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Auto Industry Doc Pump Emphasizes Our Oil Consumption is Unsustainable

A car’s high beams trace slow-motion lightning across the highway. An auto worker in suspenders strides the factory floor. These seductive images of the American automotive industry act as dreamy parentheses to Josh and Rebecca Tickell’s compelling and cogent documentary Pump, which examines why Americans are so lacking in options at the gas station, what that means about the future of transportation and environmental health, and why the oil-driven American Dream must die — why it is dying.

The core of Pump‘s argument comes from interviews with writers, activists, politicians, and current and former oil and auto industry executives, all of whom emphasize that the rate at which Americans consume oil is unsustainable, and that, ultimately, oil reserves will be exhausted; the only option is to change our fuel sources.

The Tickells complicate and ultimately underscore this argument by placing American practice and policy in conversation with other countries’ fuel habits. While fast-industrializing China once had streets full of bicyclists, the country’s new prosperity has brought with it a status-driven car culture; Brazil responded to fuel crises in the 1970s and ’80s by mandating that the cheaper — and arguably more sustainable — ethanol be offered at pumps alongside gasoline.

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It’s no accident, the Tickells argue, that ethanol hasn’t caught on in the U.S. By carefully tracing the history of the oil companies’ legislative and consumer power and influence, the directors explore America’s issue of substance dependence, and indict the companies that act as enablers. If you’re not convinced we’re addicted, ask yourself if you could quit at any time.

Article source: http://www.villagevoice.com/2014-09-17/film/pump-auto-industry-doc/

Indian auto industry can touch $300 billion mark by 2026: Study

It said commercial vehicle sales will rise to 3.9 million units from 0.7 million in FY14; of two-wheelers, to 55.5 million units from 16.9 million, and of three wheelers to 3 million units from 0.8 million units.

It is estimated that the Indian auto industry will grow to 75.8 million units by FY 2026 as compared to 21.5 million units in FY14.

“Vision 2026 will enable the Indian auto industry to contribute around 13 per cent to GDP, generation of additional 100 million jobs and attract more than $ 80 billion in investments,” it said.

According to it, vehicle export revenues are expected to touch $ 40 billion by 2026 from $ 8 billion in FY14, while the component exports are expected to rise to $ 74 billion over $ 10 billion in FY14.

As per the document, over the next 10 years there will be a shift in global trend with 75 per cent of incremental demand expected to come from BRICS and emerging economies.

It also expects the proportions of A and B segments (compact cars) to rise sharply in the next decade. It further anticipates India to be among the top three automotive markets in the world.

The document also lists various factors like creation of infrastructure, human resources and incentivisation as the enablers to achieve the targets under the Vision 2026 plan.

Further, the implementation of GST, ban on overloading in commercial vehicles and urban planning are some of the factors which would help the Indian auto industry grow in the next 10 years, it added.

The AMP 2026 is under formulation but the economic slowdown in the last three years that resulted in a demand slump is expected to force the Indian auto industry to miss by up to 25 per cent of the targets set in AMP 2016.

The auto industry had set an ambitious target under the AMP 2006-2016 to take its annual turnover to $ 145 billion with special emphasis on export of small cars, MUVs, two and three wheelers and auto components.

Article source: http://economictimes.indiatimes.com/industry/auto/automobiles/indian-auto-industry-can-touch-300-billion-mark-by-2026-study/articleshow/42441190.cms

Analyst Says Tesla’s Competition Is The ‘Entire Auto Industry’

tesla musk electric cars

REUTERS/Brendan McDermid

The auto industry will wait to see how Tesla does.

Morningstar analyst David Whiston is cautiously optimistic about Tesla’s prospects. In a note published Monday, he writes: 

Although we stress the uncertainty in investing in Tesla today, the company’s competitive position is better than some may expect from a tech startup that makes automobiles…

And yet:

…Although Tesla’s long range gives it a huge advantage over pure EVs on the market (265 miles EPA range for the 85 kWh battery versus 84 miles for the Nissan LEAF and 76 miles for the Ford Focus), we consider Tesla’s competition to be the entire auto industry rather than just EVs. There are far too many automakers all over the world for us to claim that Tesla’s market is effectively served by a small number of players.

