Car Manufacturers: On the way to hyper-connectivity
At the beginning of a new year, it is always nice to look back and take a look forward. Robert Boscari, former Expert Leader Fleet Sales at Renault SAS, and now an expert for Fleet Europe and Global Fleet, analyses the evolution of and outlook for the car market in 2015 and 2016.
2015: contrasts and vision
- The world slowing down, Europe making progress
Where worldwide sales are concerned, 2015 saw a slowing market leading to a stable position but with three notable and opposing trends:
- A substantial revival of the North American market (USA up 6%, Mexico up 20%), of the European market (up 9%) and the Turkish market (up 35%).
- A further stagnation of the Chinese market (up 2%)
- A marked slowdown in the Asiatic market (Japan down 7%), the South American market (Brazil down 23%) and the Russian market (down 34%).
Remaining with the worldwide situation, Toyota has regained its position as number one manufacturer, ahead of the Volkswagen group and Renault-Nissan.
The strong growth of the Mercedes brand (up 14%), Mazda (up 10%) and BMW (up 9%) are worthy of mention here.
And looking more closely at the European markets, the particularly strong growth in Spain (up 24%), Sweden (up 11%) and Italy (up 14%) has been observed, not forgetting Ireland, Portugal and the Czech Republic, up 31%, 26% and 19% respectively.
In general terms, the worldwide fleet market is continuing to develop, and now represents 20% of all sales and one third of sales in Europe!
- More profitable manufacturers
Apart from Volkswagen, all the manufacturers have improved their operating results and net profits in 2015, a fundamental element for the development of the sector.
- Fall-out from the Volkswagen affair
Along with the risks for Volkswagen itself (decrease in stock market valuation, financial costs, vehicle recalls and possible legal cases, investment freeze and even dropping new and used vehicle sales), this affair is going to speed up the move away from diesel in favour of petrol, hybrid and electric powertrains.
- The major trends and lessons from 2015
- The rechargeable hybrid vehicle offensive and especially in up-market brands (German and Asiatic manufacturers).
- The growing offering of SUV’s and the personalisation of the offering from manufacturers – we observe today around thirty models per mass-market manufacturer.
- A year marked by a vision of a very connected future. In 2015 the car is more and more capable to react without driver input and to mutate towards becoming a living and working environment (e.g. Ford’s open-source platform).
- The first generations of fuel cell vehicles (e.g. FCV Honda and Toyota Mirai and Hyundai ix35)
2016 / 2017: technologies and green
- Unbalanced worldwide market with very weak growth
We can expect average growth of 2-3% in a world which is going to remain divided into three opposing trends.
- North America and Europe should remain positive.
- The growth potential of the Chinese market remains substantial, given the low level of ownership, but this remains allied to the current weak economic performance of the country where Chinese stock market valuations are concerned.
- No current sign of a recovery in South America.
In both 2016 and 2017 we will see a decrease in demand for, and sales of, diesel-powered cars, which still represent an average of 52% in Europe. This will be to the benefit of petrol, hybrid and electric powertrains.
The fleet market will make further progress thanks to more focus on the Small Fleet sector by the manufacturers’ captive leasing companies and the continuing internationalization of large accounts thanks to global fleet managers.
- New technologies to make the change
Connectivity, autonomous vehicles, shared mobility and more ecologically-friendly vehicles are the four sectors of technological evolution for the years to come.
The forecasts are clear: 67 million connected vehicles expected by 2018.
Drivers connected on the Cloud, on their social networks and to their companies will be able to benefit from increased safety and information.
Indicators on vehicle use, dangerous driving, excessive fuel consumption, anticipation of mechanical problems, should increase resale values and decrease fleet management costs.
- Autonomous vehicles
What is at stake here is safety and mobility, and it is set to develop in stages.
The next stage ‘let go of the steering wheel’ on motorways, and communicating with other vehicles or pedestrians will develop in the years to come, and in cities after 2020. Development costs remain high.
Google, Apple, Uber and Intel are certainly going to play a role in the autonomous vehicle.
- Shared mobility
The development of mobile connectivity and the electric vehicle will benefit mobility and access to all transport and car-sharing services.
This development is now set to speed up in cities, towards ‘à la carte’ mobility, and the demand will necessitate partnerships between players in the car domain and others (software, telecoms, start-ups etc.)
The development of the electric vehicle involves the development of its driving range, recharging points and car-sharing.
The offering of rechargeable hybrids will increase.
The first hydrogen fuel cell vehicles will be marketed (of Asian brands Toyota, Honda, Hyundai) and will develop from 2016.