The Auto Industry Overview » CAREER OUTLOOK TOTAL VEHICLE SALES IN THE U.S. FROM 2012-2017
Data source: St. Louis Fed Driverless, or autonomous,
car production is another area of development and investment. If automakers get it right and they safely and legally make it onto the road, driverless cars could be a feature of the U.S. roads by 2020—or even sooner, according to GM Chief Executive Offi cer Mary Barra. “We’re also investing in
transformative technologies around electrifi cation, autonomous technology, connectivity, and shared mobility services,” said GM’s CEO, Mary Barra in the recent conference call discussing GM’s second quarter earnings. “We will continue to build on our signifi cant progress by driving improvements across markets and in product segments.”
WHEN AUTOMAKERS DON’T PLAN AHEAD
Getting back to the initial statement
that things aren’t all that great for the auto industry right now, car giant Ford is a case in point. While 2016 was a very good year for the company—it earned a pre-tax profi t of $10.6 billion, it’s second ever highest profi t—analysts anticipate the business needs to pare back on its profi t forecasts for 2017 and possibly even into 2018. Why? Failure to respond to the changing needs of car consumers and creating vehicles that compete with the broader market on self-driving cars. Even though the well-known U.S. car maker is off ering electric and hybrid models—and has been since 2011—that
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wasn’t considered to be enough to push profi ts higher. “We believe that Ford’s earnings
outlook may need to be reset as much as 50 percent lower over the next 18 to 24 months,” Morgan Stanley auto analyst Adam Jonas said in a CNBC interview.
AND WHEN THEY DO However, following a change in
leadership at Ford—with Jim Hackett now at the helm—things could soon improve for Ford. And the new CEO’s strong stance on its electric vehicle plans and open mind on self-driving vehicles has brought about a change of heart.
While analyst Adam Jonas has so
far fallen short of saying Ford’s profi ts will benefi t immediately from the new plans, he was much more upbeat on the company in August than just a few months ago. “We expect Ford to go ‘all-in’ on
EVs, with an emphasis on pure EVs,” Jonas said in a client research note. “We are hopeful for a signifi cantly upgraded level of transparency given the pace of change in EV adoption and expenditure worldwide.”
AUTO INDUSTRY OUTLOOK As you can see from the few key details highlighted here, the outlook for the auto industry is mixed to say the least. However, with the right mix of investment, development, pushing boundaries, and giving consumers what they want, there is a defi nite, positive way forward for the auto industry. For
most businesses, though, it’s a case of navigating the current confusing situation in a way that suits their company setup and target consumer too. It’s likely, though, that fi ve years
from now could be a little more settled and automakers will have a better idea of where their strongest income streams will come from. That suggests that while production might not exceed the magic 17 million number by much, what is being produced will better suit the needs of auto consumers. “Digitization, increasing
automation, and new business models have revolutionized other industries, and automotive will be no exception,” the McKinsey Institute stated in its latest auto industry report. “Given the widespread understanding that game- changing disruption is already on the horizon, there is still no integrated perspective on how the industry will look in 10 to 15 years as a result of these trends.” As underlined by the McKinsey
Institute, looking further ahead is trickier still, largely due to future demand of traditional combustion engine vehicles. Despite the push toward alternatively fueled and operated cars, right now even diesel engines remain a mainstay of many automakers’ output. That’s unlikely to remain the case
forever, but until that changes, car makers must broaden their horizons, innovation, and output to satisfy as many potential customers as possible. S
CONFERENCE ISSUE 2018
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