The automobile industry surged ahead worldwide
in recent years, with particularly sharp growth in the U.S.
and China.
Analysts at IHS Automotive forecast the
global market at 98.2 million units for 2019.
Car sales within North American markets have
been running at very high rates.
Total
U.S.
car and light truck sales for 2019 are projected by National Automobile
Dealers Association (NADA) at 16.8 million units.
U.S.
car and light truck sales totaled 17.22
million units for 2018, according to NADA.
The biggest upward trend in auto sales has been
in China.
While estimates of its annual
unit sales vary widely, China has clearly become the world's largest car market
with about 23.5 million units sold in 2018.
However, China's sales are subject to change due to such factors as
economic growth, the availability of credit and the regulatory
environment.
China's government has a
great deal of control over the market, as, at any time, it may increase sales
by encouraging new auto loans, or decrease sales by adding new registration
fees or restricting traffic in major cities in order to reduce congestion and
pollution.
One of the biggest winners by far in today's
highly competitive automobile market has been Korea, where Hyundai, along with
its brand Kia, have enjoyed soaring global sales.
Consumers are attracted to their reasonable
prices, excellent warranties and world class quality.
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The automobile industry surged ahead worldwide
in recent years, with particularly sharp growth in the U.S. and China. Analysts at IHS Automotive forecast the
global market at 98.2 million units for 2019.
Car sales within North American markets have
been running at very high rates. Total
U.S. car and light truck sales for 2019 are projected by National Automobile
Dealers Association (NADA) at 16.8 million units. U.S. car and light truck sales totaled 17.22
million units for 2018, according to NADA.
The biggest upward trend in auto sales has been
in China. While estimates of its annual
unit sales vary widely, China has clearly become the world’s largest car market
with about 23.5 million units sold in 2018.
However, China’s sales are subject to change due to such factors as
economic growth, the availability of credit and the regulatory
environment. China’s government has a
great deal of control over the market, as, at any time, it may increase sales
by encouraging new auto loans, or decrease sales by adding new registration
fees or restricting traffic in major cities in order to reduce congestion and
pollution.
One of the biggest winners by far in today’s
highly competitive automobile market has been Korea, where Hyundai, along with
its brand Kia, have enjoyed soaring global sales. Consumers are attracted to their reasonable
prices, excellent warranties and world class quality.
There were approximately 278 million cars and
light trucks in operation in the United States, as of 2019. Around the world, there were about 1.24
billion cars and light trucks on the road in 2018.
Most major car makers are aggressively pushing
their crossover vehicles, which are an excellent compromise in design between
sedans and SUVs. They offer large
passenger and cargo compartments, good visibility and reasonably good gas
mileage. Crossovers are essentially
replacing sedans and some vans as the new family car. Ford, for example, is phasing out nearly all
of its sedans in its U.S. market, including the Taurus, so that it can
concentrate on its highly popular crossovers and pickup trucks. In sedans, Ford will offer only the Mustang
and the upscale Lincoln sedans.
Engineers are pushing technological changes in
their larger cars and light trucks in order to enhance their fuel
efficiency. An excellent example is the
launch of the Ford F150 full-size pickup truck that relies on the use of
aluminum body panels and advanced engine/transmission combinations to
dramatically reduce weight and improve mileage.
This truck has been selling in very large numbers in the U.S., as have
the Chevy Silverado and Chrysler Ram full-size pickups. Recent low gasoline prices have boosted this
trend. Roughly one-third of all light
vehicle sales in the U.S. were pickup trucks, as of 2019, with the Ford F-150
holding the greatest market share.
Considering the popularity of such trucks, it isn’t surprising that even
Tesla has announced its intention to launch an electric pickup.
At the same time, manufacturers are forced to
continue to invest in smaller, high efficiency vehicles due to government
mandates that they meet high average miles-per-gallon rules. Over the mid- to long-term, manufacturers
will emphasize hybrid and electric vehicles.
Honda, Volkswagen, Toyota, Hyundai, Nissan and Peugeot all have invested
in new, advanced small cars.
Most major luxury brands, such as Mercedes,
BMW, Lexus and Audi, have relatively small cars on the market and will steadily
introduce a wide range of fuel efficient designs, including electric and hybrid
vehicles. BMW introduced its iSeries
high efficiency all-electric, as well as hybrid cars.
Both VW and Toyota have announced very
aggressive investment in the design and manufacture of advanced hybrids and
electrics. These cars will be rolled out
globally over the next several years.
There have historically been strong sales for
Toyota’s Prius gasoline-electric hybrid car.
