Automotive Industry Current And Long-Term Future Outlook

Summary

• Where the automotive industry stands now.
• Explore the 5 future trends shaping the automotive industry.
• Take a look at possible future winners in this space.

Key long-term trends are underway in the automotive industry. There will be a major transformation over the next decade. Technology is significantly advancing for vehicles. Through the year 2030, we are likely to see an increasing amount of electric vehicles on the road. There is also likely to be more autonomous vehicles and ride-sharing.

According to a PwC report, there are five main trends that will transform the auto industry through 2030. They are summed up in the acronym ‘EASCY’: electrified, autonomous, shared, connected, and yearly updated.

Current State Of The Automobile Industry

Most traditional automakers have been experiencing stagnant or declining growth over the past few years. Total automobile sales for 2018 in the United States only increased 0.3% over 2017. That was better than what was expected. 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 when total sales only inch up by a small percentage basis year over year. This stagnant growth is reflected in the stagnant stock prices for the traditional automakers. Sales of vehicles in the U.S. are expected to decline by 1.2% to 4% in 2019.

One company that is bucking the stagnant vehicle sales trend 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.

The traditional automakers: Ford (F), General Motors (GM), Fiat Chrysler (FCAU), Toyota (TM), Honda (HMC), Volkswagen (OTCPK:VWAGY), Nissan Motors (OTCPK:NSANY), Volvo (OTCPK:VLVLY) etc. will have to adapt to the new transition to electric vehicles and ride-sharing trends. This will be paramount for their survival.

Tesla’s Model 3 was the best-selling electric car in 2018 with the Model S and X being the 4th and 5th

Analyst’s Disclosure:I am/we are long AAPL.

Business relationship disclosure:The article was written by David Zanoni with guidance from Kirk Spano.

The article is for informational purposes only (not a solicitation to buy or sell stocks). David is not a registered investment adviser. Kirk Spano is an RIA. Investors should do their own research or consult a financial adviser to determine what investments are appropriate for their individual situation. This article expresses my opinions and I cannot guarantee that the information/results will be accurate. Investing in stocks involves risk and could result in losses.