A closely watched annual report on the auto industry says product planners will soon be facing one of the most challenging stretches in history as they try to juggle a looming electric vehicle transition.
But the 45-page “Car Wars 2024-2027” report released this week from BofA Global Research, which is part of Bank of America, also highlights how it sees Ford, General Motors and Jeep- and Chrysler-parent Stellantis stacking up as they replace their vehicle offerings in coming years.
For the Detroit Three, the picture is mixed, with Ford leading, GM in the middle and Stellantis, which also owns the Ram, Dodge and Fiat brands, bringing up the rear, according to the report.
“The Detroit Three book end the range in terms of replacement rate, with Ford among the leaders in the industry (behind only other OEMs), Stellantis lagging and GM about in line with average,” the report says, using an industry abbreviation for automakers. The other automakers include Tesla and other EV entrants.
The report also highlights Ford and GM’s “relatively solid” EV strategies and Stellantis’ “evolving” strategy.
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A spokeswoman for Stellantis was asked for comment. Stellantis is planning to launch its first electric pickup, the Ram 1500 REV, in coming years, and the report anticipates a small EV pickup from the automaker as well.
Replacement rate, the report notes, is the percentage of the automaker’s sales volume to be replaced with new or next-generation models.
That has implications for the bottom line.
“We believe replacement rate drives showroom age, which drives market share, which in turn drives profits, and ultimately stock prices,” the BofA Global Research report says.
And while it forecasts a competitive stretch that could challenge profits in some cases, the report also shows a silver lining for the industry in terms of U.S. auto sales, projecting “a relatively steep increase” from 14.3 million vehicles in 2023 to a new peak in the auto cycle at about 18 million by 2028.
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Before then, however, the industry will be in a bit of scramble.
“The challenging macro and shifting powertrain strategies are wreaking havoc on product planning. There is a significant acceleration of EV launches, greater uncertainty around new (internal combustion engine) launches, and likely more last-minute product cancellations. The next four-plus years could be some of the most uncertain and volatile for product strategy ever,” the report says.
Contact Eric D. Lawrence: elawrence@freepress.com. Become a subscriber.