Worldwide, the sales volume of the automotive industry will rise from today’s $3.5 billion to $6.7 billion by 2030, predicts a study conducted jointly by McKinsey and the Stanford University. This translates into an average annual growth rate of 4.4%, significantly higher today’s long-term average growth rate of 3.6%. The demand will be excited and driven by innovative mobility offerings and connectivity services.
By 2030, such services will add up to $1.5 billion and thus account for almost one quarter of the automotive industry’s total sales volume. In contrast, sales associated to the car as a product will slow down to a rate of about 2% per year (which still means positive growth).
According to Detlev Mohr who oversees McKinsey’s European automotive consulting business, the upheavals in the automotive industry are already becoming visible. “Connected Driving, electrification of the power train, and new mobility concepts are already challenging the traditional car makers”, he said. The study however shows that the growth of the entire industry segment still has potential to accelerate, in particular through new fields of business like car sharing, specific infotainment offerings. “It has yet to be seen how and to which extend traditional car manufacturers versus new players will be able to secure new sources of profit”, he said.
The classic sales model in mature markets such as Europe and North America faces stagnation, but other regions still offer high growth potential, the study concludes. In 2030, the authors expect that 75 million vehicles can be sold in Asia and other growth regions. This is 28 million more units than in 2015. To tap this huge potential, the carmakers need to better understand the markets and their varying conditions at the city level. “In the medium term, the car markets in New York will be more similar to the market in Shanghai than in rural states like Kansas”, Mohr said.
As the driving forces for automotive demand, the study identifies the following trends:
- Autonomous driving: In the best case – if the legal and regulatory obstacles can be removed at the same speed as the technological progress, up to 15% of the new vehicles can be driven completely autonomously in 2030. The improvement of existing and development of new driver assistance systems will gradually lead the users to this state.
- Innovative mobility offerings: In contrast to today’s cars that typically are used for a broad range of driving tasks from shopping to holiday trips, the cars of the future will increasingly be customised for specific tasks and be offered to customers increasingly in the context of car sharing models. The researchers from McKinsey and Stanford University believe that by 2030 shared cars will have a market share of about 10%.
- Electrification: Stricter emission regulations, an improved charging infrastructure and lower prices for batteries will further stimulate the sales of electric cars. In an optimistic scenario that includes state support, the study predicts that in 2030, almost one of two new vehicles will feature an at least partially electrified powertrain.
- Electrification in the automotive market however will differ greatly on region: In large cities, electric vehicles will have a much greater role than on the countryside.
To meet these challenges, traditional carmakers will have to unfold activities under multiple aspects.
This will force them to enter collaborations – either with other car manufacturers or with technology companies. “Auto makers should implement a dedicated ecosystem around the car. In the long run, they should turn into mobility service providers,” advices Dominik Wee, co-author of the study and McKinsey Partner in Munich.