John Murphy, senior North American automotive equity research analyst for Bank of America
A new report by Bank of America is predicting a rough road ahead for the auto industry—but it does appear to be a few bright spots in it all for the Detroit Three automakers.
The details: Bank of America's annual "Car Wars" report predicts automakers will launch far fewer new models over the next four years than previously expected.
The report now forecasts 159 new models to be launched over the next four years, down from a 2024 forecast of 200 models over the next four years, which aligns with the traditional launch rate.
Murphy said there are 29 new model launches scheduled for this year, the lowest number of new launches in decades.
The replacement rate for Detroit automakers from model year 2026 to 2029 will fall around the industry average of 16%, suggesting that their market share will likely remain stagnant.
What they’re saying: "This year, at 159, is a dramatic decline from above 200 last year. We have never seen this kind of change before,” said John Murphy, senior North American automotive equity research analyst for Bank of America (via The Detroit News).
Between the lines: The drop in new vehicle launches over the next four years is heavily attributed to automakers pumping the brakes on their investments into EVs, prompting several write-offs in the sector, noted Murphy.
“Car Wars” projects that there will be 71 electric vehicle nameplates offered over the next four years—which is roughly half of what was forecasted two years ago.
Last year, Ford wrote off nearly $2 billion when it nixed plans to launch a new all-electric SUV—saying that the EV would not have been profitable in the first year.
However, Murphy’s outlook on the industry isn’t all doom and gloom. The analyst predicts that even with the predictions of a lower number of new vehicle intros, the Detroit Three automakers will likely have some pretty profitable next few years, driven by their core products.
Bottom line: Companies invested heavily in electric vehicles expecting rapid adoption, but with EVs stuck at 8-9% of sales, they're now cutting back on new products to preserve cash. This means car buyers will have fewer new options to choose from over the next few years as companies focus on their most profitable existing models.
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