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Sales of new vehicles will slow while miles traveled will soar, IHS Markit says

Friday, November 17, 2017 - 08:00
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The automotive future will be different – though with some noticeable similarities – as the convergence of disruptive technologies, government policies and new business models usher in a new era of multidimensional competition, says a new major research initiative by IHS Markit, a leader in information, analytics and solutions.

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A shift from buying cars to buying “mobility” will be a driving force of change in the automotive future, the study says. By 2040, vehicle miles traveled (VMT) will have grown to an all-time high of around 11 billion miles per year (a 65 percent increase since 2017) in China, Europe, India and the United States – the key markets examined for the study – and will keep growing. At the same time, sales growth of new light-duty vehicles will slow substantially. 

The findings are part of Reinventing the Wheel, a major new multi-client, scenarios-based research initiative by IHS Markit that combines the industry-leading expertise of the company’s energy, automotive and chemical teams to provide a first-of-its-kind, system-wide analysis of the new reality of transportation. The project focuses on the world’s largest automotive markets: the United States, Europe and China. It also covers India, a large and fast-growing market.

The competition between the internal combustion engine and electric vehicles, the disruptive force of “mobility-as-a-service” (MaaS) – such as ride-hailing – and the much-anticipated emergence of autonomous vehicles will lead to more profound changes in personal transportation than experienced over the past century combined, the study says.

“A great ‘automotive paradox’ – where more travel via car than ever, but fewer cars will be needed by individuals – will be a defining quality of the new automotive future,” said Daniel Yergin, IHS Markit vice chairman, Pulitzer Prize-winner and project chairman. “The shift is just beginning. By 2040, the changes in transportation will be accelerating in a way that will be visible on roads and highways around the world. The pace and degree of this dynamic shift will have significant implications for industry, for public transportation systems and for how people get to work and live their lives – and spend their money on transport.”

“We could very well be on the cusp of the greatest transformation in personal transportation since the dawn of the automotive age,” added Jim Burkhard, vice president, global energy markets and mobility. “Understanding the implications of such a transformation requires a broad perspective that goes beyond any single industry or market.”

The continued emergence of mobility-as-a-service (MaaS) providers will be among the most important and disruptive forces in the future, the study says. The MaaS industry is expected to purchase more than 10 million cars in the study’s key markets in 2040 – compared to just 300,000 in 2017.

“Mobility service companies will be a prime driver of shifting car sales from personal to fleet economics,” said Tom De Vleesschauwer, transport and mobility practice leader, IHS Markit. “Ride hailing has the potential to be so disruptive because it is often the most convenient for consumers and can significantly increase access to car transport, particularly in markets with low car ownership rates.”

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