developments in the automotive industry iara las vegas march 9, 2011
TRANSCRIPT
Developments in the Automotive Industry
IARA
Las VegasMarch 9, 2011
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…100+ years at the crossroads
• Information• Quality• Changing Vehicles• Technology • Alternative Fuels• New Makes and Models• 2 Minute Drill• Q&A
IntelliChoice
Motor Trend Auto Group• Motor Trend
– Original Enthusiast Magazine• Automobile
– Life Style and Ownership• IntelliChoice
– Quantitative Data
WHAT WE DO• Empowering and educating
consumers since 1986
• Online service for buyerssince 1996
• The preferred resource forautomotive purchasing decisions– Automotive Analysis– Cost of Ownership
• www.IntelliChoice.com– Source Interlink Media– Automotive Digital Network– In-Market Channel
COST OF OWNERSHIP VALUES
• For over 25 years, we have helpedconsumer do their homework
• Provide vehicle ownership costs, ratings, and values
• The Cost of Ownership includes:– Depreciation– Maintenance– Repairs– Fuel Costs– Financing– Insurance– License and Registration
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Transformation into an Information Society
• Wave 1 — Agricultural Society
• Wave 2 — Industrial Society
• Wave 3 — Information Society
• 1920’s Buy Sheet• Ceiling Price• Regional Guide• Consumer Guide• Internet Pioneer• www.kbb.com
Kelley Blue Book
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Consumerism - Information
• Transparency of pricing
• Used Vehicle Values
• New Car Prices
• Online Negotiation
• Inventory Availability
• Alternative ways to buy
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Information & Technology Trends:
• Social Media• Communities• User Generated• Web 2.0…3.0
• Localization• Internet 3rd Screen• Personal Screen • Ubiquitous
2012 Ford Focus Introduction…
• Face Book• Twitter
• Social Media…not Auto Shows or Enthusiast Magazines
• User Generated Content• Everybody knows
everything…and has something to say about it…
• Journalists meet…
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The Wall Street Journal
May 7, 1973
Realizing the Power of the Voice of the Customer
J.D. POWER, III – 40 years ago
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I can’t get no Satisfaction
• Voice of the consumer
• CSI Consumer Satisfaction Index– Rate the Product
• Sales Satisfaction– Rate the Process
• Measurement gone wrong
• Comparisons don’t make sense
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Every Major Automotive Company Depends on Insights
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Not Listening to CustomersCould be Very Costly
Brands we’ve recently lost
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and we almost lost…
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No more Quality?
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14.8 14.6 14.2 14.0 13.813.2 13.0
12.8
17.4 17.216.8 16.7 16.9 17.0
16.516.1
2000 2001 2002 2003 2004 2005 2006 2007 2008
Vol
ume
10.6
Over 7M Units LostOver 7M Units Lost
13.2
Total
Retail
2009
8.6
10.4
US Automotive Sales Collapse
20202020
Industry Walk: Retail Forecast
14.8
12.8
11.2
2000 2007 1.Macro
Economic
2.Gas
Prices
3.HomeEquity
4.VehicleEquity
5.Used
VehicleImpact
6.CreditAvail-ability
7.InterestRates
8.Net
Pricing
9.ProductActivity
10.Other
2008
Vo
lum
e
2M Retail Units Lost
11.6
Risk
10% YoY
13% YoY
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8
10
12
14
16
18
20
22
U.S.: Light Vehicle Sales Forecast
Million of Units
Short-Term Trend
Shallow Peak2000
Long-Term Trend
Recent Peak2005?
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A car for every household…
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A car for every driver…
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A car for every purpose…
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The Changing Vehicles…• Larger - Baby Seats…BS• Heaver - Safety – Comfort and Convenience• Luxury Transition - WLTC…LR…SR• Luxury Brands VW and Hyundai?
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Vehicle interiors were pretty basic for a while…
1960 Ford Thunderbird1962 Cadillac Coupe de Ville
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However, are they becoming too complex…
1986 Chevrolet Monte Carlo 1983 Mercedes-Benz 300SD
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…or are we becoming more accustomed?
Cadillac SRXInfiniti G35
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Even the entry level cars have it all.
Nissan CubeKIA Soul
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What’s really involved in driving?
What we should be doing…
• Aim high in steering• Get the big picture• Keep your eyes moving• Leave yourself an out• Make sure others see
you
What we are doing…• Change the radio• Insert a CD• Adjust your iPod• Work the phone• Program a destination• Try to activate
something by voice• Adjust movie for kids in
the back
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Navigating HMI
Big Picture
Aim High
Eyes Moving Be Seen
Leave an out
Stability ControlLane Departure Warning Blind Spot Warning Night VisionCollision Detection
Real Time TrafficSpeed Warning
Intelligent Cruise Diagnostics
Radio/CD Hard DriveNavi PhoneRSE PDA Web/Email AuxVoice
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Technology
Top 10 Options• Automatic Transmission (Definitely)• 4WD (FWD and traction control)• Leather (OK)• Cruise Control (OK…make it adaptive)• Heated Seats (Yes!)• Trailer Hitch (Occasionally)• DVD (Really?)• Third Row (If there is room)• Moon Roof (Maybe?)• Navigation (With traffic, speed and Google-map)
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…but what about?
• Climate Control
• Blue Tooth
• IPod/MP3
• Back-up Cameras
• Parking Assist
• Blind Spot Detection
• Lane Departure
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and you heard of?
