Sales Forecasts

Edmunds: Dealers looking to ‘thin’ inventory this Black Friday

 SANTA MONICA, Calif.  - 

As dealers across the country gear up for what is arguably one of the biggest car shopping holidays of the season, the team at Edmunds announced they anticipate near record deals on new cars this upcoming Black Friday.

Edmunds experts shared they expect this year's post-Thanksgiving car shoppers to find some of the “best deals in years.”

What’s pushing these bargains? It has a lot to do with incentives trends.

"Incentives reached near-record levels in October, so we expect automakers to continue to sweeten savings as the year winds down," said Jessica Caldwell, director of industry analysis at Edmunds. "With slower sales of 2017 model year vehicles, automakers and dealers are more likely to leverage fully the Black Friday holiday as an opportunity to thin bloated inventories to make room for 2018 models."

According to Edmunds research, Black Friday accounts for 15 percent of total November car sales. And for dealers, it’s a busy time of year — their traffic roughly doubles during big holidays sales weekends.

Although it will be interesting to see how Black Friday vehicle sales turn out this year, as normally busy holiday weekends earlier in the year were calmer than usual.

For example, according to data from Cox Automotive brands Dealer.com and Dealertrack, Columbus Day weekend car shopping activity took a downturn this year.

This past Columbus Day weekend, Dealer.com’s DataView saw a 5-percent drop in visits and a 1-percent drop in vehicle views compared to the six prior weekends. That said, earlier in the year Presidents Day and Memorial Day saw shopping activity go up by single and double digits, respectively, on Dealer.com dealership websites. 

Even back in October, industry experts were commenting on high incentives, and how the industry has struggled to create additional demand.

“We’re seeing OEMs continue to put a lot of incentive money out there. Inventories in terms of dates and supply are still quite high, so I think there’s been a pretty consistent push for serval months on getting additional demand out there,” Cox Automotive product analytics senior director James Grace said in a phone interview with AuSM in October.

We will just have to wait and see if recent efforts from OEM and dealers come to fruition this upcoming Black Friday.

3.2 Million used-car sales likely for October

CARY, N.C.  - 

Used-vehicle retail sales have continued tracking at an annual pace near 39 million units, according to a sales forecast released this week by Edmunds. 

The company is projecting 3.2 million used-car sales for October, which would be even with September.

The seasonally adjusted annualized rate for used sales in October would be 38.9 million units, up slightly from the 38.8 million-unit annual pace last month, Edmunds said.

In other analyses, Cox Automotive pegged the September used-car SAAR at 40.4 million, up from 38.1 million in August.

Through nine months of the year, used retail sales were beating year-ago figures by 2 percent, a Cox Automotive spokesperson said in an email earlier this month. The company is forecasting 39.1 million used retail sales for full-year 2017, he said.

In an analysis, Cox Automotive estimates that there was an 8-percent year-over-year hike for used-car sales in September. 

Additionally, Cox Automotive’s data shows a 5-percent increase year-to-date in sales of used cars less than 4 years old through September — and this group has the biggest share of the pre-owned market, the analysis indicates.

One slice of that later-model volume is certified pre-owned cars.

With the best third quarter ever and a sales increase of more than 6 percent in September, the certified pre-owned market passed the 2-million unit sales mark for the year, according to Autodata Corp. 

The market remains ahead of the 2016 pace by one percent, meaning another record year is likely in the works. 

Autodata said there were an estimated 221,902 certified vehicle sales in September, which beat year-ago figures by 6.6 percent.

This capped a record third quarter, where dealers moved 679,367 units.

In addition to besting Q3 2016 figures by 0.5 percent, it was the strongest third quarter on record and the second-best quarter ever for CPO sales, according to Autodata. 

The best?

The second quarter of 2017, which was 2.1-percent stronger than the most recent period.

With consecutive strong quarters on the books, the CPO market has now tallied 2.02 million sales for the year, which beats the first nine months of 2016 by 1.0 percent.

 

September used sales not expected to see Labor Day or storm-damage lift

IRVINE and SANTA MONICA, Calif. - 

Activity over Labor Day weekend and the need for replacement vehicles destroyed by Hurricanes Harvey and Irma evidently aren’t going to push used-vehicle retail sales higher this month.

Edmunds analysts said an estimated 3.19 million used vehicles will be sold in September for a seasonally adjusted annual rate (SAAR) of 38.8 million. Those projections are a bit off from what Edmunds reported for August:  3.33 million unit sales or a SAAR of 39.0 million.

