DETROIT — U.S. vehicle sales are expected to increase during 2017. However, the main topic of discussion at the 30th annual SAA Auto Outlook Conference was…What will President Trump do? Many of the analysts said his policies will help the manufacturers more than it will hurt them.
Mustafa Mohatarem is the chief economist at General Motors. He said that low interest rates will push consumers into dealerships for record sales in 2017. In addition, Mohatarem said that Millennials, people born between the 1980s and the 2000s, are finally embracing cars.
“The auto industry is almost decoupled from what’s going on in the economy,” the chief economist explained. “This has been the slowest recovery since World War II. Now, we have a new administration coming in. the market reaction has been pretty impressive. A lot of positives there. He’s also emphasized regulatory reform. He also wants to re-look at environmental policy regulations. I am concerned that on the trade front things could get rocky. Consumer confidence is back. Crossovers are now the dominant product in the industry.”
Colin Langan, a U.S. autos analyst at UBS spoke via Skype because his flight was cancelled in New York City. He predicts that 17.8 million vehicles will be sold in the United States by the end of 2017. Langan said 68 months is now the average amount of time a vehicle is financed.
“In regards to the impact of Trump…There’s four key categories: three of them are positive and one is a big negative,” the UBS analyst said. “The first is low corporate tax rates. The U.S. corporate rate goes from 35 percent to 20 percent. Overall, it’s a huge positive for automakers and dealers. there’s an anti regulation trend in the Trump administration. The third positive is going to be infrastructure. There’s good chance that an infrastructure bill will pass in the end of 2017. Lastly, the negative concern is the border adjustment or renegotiating NAFTA. Trump tends to say something more aggressive and tends to negotiate more moderate.”
Michael Robinet is the managing director of automotive advisory services at IHS Markit. He argued that vehicle sales are at a plateau. In addition, he said that light trucks and crossover vehicles will be very popular this year.
“The Trump impact has three areas: trade side, economic side and the regulatory side,” Robinet explained. “We think we’ll have relatively stable sales. We expect light truck to be relatively strong. Virtually every new entry is coming into light truck. The number of offerings in this market is growing tremendously. We expect mild and full hybrids are still very important to the OEMs. There will be very few new engines after 2020. We’re taking existing powertrains and adding more electrification of the componentry. Also the risk of what happens with all of these new components and systems from a hybrid perspective.”
Vishwas Shankar is a research manager at Frost & Sullivan. He argued that four key things are going to be critical: New partnerships, new branding methods, new mobility business models converge and integrated mobility. 2017 will be a make or break year for many of them.
“We see a $2 billion investment in shared mobility,” Shankar said. “Cars are going to be co-existing along with other things. Ford will try lease-sharing. Fractional ownership could be one of the biggest trends of the future. Uber has self-driving taxis in Pittsburgh. More and more companies are trying to partner with Uber right now. the human intervention will be there for some time like Apple Genius inside the store. Hyundai will try to give you a car for free with advertisements around the car. Book by Cadillac talks about how you can have 18 vehicles per year. The consumer has been kept in mind.”
Independent Consultant Glenn Mercer completed a 100-page report about the future of dealerships using 50 interviews and lots of research. He said that small rural dealers will be affected differently by car sharing than larger suburban dealerships will be.
“The single most predicted thing…build to order,” Mercer said. “A drone will drop a car in your backyard. The digital store will be bigger and bigger. dealerships have been defined by geographic territories. Now every dealer can sell to everyone. We do think the regulatory environment will be relatively stable. rural dealers face different challenges. car dealers have to get better at service. By 2025, 100 percent of new cars will be fitted with assisted driving features.”
Joe Vitale is the global automotive leader at Deloitte. He said that car sharing will become more prevalent. The level of interest among consumers for fully autonomous vehicles is about 50 percent.
“What’s really happening is the shift in mobility preferences,” Vitale explained. “The real significant change is when we’re at state four, the sharing of autonomous vehicles. We can decrease the cost per mile by 2/3 by moving into this quadrant. Trying to meet those unmet needs is critically important. When we get to autonomous vehicles, consumers actually view fully autonomous vehicles as unsafe. that is a huge perception that has to be overcome. The real shift is when people stop buying vehicles and start using exclusively shared rides. We do believe that will occur.”
Jim Taylor is the chief revenue officer at Karma Automotive. He outlined the company’s upbringings and gave us a preview of where the electric carmaker is headed.
“The company that purchased us is Wanxiang, they have a lot of business in the chassis space,” Taylor explained. “The second part of the story is bringing manufacturing back to America. we went literally all over the United States and at the end, our best shot was to be very, very close to our engineering headquarters. We built a brand new plant in Riverside, California. A brand new paint shop and general assembly. We’re using a dealership model. The eight dealers we selected will have a boutique. We will have our own factory store right by our headquarters in Orange County.”
For more information about the Society of Automotive Analysts, visit www.saaauto.com. Their next meeting feature a discussion called “The Chinese Aren’t Coming; They’re Already Here” on Feb. 1 at Lear Corporation Headquarters in Southfield, Mich.