The company has also made investments that enable it to manufacture
hybrid versions of many of its popular models, including the Camry and several
models of the Lexus. Hybrids are
available from a wide variety of other makers as well, and technology has
steadily improved. Nonetheless, hybrids
remain a very small fraction of the overall car and truck market due to their
relatively high initial costs. Manufacturers
have a significant challenge ahead of them in order to produce hybrids and
electrics that will generate high demand from consumers. Better batteries with longer driving ranges
will be a big help. The automobile
industry is looking forward to the eventual development of advanced, long-range
batteries at much lower cost. Many of
the world’s top research organizations are working steadily on this challenge.
Meanwhile, the use of ethanol as a gasoline
additive in America has grown substantially over the long term, whether or not
it makes any environmental or economic sense, thanks to requirements enacted by
Congress. However, Congress recently
dropped its financial subsidies to ethanol.
The rising affluence of consumers in China has
been creating both huge opportunities and major problems. China has become the world’s largest user of
energy overall and one of the world’s largest importers of petroleum products,
partly to fuel its burgeoning fleet of cars and trucks. Streets and highways are clogged with
vehicles, to the extent that traffic and smog are nightmarish. Automakers from abroad have raced to
establish plants and partnerships in China.
India has also seen significant growth in its
automotive manufacturing in recent years, and its auto exports are
growing. India-based Tata now owns the
prestigious Jaguar and Land Rover brands.
Not to be overlooked are the vast changes
taking place in automobile manufacturing plants. Flexible factories have reduced man-hours and
cut costs per car, while offering a much wider range of choices for
customization by consumers. The wide use
of robotics, advanced factory software and lean inventory methods have
completely revamped the modern car factory.
Today, more than ever, car manufacturers and their suppliers are
cooperating in the design and manufacture of new cars in ways that are revolutionizing
the entire process. Bankruptcies at GM
and Chrysler in 2009 enabled these firms to shed debt, cut employees,
renegotiate contracts and dramatically reduce operating costs.
Inexpensive cars manufactured in China are now
on the market in many emerging nations.
The question is not whether China will export cars and trucks, but
whether consumers in advanced markets such as America will be convinced that
they offer safety and reliability.
Meanwhile, U.S. automakers have made intense demands on their component
suppliers for lower prices—these suppliers are, in turn, looking to low-cost
production in China, Mexico and elsewhere.
European manufacturers
are facing challenges of their own. High
costs, tough labor laws and daunting government regulations are constant
challenges to manufacturers in Europe.
Nonetheless, firms like Volkswagen and Daimler/Mercedes-Benz have found
great success in the global market over a period of many decades, often
locating plants in nations where their products sell well, including major
plants in the U.S.
The thought of the next
billion automobile owners/users is either the most intriguing or the most
terrifying vision for the near future, depending on how you look at it. Future global demand for cars could possibly
outstrip today’s levels, creating immense business
opportunities.
However,
the combination of car sharing strategies like ZipCar, ride sharing systems
like Uber and autonomous vehicles capable of driving themselves will have very
profound effects on automobile manufacturing, usage, sales and ownership
patterns. At least in dense urban
environments, the result is very likely to be a large proportion of individuals
who opt to use shared vehicles rather than user-owned cars.
Surveys show that many
young adults have little interest in owning a car of their own, which is vastly
different from the attitude that was held by previous generations. U.S transportation analysts reported that
only about 25% of 16-year-olds had a driver’s license in 2017, down from almost
50% in 1983. Car sharing is such a
strong trend that car rental giant Avis acquired Zipcar, a pioneer in this
area. Even major auto makers, like BMW
with its DriveNow program, are starting their own car sharing schemes, hoping
to develop strategies that are well in tune with changing consumer trends. Major automobile makers, when looking to the
future, talk in terms of delivering “mobility services” as much as automobiles,
while they consider the looming effects of car-sharing and ride-on-demand
services.
Car safety has made
dramatic progress in recent years, mainly by adopting technologies such as
backup cameras, anti-skid, advanced brakes and collision avoidance
systems. Now, all major car makers are
heavily invested in technologies that will enable cars to essentially drive
themselves.
The automobile and
heavy truck sectors are rapidly forging ahead with remarkable technologies for
self-driving (autonomous) vehicles. The
first step is vehicles that communicate with each other while utilizing
advanced technologies to safely stay in lanes, regulate speeds and apply
emergency braking. (This is referred to
as vehicle-to-vehicle communications, and is part of an overall digital strategy
known as ITS, or intelligent transportation systems.)
Automobiles have become high-powered computers
on wheels, as many automotive systems are now controlled by chips and
software. At the same time, auto makers
are finding innovative ways to use the latest in wireless and smartphone technologies,
including apps, to enhance the entertainment, information and communications
capabilities of vehicles. Automotive
“infotainment” has become a dominant theme.