On the new-car side, the projection is a bit rosier.

Edmunds forecasts that 1,435,375 new cars and trucks will be sold in the U.S. in September for a SAAR of 17.5 million with fleet transactions accounting for 14.0 percent of total sales. This is the highest SAAR so far in 2017. The previous highs were set in January and February, which both had a SAAR of 17.3 million.

Edmunds added this rate reflects a 2.9-percent decrease in sales from August but a 0.4 percent increase from September of last year.

Edmunds analysts say this slight year-over-year increase is due in part to automakers pumping up the deals over the Labor Day holiday; typically, auto sales over Labor Day weekend are 33 percent higher than the average first weekend of a month.

“Labor Day weekend got September auto sales off to strong start,” said Jessica Caldwell, Edmunds executive director of industry analysis. “Automakers are finally starting to dial up the incentives to clear excess inventory, which we anticipate will continue through the rest of the year.”

Edmunds added that September new-model sales are also expected to get a slight lift from buyers who needed to replace vehicles that were destroyed in the recent hurricanes.

“We anticipate that the recovery from the recent hurricanes will give vehicle sales an incremental boost in September, and will likely continue to slightly lift the market in the months to come,” Caldwell said. “When you have hundreds of thousands of people affected by an event of this magnitude, not everyone will hit the market at once.”

The team at Kelley Blue Book is offering a similar new-car sales projection for September.

New-vehicle sales are expected to rise 1 percent year-over-year to a total of 1.44 million units in September, resulting in an estimated 17.5 million SAAR, according to Kelley Blue Book.

“September will be another opportunity for the first sales increase of the year, as we project slight growth for the industry,” Kelley Blue Book analyst Tim Fleming said.

“While major hurricanes devastated parts of Texas and Florida in the past month, this is driving replacement demand for those drivers with vehicles destroyed,” Fleming continued. “This demand has already started in some areas, but will continue into October and potentially November, as vehicle insurance payouts are received.”

Most consumers are likely to shop used, but with used prices trending upward recently, Kelley Blue Book pointed out some used buyers may opt to purchase new.

In addition, many automakers are offering hurricane relief incentives of up to $1,000. In these areas, car segments are likely to be shopped more, as these vehicles are the most affordable and in plentiful supply. Nationally, demand is still shifting steadily toward SUVs.

Other highlights from KBB’s September sales forecast include:

• In September, new light-vehicle sales, including fleet, are expected to hit 1,440,000 units, up 0.7 percent compared to September 2016 and down 2.6 percent from August.

• The SAAR for September 2017 is estimated to be 17.5 million, down from 17.6 million in September 2016 and up from 16 million in August.

• Retail sales are expected to account for 85.8 percent of volume in September, up from 85.3 percent in September 2016.

After a record year of sales in 2016 and seven consecutive annual increases, Kelley Blue Book’s forecast for 2017 calls for sales in the range of 16.8 and 17.3 million units, which represents a 1 to 4 percent decrease from last year.

Harvey numbers: 49 inches of rain, 366K new models potentially impacted

CARY, N.C. - 

With now Tropical Storm Harvey taking at aim at Louisiana and other locations inland after dumping 49 inches of rain near Houston, experts from Cox Automotive and Edmunds are looking to project how much this natural disaster is going to impact vehicle sales.

Meanwhile, the National Independent Automobile Dealers Association is organizing a fundraising effort to help people impacted.

Perhaps Edmunds executive director of industry analysis Jessica Caldwell summed up the entire situation when she stated, “Harvey is an unprecedented storm and it’s going to take time to fully comprehend exactly how much it will impact the automakers.

“Texas is the second largest auto market in the U.S. so an event of this magnitude is going to make a dent in sales,” Caldwell continued. “Edmunds estimates 2 percent fewer vehicles will be sold in August due to Harvey, with declines likely continuing into early September.

“In subsequent months we’ll likely see a slight localized bump in sales as the recovery takes hold and people are able to buy replacement vehicles,” she added.

Edmunds estimated there are approximately 366,000 new vehicles on dealer lots in Texas that could be affected by Harvey. Caldwell pointed out many of these vehicles are high-profit trucks and SUVs, “so the automakers will feel a slight pinch, at least in the immediate term.”