This is a theme we’ve spotted recently in financial coverage of Tesla. Morgan Stanley analyst Adam Jonas warned investors in a note on Monday that Tesla faces a cluster of “sobering” risks, not least of which is that the entire auto industry isn’t going to stand idly buy and allow Tesla to own the electric-car market.

It may, however, stand idly by for a few more years.

Flickr/ Maurizio Pesce

Enjoy it while you can, Elon!

It tempting to see Tesla as a runaway success story, and in the narrow confines of Silicon Valley’s involvement with mobility, it is. But Tesla has also benefitted from much of its competition either going out of business (in the case of electric car startups) or turning away from electric propulsion (in the case of the major automakers). 

This has distorted perceptions not just of where Tesla is now, but of where it’s going. CEO Elon Musk is aware of this and has publicly questioned his company’s elevated valuation (the current market cap is $35 billion). The bottom line is that if Tesla is successful, then the rest of the auto industry will see not just a proof-of-concept for the electric car, but also Tesla’s business model. 

elon musk tesla model x Tesla Design Studio in Hawthorne, California February 9, 2012

REUTERS/David McNew

Looks good, but will it sell?

But for Tesla’s business model to be vindicated, much must be overcome. Here’s Whiston again:

Until the [mass market] Model 3 goes on sale, there is no way to know for sure if consumers in large volume are willing to switch to an EV and deal with range anxiety and longer charging times compared with using a gas station. Tesla is fighting a state-by-state battle to keep its stores factory-owned rather than franchised, which raises legal risk for Tesla and could one day stall growth.

At this point, it doesn’t make a lot of sense for big global automakers to invest heavily in mass-market electric cars simply because Tesla has seen a massive run-up in its stock price over the past year. Tesla has a substantial technology lead in long-range batteries, but it will unquestionably struggle in the short term to build enough of those batteries to power 200-300,000 new vehicles. That’s why the company is constructing a $5-billion battery factory in Nevada.

But there’s considerable risk in what Tesla is trying to achieve. And the major automotive players are happy for Tesla to have as much of that risk to itself as it wants. Competition from the rest of the auto industry will arrive in force once Tesla proves that its market is truly worth competing for. 

Article source: http://www.businessinsider.com/analyst-says-teslas-competition-is-the-entire-auto-industry-2014-9

The Dark Age for the Automotive Industry in Argentina

Diagnostic

Statistics have shown that during the first half of 2014, the sales for brand new cars dropped by 23 percent, while used car sales decreased by 9 percent in Argentina. These results were provided by the Automotive Commerce Chamber (CCA – Cámara del Comercio Automotor) and the Association for Automotive Dealerships (Acara – Asociación de Concesionarios de Automóviles).

The drops are thought to be in relation to the local demand that is way too low against the supply from the companies, which in many cases have started to increase their stock alarmingly.

Real and great concern

Most companies have started to develop contingency plans that include suspensions and dismissals. No company is safe from this situation, and this raises a huge distress due to the fact that more than 20,000 employees have been laid off, which contributes to the rise in the unemployment rate.

General Motors (GM): 2,700 workers will be suspended one day a week.

Peugeot-Citroën (UG): In its facility located in Villa Bosch, Buenos Aires, the company decided to suspend one of its two shifts. One thousand workers were affected by this resolution.

Volkswagen (VOW): A decision was made to halt the Friday production from the Pacheco facility (Buenos Aires) since May. VW stated that it has in stock more than 15,000 cars with no prospect of being sold. For that same reason, in addition to the previous measure, VW has also decided to design a plan for volunteer retirement.

Scania (SCVB): A company known for producing trucks and buses has also suspended 400 workers from the facility located in Tucumán.

Renault (RNO): In its facility located in Córdoba, the company had to suspend nearly 600 employees.

Fiat (FIAT): Since the beginning of the year, Fiat has suspended 2,100 workers from its facility located in Córdoba.

Iveco: In Ferreyra, a local town in Córdoba, Iveco decided to suspend 80 percent of its workers for two months.

