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Self-Driving Cars and Car-Sharing May or May Not Increase New-Car Sales

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author photo by Russ Heaps August 2016

Self-driving cars and car-sharing may or may not drive future new-car sales, depending on who's gazing at the tea leaves. Experts are divided on whether autonomous vehicles (AVs) and the growing number of car-sharing schemes will positively or negatively impact new-vehicle sales numbers.

How can experts be so split? Well, it's pretty simple: It's all mostly guesswork. Personal transportation is heading into uncharted waters, and anything can happen.

Although, as a topic, annual new-car sales numbers are really inside-the-industry stuff that most of us don't care much about, we can't ignore the inevitability of AVs or the ever-growing trend of car-sharing. Each represents a huge sea change in the way we get from place to place.

As a what-if exercise, how these changes in personal transportation might affect the future of the automotive industry -- one of America's largest employers and a cornerstone of our economy -- is worth some attention, and there are strong arguments made for the trend having a positive or a negative impact.

AVs and Car-Sharing

Although there are already all manner of driver-assistance features in many new cars -- some can even take over certain driver functions for short periods -- AVs, strictly speaking, are vehicles that can operate completely on their own, without any driver input beyond setting a destination.

Car-sharing can cover a wide range of non-owner transportation ventures, from ride-hailing services like Uber and Lyft to actual car-sharing models, including peer-to-peer car-renting, carmaker-sharing fleets and membership services like Zipcar. For our purposes, we're defining car-sharing as the latter group: services that actually enable individuals to share use of a fleet of vehicles.

More Sales

Carmakers themselves generally predict that the advent of self-driving cars and the continued growth of the various car-sharing models will translate into more robust new-vehicle sales in the future. There's no doubt that at some point, if the trend continues, the entire body of cars currently on our streets will need to be replaced by AVs. Estimates place the number of registered vehicles on U.S. roads at more than 250 million. Such a transition will take years and could be a boon to carmakers.

Likewise, car-sharing requires growing fleets of cars available for sharing. The driving force behind carmakers' sharing ventures -- like the General Motors-sponsored Maven, which has more than 3,500 vehicles scattered among several big cities -- is that car-sharing is really just an alternative to the taxi cabs, buses and subways that non-car-owning city-dwellers are already using. There's no threat to GM's core business or that of any other carmaker.

Fewer Sales

On the other hand, believing that every current car-owner -- or even most -- will be able to pony up the price of an AV and all its newfangled technology requires more hope than most missionaries can probably muster. At least in the initial years of AVs, early adopters will be dumping their high-end luxury vehicles for AVs, but few others will be able to afford them. Higher prices equal fewer sales; it's Econ 101.

Meanwhile, there are some industry watchers, including Morgan Stanley, that are convinced consumers will embrace car-sharing and ride-hailing to the point of giving up personal vehicle ownership. In fact, Morgan Stanley sees vehicle sales in this country flattening out by 2025. The more people are sharing cars, the fewer people will be buying them.

What it means to you: Because the average time a person keeps a new car is more than 11 years, you might want to research all the current options out there, as well as those that are likely coming in the near future, when planning your next car purchase. The times, they are a-changin'.

This story is based in part on reporting by Automotive News and a Linkedin post by Roger C. Lanctot, an associate director in the Global Automotive Practice at Strategy Analytics.

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This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
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