Welcome back to the latest episode of The Future of Automotive, with Steve Greenfield, Founder and CEO of Automotive Ventures, where we put recent automotive and mobility news into the context of the broader themes impacting the automotive industry.
If you missed last week’s show, you missed my nine big predictions for the automotive industry for 2024. Don’t forget to check them out here.
This week, I want to look forward and discuss what the investment climate may look like over the remainder of 2024.
First up, we should all be thankful that it looks like we successfully avoided a recession. And while 2024 may prove slower than usual growth, it’s looking increasingly less and less likely that this will be the year that the U.S. economy tips into a recession. Fingers crossed and knock on wood!
Having said that, high-interest rates and declining inflation will likely continue throughout the year, which will continue to limit consumer spending. And the labor market is expected to weaken.
Interest rates should begin to drift down from their recent highs. We’re already seeing evidence of this in consumer mortgage rates. Though the downward trend likely won’t be rapid, nor really that significant, any decline will help improve affordability for both homes and for vehicles.
Over the course of 2024, consumer spending will likely slow down, but should remain healthy enough to continue to support moderate growth.
So, the 2024 economy may not prove to be overly exciting – but we’ll be in far better shape than if we were having to live through the recession that never came.
Having said all of that, it’s an election year, and this one is going to be a doozy. I fear that the mudslinging is going to get really, really bad, and there will be a lot of finger-pointing back and forth about the big issues this year: the state of the economy, immigration, foreign policy including China, Ukraine and Israel, electric vehicles and climate change.
The IPO market is expected to effectively remain closed through the first 6 months of the year. But there should be signs of life of it opening back up the latter half of the year.
The Fed should start to cut rates, albeit moderately, which will help the markets.
Mergers and acquisitions will accelerate throughout the year. The anticipation of rate reductions will motivate a lot of the capital that has been sitting on the sidelines – which will fear that valuations will start to strengthen. Private Equity will begin to get energized, becoming an important buyer of companies, driven by lower debt costs.
AI will continue to be the big buzzword this year. Companies will begin to report meaningful improvements in productivity from AI, reducing their headcount growth, and eliminating operating costs. This should start to accelerate productivity per worker.
Finally, in terms of the venture capital landscape – in which Automotive Ventures exists – valuations for early-stage companies has already started to stabilize, and as the fear or recession has subsided, along with an environment of lower interest rates, companies will be better positioned to raise money and to ultimately exit.
Other than the significant amount of uncertainty and volatility around the election, it should be a pretty good year, all in all.
Companies to Watch
Every week we highlight interesting companies in the automotive technology space to keep an eye on. If you read my weekly Intel Report, we showcase a company to watch, and we take the opportunity here on this segment to share that company with you.
Flow Labs
Flow Labs’ AI-powered platform generates the most accurate transportation data available today to analyze, monitor, and optimize traffic flow across an entire city in seconds.
Flow leverages AI to process, clean, and integrate data from multiple sources to create the most reliable model in the industry of what’s happening on a city’s roadways.
The company then uses AI-backed solutions to automatically address transportation safety, equity, mobility, and its environmental impact, all at a low cost.
Even with more transportation data available than ever before, traffic still costs us time, emissions, money, and lives. But with a better approach to collecting and using data, it doesn’t have to be this way.
Flow Labs delivers proven results: They reduce vehicle travel times by up to 24%; reduce vehicle emissions by up to 21%; and reduce crash risk by up to 51%.
If you’d like to learn more about Flow Labs, you can check out their website at www.flowlabs.ai.
If you’re an AutoTech entrepreneur working on a solution that helps car dealerships, we want to hear from you. We are actively investing out of our new DealerFund.
If you’re interested in joining our Investment Club to make direct investments into AutoTech and Mobility startups, please join. There is no obligation to start seeing our deal flow, and we continue to have attractive investment deals available to our members.
Don’t forget to check out my book, “The Future of Automotive Retail,” which is available on Amazon.com. And keep an eye out for my new book, “The Future of Mobility”, which will be out at the end of the year.
Thanks (as always) for your ongoing support, and we look forward to working closely together with you to create the future of this industry.
Thank you for tuning into CBT News for this week’s Future of Automotive segment, and we’ll see you next week!
