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www.langmarketing.com Tech Titans: New Automotive Big Five Five powerful tech companies intend to disrupt the car and light truck market, at both the OE and aftermarket levels: Amazon, Apple, Google, Microsoft and Tesla. The potential for these Big Five companies to significantly change the vehicle market stems from their long-term mobility goals and immense technical and financial resources. Changes in vehicle design, operation and use will be determined largely by software, alternative propulsion systems and connectivity. The Big Five are dominant players in these key areas of mobility evolution. Six Major Takeaways: • A new Big Five tech juggernaut is emerging in the mobility market. These financial titans have a combined market value topping $5 trillion, many times the combined value of all automakers worldwide. • Amazon has recently acquired several companies that provide it with leading-edge technology for the development of electric and autonomous vehicles. Amazon differs from the other members of the Big Five in its unique position as an investor in electric vehicle companies, a large user of electric vehicles and a major player in the development of electric and autonomous vehicles. • Google (Waymo) and Apple are focusing on driverless vehicle development, which will change the relationship between consumers and vehicles, remove the driver experience and change the social significance of vehicles to consumer status and self-expression. • Microsoft is positioning itself as the leader in AI assisted cloud-based data computation and storage for the immense amount of data that driver-assisted and driverless vehicles will generate. In this way, Microsoft can provide the resources for vehicle connectivity, which is a key requirement in the efficient and safe operation of driver-assisted and driverless vehicles. • Tesla, the leader in the development of electric vehicles, has programmed driverless features into many of its vehicles. Tesla is the leader in putting EVs on U.S. roads.
• The aftermarket impact of these vehicle changes on which the new high-tech Big Five are focused could influence the volume, nature and location of vehicle repair and maintenance. Vehicle Scrappage is Shaping the Aftermarket Vehicle scrappage (attrition) is the removal of vehicles from operation. There are many causes for vehicle scrappage: wear and tear, accidents, airbag deployment, damage from fire or water and other factors that render vehicles not worth the repair costs necessary to keep them on the road. Vehicle scrappage has a significant impact on important characteristics of the vehicles in operation (VIO) and, therefore, aftermarket product volume. Six Major Takeaways: • Although vehicle scrappage traditionally has moved in the same direction as new vehicle sales, vehicle scrappage remained low between 2015 and 2019, despite record-high car and light truck annual sales. • Low scrappage rates and the population growth of older vehicle age groups have helped to increase
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the average age of light vehicles in the U.S. • The population of older vehicle age groups, particularly 15 years and higher, has been boosted by moderate scrappage rates. Older vehicles generally use more aftermarket products per mile travelled than new cars and light trucks. • Since older vehicle age groups contain higher shares of domestic nameplates than younger groups, low scrappage has enabled more domestic nameplates to stay on the road. • By keeping light trucks in operation longer, low scrappage rates are helping to increase aftermarket product volume, since light trucks in the U.S. average greater annual aftermarket product use per vehicle than cars. • Lang Marketing expects scrappage rates will remain low during 2021, continuing these aftermarketboosting trends in vehicle average age, the populations of older vehicle age groups, the mix of domestic and foreign nameplates and the population percentages of cars and light trucks.
May 2021 | 9
