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What Will the Auto Industry Look Like in 2015?

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THE FUTURE
DailyFeed
A new study by the consulting firm Roland Berger dares to ask: What will the automotive industry look like in 2025?

My bet? Like this:



But, should flying cars fail to materialize, here’s what the study actually predicts:

There are three different scenarios for the future: a high-tech scenario, a budget scenario, and a sustainability scenario.

Under the high-tech scenario, consumers will enjoy cars fully equipped with all the gadgets by which we've become utterly enslaved. This includes “connectivity” applications to allow drivers to use social networking and web-based services, 24/7 service, and even “virtual reality,” whatever that means.

Under the budget scenario, consumers will have less purchasing power as a result of inflation, rising taxes, and little or no income growth. This will result in a “back to basics” approach so that cars can remain affordable. And booooooooooring.

Under the sustainability scenario, the Al Gores of the world have had their way and the automotive industry will be forced to comply with a range of environmental legislation aimed at curbing CO2 emissions, noise pollution, and boosting safety. The study posits that this will lead to rapid development of green (not necessarily just the color) cars.

Lastly, the study concludes the following broad based changes that will affect all players of the auto industry:

•A dramatic production & sales shift to the Asian markets will take place –quickly and permanently

•The Asia demand supports low-cost cars as an important entry point as well as A/B segment cars in general –This segment will also grow in mature markets, where values are changing

•Cars will lose their appeal for younger generations in developed countries. In major urban areas, car ownership will become unnecessary –Mobility ecosystems will provide cars on demand

•The cars in question will mainly be electric –50% will have a fully or partially electrified powertrain

•Many vehicles will be permanently online via the Internet –Connectivity will be key

•The automotive industry will converge with other industries –companies will engage in multiple partnershipsas a way of accessing technology and customers and securing economies of scale

•New business models and value chain partners will emerge, challenging the status quo, especially where they come from sectors other than the automotive industry

•Players will move away from centralized organizations in the pursuit of size and access to fresh sources of engineers and other specialists –they will begin to operate glo/cally

•Consolidation will continue among OESs–new OEMs are likely to emerge from different industries.

Of course, as is the case with any forward-looking study, actual results may vary.  For example, take this prediction about the auto-industry found in the US Congressional records of 1875:

"The dangers are obvious. Stores of gasoline in the hands of people interested primarily in profit would constitute a fire and explosive hazard of the first rank. Horseless carriages propelled by gasoline might attain speeds of 14 or even 20 miles per hour. The menace to our people of vehicles of this type hurtling through our streets and along our roads and poisoning the atmosphere would call for prompt legislative action even if the military and economic implications were not so overwhelming... [T]he cost of producing [gasoline] is far beyond the financial capacity of private industry... In addition the development of this new power may displace the use of horses, which would wreck our agriculture."
POSITION:  No positions in stocks mentioned.

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