Edmunds projected there are between 150,000 and 200,000 units of new inventory that could be affected in the areas hardest hit by Harvey in the Texas cities of Austin, Beaumont, Port Arthur, Corpus Christi, Houston and San Antonio.

Edmunds added that Texas makes up 9 percent of U.S. retail sales and is the No. 1 truck market, accounting for 14 percent of all full-size truck sales so far this year.

To put that metric into perspective, analysts tabulated one out of every five vehicles sold in Texas so far in 2017 was a full-size truck.

Texas is the top sales market for Ford, RAM, GMC, Cadillac and Mitsubishi, according to Edmunds’ data.

Over at Cox Automotive, chief economist Jonathan Smoke uncovered information throughout the company’s portfolio of service providers, including Autotrader, Dealer.com, Dealertrack, Kelley Blue Book, Manheim, NextGear Capital, vAuto and Xtime.  As a result, Smoke indicated Cox Automotive revised its August new-model forecast of 16.6 SAAR to 16.3, based on the hurricane and its aftermath delaying the turns of 20,000 to 40,000 new vehicles.

“However, September will likely get a mild boost from delayed purchases and the beginning of the market’s recovery, driven by the need to replace damaged vehicles,” Smoke said. “That process will likely last months, pushing higher sales in the region in 4Q. We are looking at impact to full-year SAAR. Initial estimates indicate a potential net improvement on full-year sales once replacement sales pick up in earnest.”

Federal officials said on Tuesday that they obtained a reading of 49.32 inches of rain being recorded at a location southeast of Houston. Officials said Harvey is expected to produce additional rainfall accumulations of 6 to 12 inches through Friday over parts of the upper Texas coast into southwestern Louisiana as the storm is projected to move further inland into Tennessee, Kentucky and West Virginia this weekend.

“A Texas-sized storm requires a Texas-sized response, and that is exactly what the state will provide,” Texas Gov. Greg Abbott said. “While we have suffered a great deal, the resiliency and bravery of Texan’s spirits is something that can never be broken. As communities are coming together in the aftermath of this storm, I will do everything in my power to make sure they have what they need to rebuild.”

And NIADA is looking to help with the rebuilding effort.

The NIADA Foundation has established an emergency relief fund to provide a venue for members of the National Independent Automobile Dealers Association to assist fellow dealers and others in the automotive community devastated by the effects of Hurricane Harvey.

Steve Jordan, CEO of NIADA and president of the NIADA Foundation Board of Trustees, said 100 percent of all contributions received will be donated to provide relief from the effects of flooding, help repair property damage and assist with other disaster-related needs attributable to the catastrophic weather event that struck Houston and other areas along the Texas coast.

Jordan said the foundation's goal is to raise $100,000 for the fund.

Donations will be made in collaboration with the Texas IADA – NIADA’s state affiliate – and will be considered on a case-by-case basis as identified through the collaborative disbursement relationship.

“We are committed to helping our friends and colleagues in the automotive industry get through this trying time,” Jordan said. “Our thoughts and prayers go out to all those affected or displaced by this massive storm.”

The NIADA Foundation is a non-profit 501(c)(3) charitable organization that serves as the focal point of NIADA’s charitable efforts and coordinates the association’s charitable giving. Individuals can contribute by .

While region residents still are dealing with the storm, Smoke uncovered that they aren’t necessarily shopping for or taking delivery of vehicles.  

Since the storm came ashore this past weekend, Smoke noticed Dealer.com websites in the market have seen an almost 40-percent drop in vehicle shopping research compared to the previous weekends in August.

“This is a significant number as Dealer.com powers over 60 percent of dealer websites,” Smoke said.

Smoke noticed an even steeper drop in Dealertrack business within where Harvey dumped rain.

“Our Dealertrack credit application system has experienced a roughly 80-percent drop in activity in the affected area. Since most cars are financed, that’s an 80-percent drop in business since the storm came ashore Friday,” said Smoke, who also pointed out that 80 percent of U.S. franchised dealers use Dealertrack to submit credit applications electronically to finance companies.

Used-car sales picture for August, July

CARY, N.C. - 

There are likely to be fewer used-car sales this month than there were in July, but the seasonally adjusted annualized rate should stay in the neighborhood of 39 million units.

Edmunds released a forecast Thursday projecting 3.3 million used-car sales for August, which would be down from 3.4 million in July. The resulting used-car SAAR for August would be 39.0 million, down from 39.2 million in July, Edmunds said.

