Riding-share-company Lyft’s director of product, recently talked to MarketWatch about how autonomous vehicles will revolutionize the ride-sharing industry within the next 4 years. Here is a direct video link.
This evolution is so imminent now that even the notoriously dysfunctional US House of Representatives yesterday unanimously approved a bipartisan Self Drive Act that limits states from controlling how automakers construct and design self-driving cars. It also allows automakers to deploy 25,000 self-driving cars in the first year, rising to 100,000 over a three-year time span. See: Self-driving car bill passes the House
Representing 20% of US retail sales, the auto sector was a key GDP driver out of the 2008 recession, as government-backed ‘cash-for clunker’ programs and finance enabled ‘easy lease’ terms helped millions of people, with little-to-no-actual money, drive away in new vehicles. At the cycle’s peak in February 2016, auto leases made up one third of new car sales and have averaged about 30% since.
The trouble is that the millions of vehicles coming ‘off lease’ are now gushing used cars on to the resale market where prices have been falling since 2014. An additional 11 million+ are slated to come off-lease over the next 2.5 years.
Lower than expected ‘residual’ prices are eating profits for the finance companies that offered lease contracts on the assumption of higher end values. This also means that new leases will be more expensive and less possible for the cash-poor masses going forward.
This suggests ongoing price declines for used and new cars. Good for consumers who have money and interest in buying vehicles. Not so good for the top-heavy, indebted, old-tech-dominated transport and auto sectors, about to be side-swiped by demand evaporation and dramatically less maintenance and repair revenues from an incoming fleet of shared, autonomous, electric vehicles. No wonder even the out-of-touch US Fed expressed worry about the US auto industry in their Beige book notes released yesterday.
This evolution will lower consumer costs, increase efficiency and air quality, reduce noise and carbon emissions, while freeing up acres of land from parking lots and freeways for more productive uses. All good. But not without some business casualties and economic upheaval in the process.