Musings from the CU Suite

Written by Anthony Demangone

Driverless cars.  

I haven't seen one on the roads yet. I don't know anyone who has. 

But this phenomenon could affect your bottom line. Not today, but down the road a bit.

Driverless cars could drive a great reduction in the number of cars, according to a study from the University of Michigan. Fortune magazine wrote about the possibility...

The study essentially posits this: if autonomous cars become the norm, they could be shared by two people in the same household. Say Jack and Diane are married and live in the center of a medium-sized city, one where there is no major public transportation to speak of. Their self-driving car could take Jack to his job in the suburbs, then return to the apartment, where Diane would get in and be shuttled to her job in another part of town. The two no longer need their own vehicles to get to work, and can share the one autonomous car without having to deal with car pooling or going out of their way.

“This reduction in ownership and an accompanying shift to vehicle sharing within each household, in the most extreme hypothetical scenario, could reduce average ownership rates by 43% (from 2.1 to 1.2 vehicles per household,)” the report says.

What if they are right, and America sees a 40% reduction in cars? How would that affect your loan portfolio? Where would you make up the lost revenue?

What if is a powerful question. So, who is your CWIO? (Chief What If Officer?)