The effect of increasing vehicle utilization on the automotive industry

David R. Keith, Sergey Naumov, Hannah E. Rakoff, Lars Meyer Sanches and Anuraag Singh

European Journal of Operational Research, 2024, vol. 317, issue 3, 776-792

Abstract: Shared mobility is widely expected to play an important role in the future of transportation. Sharing vehicles (using services such as ride-hailing, peer-to-peer car-sharing, and autonomous taxis) will allow people to enjoy the benefits of automobile use without ownership, access various types of mobility services on-demand, and create value by increasing the utilization of these expensive and durable assets. Most analysts agree that widespread adoption of shared mobility would cause the size of the on-road automobile fleet to shrink, potentially dramatically, because the same amount of personal mobility can be provided by fewer vehicles. There is less agreement, however, on the effect higher utilization will have on the rate of new vehicle sales: some believe that vehicle sales will fall similarly, while others believe there will be no change in sales, or even an increase in sales as fleets of shared vehicles turn over more frequently. In this paper, we seek to clarify the effect that emerging mobility technologies will have on the future rate of new vehicle sales in the United States, modeling how the sales rate varies with factors such as population growth, vehicle utilization, and vehicle durability. We show across a range of plausible scenarios that vehicle sales are likely to remain steady or increase in coming decades. However, the potential exists for a temporary surge or dip in sales as the composition of new vehicle sales transitions, requiring effective mental models if managers are to make efficient production and capacity planning decisions during this time.

Keywords: System dynamics; Mobility; Sharing economy (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:317:y:2024:i:3:p:776-792

DOI: 10.1016/j.ejor.2022.10.030

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