ARE you preparing for a 40% collapse in global auto sales by 2040? Are you instead, both privately and publicly, burying your head in the sand because 2040 seems too far away to even begin to think about?
But this Barclays Investment Bank scenario for a possible 40% collapse in auto sales by 2040 doesn’t of course mean that by the end of January of that year, data will emerge showing a sudden collapse in sales by that very amount. This would be a gradual process, and a process that might move faster than the Barclays scenario.
What Barclays are referring to is the impact of the rise of shared autonomous-driven vehicles, where it will be possible to for example summon a computer-driven car from an App on your smartphone, or on your Google Watch etc.
Why waste all that money buying your own car to see it instantly and rapidly depreciate as soon as you drive it off the dealership forecourt, only for it to then sit in your garage unused for more than 90% of the time?
Autonomous-driven vehicle companies, aided by the vast improvements in IT-enabled supply and distribution planning, will be able to guarantee you a lift anytime you need it at a much-lower cost than buying your own car. So why bother wasting the money?
“That’s silly. People will nearly always still want their own cars as the world becomes ever-richer,” I can hear you say.
No, you are wrong, dangerously wrong. Here are three of the reasons why:
- The ageing of the Babyboomers in the West guarantees a secular decline in global demand. Income growth will thus slow down or go into reverse. This will force people into making hard choices about essential needs versus frivolous and unnecessary purchases.
- In emerging markets, the great myth of the rapid rise of a developed-world middle class has belatedly been exposed for it always was: A myth. So affordability will also really, really matter in emerging markets – as, in fact, has always been the case.
- The world doesn’t really want to choke to death, even if you still think it is relevant that you disagree with the widely accepted scientific opinion that hydrocarbons are behind climate change. Air pollution is a fact that nobody can possibly dispute, as anyone who has been to New Delhi or Beijing will tell you from first-hand experience. So shared autonomous vehicles – especially if they are also electric-battery powered – represent a huge opportunity to improve human health. This will result in enormous savings on health-care costs, and would mean many more millions of people will be alive and healthy and so able to contribute to the global economy. And of course morally and ethically, the argument is overwhelming.
Beyond these three reasons are social changes driven by social media. Young people no longer regard owning a car as essential because they can communicate with their friends via Facebook etc. Plus they have grown up in a world where man-made climate change is viewed as a fact. They are thus much more conscious of the need to preserve the environment.
So you are producer of say polypropylene or polyurethanes, one of the major end-use applications of which is autos. Somebody comes to you with supply and demand forecasts that overlook the impact of shared auton0mous-driven vehicles . How do you respond to this internal or external adviser? Show them the door, of course.
In our new Study, we factor in the rise of shared autonomous vehicles – and many other megatrends that are reshaping global autos markets.