PricewaterhouseCoopers: car sharing or will bring destructive power

On December 9, PwC automotive analysis team Autofacts released the global and China auto market dynamics and future prospects for the new year. The company specifically reminded the industry to pay attention to the car sharing consumption model, and believe that it is very likely to develop into an industry changer.

PricewaterhouseCoopers is optimistic about the growth prospects of the global automotive industry in the coming years. In 2014, global light vehicle production is expected to reach 86 million units, up 4% from last year. Autofacts expects this number to increase to 109.5 million units in 2020.

“The biggest increase in future production comes from developing markets, especially the developing Asia-Pacific region, which is expected to account for 60% of total production growth between 2013 and 2020,” the Autofacts analysis reported. The agency predicts that China's automobile production in 2020 will be close to 40 million, far more than the 24.84 million in the US at that time, and India's 2020 car will be on the same level as the United States, reaching 24.84 million.

Due to the slowdown in market demand growth, China's auto industry will also face the problem of overcapacity while its output is growing. Autofacts believes that by 2020, China's auto market may only maintain a growth rate of 6% to 7%. It is estimated that by 2016, China's auto industry's excess capacity will increase to 11 million units, of which the main excess capacity will come from independent brand auto companies. In contrast, the current capacity of multinational companies such as GM and Volkswagen in China is still in short supply, and independent brands may need to find a way out for overseas markets.

In addition to the traditional global automotive industry development forecast, Autofacts reminds the automotive industry to focus on car sharing. The car sharing boom triggered by smartphone apps may have an incalculable impact on the automotive industry. According to an analysis released by the University of California at Berkeley, in North America, the number of private cars replaced by a shared vehicle is equivalent to 9 to 13 private cars.

“The car is used for a small amount of time a day, and it is considered an important idle asset at other times,” said Liao Zhongmin, managing partner of the automotive industry in PricewaterhouseCoopers Greater China. Millennials, young people under the age of 27, are not as interested in owning cars as their predecessors, and with the use of mobile Internet, car sharing is likely to see rapid growth in the near future.

"You are witnessing the starting point of the car sharing market, and it is becoming mainstream," Autofacts quoted an analysis report. Globally, there were only 80,000 vehicles used for car sharing in 2013, and this number could increase to 300,000 in 2018.

"Car sharing may change the car society, it brings cost savings, environmental protection, and lifestyle changes," Liao Zhongmin pointed out. Autofacts analysis said that the demand for car sharing in China is theoretically higher than in many other countries, because the traffic conditions in China's big cities are more congested, and the number of people holding licenses is 140 million more than the number of civilian vehicles.

“80% of Chinese consumers are not aware of car sharing, but after hearing a brief introduction about the benefits of car sharing, 47% of consumers changed their minds and expressed their willingness to consider it,” Liao Zhongmin said. According to PricewaterhouseCoopers, there are hundreds of first- and second-tier cities in China suitable for automotive pilot projects, especially in areas with heavy traffic congestion, restricted car licenses and high penetration of smartphones. Some major Chinese automakers are also expected to launch pilot projects in first-tier cities.

“The biggest destructive power of the automotive industry may not necessarily come from within, but from external companies,” said Rick Hanna, PwC's global automotive industry partner. This coincides with the Internet prophecy of the godfather Kevin Kelly at the Telematics@China Summit Forum not long ago. “Once the main obstacles are overcome, the demand and supply of the Chinese market can fully accept the project, and car sharing will have a huge impact,” said Rick Hanna.