One previous gear of this circuit

The autopart company called Montich has also been applying suspensions to its personnel. Its CEO, Ramón Ramirez, has acknowledged the crisis that is hitting the industry and has decided that Montich will start coping with the situation by reducing salaries and possibly a few dismissals.

Montich has a permanent plant of 490 employees and three facilities in Córdoba, Buenos Aires and Brazil.

Its main customers are Renault, Fiat and Iveco — all companies going through the same crisis.

The crisis within this specific sector of the industry has a great impact on the companies previously mentioned. Official sources stated that between 2,000-2,500 employees were suspended, and some auto part companies have given their workers early licenses.

Auto dealerships

Due to the lack of activity and sales, many auto dealerships were obliged to close. High real estate costs, high maintenance costs, and the obligation to support salesmen and their salaries were the main factors that turned this decision.

During the first four months of the year, 272,095 cars were registered, which can be translated as a drop of 18 percent.

Kicillof calls on Brazil to increase purchases of Argentine cars

Argentina’s Minister of Economy Axel Kicillof reported that since last year, Brazil increased its imports of autos from countries such as China, Japan and the nations of the European Union, and reduced vehicle imports from Argentina.

There is an urgent need to reduce the bilateral trade balance deficit for Argentina in about $3.1 million, of which $2.4 million correspond to red automotive sector.

In addition to the deficit of $3.1 million, official figures of the trade balance between Argentina and Brazil in 2013 show almost no growth in exports to Brazil, which totaled about $16.4 million last year, while imports increased by 10 percent in the year to reach 19.7 million. At that point the Argentine authorities, through the Minister of Industry Debora Giorgi, expressed the need for a more balanced agreement in the automotive sector. For the sale of finished cars there was a surplus of about  $400 million to Argentina, whereas imports from auto parts deficit reached 2.8 million.

Article source: http://www.gurufocus.com/news/278760/the-dark-age-for-the-automotive-industry-in-argentina

Having learnt from the slowdown, the auto industry is now on a rebound

After a crippling 2013-14, when car sales declined 6 per cent, the first such drop in 13 years, the Indian auto industry is now on the rebound with four consecutive months of growth.

Looking back, CEOs say the slowdown wasn’t entirely a disaster; several lessons learnt during the difficult year will help them make the most of the coming growth phase.

“A slowdown is a good time to review the business, and try to reduce cost and improve efficiency,” says RC Bhargava, chairman of Maruti Suzuki.

The company did plenty of that during the slowdown, not just at the top-management level but by also involving the rank and file. Maruti actively sought cost and efficiency improvement suggestions from its employees.

It received 350,000-400,000 such ideas. About 75 suggestions that were implemented saved it Rs 300-400 crore in cost, according to Bhargava. For example, Maruti used to source components from vendors in a trolley, which had disposable plastic covers.

A suggestion to use a more durable cover resulted in the company reusing the covers. While the initial cost was more, the company saved in the longer run. Chennai-based Ashok Leyland also navigated the slowdown with a similar mindset.

“We looked at the downturn as a blessing in disguise,” says Vinod Dasari, its managing director. “This was our one opportunity to fix what was wrong with the company and prepare ourselves to be future ready. That was our whole theme (through the slowdown).”

The commercial vehicles maker reduced working capital significantly, almost halved its debt (Rs 2,500 crore), sold non-core businesses, and made the organisation leaner and more efficient.

Time To Introspect

A slowdown also forces companies to think out of the box and explore cost-cutting options it may not otherwise have considered. Maruti took the central bank’s permission to hedge currency on behalf of its vendors.

More recently, to further cushion itself from a fluctuating currency, the company decided to pay royalty to parent Suzuki in rupees instead of yen. The company paid Rs 2,485 crore as royalty in 2013-14.

Over the last couple of years, Maruti also helped its vendors to improve localisation, which has aided in reducing cost through lower import content. Even though Maruti’s sales have declined marginally, its profit margin has gone up.

Several companies retrenched workers to survive the slowdown. Others cut pay for all employees hoping to save a few jobs, while increasing communication with employees. Ashok Leyland effected a 5 per cent across-the-board cut.

