Are you in the market for a new car in 2016 and wonder what to look out for? Even if you are just an interested part about how the auto industry will fare in 2016 knowing that the experts are predicting a slew of challenges, changes and issues can help you with important decisions. Below are the trends expected to make an impact on the industry this year.
Technology & Safety
If you thought your vehicle was laden with gadgets before, the development of the Internet of Things and further connectivity in your vehicle is gaining not only interest from automakers but are being pushed by consumer demand for more options in their vehicles. The rise of Infotainment was just the beginning of connectivity in vehicles. Technology is pushing the boundaries in vehicles and this can be expected to continue.
Part of this technology is the ever-increasing research and development of autonomous vehicles and although these cars will not be self-driving or available in 2016 you should expect to hear more debate about how they should be insured and legislated as automakers continue to push in order to get these vehicles into the market by 2020. These will be what will be ultimately pushing the ride-share, car-sharing of the future.
Within this envelope also includes the ever increasing safety technology being included in vehicles as pushed by the NHTSA and the IIHS. These organizations want forward collision warning and prevention as standard features on cars with autobraking being the biggest player at the moment. However, with so many technologies being used in vehicles like adaptive headlights, adaptive cruise control, blind spot and land departure warning and prevention, safety technology will continue to dominate in 2016.
Lastly of course in the technology sector is the partnerships building between Silicon Valley and automakers as they see each other more as partners now than competition. Expect to hear more ways to connect your favorite devices for use in your next vehicle purchase.
Greener & Fuel Efficiency
As a condition of the bailout after the Great Recession, greener technology and better fuel efficiency were made mandatory for automakers in the US. Full electric vehicles are starting to push into mainstream in both consumer interest and pricing. With consumers wanting the most fuel efficient model of the class they want, the auto industry will continue to push the bounds of fuel efficiency even as oil prices stabilize in 2016.
Used Car Onslaught
In 2016, it is expected that more than 3 million leases will be turned in, making it the largest lease return year since 2004 and sparking a decrease in prices that many millennials seeking their first car purchase will be enticed to purchase used and get a significant savings. In fact, a recent survey showed 77% of millennials will be willing to purchase a used car compared with only 60% for other buyers.
Declining Growth in New Car Sales Sparks More Incentives
This used car glut of vehicles on the market will slow the growth of car sales from its rapid 2015 pace of 3.6% down to just over 3% with experts expecting this number to continue to drop. However, this means there will be even fiercer competition amongst car makers to grab up as much new market share as possible driving them to offer more incentives than in past years.
Millennial Marketing Efforts
Part of these incentives and direct incentives will be increasingly targeted toward millennials, a group born between 1980-2000 as they start to purchase their first new vehicle. The true test of automakers in 2016 will be if they can find a common voice to reach out to this fractious group of buyers. More eco-conscious than any other generation they also are more apt to delay buying vehicles in favor of urban mass transit. As they are not used to the “golden years” of labor like the baby boomers, this group may also still be struggling to find their life-long career job. This increased instability makes this group even more frugal and their research into the “best deal” even more pronounced.
Urban Car-Sharing & Hailing Rise further
Automakers will also suffer or benefit from the further rise of two phenomenons that have taken the world by surprise. The tech-savvy Uber ride hailing app has disrupted taxi services the world over with their unique technology. Although self-labeled as a ride-sharing service, they are in effect a ride-hailing service and allow users a much more seamless experience over a traditional taxi. The ease and lower prices in general of Uber and Lyft help millennials put off buying a new car.
On the other side of this equation is the new and rising service of car-sharing. Just like in many major urban centers you see racks of bicycles for rent, to tour or transport yourself around town, these new car-sharing services are parking cars in convenient locations around urban metropolises for you to use for a day or even as little as an hour. This unique model allows users get to from point A to point B with much more convenience than a taxi and much more cost effective than owning their own vehicle.
Volkswagen Continues to Pay for their Deception
One automaker in the US will continue to have a very difficult existence. With over half a million vehicles involved in the deception by Volkswagen to mislead US consumers and cheat the requirements for emissions this story will not end until major class action lawsuits are settled and the company pays restitution to the US government and consumers.
The Continued Rise of the SUV & Crossover
On a final note, the SUV, be it a compact, mid-size or crossover has taken control of the majority of consumers wish list surpassing the sedan market in the US. Millennials are less likely to hop into large pickups or minivans and tend to opt for a combination of both size and utility. If one segment of the auto market will see larger than expected gains, it should be this one.