U.S. auto sales remained brisk in August but showed continuing signs of moving away from the blistering pace set a year ago, further fueling concerns the industry’s best days are behind it.
It’s hard to know whether this is signal or noise. There is certainly a story to be told that it’s a real trend:
- Americans are migrating into urban cores, where costs to owning a car increase and benefits decrease
- Ride-sharing services like Uber and Lyft are reducing demand for car ownership
- Longer lives of existing vehicles reduce the need for new car purchases
- Mass-transit is improving (I’m not sure that’s actually true, but maybe)
But it’s not obvious to me if that’s a real explanation or just one of many theories that happens to fit the facts.
What is true is that self-driving cars are really going to increase the power of that second bullet point.
A good model for this might be DVD sales. As the ease of streaming movies increased, DVDs sales dropped. Pretty classic substitution effect from business school.
As the ease of hailing a self-driving car increases, I expect car sales to drop, too.
And so do the automakers, which is why they are racing to become mobility companies.