CENTER FOR AUTOMOTIVE RESEARCH-MANAGEMENT BRIEFING SEMINARS – DAY FOUR WRAP-UP

By Steve Purdy
The Auto Channel
Michigan Bureau

As we review the week at the Center for Automotive Research Management Briefing Seminars we’ll add a few tidbits of news and opinion we’ve not reported on yet before offering our synopsis and assessment.

We learned this week that French automaker PSA is planning a return to the U.S. market. We once had the Peugeot and Citroen products but neither made a go of it. Peugeot had serious quality and durability problems and Citroen cars were just too quirky for U.S. tastes. Both are now as high quality and mainstream as any brands in the world. PSA recently bought GM’s European brands, Opel and Vauxhall and is the second largest automaker in Europe next to VW. The company already has a car-sharing service in the U.S. and they are beginning to establish a dealer network. No Peugeot or Citroen products are sold here yet and PSA did not hint at what their product strategy might be.

Renegotiation of the NAFTA (North American Free Trade Agreement) was a topic of discussion as trade officials from Mexico and Canada took the stage to lay the groundwork for their respective agendas. The Trump administration has NAFTA restructuring on their to-do list insisting that the U.S. is getting a raw deal from the agreement. Talks are scheduled to begin in Washington DC later this month. All seem to agree that the whole deal should be simplified. Both the Canadian and Mexican speakers said the opportunity to restructure this regional deal could mean a more competitive position against European and Asian producers. All agree that the tariffs the Trump administration has suggested would be catastrophic.

The California Air Resources Board has led the nation in imposing fuel economy standards usually with the most stringent regulations in the country. Often coordinating with the Federal government’s EPA regulations CARB standards have been copied by other states as well. As the Federal government backs away from some of the traditional environmental standards Annette Hebert, CARB chief of emissions standards, said her organization is willing to talk with government and industry officials as they review policies. She noted significantly that CARB has not been invited to join Federal regulators to talk about these standards.

Topics of discussion at MBS evolve ever more rapidly. Not long ago the discussion of self-driving cars would have been purely science fiction. Car sharing, new ownership models, autonomous shuttles and the ever-accelerating move away from traditional car ownership and enthusiasm were on no one’s radar. We are rapidly learning about such technologies as 3D printing, the electric turbo, light weighting with exotic materials, evolving propulsion systems . . . and on and on and on. We always find fascinating stories at MBS

One measure of the health of the automobile industry is attendance at MBS. Jay Baron, president and CEO of CAR assures us that attendance is up about 10% to around 1,000 conferees. Compare that to about half that number during the recent recession. In those dismal days we were worried about who would be going belly up. Even the major OEMs were at risk. The conventional wisdom was that if GM and Chrysler failed it would have had a domino effect taking major suppliers down and that would take all the other OEMs down as well. Many thought we were at risk of losing our entire auto industry.

Now, just less than 10 years later, after the government bailed out GM while managing its bankruptcy, presided over the takeover of Chrysler and propped up other elements of the business, the automobile industry today is as healthy as it has ever been. Products are better than they’ve ever been and profits consistently come in strong. So, what’s not to be optimistic about?

Well, just this. The auto business has always been, and will always be, cyclical. We’ve now been in the longest period of sustained growth in the industry’s history and it is just now leveling off. Does that mean we’re headed for a downswing? Probably. But so far it looks like it may be a gentle one.