Ford CEO Mark Fields thinks that the U.S. car market will keep booming for some time to come, and he’s not worried that millennials and their changing attitudes toward car ownership will hurt the company.
At a press event in San Francisco this afternoon, Fields said that he thinks the current economic state of the country and “physical” state of the car business is “very supportive of an industry in the 17 to 18 million units for the next couple of years.”
In 2014, 16.5 million new cars were sold in the U.S., according to Autodata, and were on pace to come close to 18 million this year based on May sales data.
Economically, Fields notes that there was a sharp crash in sales during the recession of 2008 and 2009, but unlike after past crashes, there was no big spike or rebound coming out — instead, the rise in sales has been slow and steady. The labour force and other economic conditions favour a strong car market.
More important, he notes, is the fact that “the inventory of the cars on the road today is the oldest they have ever been — 11 and a half years old.”
Pickup trucks, which are a big part of Ford’s business, are even older — “25 per cent of full-size pickups are 20 years or older, and 50 per cent are 10 years or older. That’s before the housing industry came back pre-recession. The housing industry is most closely correlated with full-size pickups.”
Since 70% of car sales are driven by replacements, that all spells good news for Ford and the car industry in general.
He also dismissed the notion that millennials and their changing attitudes toward car ownership would be a huge problem. Yes, today a lot of millennials — especially those living in cities — prefer “access instead of ownership,” thanks to expensive parking, traffic, and so on. A lot of those millennials may favour self-driving (autonomous) cars when they become available.
But as they get older and have kids, a lot of them will turn to cars for the same reasons their parents did.
“The world is not going to evolve to just autonomous vehicles roaming the planet and any time you want one you just hit your smartphone. Life stage comes in to play. When they’re in the stage where they’re having kids, does mum or dad want to schlep two car seats from shared vehicle to shared vehicle? Part of my car was my roaming cargo facility, I kept all our stuff in there. So it will be a spectrum. We see autonomous vehicles, and vehicles with more semiautonomous features.”
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.