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The Future of the Auto Industry Is A Brave New World

With the auto industry still on a relatively strong footing in the seventh year of a vigorous recovery … car companies don’t want to dwell on the herd of elephants in the room that represents an existential threat to their future.

Car-sharing, self-driving vehicles and an endless fleet of appliance-like electronic people movers … all seem to converge in undermining the current industry model where the holy grail is selling ever more cars than were sold the month or year before, and better yet at a higher cost per transaction.

Earlier this week industry lion Bob Lutz, the 85 year-old veteran executive of BMW, Chrysler, Ford and General Motors, announced in Automotive News … ”Everyone will have 5 years to get their car off the road or sell it for scrap!”

He was foretelling a future where the concepts of automotive performance and traditional brands will be obsolete. And while this era of passionless, strictly utilitarian transportation is probably more than 5 years off … but well within two decades, today’s selection of vehicles catering to varied market segments is likely to dwindle and largely disappear.

We are seeing it now with the steady decline of the full sized sedans and the surge of SUV, crossovers and pick-up trucks. For the near term expect these higher margin models to be where carmakers put their efforts to maximize their profits before the industry evolves into a barely recognizable future.