In a separate analysis on the used-car market, CompetitorPro found that average used-car sales per store at franchised dealerships in its database for July was 58.4 vehicles, with average days to sell at 35.3. The company had total used sales for franchised dealerships in July at 1.13 million.

For independent dealerships, the firm found that average used-car sales per store within its database was 185.3 in July, with average days to sell at 16.7.  Total used sales among independents was 166,400.

The data is based on internal VIN analysis on dealership websites (which are publicly accessible) by CompetitorPro. There were 19,307 franchised dealers in July’s data set and 898 independent dealers.

CompetitorPro counts individual franchises as separate dealerships.

VSC penetration forecast into 2024

CHICAGO - 

Colonnade Advisors offered quite a bullish forecast for the penetration level of vehicle service contract purchased by consumers that should make F&I managers and VSC providers smile now and seven years down the road.

The boutique investment bank and registered broker dealer providing investment banking services to F&I firms and other financial services companies released a new white paper that showed the macro fundamentals in the VSC industry are “compelling,” and the industry demonstrates growth, strong margins and recurring cash flow. Analysts computed the industry already totals $33 billion at the retail level and comprises a large and important component of automotive sales and profitability.

“New entrants and consolidators should enjoy industry tailwinds for several years,” Colonnade Advisors said in the white paper.

The firm highlighted the market size of the “sweet spot” for aftermarket VSC sales is estimated to continue to grow and cyclically peak in 2024. Despite the recent dip in new-vehicle sales, analysts insisted the market for the purchase of VSCs to cover following the expiration of an OEM warranty is increasing.

Colonnade Advisors estimated 85 million vehicles had a VSC attached in 2016 with the penetration growing to 108 million vehicles by 2024.

The white paper pointed out that consumer demand for VSCs is significant. Authors cited other studies that stated an estimated 46 percent of Americans do not have cash on hand to pay for an emergency expense of $400 or more.

“As the average age of vehicles increases and drivers hold their cars longer, the need for protection plans is increasing,” the firm said.

“These vehicles typically outlive their OEM warranties and have higher maintenance needs, creating demand among consumers that are increasingly accustomed to buying vehicle protection products,” the firm continued.

“Dealership margins remain under pressure, and F&I products provide significant profitability,” Colonnade Advisors went on to say.

Analysts went on to discuss another element of the VSC space, insisting the pace of mergers and acquisitions is increasing. Why? Colonnade Advisors noted demand from investors, low interest rates and availability of capital.

“Private equity is attracted to the industry by its high margins, strong cash flow, fragmentation and growth and making platform and add-on acquisitions to existing portfolio companies,” the firm said. “More and more, industry participants are considering vertically integrating, potentially disrupting market dynamics among the pure plays.

“Administrators, seeking to grow revenues and improve margins, are acquiring to increase and protect product distribution, improve scale and capture more of the value chain,” the firm continued.

“Sellers and administrators are bringing the payment plan function in-house. Insurance companies, looking to preserve books of business or enter the industry, seek the acquisition of administrators,” the firm went on to say. “Colonnade Advisors expects strong demand for well-run companies in this industry to continue.”

Colonnade Advisors’ entire white paper that explores trends, growth drivers and M&A in the VSC industry .

4 reasons why Latin America’s used market is ‘transforming’

BUENOS AIRES - 

New research shows the United States is a model for how used vehicles can be a profitable industry growth segment for other places in the world, including the use of certified pre-owned programs.

Strategic consultancy firm Frost & Sullivan cited four reasons why the used-vehicle market in Latin America is “transforming.”

While noting factors common in the U.S. marketplace, Frost & Sullivan projected the total used-vehicle market in Latin America will reach 22.4 million units in 2022, exhibiting a compound annual growth rate of 3.4 percent during 2016 through 2022. The four reasons for that sharp rise include:

—OEM collaboration with franchised dealerships in order to resolve informality and lack of financing, improve their brand image and equity, and increase new unit sales as customers can use their old vehicle as partial payment.

—Deployment of new apps, mostly in Mexico, Brazil and Argentina, which create opportunities for independent dealerships and individuals selling their vehicles.

—Online disruptors partnering with OEMs, dealerships and financiers to create shared value through data such as customer preferences and new-model reselling patterns

—OEM efforts to promote used hybrid and electric vehicles through certified pre-owned programs designed to ease battery life anxiety among buyers.

