Phil Biggs covers the automotive industry for NewsTalk 1340 WJRW
January 22, 2013 10:30 A.M. ET
DETROIT, Mich. – The 2013 North American International Auto Show (NAIAS) wrapped up last week in Detroit, and once again there was plenty of focus on advanced technology, alternative powertrains, new concepts, and the key business issues facing the automotive industry today.
But this year, despite the continued global economic struggles we face, the show reflected a lot of upbeat enthusiasm. With good reason, as light vehicle sales in North America grew to 14.5 million units, up 13% from 2011 and the highest volume in five years. Forecasts for 2013 will likely push even higher to more than 15 million units.
Presented here are my observations of the show, and my perspective about the state of the industry. We acknowledge the complexity of the automobile business and the continued challenge of the current economic surroundings facing our OEM and supplier customers today. But we also reflect the strong optimism we saw from the floor of the show.
Observations from the floor of the 2013 Detroit Auto Show…
NAIAS is a huge economic boost for Detroit…
The Detroit Auto Show attracted nearly 800,000 people last year and NAIAS organizers believe that number could reach 1 million for this year’s show. And that translates to $400 million to benefit the greater metropolitan area. With all that is hurting in the Motor City, the auto show serves as a healing salve this time of year. No, Detroit is not as sexy as Tokyo or Frankfurt or even Los Angeles…but it remains the most important car show destination in the world. The more than 500 vehicles on display include 60 new unveilings, which represents a 20% increase over 2012.
Social media is a critical piece of the marketing plan…but does it sell cars?
“As expected, our media numbers remained strong overall, and actually increased internationally, a critical factor for a global show,” said NAIAS Chairman Jim Seavitt. “We saw more registrations from foreign media which has led to significant increase in national coverage.”
Perhaps more important is the rise of social media at the show. Of the 5500 media representing more than 60 countries, this year a greater share – upwards of 1000 – came from the blogosphere. Yes, the bloggers showed up, and the OEMs have responded with designs that specifically target the Millennials…but will they buy cars?
Scott Monty, Director of Worldwide Social Media for Ford Motor, believes the purchasing power of the Millennials is very difficult to measure and predict, but cannot be ignored. “With numbers of 75 million and growing, Ford cannot overlook the impact of social media to help position our lineup with the Millennial market segment.”
The cars here at NAIAS are smarter, brimming with new technology in a direct effort to entice the Millennials. The cars are also smaller, and smaller is good: it helps OEMs meet the 54.5 mpg EPA standard facing the industry but, it so happens, smaller is exactly what both the Baby Boomer and Echo Boomer segments are demanding now.
But, as Monty said, there is no easy or direct way yet to link social media to volumes. For now, social media’s role is an awareness builder. But with his success in Europe several years ago, Monty is replicating social media coverage here in the U.S. and will keep chipping away at the fickle Millennials in hopes they become car lovers like their fathers and grandfathers were.
Among the new debuts, the new Ford F-150 was the talk of the show.
Yes, the new 2014 Chevy Corvette, with its aluminum frame and 450-hp engine, is a high performance and stylish seventh-generation beauty, “worthy of being christened Stingray for the first time in more than 25 years,” said Dale Jewett, senior writer for Autoweek. And yes, the 2014 Audi RS7 sedan, the 2014 Mercedes CLA sedan, and the new Maserati Quattroporte are all lookers.
But the 2015 F-150 Atlas concept had more of a design impact as it debuted this week at NAIAS, and it will likely be another breakthrough for Ford Motor. If this concept becomes the next F-150 (and it likely will), it will have a major impact on the industry globally and for millions of truck owners everywhere. To put it in economic perspective, Ford sold 645,000 F-series trucks in 2012, as contrasted with roughly 12,000 Corvettes sold annually by General Motors.
