DETROIT — The 2016 Society of Automotive Analysts’ Automotive Outlook Conference was held at the Gem Theatre on Sunday, January 10. This new venue was very well received. The topic today was “Disruptors and the Auto Industry.”
Phil LeBeau, CNBC auto and airline industry reporter, discussed the Disruptors 50 in technology. He listed the top ten from this years list which includes UBER, and EcoMotors, just to name a couple. “There are a lot of tech companies and pharmaceuticals. Tesla, Google and Apple are not on the list because they are publicly traded. Local auto companies here are not disruptive. Most of the disruptors are based in California,” says LeBeau. What is truly a disruptor or an innovator? A disruptor changes the fundamentals of how business is done. It’s like the chicken or the egg when it comes to being a disruptor company or an innovator. Have you seen any disruptors in the big three? “Nothing that I have seen. There are a lot of things in manufacturing and supply chain behind the scenes. Will Detroit be the center of the universe? “It will be bright and also huge. I clearly think when you go out to California with their brain power, they are important. But I don’t think Detroit will fade away.”
Brian Johnson, managing director and senior equity analyst of U.S. autos and auto parts sector at Barclays, didn’t make it to Detroit due to weather conditions. However, he was on Skype, and talked about disruptive mobility which may be happening in 2030-2040 or maybe sooner. “We’ve been here before with Henry Ford and the Model T. The horse population peaked in 1920,” said Johnson. Cars, like horses, are used for different “jobs to be done.”
Cars are used for work, transport, performance and status. Where do traditional vehicles survive? “We have to rule out urban areas. Rural areas will be strong with pickup trucks.” Luxury cars and performance/status vehicles evolves to family autonomous vehicles. “The luxury market share could see some expansion,” added Johnson. Shared autonomous vehicles (UBER without the dude) will be used downtown and the suburban metro areas. Pooled shared autonomous vehicles has the greatest cost savings. Can car pooling be cool? “It can be a social experiment,” says Johnson. Therefore, we see vehicles in use falling 60 percent and light vehicles sales falling 40 percent. Luxury are in a better position if they move into autonomous vehicles.
“Ford and GM operate 30 assembly plants. The future is 17 plants in North America. Legacy companies never do get it, and never does anything until it’s too late. In the near future, I think the biggest disruptor is the Apple car, but it won’t be fully autonomous,” Brian says.
David Johnson, president and CEO of Achates Power, talked about the road to the future of the powertrain. He says cars are going to go more miles. He brought to our attention a book by Professor Daniel Sperling from the University of California-Davis, called Two Billion Cars. He says the number of vehicles will double. There is a need for sharply reduced fuel consumption. “I agree with that. We need a new battery, but they cost too much and take up too much space in the vehicle. The cruising distance is so short,” says Johnson. With the Achates Power OP engine, efficiency is improved by 20 percent and the cost is down 10 percent.
David Woessner, General Manager of Local Motors, says his technology company designs, builds and sells vehicles using the world’s first 3D printer. Their platform fundamentally changes the way to develop a vehicle. ” We believe in manufacturing in small batches in micro factories. We’re planning to put 100 vehicles in these micro factories. There is a way to do vehicles differently and bring vehicles to market. We, unfortunately, are not exhibiting in Detroit.” says Woessner. What materials are you using to print the vehicles? “ABS plastics.”
David Liniado, Cox Automotive, talked about creating opportunities from disruption. The game changers are: connected cars, car sharing, digitalization of wholesale and retail trade, and low investment, easy entry for start ups.
Martha Blue, CarGurus, a company responsible for partnerships with OEMs, dealer groups, inventory hosts, third party publishers and data providers. She also directs the company’s dealer marketing programs. CarGurus has transparency in pricing. It rates vehicles for sale as great, good or fair deals along with dealer reviews. It also has a better user experience. It gets to the car they’re searching for very easily. Eighty percent are better-informed shoppers.
Steve Kiefer, Vice President Global Purchasing and Supply Chain for General Motors, says with GM, you’re gonna see a lot more disruptors in the future. “The electric self-starter in 1912 dramatically changed the industry. Mobility increased. GM shook things up in 1991 with the EV-1. In 2010, Volt was the first electric range vehicle. The Volt won the 2016 Green Car of the Year at the Los Angeles Auto Show. It’s a five-seat car with lots of room and is 250 pounds lighter. It receives 1,000 miles between gasoline fill ups.” says Kiefer.
“The Bolt expects a 200 mile range and got great reviews. It has a non-restrictive rear view mirror with a camera. The Bolt won Best of Show at the Consumer Electronics Show in Las Vegas. Autonomous vehicles will be researched and developed in the safe environment of our Warren Tech Center. The Motor Trend Car of the Year was the Camaro and the Truck of the Year was the Colorado. We are proud of that.” added Kiefer.
Jim Sayer, Research Scientist, Transportation Research Institute and Deployment Director, Mobility Transformation Center, at University of Michigan, talked about the role of smartphones and what roles they are going to play in transportation. They are: navigation, infotainment, route optimization, driver-vehicle interface, and interior configuration. “It’s about seamless convenience,” says Sayer. Interfacing with the vehicle has cybersecurity issues that already exist. The software interface uniformity to link variety of devices and provide power. “This would seem necessary moving forward towards autonomous vehicles,” says Sayer. Are autonomous vehicles ready for this? “It is possible. OnStar will eventually go away,” says Sayer.
Gregg Garrett, CEO and President of CGS Advisors, began by saying that 54 percent of people check their smartphones first when they wake up, even before getting their coffee. “We are more connected as ever. Technological changes form disruptors in all industry not just the automobile industry. Be brave and take some risks,” says Garrett.
Phil Gott, Senior Director for IHS Automotive, discussed urbanization as a disruptor. “Autonomous cars are not fun to drive, they are fun to ride. More than half of the population in the world are living in the city. The urban planners’ challenge is ensuring their economic viability of their city. They need to maintain fluid mobility. Change is already occurring. Cars will continue to decline. Change is coming in different ways. We need to keep pushing,” says Gott.
Kelley Blue Book Senior Editor Karl Brauer offered a preview of the 2016 NAIAS. He says we are going to see a lot of luxury at the auto show, such as: Lincoln Continental concept, Volvo S90, Lexus LC500, Mercedes-Benz SLC, Hyundai G90, BMW M2, Lexus LC500, Acura Precision concept and the Mercedes-Benze E class. The U.S. loves utilities. We look forward to the Buick Envision, Volkswagen Tiguan, BMW X4, GMC Acadia, Nissan Pathfinder and the Honda Ridgeline.
Autotrader Executive Editor Brian Moody adds the Volvo S90 senses the car environment around it. The Buick Envision is built in China. “Consumers are not going to care,” Moody explained. The Nissan Pathfinder is having a mild refresh from 2013. The green cars to watch are as follows: Audi Q6 H-tron, Chrysler Town and Country, Chevy Bolt and the Volkswagen BUDD-e. Other cars to be on the lookout for at the auto show are the Chevrolet Cruze hatchback, Ford Fusion, Porsche 911 and the Chevrolet Camaro.
SAA President Paul Wheeler welcomed everyone to the new home of the Automotive Outlook Conference. “Our new venue (at the Gem Theatre) is more intimate,” says Wheeler. “2015 was a year of strong profits and good returns. Let’s look ahead. We are starting the new year with great optimism. New technologies are forcing automakers how to do business differently.”
The next SAA event will be the Warranty/Recall Summit on March 9, 2016 from 8 a.m. to 11 a.m. For more information, visit www.saaauto.com.
