Outside of an earthshattering discovery in the time travel industry, the future remains a mystery. Yet, despite its elusiveness, we can make an educated guess by looking at current trends. The automotive industry in the United States has long been vital to both the economy and everyday life. For decades, pundits have written premature obituaries for the auto industry, only to have the future prove them wrong. Even without the benefit of time travel, we can take a look at some current trends and with some degree of confidence predict where the industry is headed.
Before we can take a look at the future, we must first examine the present. 2015 was a record year for new car sales, with unit sales reaching 17.5 million. Not only are new car sales achieving record highs, so are new car prices. The average price for a new car hit $33,560 in 2015, an all-time record. Even as new car sales grow, the American fleet is getting progressively older and less fuel efficient. According to Franchise Help, “The scrappage rate – the rate at which cars are taken off the road – has also been declining with only 11.4 million cars retired in 2014. Fewer cars are being unregistered, abandoned, or junked. In 2015, new vehicle registrations were greater than scrappage by 42% – the highest number recorded by the IHS.” Many Americans, being unable to afford a new car, are holding on to their clunkers longer.
Despite perpetual predictions of the auto industry’s demise, the number of vehicles on the road will continue to grow for the foreseeable future. According to Automotive News, sales could reach up to 20 million units in 2018. Despite this influx of new cars, the average age of the American fleet is expected to rise to 11.7 years old in 2017. In conjunction with this influx of new vehicles to the market, the consulting firm McKinsey and Company believes that new companies will emerge. According to a report, McKinsey predicts that “diverging markets will open opportunities for new players.”
While the number of new cars is likely to rise, the question becomes, what will these cars look like? Ultimately, successful automakers listen to the wants of the car buyer and design their vehicles based on these wants. A JD Power study found that potential car buyers identified fuel economy as the single most important factor when considering a new car purchase. Additionally, Car Talk believes “Americans do want it all, but they’ll settle for something affordable with good fuel economy, styling and image, in that order. Automakers: No bland meat-and-potatoes sedans—the public wants pizzazz.”
There is no definite way of knowing what the automotive industry will look like in the future, but by analyzing current trends, we can piece together a reasonable guess. In all likelihood, the industry will continue to grow in the coming years and new manufacturers are likely to enter the marketplace. If automakers listen to car buyers, these new vehicles will be affordable, fuel-efficient, and have distinct styling. While there is no way to know what the industry will look like with complete certainty, as new options present themselves, the next few years promise to be an exciting time for car buyers.