Automakers Face a Demographic Time Bomb · 2019. 2. 27. · Automakers Face a Demographic Time Bomb...
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A Triple Threat to Automakers: Recession, Demographics and Disruption www.bain.com/automakers-triple-threat Read more: Big bets By the mid-2020s, US light vehicle sales could fall to the same level as in the 2008–09 recession. While drivers age 15 to 64 propel demand … ... growth of this key demographic is rapidly approaching zero The demographic shift is just one of three grave challenges automakers face. The leaders of the next era will be able to pivot quickly and get out in front of change. The number of new car buyers will fall. Demand for autos has declined in the US The triple threat facing automakers Automakers can adopt a strategy for uncertain times Demographics A likely recession in the coming years would dampen demand. Recession Cut costs today to improve a company’s resilience and generate benefits under any scenario. No-regret moves Develop strategic options for specific scenarios. Avoid betting on every square to avoid the risk of underinvesting in all options. Options and hedges Timing is critical for large-scale investments. Wait to pull the trigger until it’s clear which scenario is most likely to play out. As the core business declines, develop an “Engine 2” to pave the way for a smooth transition. Engine 1 vs. Engine 2 A rapid shift to electric and autonomous vehicles and shared mobility services looms. Disruption Car and truck registrations (millions) Percentage change in population growth from the previous year 0 50 100 150 200 250 1977 80 90 00 10 17 267 million car and truck registrations in 2017 0.3% growth from 2016 to 2017 0 0.3 0.6 0.9 1.2 1.5% 1977 80 90 00 10 17 Note: Light vehicles consist of autos, light trucks and sport utility vehicles Structural demand implied by demographics Actual light vehicle sales Sales align with structural demand Boom/bust cycle Constant fertility and migration No US immigration 1977 80 85 90 95 00 05 10 15 20 25 30 0 5 10 15 20 million light vehicles 0 1 2 3 4 5 6 7 8 9 Automakers Face a Demographic Time Bomb The industry is facing an uncertain future, but companies can still make smart bets to succeed.
Transcript of Automakers Face a Demographic Time Bomb · 2019. 2. 27. · Automakers Face a Demographic Time Bomb...
A Triple Threat to Automakers: Recession, Demographics and Disruptionwww.bain.com/automakers-triple-threat
Read more:
Big bets
By the mid-2020s, US light vehicle sales could fall to the same level as in the 2008–09 recession.
While drivers age 15 to 64 propel demand …
... growth of this key demographic is rapidly approaching zero
The demographic shift is just one of three grave challenges automakers face.
The leaders of the next era will be able to pivot quickly and get out in front of change.
The number of new car buyers will fall.
Demand for autos has declined in the US
The triple threat facing automakers
Automakers can adopt a strategy for uncertain times
Demographics
A likely recession in the coming years would dampen demand.
Recession
Cut costs today to improve a company’s resilience and generate benefits under any scenario.
No-regret moves
Develop strategic options for specific scenarios. Avoid betting on every square to avoid the risk of underinvesting in all options.
Options and hedgesTiming is critical for large-scale investments. Wait to pull the trigger until it’s clear which scenario is most likely to play out.
As the core business declines, develop an “Engine 2” to pave the way for a smooth transition.
Engine 1 vs. Engine 2
A rapid shift to electric and autonomous vehicles and
shared mobility services looms.
Disruption
Car and truck registrations (millions) Percentage change in population growth from the previous year
0
50
100
150
200
250
1977 80 90 00 10 17
267 millioncar and truck
registrations in 2017
0.3% growth from 2016 to 2017
0
0.3
0.6
0.9
1.2
1.5%
1977 80 90 00 10 17
Note: Light vehicles consist of autos, light trucks and sport utility vehicles
Structural demand implied by demographicsActual light vehicle sales
Sales align with structural demand
Boom/bust cycle Constant fertility and migration
No US immigration
1977 80 85 90 95 00 05 10 15 20 25 300
5
10
15
20 million light vehicles
012
3
45 6 7
8
9
Automakers Face a Demographic Time Bomb
The industry is facing an uncertain future, but companies can still make smart bets to succeed.
