US Automotive 2019

Viacom summer project

Transcript

1. US AUTOMOTIVE 2019 Industry Background Players Consumers
2. 2 Industry The industry is facing a disruptive future Tech players are entering the space and reshaping the landscape Car sales will fall 9%-15% by 2023 While car ownership is becoming less important, gasoline prices are low, buffering up an auto presence History 0 5,000 10,000 2006 2008 2010 2012 2014 2016 2018 US car sales (in 1,000 units) 0 1 2 3 4 2006 2008 2010 2012 2014 2016 2018 Price of gasoline in US (in USD/gallon) After the 2008 financial crisis, car sales plummeted and then recovered. In 2018, sales were lower than during 2009 The auto industry has a strong history. However, disruption lies ahead Sources: BCG, 2019. Statistia, 2019.
3. 3 Technology and regulations will dictate the movement of the industry Technology Regulations Industry Present EPA tightened regulations on car emissions This lends automakers more leeway to create vehicles that meet regulations by 2020 However, the Trump administration has looked to relax them Regulations Met Ease emissions standards Reduce gas emissions More fuel- efficient rides Predictive vehicle tech Self-driving tech Cars-as-a- Service Sources: Towards Data Science, 2018. EPA, 2019. WSJ, 2018.
4. 4 Manufacturers Disrupters Shared Mobility Ride-hailing has integrated itself into the mobility market Other shared mobility modes, like e- scooters and e-bikes compose a large but uncertain market Given recent tech innovation in EVs, AVs, and shared mobility, the top players are affected Auto players are responding to a changing landscape with innovations The top auto players in the industry have not changed significantly. However, *EVs and **AVs will shift the top players Overview of the top auto players Players Top Players *EV = electric vehicle **AV = autonomous vehicle Sources: Edmunds, 2015. Statista, 2019. BCG 2019.
5. 5 Willingness to Pay 80% would pay $1,150 for tech that reduces accidents by half 43% would pay more for a self-driving car In the next few years, mobility will undergo a significant transformation Players Trends Shared mobility gaining traction AVs on the streets in the next 10 years 2025 • Increased EVs share • Declining battery prices, more public charging stations, and higher demand 2035: 30% of new cars will be EVs Increasing adoption of EVs 2025 • Commercial deployment of fully self-driving cars • Young consumers will be receptive 2035: 1 in 4 cars sold globally will be fully autonomous 2025 • Urbanization and sharing economy will drive shared mobility • Younger consumers will be more open 2035: 18% of passenger miles will be driven in vehicles on demand Sources: BCG, 2018 & 2019.
6. Dominant powertrain as regulations are met Players: 2020-2025 will be regulatory driven. Increasing costs of emission requirements and “clean” consumers will drive EV production 6 Electric Vehicles (EVs) will experience a tipping point Players Trends Pure ICE vehicles will decline from 95% to 50% global market share in 2030 Most EVs will be hybrids, prolonging the life of ICE Limited adoption as total cost of ownership is high **BEVs will account for the other 50% of the global market share Higher market share as manufacturers meet tightening regulations *ICE EVs 2018-2020 2020-2025 2025-2030 Speed of ICE to EVs Consumers: 2025-2030 will be consumer demand driven as total cost of ownership decreases Industry: carbon fuel prices are low but future volatility can influence players and consumers alike *ICE = Internal combustion engine (found in most cars) **BEV = battery electric vehicle Sources: BCG, 2018.
7. 7 Geographics Demographics Younger people, who are grew up in a digital world, are more willing to use SAEVs than older people 63% of A45-64 will have significant barriers to use SAEVs Only 44% of A18-24 will have such barriers By 2030, people who live in the nation’s largest cities will turn to SAEVs 67% of people in rural areas will have significant barriers to SAEV adoption Only 49% of people in very large cities will have such barriers $1.22 per mile for a person who drives a car in very large cities (vs 79 cents outside of these cities) 50% decrease in costs of personal mobility for people who adopt SAEVs in very large cities Shared, autonomous, and electric vehicles (SAEVs) will be adopted in cities by 2030 Players Trends Sources: BCG, 2017.
8. 8 There is a clear difference between purchasing patterns of Millennials (A18-34) and Gen X (A35-49) Millennials are buying less cars than do Gen X Price 34% of Millennials have spent $20,000 or more on a vehicles (index 79) 46% of Gen X have done so (index 107) Millennials only account for 1 in every 5 visits to dealerships, and over-index for Lyft/Uber installs Millennials value function more than do Gen X Function 57% of Millennials want the cheapest and easiest to maintain vehicle they can find (index 113) Only 48% of Gen X want so (index 100) Millennials engage with socially responsible companies Social Responsibility 29% of Millennials say their ideal car is green and trendy (index 119) Only 25% of Gen X say so (index 102) Millennials pay closer attention to the arrival of new tech Future Tech Millennials are 34% more likely to buy an EV or HEV in the next 12 months than the average person Gen X are only 6% more likely However, they are more likely to buy a vehicle in the next 12 months than Gen X are Demographics Consumers Sources: CAA Insurance, 2018. 2018 MRI Doublebase, based on 18+. Placed, 2018.
