crossover and EV trends
06-15-19, 06:14 PM
#1
Lexus Champion
Thread Starter
crossover and EV trends
According to this study, our infatuation with light trucks (crossover and sport utility vehicles), with more and more new (redundant?) models being introduced, is getting out of hand and will not be sustainable.
Source
The annual "Car Wars" report says an over-saturation of the market could precipitate a 30-per-cent drop in sales by 2022
Automakers may be following the money as they focus their attention on sport-utilities and crossovers, but market saturation is sending them toward the edge of a steep cliff, with dwindling profit margins and a 30 per cent decline in auto sales expected by 2022.
That’s according to the recently-released “Car Wars” report from Bank of America Merrill Lynch.
The annual report looks four years into the future of profitability and market share. The new report looks at the 2020 to 2023 model years.
During this period, automakers are expected to launch 246 new or significantly updated vehicles—an average of 62 per year, versus the average 40 per year released annually in the 2004 to 2019 model years. Traditionally, automakers grab a larger piece of the market with new models.
Seventy per cent of those will be crossovers, sport utilities or light trucks, compared to 24 per cent of cars. The report suggests that with so many flooding the market, these traditionally high-profit vehicles will drop to the much-lower profitability level of cars. Crossovers run the highest risk, with 149 nameplates by the 2023 model year, 25 per cent more than for cars and trucks.
The Korean automakers’ rate for replacing its models over the next five years is above the industry average, but will continue to place more emphasis on passenger cars. Along with Hyundai and Kia, Ford will replace the most number of models for 2020 to 2023, while Fiat Chrysler, General Motors and Volkswagen will have the lowest replacement rates.
The study said that alternative-fuel vehicles, including electric and hybrid vehicles, will remain limited as their development costs continue to keep their prices higher than conventional vehicles.
U.S. auto sales softened in 2016 and will continue to drop, the study said, reaching a decrease of nearly 30 per cent by 2022—although it expects a recovery after that.
Speaking to the Automotive Press Association in Detroit, John Murphy, research analyst for Bank of America Merrill Lynch said, warned that automakers shouldn’t lower their prices to tempt customers, as they did from 2007 to 2009 in response to the economic crisis. They’ll only be able to invest in new technologies if they keep their vehicles profitable—and if they don’t, they risk falling behind new competitors, such as Silicon Valley tech companies.
Murphy also said private car ownership will continue. Although vehicles are expensive, the cost-per-mile to operate a new one is about US$1.00 per mile, versus $4.00 to $6.00 per mile for taxicabs or ride-hailing services such as Uber or Lyft, and that “it’s a very difficult thing to believe there will be that mass substitution.”
Automakers may be following the money as they focus their attention on sport-utilities and crossovers, but market saturation is sending them toward the edge of a steep cliff, with dwindling profit margins and a 30 per cent decline in auto sales expected by 2022.
That’s according to the recently-released “Car Wars” report from Bank of America Merrill Lynch.
The annual report looks four years into the future of profitability and market share. The new report looks at the 2020 to 2023 model years.
During this period, automakers are expected to launch 246 new or significantly updated vehicles—an average of 62 per year, versus the average 40 per year released annually in the 2004 to 2019 model years. Traditionally, automakers grab a larger piece of the market with new models.
Seventy per cent of those will be crossovers, sport utilities or light trucks, compared to 24 per cent of cars. The report suggests that with so many flooding the market, these traditionally high-profit vehicles will drop to the much-lower profitability level of cars. Crossovers run the highest risk, with 149 nameplates by the 2023 model year, 25 per cent more than for cars and trucks.
The Korean automakers’ rate for replacing its models over the next five years is above the industry average, but will continue to place more emphasis on passenger cars. Along with Hyundai and Kia, Ford will replace the most number of models for 2020 to 2023, while Fiat Chrysler, General Motors and Volkswagen will have the lowest replacement rates.
The study said that alternative-fuel vehicles, including electric and hybrid vehicles, will remain limited as their development costs continue to keep their prices higher than conventional vehicles.
