If only we had a nice time series of data to use in forecasting demand for the relatively new product like electric cars! We could take several of the quantitative models in Chapter 4, Forecasting, and present a report complete with error measures such as MAD.
But when the product is heavily promoted battery-powered vehicles about to appear on roads around the world, such math models do not apply. We talk about 4 qualitative methods in the chapter, and these become our toolbox. Most forecasting firms, as we see in The Wall Street Journal (Oct.28,2010), turn to consumer market surveys to predict sales through 2020.
J.D.Power, for example, thinks sales will remain low and be only a small slice of the global market even a decade down the road. That firm puts the combined forecast of hybrids (such as the Toyota Prius) and all-electric models (like the Nissan Leaf) at 5.2 million cars in 2020. This is just 7.3% of all 70.9 million passenger vehicles to be sold by then.
Boston Consulting Group, in its separate study, forecasts hybrid and electric autos making up 26% of the 2020 global market. PRTM, yet another forecasting group, estimates the total at 30% of the market. PRTM thinks battery prices will fall enough to make prices the same as standard models.
Why the huge spread? “Based on our research of consumer market attitudes towards these technologies, we don’t anticipate a mass migration to green vehicles in the coming decade”‘ says one J.D. Powers VP. “Everybody feels that everybody else should be driving environmentally friendly vehicles”, says another Powers VP. But the CEO of a different firm states, “I think we might be underestimating the enthusiasm of the customers”.
Discussion questions:
1. Discuss the dangers of using consumer market surveys to forecast.
2. How have firms forecast the demand for other new products, like color TVs or HDTVs?
3. What could have a major impact on buyers’ behavior?