“The Latin American used-car market is primed for online disruptors that can offer financing, easy and friendly processes, and limited warranties and maintenance plans to differentiate and add value for customers," said Frost & Sullivan mobility industry analyst Hernan Cavarra.

“The focus of these startups will be to remain competitive on pricing by keeping operational costs low,” Cavarra continued. “Taking advantage of the learning curve from similar business models in the U.S. market, online businesses can expect success in the medium to long terms."

Frost & Sullivan also mentioned several innovative players are helping accelerate market growth in peripheral used-vehicle markets like Peru and Mexico that are “informal, unprofessional, and poorly regulated,” and in large markets like Brazil, where oversupply of new models due to an economic crisis and influx of low-cost Chinese units, restrain used-vehicle sales.

For instance:

—KAVAK offers end-to-end buying and selling of second-hand vehicles in Mexico along with the commitment of selling the vehicle offered by individuals within 30 days.

—InstaCarro.com has a disruptive business model that promises to sell any used vehicle in an hour and a half or less to any of more than 1,500 dealers that buy it through an online auction. In its first year of operation, the company reported more than $32 million in revenue.

—Localiza, one of Latin America’s biggest car rental companies, has a used-vehicle division that uses smartphone apps, offers good financing options by taking the customer's used unit as part of the transaction, and provides insurance and regular maintenance services.

—Superbid, which specializes in online auction sales, also offers fleets.

—Nissan Mexico offers almost-new and used vehicle eCommerce through its listing-driven website, and has a 154-checkpoint CPO program, financing, warranty, on-demand maintenance and services features, and original spare parts.

“Government regulations, OEM CPO programs, active participation in the market through franchise dealerships, and startup apps for 100 percent used-car sales processes will build trust among buyers and boost confidence in used cars,” Cavarra said.

to access more information regarding this Frost & Sullivan analysis.

July used sales expected to climb to 3.4M

CARY, N.C. - 

While it appears new-car sales are continuing to lose steam, Edmunds is projecting that used-vehicle sales in July should climb when compared to the previous month.

Edmunds is estimating that 3.4 million used vehicles will be sold this month, which would compute into an estimated seasonally adjusted annual rate (SAAR) of 39.2 million. For June, analysts had projected that used-vehicle sales would come in at 3.2 million.

Meanwhile, on the new-car side, Edmunds is forecasting that 1,423,097 new cars and trucks will be sold in the U.S. in July for an estimated SAAR of 16.9 million. This reflects a 3.1 percent decrease in sales from June and a 6.2 percent decrease from July of last year.

Edmunds also is estimating that retail SAAR will come in at 14.6 million vehicles in July, with fleet transactions accounting for 13.8 percent of total sales.                                                             

“July is historically a strong month, but with disappointing sales and inventories still building, something needs to give,” said Jessica Caldwell, Edmunds executive director of industry analysis. “A lot is riding on late-summer sales events to help move vehicles before 2018 models start arriving at dealer lots.

“Production slowdowns will help address some of the inventory issues, but consumers may be waiting for automakers to loosen the purse strings on incentives to get them to pull the trigger on making a purchase,” Caldwell continued.

The new-model sales projections are similar from Kelley Blue Book.

KBB is expecting new-vehicle sales to fall nearly 6 percent year-over-year to a total of 1.43 million units in July 2017, resulting in an estimated 16.7 million SAAR.

“The annual selling pace is expected to remain below 17 million SAAR in July, with volume dipping slightly from the levels seen in May and June 2017,” Kelley Blue Book analyst Tim Fleming said. “We’re in the midst of the steady summer sales months when new vehicles tend to stay relatively consistent after peaking during the Memorial Day weekend in May. 

“Kelley Blue Book expects to see sales start to jump back up again in August and September thanks to model-year closeouts and the Labor Day holiday,” Fleming added.

KBB pointed out that July would represent the fifth month in a row where the industry would post an under-17 million SAAR, the longest period since a six-month streak from September 2014 through February 2015.

After a record year of sales in 2016 and seven consecutive year-over-year sales increases, Kelley Blue Book's forecast for 2017 calls for sales in the range of 16.8 million to 17.3 million units, which represents a 1 to 4 percent decrease from last year.

Kelley Blue Book added that analysts expect full-size trucks will likely post the smallest volume decline of the major segments thanks to strong demand from consumers and small businesses.

