A new consumer survey shows how quickly things are changing, as car-sharing dips in popularity and ride-hailing soars; to survive, companies will need different partnership strategies and organizational structures, all while coping with a sales downturn.

Backdropped by what AlixPartners two years ago identified as the “CASE” trends that are completely revolutionizing the automotive industry – the connected, autonomous, shared and electric vehicles of the not-too-distant future – the global business advisory firm has unveiled an analysis detailing how automakers, suppliers and other industry players need to evolve their organizations and their partnering approaches to successfully transition to a “new automotive ecosystem.”

Using several examples, the firm outlined where companies, often relying on traditional auto-industry approaches, are falling behind and why they should consider revamping their operating models. Meanwhile, the report also forecasts a significant downturn in U.S. sales ahead, to 16.9 million light-vehicle units this year and to a cyclical trough of 15.2 million units in 2019 – partly driven by a “used-car time bomb” of 500,000 more off-lease vehicle-returns in 2017 vs. 2016, on top of the 500,000 more in 2016 vs. 2015.

On the connectivity front, the analysis points to the example of Tesla Inc.’s “high-spec” center-stack display, featuring over-the-air upgrades from the company and iPad-like features. Though this feature has been on the market since the 2012 model year, and has garnered very strong reviews from consumers, no other major automaker has moved to match the system.

On the autonomous-vehicle front, the AlixPartners analysis finds there are more than 50 major companies now working on autonomous vehicles or full autonomous-vehicle systems, as well as a plethora of smaller companies and start-ups. This “Wild-West” environment will likely result in a handful of big winners, says the study, but on the other hand, also many disappointed investors. The report also notes that many of the newer high-tech entrants have completely different “DNAs” than traditional automotive companies, including being used to very high returns on capital. Given the white-hot competition brewing, the analysis predicts that AV systems-costs could drop 78 percent by 2025.

On the shared-mobility front, the analysis includes a survey of a total of 2,000 U.S. adult consumers that shows just how fast things are changing in today’s automotive world. The survey polled 1,000 consumers across 10 large markets where both car-sharing and ride-hailing are popular (the metro areas of Austin, Boston, Chicago, Los Angeles, Miami, New York, Portland, Seattle, San Francisco-Oakland and Washington, D.C) and, as a control group, 1,000 respondents across the entire U.S. This mirrored a consumer survey by AlixPartners in November 2013. In this year’s survey, consumers in the 10 trend-setting markets said their awareness for virtually all major car-sharing brands (names such as Zipcar, Car2Go and Enterprise CarShare) has decreased, and 21 percent of respondents were unable to name any brands at all.

By contrast, this year’s survey also asked users of ride-hailing (brands like Uber and Lyft) in those same 10 markets about their intended usage in the next 12 months vs. their past usage, and 24 percent said their usage would be the same or more than in the past, vs. just 5 percent who said less – an 18-percentage-point difference. Meanwhile, just 17 percent of car-sharing users surveyed in those markets said they’d employ car-sharing more in the coming 12 months than in the past – vs. 16 percent who said they’d use that mobility service less in the year ahead. Moreover, among respondents in the 10 markets, the survey found that ride-hailing was five times more likely to be a top-three transportation mode than was car-sharing (11.6 percent vs. 2.5 percent), and three times more likely than traditional taxis (11.6 percent vs. 4.2 percent). In addition, among millennials surveyed in the key markets, 9 percent said ride-hailing has allowed them to postpone or avoid getting a driver’s license – another indicator of today’s fast-changing times.

Another key finding of the survey, coupled with AlixPartners analysis, is that in the 10 key markets each vehicle used in car-sharing is likely replacing the need for 19 personal vehicles – a decrease from 32 vehicles based on the results from AlixPartners’ 2013 survey. Meanwhile, according to the same analysis, one vehicle used ride-hailing is likely displacing four personal vehicles. The report goes on to note that both ride- and car-sharing vehicles are typically replacing vehicles driven less than 5,000 miles per year, not typical commuting vehicles.

On the electrification front, the AlixPartners study reveals that China is investing heavily to take a leadership role in electric vehicles. The report notes that Chinese automakers commanded 96 percent of the 2016 market in China for full electric vehicles (not including hybrids), more than double their share (43 percent) for all types of light vehicles. It also finds that of the 103 EVs to be launched globally by 2020, 49 of them will come from China-based automakers. The report additionally predicts that China is targeting to have two-thirds of the world’s manufacturing capacity for lithium-ion batteries by 2021 (175 GWh of power, or the equivalent of five Tesla “giga-factories”).

Meanwhile, the report notes that hybrid sales in the U.S. have slowed, from 3.2 percent of the market in 2013 to just 2.1 percent so far in 2017, yet plug-in and battery-electrics sales, while increasing, still represent only 1 percent of the market. This, says the study, underscores the need for maximum flexibility in both organizations and partnerships to handle the expected, but bumpy, shift to the new automotive ecosystem that’s coming.

Against this fast-moving, uncertain background, the AlixPartners report forecasts a downturn – vs. the plateau some others are predicting – in U.S. vehicle sales. The report forecasts U.S. light-vehicle sales for 2017 of 16.9 million units, dropping to 15.2 million in 2019. Underlying these forecasts is the report’s findings that for the past 11 months sales incentives in the U.S. have averaged more than 10 percent of vehicle prices – a historical harbinger of downturns, and that there’s a “used-car time bomb” about to explode in the market – 500,000 more off-lease vehicle-returns hitting the market this year than last, likely depressing used-vehicle prices double the 13 percent drop already since 2014, and costing automakers’ captive finance companies up to $5 billion.

The report notes that this all will likely be a double-whammy to new-vehicle sales, displacing sales to cheaper used cars while increasing lease payments on new vehicles as leases get written with anticipated higher residual rates and tighter credit standards.

Finally, and also in a way on the partnership front, the AlixPartners study finds that private-equity firms have switched, in droves, from being buyers to sellers – most often to “strategics” (companies in the auto industry already), as private-equity-to-strategics deals skyrocketed from 6 percent of total auto-M&A transaction values in 2013 to 84 percent in 2016.

John Hoffecker, global vice chairman at AlixPartners and a 30-year automotive veteran, said, “There’s an all-new automotive ecosystem developing, and I fear that many players really aren’t prepared for it. The changes coming are the biggest since the internal-combustion engine pushed aside horses and buggies, yet what the exact changes will be are as unpredictable as trying to guess which app is going to be most popular on next year’s smartphones. Leading players will be those that both study hard and are fast on their feet.”

Mark Wakefield, global co-head of the automotive and industrial practice at AlixPartners, added, ”With the rapid but uncertain developments in connectivity, autonomy, shared mobility and electrification, traditional approaches to partnering and running organizations could well be setting up the auto industry up to be disrupted. Fast and savvy organizations that build their own agile ecosystems and create smart partnerships, but without locking themselves into technologies that may become quickly outdated, will be best positioned to afford the needed ‘CASE’ investments of the future and to prosper from the coming industry changes rather than being rolled over by them.”