Bank of America’s annual “Car Wars” survey predicts the industry will get a major jolt as carmakers introduce fleet of new electric vehicles in the next four model years, starting this fall.
The study, prepared by Bank of America’s lead analyst John Murphy, also cautions the pile up of new models in the crowded crossover segment will put pressure on the profitability of almost every manufacturer.
Toyota and Honda are expected to gain market share during the 2022 to 2025 model-year period while General Motors and Stellantis are expected to see losses because, despite the introduction of new electric vehicles, their overall line-up will be among the industry’s oldest.
The GM and Stellantis products will be just above the industry’s average “showroom age” or the time a vehicle has been on the market of three years, according to the Car War study.
The study also forecasts the number of new vehicle introductions is about to jump substantially, from a low of 34 new models during the 2021 model year, to an average of 60 new launches in the next four model years as carmakers race to bring on EVs.
New manufacturers to fall short
“A number EV-oriented automakers “have emerged with product targeted to launch over our forecast period, but a fierce competitive environment may limit success,” the study notes.
“Product activity is increasingly varied among OEMs and relative gaps are opening again. The range of strategies span OEMs with product pipelines focused on traditional high-volume models to OEMs focused on lower-volume electric vehicles.”
However, the “replacement rates appear” elevated versus historical levels due to the low volume base of 2020, even though product activity is generally still strong.
Throughout the forecast period, the new model mix is 72% utility vehicles — with much of that tilted toward crossovers and SUVs — and light trucks and 28% cars. The lack of balance creates risk, according to the study.
“Our lower average showroom age estimates are partially a result of an elevated level of product cancellations by OEMs, particularly in the passenger car segment,” the study says.
When assessed by traditional replacement rate, Honda and Toyota, appeared to have an advantage during the period. However, GM — and to a lesser extent VW — appear well positioned with regard to powertrain investment and EV introductions, according to Car Wars.
Detroit’s automakers lag on replacement rate
Overall, Detroit’s automakers all lag the industry replacement rate, though Ford is slightly ahead on a reaccelerated product cadence, GM behind due to lower-volume EV launches, and Stellantis, the former FCA, in the middle after a few hot launch years, the study says.
On the other hand, the Japanese manufacturers each have a somewhat volatile product cadence during the 2022-2025 model-year run and with a differentiated segment focus relative to the rest of the industry. Honda and Toyota lead the industry in cumulative replacement rate, while Nissan is behind.
Hyundai’s and Kia’s replacement rates are a bit behind the industry average, but they accelerate through each year of the forecast period. The South Korean pair’s launch mix is heavy — perhaps too heavy? — small cars and CUVs versus the industry, the study notes.
European manufacturers total replacement rate is just below the industry average, with Daimler ahead, VW more in line, and BMW behind. Product launches are dominated by the luxury, sporty cars and CUV segments, as well alternative powertrains, according to Bank of America.