U.S. auto sales softened in 2016 and will continue to drop, the study said, reaching a decrease of nearly 30 per cent by 2022—although it expects a recovery after that.
Speaking to the Automotive Press Association in Detroit, John Murphy, research analyst for Bank of America Merrill Lynch said, warned that automakers shouldn’t lower their prices to tempt customers, as they did from 2007 to 2009 in response to the economic crisis. They’ll only be able to invest in new technologies if they keep their vehicles profitable—and if they don’t, they risk falling behind new competitors, such as Silicon Valley tech companies.
Murphy also said private car ownership will continue. Although vehicles are expensive, the cost-per-mile to operate a new one is about US$1.00 per mile, versus $4.00 to $6.00 per mile for taxicabs or ride-hailing services such as Uber or Lyft, and that “it’s a very difficult thing to believe there will be that mass substitution.”
06-15-19, 07:39 PM
#2
Lexus Fanatic
our infatuation with light trucks (crossover and sport utility vehicles), with more and more new (redundant?) models being introduced, is getting out of hand and will not be sustainable.
No arguments there. Agree completely.
06-15-19, 07:51 PM
#3
Lexus Fanatic
iTrader: (20)
It’s simply supply and demand. Everyone wants a growing piece of what’s hot right now (utility vehicles, crossovers and trucks) and so the supply continues to grow there. At some point the supply will be too much and not all models can be successful so there will be a bunch of product sitting on lots, then the incentives come on, profitability for all shrinks, and the whole industry suffers. I don’t get where the ‘30 percent’ decline comes from... is that 30% less than today?
06-15-19, 11:40 PM
#4
I think that some of the concern for near future overcapacity is driving the cutbacks and layoffs at Ford and GM. The prediction that crossovers will become no more profitable than sedans is probably correct, but the companies have to ride the wave as it currently exists to have enough reserves to survive the coming downturn. The next "big thing" is obviously electric cars and there is a big change required to be ready. The car companies have a big issue coming, but they are likely better positioned than Exxon or Shell.
06-16-19, 03:03 AM
#5
Lexus Fanatic
The push to electric vehicles, though, is more politics/regulation and governmental action than actual consumer choice. And, California has found out, more than once, that simply legislating electric-car sales does actually produce those sales. Consumers, despite legislation, cannot be forced to buy them.
06-16-19, 08:10 AM
#6
Lexus Fanatic
iTrader: (20)
The push to electric vehicles, though, is more politics/regulation and governmental action than actual consumer choice. And, California has found out, more than once, that simply legislating electric-car sales does actually produce those sales. Consumers, despite legislation, cannot be forced to buy them.
06-16-19, 09:05 AM
#7
Lexus Fanatic
Anyone who voted to put a 50% tax on gasoline cars would almost certainly be voted out of office at the next election. Even Bernie Sanders or Alexandria-Ocasa-Cortez would have a lot of trouble surviving that.
Not only that, but, outside of CA, one will not find a relatively widespread network of electric-charging outlets. Not every person owns a home with a garage or other close-by electric-outlet....and standard 110 volt outlets usually take the better part of a whole night to recharge. 220V outlets do it in a couple of hours, and the advanced 400V outlets in about 20 minutes. But those more-powerful outlets are also harder to find or come by......you essentially have to take your vehicle to the rechargers at the dealership.
Last edited by mmarshall; 06-16-19 at 09:11 AM.
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06-16-19, 10:18 AM
#8
The EV revolution is on it's way. Every auto maker is readying multiple models to be released in the next few years. Charging stations will pop up like weeds all over the country. The biggest issue at the moment would be battery supply. It will be interesting to see how the public accepts EV's. Judging by how well Tesla is doing I think it will be big.
06-16-19, 12:26 PM
#9
Lexus Fanatic
The EV revolution is on it's way. Every auto maker is readying multiple models to be released in the next few years. Charging stations will pop up like weeds all over the country. The biggest issue at the moment would be battery supply. It will be interesting to see how the public accepts EV's. Judging by how well Tesla is doing I think it will be big.
