Sunday, September 13, 2015

Auto Industry to Follow Path of Telecom Industry: Mature Product Life Cycle

It might provide small comfort, but the telecom industry is not the only market facing maturity and therefore declining sales for legacy products.

The National Automobile Dealers Association (NADA) said that U.S. car sales would likely begin to decline in 2017 after threatening new all-time sales records in both 2015 and 2016.

A report by the U.S. Public Interest Research Group points out that Millennials are less car-focused than older Americans and previous generations of young people, and their transportation behaviors continue to change in ways that reduce driving.

Between 2001 and 2009, Millennials made four percent more trips on public transportation, walked 16 percent more, and rode their bikes 27 percent more. Driving trips declined by 15 percent.

Because there will be less demand, it eventually will take four younger consumers to replace the auto spending of just one present baby boomer customer, the auto dealers association has predicted.

That contraction might have today’s automakers casting about for new lines of business to pursue, much as telecom service providers have been doing.

Many of us, 30 years ago, would have been hard pressed to envision a world where underlying demand for telecom or automobile products dropped, instead of growing.

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