Niche Autos Today, Big Business Tomorrow?

Energy-efficient vehicles snag the top spot in some markets, while self-driving pioneers prepare for a future in the sun.

Auto manufactures had a big reason to celebrate in 2013, according to the LA Times, with 15.6 million in annual new vehicle sales translating to the industry’s best performance in five years. Credit unions have also shared in this good fortune, with new auto loans up 11.3% annually as of 3Q13, according to Callahan & Associates’ Peer-to-Peer analytics.

Buried within this positive activity are a number of interesting trends, particularly when it comes to next-generation, energy-efficient vehicles and buyers’ attitudes towards them.

While hybrid and electric vehicles still make up a fairly niche segment of the market, there are several bright standouts whose performance indicates a more mainstream role for this technology in the years ahead.

For example, Tesla Motors’ electric Model S luxury sedan already outsells comparable gasoline models from rivals BMW and Mercedes, says anotherLA Timesarticle, andForbesreports it is the most registered new car in 8 of the 25 wealthiest zip codes.

These trends aren’t just limited to certain markets or consumer segments either. The hybrid Toyota Prius was not only the top-selling vehicle in the entire state of California last year, but the company also moved an astounding 234,000 units nationally over the same time frame. That’s almost equivalent to 1/3 of the national volume for the best selling vehicle that year, Ford’s F-Series pickup, of which 763,402 were sold.

Recession paralysis may have stifled both manufacture innovation and buyer enthusiasm over the past few years. But now that so many companies are bouncing back and putting new energy into promotion and experimentation, credit unions should plan for corresponding shifts in consumer behavior and preferences as a result.

Smart cars equipped with apps are one highly promoted new trend. Yet the biggest potential change on the horizon is the evolution of the self-driving vehicle. While no such product is expected to be road legal and available to consumers within the next few years, oneindustry forecastpredicts that self-driving vehicles will actually make up 1% of the US auto market by 2025 and 9% of the market by 2035.

January 10, 2014

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