• Surround View
• Touch Pad
• WIFI Hotspot
• Braking Override
• Accident Pre-sense
• Pedestrian Recognition
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…we don’t seem to need?
• Integrated Child Seat
• Digital Dash
• Voice Reminders
• Video Screen Integration
• Heads up
• Night Vision
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Can you recall this many recalls
• AAA Test Engineer
• Independent Engineer
• Automotive Expert Witness
• Investigative Journalist
• Behavioral Psychologist
• Aerospace Engineer
• OEM System Specialist
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Unintended Acceleration
• Electronic Throttle
• Positive with the Negative
• Brakes Work
• Manual Transmission
• Pedal Application
• Role of Media and Litigation
–Insulation from the Act of Driving
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Alternative Powertrains Performance Convenience Emissions Availability Footprint Market Appeal Price
Gasoline
High Efficiency IC
Ethanol (E85)
Methanol (M85)
Diesel
Biodiesel
Vegetable Oil
CNG
LNG
Propane LPG
Hydrogen-combustion
Hydrogen- Fuel cell
Hybrid Electric
Electric Battery
Solar
Human Powered
Going Green
• Hybrid
• Electric
• Diesel
• CNG
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Industry “Green” Trends• Smaller (Micro) Cars• Wagons and Hatchbacks• Internal Combustion Engine Improvements
– 25% more power– 10% better mileage
• Smaller Engines– 4 cyl Toyota Siena– 6 cyl Mustang (300 hp 31mpg)– 6 cyl BMW 7 Series
• Electricity
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-28%
-21%
0%
-2%
6%
6%
29%
-10%
-10%
-9%
-15%
19%
120%
1%
-40% 10% 60% 110% 160%
Large Premium
Large
Midsize Premium
Midsize
Compact Premium
Compact
Basic
04 to 0707 to 09
U.S. Light Vehicle Sales – Price/SizePercent Growth Year Over Year
Source: J.D. Power Automotive Forecasting
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Increase in Model Competition
0
5
10
15
20
25
30
35
40
45
50
2006 2007 2008 2009 2010 2011 2012
New Entry Redesign Facelift Drops
Net: -4 -26 12 -13 0 15 12
Mo
de
ls
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Wasn’t that a great Olympics?!
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CHINA: Tremendous Opportunity Tremendous Risk…
• Little margin for error– Quality can’t be sacrificed for market presence– Internet magnifies and immortalizes every misstep
• Image repair is increasingly difficult• Toyota and Hyundai took years to reestablish quality reputations but today you may not get a 2nd chance
• Speed of change is staggering• Societal stress from rapid industrialization and
consumerism growth• “Everyday you see something
that you don’t see everyday”
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Everyone’s Betting on China… More Brands Competing than any other Market in the World
Source: JDPA Research
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China IQS PP100 Score – NameplatePP100
90
127
128
137
137
148
157
188
192
199
203
208
214
216
228
230
231
249
0 100 200 300 400 500 600
Total Industry
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China IQS PP100 Score – NameplatePP100
252
278
291
295
301
323
350
366
386
396
449
462
471
107
141
185
348
458
0 100 200 300 400 500 600
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Why are the Chinese exporting to other markets first?
• Less stringent safety and emissions regulations• Higher demand for low-priced simple cars• Less demanding consumers (quality, power, refinement)• Lower upfront investment needed (branding, etc)• Time to improve their products/processes• China govt doesn’t want to risk damage to China brand image
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Requirements for entry into the US market…
EmissionsEmissions
TechnologyTechnology CrashworthinessCrashworthiness
Fuel Economy or Alternative FuelFuel Economy or Alternative Fuel
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Think of a Chinese Product?
German - Sweden - Japan - Korea• Appliance• Electronic• Furniture
France - Italy - China• Good food
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Wasn’t that a great Olympics?!
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Which Chinese OEMs are the most likely players to enter the US market? When?
Perhaps soon
} After Chery
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Which Chinese OEMs are the most likely players to
enter the US market? VOLVO When? NOW
}
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Plans To Enter Boutique Start-ups
New Competitors Want a Piece of the Market
Under Consideration
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers
• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands
• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?
• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter
• Toyota - Life at the Top• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota
• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars
• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities
• Fuel Prices - Hemi to Hybrid• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi
• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars
• Rental - Fleets - Leases• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases
• Scrappage• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage
• Reputation Management• Build to Order
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2 Minute Drill• How many Dealers• How many Brands• What’s with Fiat?• Luxury Cars Falter• Toyota• Certified Used Cars• Tesla/Fisker Possibilities• Fuel Prices Hybrid and Hemi• Korean Cars• Rental - Fleets - Leases• Scrappage• Reputation Management
• Build to Order
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What I think…
• Push economic model is going away
• Consumerism empowers the buyer
• The comeback will be slower than forecast
• Too many dealers too many brands
• Consumers appetite is changing– Size - Powertrain - Opulence – Length of ownership
• We’ve yet to meet Car Owner 2.0
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Global Changes
• By 2030…– 8 billion consumers globally—a billion more than today– China tops U.S. as largest economy– India surpasses Germany, Japan– Unprecedented aging of population across developed world
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U.S. Trends
• By 2030…– 360 million consumers—60 million more than today– Further immigration/blurring ethnic lines– Further concentration of older/wealthier seniors– Women: Increasing power/influence
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Automotive Industry Trends
• By 2030…– More Complex Vehicles– Alternative Powertrains and Refueling– It’s not a Car it’s Personal and Sustained Mobility
Thank you…
Charlie Vogelheim