Question

Could you predict growth of automotive industry of 2020 to 2025 ? Show me your calculation, not just theory.

Answer 1

Hi,

COVID 19 impacted Automotive Industry adversly. There will be a major transformation over the next decade. Technology is significantly advancing for vehicles. By the year 2030, we are likely to see an increasing amount of electric vehicles on the road due to increasing trend of technology. Before we understand what will be the situation of automotive industry in 2030 we must need to understand present situtation of this industry.

Present Situtation of Automobile Industry:-

Most traditional automakers (Such as Ford, Honda, Toyota) have been experiencing Static or decline in growth over the past few years. Total automobile sales for 2018 in the United States increased only by 0.3% over 2017. There were 17.27 million vehicles sold in 2018 as compared to 17.25 million in 2017.

It is difficult for the traditional automakers to grow or sustain the market when total sales negligibly increased as compared to Previous year. This negligible growth is reflected in the stagnant stock prices for the traditional automakers. One company that is growing in this segment is Tesla (TSLA), which has been achieving strong double-digit revenue growth. This is a result of the company’s stylish and functional electric vehicles, which resonates with high-end consumers.Tesla’s Model 3 was the best-selling electric car in 2018 with the Model S and X being the 4th and 5th best-selling electric vehicles respectively.

Future of Automobile Industry:-

In the Future, Vehicle on the roads is expected to decrease significantly according to a survey of PwC. This could be because of the expected increase of shared vehicles on the road. However, vehicle sales are expected to rise because the vehicles will need to be replaced more often as a result of more frequent useage.

• There will be rapid R&D investments by auto manufacturers and related businesses.

• Total mileage is expected to increase as the amount of shared vehicles increases. Instead of cars sitting around in parking lots while people are at work, shared vehicles will be in use wherever driving needs arise. This will increase total mileage.

• About 50% of mileage driven in China, 40% of mileage driven in Europe and 36% of mileage driven in the U.S. could be covered by autonomous vehicles by 2030.

• By 2030, total mileage driven may increase by 24 in the United States, 28% in Europe, and 183% in China.

• 55% of all new car sales could be fully electric by 2030.

• 95% of new car sales are expected to be partially electric by 2030.

• During the transition period to autonomous, annual vehicle sales are expected to increase by 40% to 24 million units in Europe, up 30% in China to 35 million units, and up 20% in the United States to 22 million units.

• Ride-sharing in Europe is expected to grow at a CAGR(Componded Annula Growth Rate) of 20% by 2030. This will take ride-sharing from 1% currently to 10% by the mid 2020s and 25% by 2030.

• Ride-sharing in the United States is expected to increase from 1% to 33.5% in 2030.

Thanks !