Looks Ahead – Far Ahead
This year, the North American International Auto Show (NAIAS, a.k.a. the Detroit auto show) provided what I think is an interesting metaphor for the auto market of the future. I’m not talking about the variety of prototypes and next-generation drivetrains – that’s the auto market within the next decade. I’m talking about some of the trends in the show that point to what the auto market will look like in 30 to 50 years. And it will look a lot different.
While Ford’s all aluminum F-150 was definitely the talk of the show, sharing the spotlight with the new Corvette Z06, many of the other introductions and prototypes were focused on two main segments. There were a number of introductions in the luxury (including new BMW M cars, Mercedes C Class and S-Class coupe, Cadillac ATS coupe, and a Hyundai large sedan) and sports car (the Z06 was joined by a new Porsche 911 Targa, Ford Mustang, and Kia and Toyota concepts) segments. Other niche vehicles and concepts introduced included the Subaru WRX STI and VW Beetle Dune.
Interestingly, the fervor for electric vehicles that was shown in 2011 and 2012, yet largely disappeared in 2013, showed a few new signs of life in 2014. Audi showed the E-Tron shooting brake and the BMW i3 and i8 took a much more prominent place in the BMW press. But what I thought was particularly interesting was the fact that some of the biggest highlights were vehicles in niches (granted, the F-150 and pickups in general are a large niche in America, but a niche nonetheless).
So, what does all this tell us about the auto market of the future? To oversimplify a bit: niche vehicles will become even more critical to automakers’ future fortunes as peak cars increasingly become the norm. Almost immediately following the NAIAS, the University of Michigan Transportation Research Institute released an update of their report, Has Motorization in the U.S. Peaked? Part 4: Households Without a Light-Duty Vehicle, which finds that the number of households in the United States that are carless has increased by 0.5% since 2007 (reaching 9.2% in 2012). In fact, the Detroit metro area, home of the NAIAS and most U.S. automakers, has seen a 5% increase in carless households. Additionally, J.D. Power is reporting that those 25 and younger make up 6% of the total auto market and that these consumers are more likely to “like their vehicle to stand out from the crowd,” “like to drive on challenging roadways with hills and curves,” and “take pride in ownership,” which sounds to me like a recipe for niches like luxury, sports cars, and other specialty vehicles.
So, looking ahead 30 years or so, I foresee a market where cars could be much more profitable (while less numerous) and where cars are not the primary source of transportation for commuting, but rather, something more akin to a hobby or a status symbol.