NEW YORK (TheStreet) -- Eric Larsen, the in-house futurist for Daimler (DDAIY) -owned Mercedes, gave a presentation a year ago this month. Based on his predictions, he should either run the world's largest hedge fund or become the next U.S. Secretary of Treasury. He was absolutely right on everything he predicted about 2014.
A year ago, there were three consensus views about the broader environment for auto sales.
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- Gasoline prices were going to be on an upward trend, encouraging various classes of hybrid and electric cars.
- People were going to be flocking to "megacities" where people don't really need to own cars. They would perhaps just rent or share cars.
- U.S. economic growth was overshadowed by prospects for Asia, China, Brazil, Russia and India.
In his presentation, Larsen threw cold water on these relative consensus beliefs.
1. Gasoline prices are down.
The consensus belief a year ago was that there were too many risks to the world's oil supply, including eventually running out. But Eric Larsen said that we would be awash in oil and refined products sooner than not. Gasoline and diesel prices would be going down, not up.
He predicted that the dominant reason for falling fuel prices would be the North American fracking boom, which has increased the supply of oil and made us less vulnerable to Hormuz Strait blockade risk.
As a result of falling fuel prices, the demand for hybrid cars would mute in relation to the overall car market. This played out in 2014, when hybrid car sales in the U.S. declined. U.S. plug-in electric car sales are up approximately 20% in 2014, but from a smaller base than hybrids, and significantly concentrated in California -- where automakers are mandated to sell them even at a loss if necessary.
2. America is suburban, not centered around megacities.
There was plenty of fashionable talk about the world's population huddling together in extraordinarily dense "megacities." Larsen pointed out that there is some truth to this, primarily in Asia.