In Europe electrics will likely be much bigger because the gov. is forcing them their populations(like they basically did with Diesel's, how well did that work), maybe China, Japan but even then they don't have the electrical grids to suddenly be able to handle the millions of electric vehicles being charged daily/nightly.
06-16-19, 01:16 PM
#10
Lexus Champion
06-16-19, 01:21 PM
#11
Lexus Fanatic
iTrader: (20)
California lawmakers pass bill to phase out fossil fuels by 2045 - 72 percent of residents support the state's switch to fully green energy.[
https://www.engadget.com/2018/08/30/...il-fuels-2045/
https://www.engadget.com/2018/08/30/...il-fuels-2045/
and standard 110 volt outlets usually take the better part of a whole night to recharge.
charging is improving, availability is improving, batteries are improving, efficiency is improving... all at rates vastly more than gasoline cars. and with nearly 500 EV companies in china alone, the trend is overwhelming and unstoppable. i will seriously consider an EV for my next vehicle. if i have range anxiety for a really long trip, i'll rent something.
Last edited by bitkahuna; 06-16-19 at 02:02 PM.
06-16-19, 01:50 PM
#12
You're talking about the present, I'm referring to the future. Do some research.
06-16-19, 02:17 PM
#13
Lexus Fanatic
Originally Posted by bitkahuna
well that's WAY off. a tesla charges at about 3-4 mi. range per hour of charging on a 110 outlet, so an 8 hour night of charging will only add 30mi. of range.
Yes, I wasn't implying otherwise. I was refering to a full-recharge, on most electric vehicles, which traditionally has taken longer with 110V outlets. Teslas do have more advanced batteries and rechargers, but many other electric vehicles don't have the Tesla's range or battery-capacity.
charging is improving, availability is improving, batteries are improving, efficiency is improving... all at rates vastly more than gasoline cars. and with nearly 500 EV companies in china alone, the trend is overwhelming and unstoppable. i will seriously consider an EV for my next vehicle. if i have range anxiety for a really long trip, i'll rent something.
Florida's warm climate, of course, also contributes to battery-range and life, though what effect the generally high humidity will have on the metallic components remains to be seen.
06-16-19, 02:31 PM
#14
Lexus Fanatic
Murphy also said private car ownership will continue. Although vehicles are expensive, the cost-per-mile to operate a new one is about US$1.00 per mile, versus $4.00 to $6.00 per mile for taxicabs or ride-hailing services such as Uber or Lyft, and that “it’s a very difficult thing to believe there will be that mass substitution.”
Back on topic (since this was part of the OP), that statement about cabs is quite significant. Cabs can, indeed, impact your wallet. I used cabs, a couple of times, after I had my knee-surgery and needed to get to PT, before the doctor and therapist cleared me to drive myself again (took between two and three weeks get that clearance) when my brother couldn't take me there or pick me up. Fortunately, $20-25 one-way ($45-50 round trip, including tips) twice a week, for a couple of weeks, while stiff, didn't send me to the poor house, but it's true that cabs are not chump-change. I liked the fact, that, at least, cabs now have credit-card machines built into the back seats tat make things easier and simpler.....even adding the tips.
But Murphy has a point. I simply can't imagine a world without private cars, even if it does become a reality.
06-16-19, 04:53 PM
#15
Lexus Champion
Thread Starter
It’s simply supply and demand. Everyone wants a growing piece of what’s hot right now (utility vehicles, crossovers and trucks) and so the supply continues to grow there. At some point the supply will be too much and not all models can be successful so there will be a bunch of product sitting on lots, then the incentives come on, profitability for all shrinks, and the whole industry suffers. I don’t get where the ‘30 percent’ decline comes from... is that 30% less than today?
The push to electric vehicles, though, is more politics/regulation and governmental action than actual consumer choice. And, California has found out, more than once, that simply legislating electric-car sales does actually produce those sales. Consumers, despite legislation, cannot be forced to buy them.
The EV revolution is on it's way. Every auto maker is readying multiple models to be released in the next few years. Charging stations will pop up like weeds all over the country. The biggest issue at the moment would be battery supply. It will be interesting to see how the public accepts EV's. Judging by how well Tesla is doing I think it will be big.