CENTER FOR AUTOMOTIVE RESEARCH-MANAGEMENT BRIEFING SEMINARS – DAY THREE

By Steve Purdy
The Auto Channel
Michigan Bureau

Conspicuous by his absence at the conference this year was Michigan’s governor. The tradition of the governor offering a key-note address to this large gathering of auto industry folks at MBS goes way back and had been seen as an opportunity for a bit of cheer leading, and it was often keyed to a newsworthy announcement or two. Not so this year. Our governor, Rick Snyder, the non-ideological Republican (that might seem an oxymoron), self-described nerd may still be licking his wounds over the Flint water crisis and scandal. Fortunately, because of the strength of the industry we don’t need a lot of cheerleading right now.

Bob Carter, U.S. Toyota boss, led the morning session with wide-ranging remarks about product planning, business environment, government policy and the “salacious headline” in the New York Time about July sales numbers. Mr. Carter noted that with two fewer sales days in July the numbers did not deserve the headline appearing not only in the Times but other outlets saying, “U.S. car sales crumble.” It’s not that bad, he says. Sure sales are down incrementally but consider that we’re still on a pace to achieve around 16.8 million SAAR (seasonally adjusted annual rate of sales), according to Toyota’s official projections. Since the Great Recession of 2009/2010 we’ve experience an unprecedented 7 years of sustained growth in sales, he reminds us. Mr. Carter’s message is that the U.S. auto industry’s retail market “is very, very healthy.”

Government imposed fuel mileage standards known as CAFE (for Corporate Average Fuel Economy), have caused the wringing of hands and questionable promises of compliance from executives since the 1970s. Standards have gotten stricter over the years with the Obama administration pushing them to a level that sounded impossible to most of us. But, the manufacturers still said they could do it. We’ve still not seen details on how the complex calculations will be made about compliance and what the consequences would be of failing to meet the standards. The whole process is up for review and a report from Wards-Auto and DuPont Automotive Trends presented here suggests that a quarter of engineers surveyed believe the standard will become more stringent as a result of the current review in spite of the Republican administration’s promise to roll back regulations on business. The review process will conclude in April of 2018.

We had a nice ride today in the back seat of a Cadillac ATS equipped with Magna’s level-3 autonomy. Driving up and down Highway 31 the car mostly kept its own lane and maintained the speed limit but when the pavement markings didn’t meet the car’s expectation the driver had to take control momentarily. The self-driving abilities are rather limited at this level, but just the steering and speed autonomy would be a great benefit for long-distance, rural freeway driving - think Lincoln, Nebraska to Denver. You could take a long nap.

Pundits at MBS presented cyber security as another of the issues that is requiring serious attention with many companies now employing staffs of experts dealing with all elements of security. Any function of the automobile that allows outside information in, like software updates, infotainment content and useful apps, offer a risk of malicious intruders getting in as well. The memorable remote takeover of a Jeep Grand Cherokee by cyber hackers who drove it into a ditch started this conversation just a few years ago and the concern has grown exponentially.

It seemed the future of diesel powertrains was waning quickly after scandals involving Volkswagen and others dragged on and infested auto markets here and in Europe. Some of those problems reached beyond the immediate crisis encouraging governments to announce future limits on all gasoline and diesel powered vehicles. We were pleased to see a story from our colleague at Wards Auto, Drew Winter, about the Chevrolet Cruze Diesel he drove up here from the Detroit area that easily managed over 50 mpg. A low-end compact sedan, the Cruze can be optioned with plenty of extras and even in unadorned fashion its price starts at just over 25-grand. Chevy still offers diesel power in multiple models.

We’re not just hearing from engineers, designers, business executives and policy makers but we even have an anthropologist on the stage from Nissan today talking about traffic etiquette with self-driving cars. For example, how will an automated car learn the social mores about rights-of-way at ambiguous intersections? Good question, eh? Not only will it be different when pedestrians or bicyclists interact with essentially a robotic vehicle, rather than one operated by a person who understands social interactions. It will also differ based on geology considering cultural differences.

Ahead for product planners and marketers is dealing with the likelihood that the individual ownership of one or more automobiles may be slowly going away. As the population becomes more urban it seems more people will want to find ways to live without owning a car, but still be able to have the freedom of not having to rely on public transportation with limited services in terms of both time and geography. The head GM’s of commercial mobility unit, Rachel Bhattacharya, talked about adding 150 Bolt electric cars to their Mavin Gig unit, a car sharing project for folks who just need a car intermittently for a short “gig,” in this case a week at a time.

Stay tuned. One more report from the Center for Automotive Research’s annual Management Briefing Seminars coming tomorrow – the wrap-up.