“New home construction, and the real estate market in general, has been steadily improving and has even surpassed pre-recession levels in some parts of the country,” Fleming said. “A strong real estate market, especially with regard to new home construction, in conjunction with low fuel prices, generous incentives and improved product offerings will help to keep truck sales strong.”

Data analytics provider enhances reporting software to save dealers time & clicks

PLEASANTON, Calif. - 

Dashboard Dealership Enterprises has redesigned its business analytic reporting suite for increased functionality using input from dealer clients.

Executive Eye 3.0, the latest version of Dashboard’s flagship product, offers a variety of graphic display options designed to help dealers easily navigate the program.

New visual enhancements include updated colorful themes, more white space and increased organization.

"Reporting has always been clunky, time consuming; often it’s difficult for dealers to understand how numbers translate into actionable data," Dashboard Dealership Enterprises chief executive officer Josh Blick said in a news release. "Executive Eye 3.0 is a groundbreaking tool that completely changes the paradigm of how a business analytic reporting tool can be used. Instead of spending time compiling reports, managers instantly have actionable data at their fingertips."

In beta testing, Executive Eye 3.0 exhibited a 30 percent increase in dealership usage compared to an average usage of 2.0, according to Dashboard.

The suite’s direct messaging capabilities allow dealers to communicate directly with Dashboard's customer support and other users. The messaging tool’s reports, alerts and comments can all be shared without the need to compose emails outside of Executive Eye.

Additionally, Executive Eye’s Consolidated Doc report allows dealers to instantly combine documents from individual stores into a single report.

Dealers interested in performance comparison can also view key performance indicators from each of their stores side-by-side.

Executive Eye 3.0 is mobile-friendly across all platforms and devices. A mobile application download is not needed to access the software on a mobile device.

Consulting firm discusses ‘used-car time bomb’

DETROIT - 

The newest report from AlixPartners — whose client roster includes corporate boards and management, law firms, investment banks and other kinds of investors — cautioned the industry that a “used-car time bomb” is about to explode.

AlixPartners explained that it arrived at that dire assertion through a project that began two years ago through what the firm identified as the “CASE” trends that are “completely revolutionizing” the automotive industry — the connected, autonomous, shared and electric vehicles of the not-too-distant future.

AlixPartners released this analysis detailing how automakers, suppliers and other industry players need to evolve their organizations and their partnering approaches to successfully transition to a “new automotive ecosystem.” 

Using several examples, the firm detailed where companies, often relying on traditional auto-industry approaches, are falling behind and why they should consider revamping their operating models. 

The report projected a significant downturn in U.S. new-vehicle sales ahead, to 16.9 million light-vehicle units this year and to a cyclical trough of 15.2 million units in 2019 — partly driven by a “used-car time bomb” of 500,000 more off-lease vehicle-returns in 2017 versus 2016, on top of the 500,000 more units in 2016 versus 2015.

The reports noted these trends will likely be a “double-whammy” to new-vehicle sales, displacing turns to cheaper used vehicles while increasing lease payments on new vehicles as leases get written with anticipated higher residual rates and tighter credit standards.

While dealerships might be turn more used vehicles, AlixPartners also mentioned that as more off-lease vehicles fill the wholesale market, firm analysts are projecting that used-vehicle prices will soften at a rate double the 13-percent drop they believe already has happened since 2014, costing captive finance companies up to $5 billion. 

Beyond just the growth in off-lease volume, AlixPartners spent much effort on looking at how vehicle technology is going to impact which models might roll over the curb more quickly and which ones might need a spiff to get delivered.

On the connectivity front, the AlixPartners analysis pointed to the example of Tesla’s “high-spec” center-stack display, featuring over-the-air upgrades from the company and iPad-like features. Though this feature has been on the market since the 2012 model year, and has garnered strong reviews from consumers, AlixPartners noted that no other major automaker has moved to match the system.

On the autonomous-vehicle front, the AlixPartners analysis found there are now more than 50 major companies now working on autonomous vehicles or full autonomous-vehicle systems, as well as a plethora of smaller companies and start-ups. This “Wild-West” environment will likely result in a handful of big winners, according to the study, but on the other hand, also many disappointed investors. 

The report also mentioned that many of the newer high-tech entrants have completely different “DNAs” than traditional automotive companies, including being used to high returns on capital. Given the “white-hot” competition brewing, the analysis predicts that AV systems-costs could drop 78 percent by 2025. 

On the shared-mobility front, the analysis included a survey of a total of 2,000 U.S. adult consumers that showed just how fast things are changing in today’s automotive world.

