Automakers are churning out vehicles that are bigger and more expensive—but that might soon reach a breaking point.
A confluence of rising inflation, strained supply chains, and a global battery shortage pushed the price of an average new car to $48,301 in August, an all-time record and 10.8% more than a year ago. Those factors are largely outside automakers’ control, but another key factor is not: the shift toward ever-larger SUVs and trucks that now comprise some 80% of U.S. car sales. Smaller and more affordable models are rapidly disappearing; in the last few years, carmakers have discontinued dozens of sedan lines, including the Ford Taurus, Chevrolet Impala, and Volkswagen Beetle.
A century ago, Henry Ford supposedly quipped that Americans could choose any color they liked for their Model T, as long as it was black. Today, the U.S. is approaching a point when Americans can have any size car they want, as long as it’s gigantic. And they are going to pay more for all that heft.
At its surface, this trend seems like a positive one for automakers. Big SUVs and trucks are typically more expensive and profitable than smaller models.
But car companies should take care. By raising prices and expanding vehicles’ girth, they make themselves vulnerable to a potent form of market disruption outlined in a classic business book 25 years ago.
How might emergent challengers to the automobile appear? In the seemingly innocuous form of a golf cart or e-cargo bike.
Which Stochastic competitor product/service/business/company should IMI Hydronic fear?
Comments