Aging Vehicle Lineups and EV Delays Challenge Automakers, Analyst Warns
As the automotive industry grapples with an evolving landscape, consumers might find themselves in showrooms with fewer new vehicle options. This stagnation, influenced by delays in electric vehicle (EV) production, poses a significant threat to automakers, according to former Bank of America Securities analyst John Murphy.
Murphy, now a consultant with Murphy Automotive Partners, forecasts that profitability may rebound later in the decade as new models, particularly rugged midsize SUVs and hybrids, gain traction. His insights are drawn from his newly established Murphy Automotive Product Pipeline report, which builds on the foundation of the annual “Car Wars” study.
During an event held by the Automotive Press Association, Murphy highlighted the current downturn: “You have never seen a three-year period this low,” he remarked, referring to the bleak outlook for the automotive industry between 2026 and 2028. He noted that a revival in 2027 is anticipated due to the introduction of updated Silverado and Sierra models, yet the broader industry continues to struggle significantly.
Murphy’s analysis indicates that brands with fresher models tend to gain market share, while those with older lineups lose out. As Chinese automakers make aggressive inroads with rapidly redesigned, subsidized vehicles, Murphy predicts that only about 15% of the world’s 350 automotive brands will survive the coming decade. He expects consolidation to result in a few dominant “national champions” from key regions like the United States, Europe, Japan, and South Korea.
Under the Biden administration’s push for EVs to constitute half of U.S. sales by the decade’s end, many automakers accelerated their EV projects. However, demand has lagged, exacerbated by the cessation of government subsidies following President Donald Trump’s return to office. Consequently, automakers have incurred about $70 billion in write-downs due to program cancellations and launch delays, resulting in a notable gap in new-vehicle introductions until the late 2020s.
“The average product age gets up to 4.8 on a volume rate basis,” Murphy pointed out, highlighting a scenario where consumers face limited new options and increased prices for familiar models. This market condition presents a challenge as automakers attempt to charge significantly more without substantial product updates.
Murphy envisions hybrids becoming a dominant solution for fuel efficiency and emissions standards, rather than merely serving as a transitional technology toward EVs. “The industry is proving out that hybrids are more of a global solution and not a bridge,” he commented, emphasizing the need for future administrations to carefully regulate the industry to maintain competitiveness.
The market’s core is expected to shift from midsize SUVs to more affordable small crossovers and niche models like compact pickups and rugged off-road vehicles, following trends set by the Ford Maverick and Bronco. “It is a good thing for industry profitability,” Murphy noted, projecting potential run rates 5% to 10% higher than those in 2025 by 2028-30. He anticipates that automakers will capitalize on high-end market segments and premium trims, which offer substantial profit opportunities.
The anticipated average transaction price for vehicles is expected to rise to $56,000 by 2030, compared to $49,000 in 2025. This price increase aligns with shifting consumer preferences and market strategies. Stephanie Brinley of S&P Global Mobility compared the situation to the decline of station wagons and minivans: “People want something different.” Similarly, Sam Abuelsamid from Telemetry Group noted that small crossovers offer a more cost-effective option for those not seeking larger vehicles.
Stellantis NV, the parent company of brands such as Jeep and Chrysler, represents an unpredictable element in the industry. The company is channeling approximately $25 billion into North American products as part of a $70 billion global turnaround plan. Murphy expressed concerns over Stellantis’ strategy, describing it as “discombobulated” and potentially disruptive to the market.
Ultimately, companies with robust truck portfolios, like the Detroit Three, and those with hybrid offerings, such as Toyota Motor Corp., are well-positioned to succeed. As Murphy stated, “There’s going to be some clear winners and losers.”
Original Story at www.detroitnews.com