Driverless Cars: Good For Manufacturers, Bad For Auto Parts Retailers
By Business Desk
Saturday, March 25, 2017.
For decades, auto parts retailers have been the golden boys of the retail sector. Despite the ups and downs of the global economy, these firms have shown consistent earnings growth, the highest margins in their sector, and a lot of protection from online traders. As a result of this, their stocks have enjoyed a pattern of high valuation and outperformance on the market.
On the surface, it seems like a great time to own a parts store, but this is only the tip of the iceberg. Major auto parts retailers, stocking brands such as Flowmaster and Thule, certainly have an impressive record behind them. However, all this may be coming to an end, thanks to a new emerging technology which could turn the whole auto industry on its head.
It’s been found that self-driving cars have at least some degree of potential to leave auto part retailers out of the whole question of auto-repair. It may sound like something out of a science fiction, but the age of driverless cars is very real, and almost around the corner. BMW, Audi, Ford and Nissan are just a few of the big names that have promised to release self-driving cars in the next five years or so.
This shift towards progress has led to various new partnerships, which may prove essential to make driverless cars a reality.
In and of themselves, these kinds of deals are nothing new. Car supply chains, now more than ever, span levels of companies which are scattered all over the world. It’s just another fact of the global business arena that automakers will merge and sever, occasionally sharing engines or vehicle platforms, and pass around smaller badges like trading cards. The goal never changes: reduce cost and complexity, while upping profit.
Now, manufacturers are driving into a new age of the industry that will require greater expertise in AI, manufacturing, mapping skills, and piles of capital. While the stage we’re at now is certainly complex, it’s not expected to be extremely dramatic, and driverless cars are fast approaching. It’s going to be much more strenuous to create stable and long-lasting businesses that turn a profit by producing millions of driverless cars, but there don’t seem to be any kind of glaring obstacles in the way.
Driverless cars may be great news for manufacturers, but some suggest that it could spell major difficulties for the auto parts industry, simply because the niche’s current stability leans on human error. Drivers who have a habit of heavy braking can cause rotors, callipers and brake pads to wear down faster. Fast acceleration strains the valve trains and fuel pumps.
These are just a few of the ways that bad driving habits can shorten the life of essential car parts, and send drivers to the mechanic. When driverless technology becomes the norm, these kind of issues will vanish, and auto part businesses around the world will see their sales cycles slow down astronomically. Although autonomous vehicles are some way away, the whole sector will need to adapt very quickly!