Cars

Forecasting the auto industry does not require a crystal ball

Hybrids like the Toyota Prius are gaining in popularity, but their technology will make its way into more conventional vehicles as the decade progresses.
Hybrids like the Toyota Prius are gaining in popularity, but their technology will make its way into more conventional vehicles as the decade progresses.Kimimasa Mayama/EPA

Predicting future trends in the auto industry is not that difficult. One does not require the wisdom of Nostradamus to know that cars are becoming more fuel efficient; most traditional SUVs are going the way of the eight-track, and small cars are better equipped than ever to accommodate younger drivers and well-heeled city folk.

But to make more protracted predictions of the auto industry, it’s better to refer to an industry analyst than a crystal ball. Less a soothsayer, and more a translator of data, the analyst is able to make crucial predictions about the automotive industry and determine car sales for a given month before they are even in the books.

Michelle Krebs is the Senior Analyst and Editor-at-Large of Edmunds.com. She insists others around her are to be credited for her final analysis. “We have a lot of analysts on staff constantly pouring over data,” explains Krebs. “I may be the ‘face’ of the data, but we have dozens of employees that assemble it. I simply put it into context and build the story around the data.”

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For many analysts tied to large sites, like Edmunds, AOL Autos, and Cars.com, it means looking at how and where visitors are using their site. Data is collected as individuals start to research information about the vehicle on their respective sites. It turns out that we are predictable creatures: “We can tell if someone is going to buy a car in the next four to six weeks,” claims Michelle, “we are able to do this based on seeing how and where someone is using our site.”

So why is this data important? Why should we care about the analyst’s ability to prognosticate about the auto industry? Because impartiality is always a good thing, no matter the industry or business. “Automakers can spin how a car is performing in sales,” says Krebs, “but the data is the data, and the numbers tell a black-and-white story.”

Still, the auto industry has a lot to be happy about. The Big Three American automakers moved 10 million vehicles combined last year, and the continental triumvirate is also poised for big growth. Krebs and her team are predicting an impressive 15.3 million in sales for next year. A great deal of that will come in the form of competent family sedans like the Ford Fusion, and compact crossovers, like the Chevy Equinox.

The big question, then, is which types of vehicles will move off the lot and who will be buying them. In years past, hybrid sales were tied almost directly to fuel prices, but now vehicle sales have become more impervious to the price of regular unleaded. According to Krebs, elements from hybrid cars will continue to make their way into conventionally powered road cars.

“In order to meet the Corporate Average Fuel Economy regulations for 2016 and beyond, we’re going to see a continued electrification of common vehicles,” explains Krebs, “be that stop-start, regenerative braking, what starts in electric vehicles and hybrids will be in more and more ‘non-hybrid’ vehicles.”

While journalists and industry personnel love to make all sorts of predictions about the automotive industry, Krebs is often forced to poke holes in theories; “A lot of times, the media and the industry will come to us with a prediction,” Krebs says, “and our data dispels it. Quite often we’ll see a quote by a manufacturer and have to call them out on it.”

So what does the next five years hold for the auto industry? How about the next ten? Well, like those theorists that may leave Michelle’s office disappointed, the future that has been crafted by some journalists and industry folks may be a little farther off than expected.

“Alternative fuels will continue to grow,” hypothesizes Krebs, “but will continue to be an extremely small portion of the market. There is just so much more that we can get out of the gas internal combustion engine.” However, Krebs says that those alternative fuels will continue to gain popularity at the speed with which the infrastructure grows; “The gas engine will still be king, but with the right breakthroughs, picking a propulsion system at a dealership will be like selecting the car’s options.”

But there are certain elements to our automotive future that analyst data has not yet been able to predict. “One of the big questions,” says Krebs, “is ‘what are Millennials going to buy’—if anything at all?” As we move into a more fuel efficient, connected time, our cars will need to keep up. Though many news outlets have claimed that the younger generation does not care about cars, people still need to get to work and back. We’ll just have to wait and see. Anything past a decade, and you’ll need that crystal ball after all.

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