9. Vehicle ownership and spend White Americans generally over-index in this area. However, other ethnicities largely under-index Likelihood to purchase a car in the next 12 months While White Americans under-index in this area, other ethnicities are very likely to buy an ICE vehicle or an EV Ideal car All listed ethnicities apart from White Americans over-index in stating that their ideal car is green and trendy. Utility minded Image conscious 9 Gender and ethnicity also lends itself to different purchasing habits across demographics Gender Ethnicity Men Women Demographics Consumers 36% of men seek out vehicles with bold, innovative designs (index 118). Only 25% of women do so (index 103) 81% of women consider safety first when shopping for a new vehicle (index 108). Only 69% of men do so (index 91) Sources: CJ Pony Parts, 2019. 2018 MRI Doublebase, based on 18+.
10. • With a revamped mobile site, BMW Group found the proportion of people clicking from their website to a sales site increased from 8% to 30% • Park Place provided an online tool that allowed customers to complete 80% of the purchase process online 92% of car buyers research online before they buy • 95% spend 4+ hours researching cars online • 80% do research online and offline • 40% would buy a car online Only 5% of consumers said that they would buy a car without seeing or test- driving it Where to purchase? • Traditional players (dealerships) • Third-party multibrand sellers • Online-only sellers • E-Commerce aggregators In the future, you will see more online- only sellers and e-Commerce aggregators 10 Awareness Consideration Decision The consumer purchasing pipeline is extensive. Streamlining this experience increases sales Purchasing Pipeline Consumers Sources: Think with Google, 2019 & 2017. BCG, 2018.
11. 11 AV Sentiments Connectivity Consumer perception regarding the safety of AVs has stalled as reported AV accidents have shifted their views % of consumers who agree that AVs will not be safe Consumers have mixed opinions about vehicle connectivity. While interest in time-saving features is high, concerns remain over privacy 47% of consumers feel that increased vehicle connectivity will be beneficial 63% of consumers are concerned about biometric data being captured and shared with external parties Interest in alternative powertrain tech expands as fewer people want ICE. However, movement away from ICE is slower in the US Alternative powertrain YOY 2019 2018 US 29% 20% China 65% 61% Daily usage of personally owned vehicles is high. However, young consumers may switch this trend % of consumers who use own vehicles every day Now +3 yrs US 59% 61% China 38% 38% % of ride-hail US users that question vehicle necessity Consumers are slowly adopting the idea of a digital auto future Trends Consumers EV Sentiments Shared Mobility 2019 2018 2017 74% Boomers Gen X Gen Y/Z 46% 17% 20% 50% 47% Sources: Deloitte, 2019.
12. 12 Conclusion Summary Players Consumers Industry • Tech players and disrupters will provide more mobility options • The mobility transformation is underway • EVs, as well as SAEVs, will come to cities in the near future • The auto industry has been historically strong. However, decreasing sales indicate a changing auto climate • Tech advancements will continually improve the vehicles on the road • Regulations will also influence the speed of the transition to EVs • While Millennials are buying less cars, they are opening up to EVs • A streamlined and digitally enhanced purchasing pipeline will increase sales • A digital future is still very new for consumers, so some apprehension exists An overview of the auto landscape
13. 13 Mobility Revolution “The world is going to go self- driving and autonomous. So if that’s happening, what would happen if we weren’t a part of that future?” – Travis Kalanick, then CEO of Uber, 2016 To stay ahead, manufacturers must change with the auto landscape Going Digital Balance between ICE, hybrids, and EVs Consumers spend significant amounts of time researching vehicles, and manufacturers that streamline this process will secure sales Releasing hybrid patents royalty- free until 2030 Leapfrogged hybrids for EVs, cancelled Volt Start-up producing high-performance adventure EVs. Investments from Ford and Amazon over $1 billion Bringing the purchasing process to a digital platform In the US, these websites allow consumers to research/buy new/used cars and pick them up at dealerships In China, Alibaba is launching “super test-drive centers” in Shanghai Conclusion Best Practices Sources: CNBC, 2019. Green Car Reports, 2019. Business Insider, 2019. BCG, 2018.
14. 14 Viacom and auto manufacturers will find natural synergies Conclusion Partnership Sources: 2018 MRI Doublebase, based on 18+. Viacom viewers • Millennials embrace the idea of EVs, digital connectivity, and environmental responsibility. They will be in the market for vehicles in the next 12 months • Gen X have more brand loyalty and are knowledgeable about their vehicles Auto Manufacturers • While auto manufacturers are still focusing on ICE, they are producing more hybrids and EVs year over year • The target market of auto manufacturers is going to shift to Millennials Overlap • Viacom has a strong Millennial base and a solid older viewership • Viacom’s networks consistently perform in the top cable ranks among automobile sentiments
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