The survey polled 1,000 consumers across 10 large markets where both car-sharing and ride-sharing are popular (the metro areas of Austin, Texas, Boston, Chicago, Los Angeles, Miami, New York, Portland, Ore., Seattle, San Francisco, Oakland, Calif., and Washington, D.C.) and, as a control group, 1,000 respondents across the entire U.S. This effort mirrored a consumer survey by AlixPartners in November 2013.

In this year’s survey, consumers in the 10 trend-setting markets said their awareness for virtually all major car-sharing brands (names such as Zipcar, Car2Go and Enterprise CarShare) has decreased, and 21 percent of respondents were unable to name any brands at all. 

By contrast, this year’s survey also asked users of ride-sharing (brands like Uber and Lyft) in those same 10 markets about their intended usage in the next 12 months versus their past usage, and 24 percent said their usage would be more than in the past, versus just 5 percent who said less — an 18-percentage-point difference.

Meanwhile, AlixPartners said just 17 percent of car-sharing users surveyed in those markets said they would employ car-sharing more in the coming 12 months than in the past — versus 16 percent who said they would use that mobility service less in the year ahead.

Moreover, among respondents in the 10 markets, the survey found that ride-sharing was five times more likely to be a top-three transportation mode than was car-sharing (11.6 percent versus 2.5 percent), and three times more likely than traditional taxis (11.6 percent versus 4.2 percent).

In addition, among millennials surveyed in the key markets, 9 percent said ride-sharing has allowed them to postpone or avoid getting a driver’s license — what AlixPartners contends is another indicator of today’s fast-changing times.

Another key finding of the survey, coupled with AlixPartners analysis, is that in the 10 key markets each vehicle used in car-sharing is likely replacing the need for 19 personal vehicles — a decrease from 32 vehicles based on the results from AlixPartners’ 2013 survey.

Meanwhile, according to the same analysis, one vehicle used in ride-sharing is likely displacing four personal vehicles. The report went on to note that both ride- and car-sharing vehicles are typically replacing vehicles driven less than 5,000 miles per year, not typical commuting vehicles.

On the electrification front, the AlixPartners study reveals that China is investing heavily to take a leadership role in electric vehicles. In an example of that, the report noted that Chinese automakers commanded 96 percent of the 2016 market in China for full electric vehicles (not including hybrids), more than double their share (43 percent) for all types of light vehicles. It also finds that of the 103 EVs to be launched globally by 2020, 49 of them will come from China-based automakers.

The report additionally predicts that China is targeting to have two-thirds of the world’s manufacturing capacity for lithium-ion batteries by 2021 (175 GWh of power, or the equivalent of five Tesla “giga-factories”).

Meanwhile, the report recapped that hybrid sales in the U.S. have slowed, from 3.2 percent of the market in 2013 to just 2.1 percent so far in 2017, while plug-in and battery-electrics sales, while increasing, still represent only 1.0 percent of the market. This, says the study, underscores the need for maximum flexibility in both organizations and partnerships to handle the expected, but bumpy, shift to the new automotive ecosystem that’s coming.

Finally, and also in a way on the partnership front, the AlixPartners study determined that private-equity firms have switched, in droves, from being buyers to sellers — most often to “strategics” (companies in the auto industry already), as private-equity-to-strategics deals skyrocketed from 6 percent of total auto-M&A transaction values in 2013 to 84 percent in 2016.

John Hoffecker, global vice chairman at AlixPartners and a 30-year automotive veteran, said, “There’s an all-new automotive ecosystem developing, and I fear that many players really aren’t prepared for it. The changes coming are the biggest since the internal-combustion engine pushed aside horses and buggies, yet what the exact changes will be are as unpredictable as trying to guess which app is going to be most popular on next year’s smartphones.

“Leading players will be those that both study hard and are fast on their feet,” Hoffecker continued.

Mark Wakefield, global co-head of the automotive and industrial practice at AlixPartners, added, ”With the rapid but uncertain developments in connectivity, autonomy, shared mobility and electrification, traditional approaches to partnering and running organizations could well be setting up the auto industry to be disrupted. 

“Fast and savvy organizations that build their own agile ecosystems and create smart partnerships, but without locking themselves into technologies that may become quickly outdated, will be best positioned to afford the needed ‘CASE’ investments of the future and to prosper from the coming industry changes rather than being rolled over by them,” Wakefield went on to say.