“The Corvette is a hell of a lot sexier than any truck, and it’s important to GM because it’s a rolling example of their very best efforts,” said Patrick George, blogger for @Jalopnik, an industry periodical. “And while it may have a halo effect as it draws people into showrooms to look at the Malibu, the Corvette doesn’t pay GM’s bills like the F-150 does for Ford.”
“We remain absolutely committed to setting the agenda in the truck market,” said Joe Hinrichs, Ford’s President of the Americas. “Atlas will transform what people expect from pickups.”
Speaking of Ford…
Besides the impressive new Lincoln MK Concept, the buzz at NAIAS was what lies ahead for the newly-created Lincoln Motor Company. Ford Global Vice President Jim Farley has been charged to head up the Lincoln division. The plans call for exciting new vehicle concepts and aggressive marketing that begins to completely distinguish the Lincoln lineup from Ford’s.
Also in the works: a new dealership model that will revolutionize how customers view the Lincoln brand. Imagine a multi-floor showroom, with space for customers to interact with new technology, try out new OEM and aftermarket applications, and have
Growth in the luxury segment…
Look for Ford to create a “Starbuck’s” type of personal experience with the Lincoln brand, along the lines of an Apple store. The need to create separation from the Ford badges and make Lincoln uniquely its own brand is critical, and puts Farley and the Lincoln team on the proverbial heated seat. Today many if not most people ever associate Toyota and Lexus as one car company…that is the daunting task ahead for Farley.
So okay, this better work – and I think it may – even though the pressure on Lincoln to outperform the luxury car segment is immense. Cadillac, Acura, and Lexus have the new Lincoln MK squarely in their sights, as do Mercedes, BMW and Audi. Luxury is perhaps the most competitive car segment because it is the most profitable. All of these brands know this, all are formidable competitors. Let the Auto X Games begin…
What is the future of EV?
With Tesla’s Model S winning the 2013 Motor Trend Car of the Year, and the arrival of the new plug-in electrified Cadillac ELR, the EV category would appear robust. There is no question that it will remain part of the “mix” of powertrain alternatives.
However, it is clear that the significant dollars required to continue developing the integrated EV technology, plus the inability to bring battery costs down, has severely dampened consumer interest. Most of the automakers have a considerable stake in seeing the EV succeed. But with vehicle prices ranging 35-40% higher than traditional cars, it’s no wonder that the take-rate hovers below 2% among U.S. consumers.
That’s not stopping Tesla, whose plans this year include adding 25 new stores – half of them in North America. Tesla will also open its first store in China. The take rate there ranges to 35%, and service is a top priority. “We’ll be opening more new service centers than stores. We want customers to enjoy getting serviced,” said George Blankenship, Tesla VP of Worldwide Sales. A perk for Tesla customers is having their car delivered to their house after service. “It’s all about getting people to drive electric,” he said.
A lofty goal, and a worthy one. But lack of infrastructure, not enough public or at-home Level 2 charging capacity, gasoline prices hovering just above $3.00 per gallon, and additional costs for tools that dealers need to service EVs, tells me it is easier said than done at the moment.
Despite their high adoption costs, technology was everywhere at NAIAS.
From the interactive Kia stand where you could once again dance with the hip-hop hamsters, to the 2014 Mercedes E class radar-based collision warning system to Toyota’s Entune™ multimedia system with a collection of popular mobile apps and integrated data services, technology has become more prevalent than sheet metal and rubber.
Not only is today’s vehicle itself more than 85% comprised of integrated software systems, but so is the dizzying array of driver control choices: haptic-sensing feedback, multi-touch hand gestures, proximity sensing, natural speech recognition, smartphone-like display modules, active park assist, adaptive cruise control, lane keeping technology…the list goes on and on.
Americans are gluttons for these under-the-hood and on-board technologies, and they will continue to be served up to us in heaping portions. Not necessarily a bad thing, just be advised you’ll likely need a savvy teenager available to help you prioritize and sort it all out. Otherwise, good luck sifting through an epic owner’s manual.
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