2019 was not a good year for the global auto industry. On a year-over-year basis, the total vehicles sold was down about 3%.
In the passenger category, see saw about 77 million vehicles sold. This was down from 79 million. Worse yet, the projection for 2020 is 74 million.
https://www.statista.com/topics/1487/automotive-industry/
This does not bode well for the global economy is we use traditional metrics. The automobiles industry is usually one of things analysts cite when trying to forecast where things are going. Automobiles are expensive items, adding a great deal of revenue. At the same time, it is labor heavy industry albeit less than it was a few decades back. When we add in the suppliers, we still see an industry employing millions of people.
Tony Seba, an individual who's work I cited in the past, believes we saw peak auto sales. It is his belief that the number of automobiles sold will keep declining as we head towards 2030. In other words, this will not be a great market to be in.
There are a couple reasons why Seba feels this way. The first is the move towards urbanization. Simply put, more people are living in cities than every before. As people know, it often is easier (and a lot more affordable) to not own a vehicle. There are enough options available which make the expense unnecessary.
The second, and more important, reason is Seba's belief that we are going to see automation start to take over. His view is this will happen very quickly. Even if we only see Level 4 autonomy, that will likely eliminate the need for many vehicles on the road. The amount of "rides" will increase significantly.
A final reason for this is the idea that electric vehicles are going to eat up a larger part of the market. The benefit here is they, in theory, have a much longer lifespan than ICE vehicles. Thus, a ridesharing fleet would be able to maximize the use of the automobile, which is about 3x greater than the a gas powered vehicle.
As we can see, the trend here is not great. Even in the United States, the amount of cars sold dropped in 2019. The challenge with this is the American economy is not in a recession. If this is how the industry is going to fare when things are relatively good, what is going to happen when things turn bad?
This is an area that has to be of major concern. Many talk about the disruption of autonomous vehicles and the number of jobs that it will cost people. However, what gets overlooked is the fact that millions are at risk is the industry keeps experiencing this slowdown.
Technological disruption can be very painful for jobs. There is something equally as powerful: basic supply and demand.
If we did indeed see a peak in automobile sales, this could be the start of something much bigger. The implications stretch to many areas of society.
In the medium term, I fear it will not be pretty.
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