A New Forecast That Cars Are Going Away

February 16, 2018 by Douglas A. McIntyre

With the dawn of the self-driving cars and ride-sharing services, many experts have said that sales of traditional sedans, coupes, crossovers, sport utility vehicles and pickups will plunge. This would gut revenue at the world’s largest car companies, including U.S.-based manufacturers GM and Ford. An industry leader recently made comments to support the theory that mainstream cars will disappear, and the warning is starker than most.

According to Automotive News:

As sharing services change car use and ownership, Toyota Motor Corp.’s new design chief believes that vehicles will shift towards either generic boxes on wheels for everyday use or ultra-luxury cars, wiping out the need for mass-market models.

Simon Humphries, responsible for design at the automaker’s Toyota and Lexus brands, said that fleets of electric, self-driving shuttle bus-like vehicles could one day eliminate the need for people to drive themselves around on a daily basis.

What is left unsaid is that the largest car companies can make the new vehicles, but the numbers will never be more than modest. Demand for traditional vehicles, made by the millions each year, will never return. Car plants will be idled and the people who work in them laid off. The white-collar employees who operate the manufacturers will become less and less necessary as well.

Where will this leave the publicly traded car companies? Presumably with dwindling revenue and more difficulty keeping their bottom lines. Companies like Toyota Motor Corp. (NYSE: TM) will shrink to the size of BMW or smaller. BMW’s sales run about 2.4 million a year. Toyota’s are 10 million. An even more pessimistic number is based on Porsche’s global sales, which number about 230,000.

The “generic boxes on wheels” may help large car companies keep some volume. But these will be inexpensive, which means margins will be hard to come by.

It may well be that the future of the car industry is grim and getting grimmer.