McKinsey Report on the future of the Automotive world: too conservative?

Very recently McKinsey & Company, one of the most known and prestigious consulting firm in the world (see for example this ranking: link), published an article and a related report regarding the possible scenarios for the future of the automotive industry, with a specific target date of 2030.

Here you have the links to these interesting resources:

• Article

• Report (PDF format) 

I do agree on most of the possible scenarios presented in the report, but I think that this research took a quite conservative approach regarding the extent of the changes which we are going to see in the next 10-15 years in this industry.

For example, the article is forecasting that "up to 15 percent of new cars sold in 2030 could be fully autonomous" even in the high-disruption scenario (note: fully autonomous cars are defined as requiring "no driver intervention for the entire trip". For a more detailed classification of the level of autonomy in the car, the one made by the NHTSA can be a good resource: link).

There are currently different opinions among industry top leaders regarding how fast the fully autonomous vehicles will be commercially available. For example, Elon Musk, CEO of Tesla Motors, is targeting to have fully autonomous vehicles within 5-6 years (link. Note: he said this in September 2014, so the horizon is now shorter, circa 3-5), while Swamy Kotagiri, CTO of Magna International, predicts a much larger time frame of 20 to 25 years and Volkmar Denner, CEO of Bosch, said "We won't see full autonomy in the next decade"(link. Note: these comments were released during this year CES in Las Vegas).

Many are the obstacles which a fully autonomous car will have to face, the technological ones being only the first ones, but Google has already (since December 2014) a prototype car which is fully autonomous, to the point that there is no steering wheel in the car, thus not allowing to actually intervene and take control of the car in the usual way (safety systems are of course integrated and there is a possibility to manually drive the car). Here some footage of the car created by Google.

 

Although being still a prototype, these cars from Google (including earlier version based on normal vehicles) have driven more than 1 million miles in autonomous mode. Given also the fact that Google is not the only company putting R&D resources on this topic, my personal opinion is that fully autonomous cars will be available (at least in selected regions/areas) quite soon: as such, I do tend to agree with the time frame declared by Elon Musk. Having autonomous cars available as early as 2020, in 10 years there will be the possibility to have a market penetration of more than just 15%.

ACEA Data - New registrations by Manufacturer - Intro

Being a well-established industry in which several associations are present, it is fairly easy to find free and publicly available data on the automotive world, at least for the new vehicle registrations. For example, ACEA (Association des Constructeurs Européens d'Automobiles in French, European Automobile Manufacturers’ Association in English) has a specific section dedicated to different statistics, providing reports, forecasts and data.

It is actually this part that I find at the same time interesting and with the possibility to extract relevant information out of it. The way in which data is provided is in my opinion not optimal, for several reasons (I will take as example the New Registration data by Manufacturer, as for example here):

• There is a different file each year (at least, as in some cases, two files are present, one for Western Europe one for Enlarged Europe, see below*), not allowing for an easy historical view.

• The data is provided in a table in which the month and brand/group (or country in the By Country datasets) are represented in the columns and lines, respectively. Giving the fact that there are tens of brands, the amount of data present is very high, and it is not easy to focus on the more relevant numbers.

• Subtotal are present: they do help in clustering data at a higher level then just brands, but at the same time they do complicate the process of extracting and re-workiong the data, as they are actually a repetition (aggregation) of data already present.

• Extra point, not really critical: The naming of the files is not consistent, there was a naming change over time and in several cases the filename is somehow different.

Given all these point, I decided to rework the data files, in order to have all the data in a single file and in a format that allows quicker and more effective analyses, with the possibility to create custom reports with just a few clicks. The format I think it is most useful  has in each column a specific dimensions (time, group/brand) and each line represent a single data point (see screenshot below). In this way, it is very easy to use the powerful pivoting functions present in Excel and other softwares.

At the moment I'm still in the process to tranform the data (possible topic for a near-future post, an explanation on how I'm performing the format convertion), so I have data from 2006 up to 2013 (most recent data available) and I'm focusing only on the passenger cars (PC) segment for the moment.

The figure below is graph obtained from the data I already processed. As it can be seen, the market is schrinking from its high levels in 2006 and 2013. Overall, in the 7 years before 2013, there was an decline in the number of registration in Europe: a CAGR (Compound Annual Growth Rate, see more explanations on Investopedia) of -3,52% can thus be computed.

More analysis and the full dataset will come soon and there will be new posts soon on this topic. If you are interested, the actual file (as mentioned, not complete) can be downloaded from clicking here.

* Western Europe: EU15 (Austria, Belgium, Denmark, Finland, France, Greece, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, the UK) + EFTA (Iceland, Norway, Switzerland)

Enlarged Europe: Western Europe + EU11 (Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia)

First post: Declaration of Intent

Here I am, in front of the proverbial blank sheet of paper (well, actually a screen, but the effect it is the same).

The decision to open a blog on this topic was in my mind since at least several months, if not more. Now, in this 2016, I put this blog among other good intentions/goals for this year. So, again, here I am!

In my first post I would like to declare my intentions, both in terms of what I'll write about and how often.I would like to:

• write about the automotive industry (but I do not exclude "guest posts" on other industries),
• providing the results of my own analyses on publicy available data
• or linking and commenting analysis and articles from other people,
• with at least two posts per week 
• for at least the full 2016

This sounds quite straightforward, but I wanted to put down my objectives, mostly for myself. However, as they are now online, this becomes also a public commitment.

Now, time to think about the first few posts...