C.A.R. Management Briefing Seminars - Day 1

CENTER FOR AUTOMOTIVE RESEARCH
MANAGEMENT BRIEFING SEMINARS

Day One
By Steve Purdy
The Auto Channel
Michigan Bureau

Traverse City, MI – August 2016

For the 51st consecutive year, auto industry executives, analysts, government officials, journalists and other stakeholders gather here in beautiful northern Michigan during the first week in August to assess the state of the auto industry, confer and commiserate. For just the 13th year I’m here to soak up as much as I can and pass it on to our TAC audience.

Most memorable, perhaps, were the years surrounding the economic crash and resultant bankruptcies in and around 2009. Conferees tried to remain confident but the wringing of hands and gnashing of teeth was palpable. As the industry eased its way out of the crisis having survived the risk of the whole U.S. auto industry going belly up, optimism slowly grew over the years. These past few years the common view has been, “if you’re not making money in the auto industry these days you should find a different business.”

The Center for Automotive Research, host for this important conference, is essentially a think-tank for the auto industry funded by grants, paid research projects, conferences like MBS and other sources. CAR is one of the most respected voices in the industry.

A recurring issue at MBS, that has become a feature story this year, is STEM education for our youngsters. STEM refers to science, technology, engineering and math, those skills needed desperately in the auto industry to fill high-tech, high-paying jobs now and into the future. We in U.S. are generally doing a dismal job of producing youngsters with these skills and this education as we look to Asia, India and other societies where students seem more hungry for these jobs. No fewer than five organizations from the SAE Foundation to the Square One Education Network are here promoting projects to fill this gap.

CAR MBS is the place we often encounter mindboggling new technologies soon to be in our cars. Continental Automotive is one of those companies at the leading edge of surprising answers to those questions I never thought to ask. I just experienced a demonstration of two.

Conti’s Traffic Light Assist soaks up real time data from the cloud that reads traffic lights and not only reports their status but tell us the exact speed we need to maintain in order to hit them green, thereby minimizing surprises that might cause a crash but also maximize efficiency. I’m assured by our Conti guys that most, and soon nearly all, traffic lights will be part of the interconnected highway infrastructure that can be read and reported by sophisticated software to accomplish the above. Yes, I call that mindboggling.

The other is what they call “Blind Curve Assist,” and that one can electronically (again presuming the cloud sees everything) see a disabled vehicle around a blind corner and report that to the driver through increasing auditory signals. Of course, it could also be programed to notify the driver with a buzz in the seat.

Speaking of surprises we also ran across a tiny 4-door car poised outside with a Datsun badge and a couple of Indian gentlemen waiting to answer my questions, the first of which was, “What is this little thing?” The answer is: it’s a small, inexpensive, simple people’s car just going on sale in India. Contract engineering firm Hinduja Tech created it for Datsun to be marketed in the BRIC (Brazil, Russia, India, China) emerging markets where people want and need that kind of transportation but don’t want such minimalist vehicles as the Tata Nano. Hinduja Tech Limited is an engineering services company whose forte is what they call “frugal” engineering. They’ve designed and engineered this diminutive 0.8-liter (Renault unit) sedan with about 50 horsepower from scratch. They also have a presence in the U.S., as does Tata Engineering, where they would like to offer their expertise to other carmakers.

We all know that the auto industry, like the U.S. economy, is cyclical. Despite a banner year for car and light truck sales the senior economist for the Original Equipment Suppliers Association, Charles Chesbrough, warns his audience to beware. While he is not predicting a downturn he notes that his members are now divided between the bears and the bulls. In any event, he notes, most are in much better shape now to weather a downturn than they were before the crash.

On the other hand a story in WardsAuto generated here notes that the number of older vehicles on the road, a positive outlook for job growth and potentially strong income growth could outweigh the downside risks and boost vehicle sales.

Another trend we thought we would never see is that of “vertical integration.” Lindsay Chappell, news editor for Automotive News, notes in an editorial for that most respected industry publication that Tesla, a company noted for going its own way, is bringing more of its production in-house. For most of that last many decades automakers strove to outsource as much of their parts production as possible. He notes that analysts assigned to that company believe it might be a big advantage at some point to control more of their production and suffer fewer transportation costs. Tesla, by the way, just began production at their “mega” battery plant in Nevada where they expect to produce more lithium-ion batteries than anywhere in the world.

Stay tuned for more from the Center for Automotive Research Management Briefing Seminars in Traverse City.