“It was painful, but if you don’t fix the company, then you would be in deeper pain in the future,” says Dasari. With the market reviving now, salaries and performance pay cuts have been restored. But to keep employee morale up in the midst of these painful decisions, the top management stepped up engagement with employees.

Every quarter, Dasari shared the presentation made to his board with all employees as well. For some companies, a slowdown brings the resolve to drive against the tide. Toyota decided to do away with discounts on the Etios and Liva even though most other companies were offering plenty.

“Discounting will give us the volumes, but it will destroy the brand,” says Naomi Ishii, MD of Toyota Kirloskar. “So, from April onwards, we decided to stop all schemes on Etios and Liva. We have also realigned our expectations from these two models.”

Across the industry, companies are now leaner, thanks to cost-cutting measures initiated during the slowdown. The Rs 6,700 crore Anand Automotive shifted its focus to efficiency improvement and costcutting initiatives.

“We also managed to engage our suppliers to manage their costs and improve fiscal discipline,” says Sandeep Balooja, president for business development, Anand Group. Companies that genuinely believed that even the pain of bleak times could be turned to profit will gain so much more as growth comes calling again.

Inputs from Chanchal Pal Chauhan and Nabeel Khan

Article source: http://economictimes.indiatimes.com/industry/auto/automobiles/having-learnt-from-the-slowdown-the-auto-industry-is-now-on-a-rebound/articleshow/42576162.cms

Auto industry to exceed 250k sales target

The domestic automotive industry is confident of exceeding its revised 250,000 unit sales target for the year and an accelerated 300,000 unit sales level by 2015.

This developed as final industry sales figure from members of the Chamber of Automotive Manufacturers of the Philippines Inc. and the Truck Manufacturers Association showed sales as of August this year grew 27.59 percent to 148,803 units from 116,617 units in the same period last year.

15Auto Industry15Auto IndustryOn a month on month basis, growth jumped 39.53 percent to 19,116 units in August as against 13,700 units in August 2013.

Sales of industry leader Toyota Motor Philippines Corp. already reached 67,059 units in the January-August period or a whopping 43.37 percent increase from 46,773 units in the same eight-month period last year.

Mitsubishi Motor Philippines Corp., the country’s second largest carmaker, registered total sales of 33,067 units or 17.61 percent higher than its last year’s sales of 28,115 units.

Completing the top five are Ford Group Philippines with sales of 12,554 units from 9,651 units last year; Isuzu Philippines Corp. with 8,417 units from 7,673 units; and Columbian Motors Corp. with 5,768 units.

Sales from the all-CBU importers of the Association of Vehicle Importers and Distributors Inc. (AVID) are also expected to contribute more than 20,000 units as of August for combined industry sales of about 170,000 units.

Arthur Balmadrid, senior vice-president of Isuzu Philippines Corp. (IPC), said the robust industry performance is expected to surpass the revised 250,000 unit target for the year.

“At the rate we are growing, we can even surpass the reforested 250,000 units although last month was a little slower,” Balmadrid told reporters.

If sales of CAMPI and TMA will average 20,000 unit monthly sales in the last four months of the year that would translate to additional 80,000 units for total of 248,000 units at the end of the year. AVID, for its part, could possibly add another 3,000 units a month or 12,000 units in the remaining four months. Overall, the industry is expected to hit 260,000-unit sales mark this year.

Balmadrid further noted if the industry could grow as much as 20 percent next year, “That means an additional 50,000 units making it possible to really hit 300,000 units in 2015 instead of 2016,” Balmadrid said.

Article source: http://www.mb.com.ph/auto-industry-to-exceed-250k-sales-target/

Could new technology, changing attitudes, devastate auto industry?

Communications technology has shaken the book business to its foundations, not to mention newspapers, and automobile manufacturers might be the next industry ripe for attack.

When the global automotive industry gathers in Paris next month for the biennial car show, you will hear the usual soothing claims about how healthy the industry now is, and how its poised for long-term healthy growth. The trouble is there are some sinister issues festering away behind the scenes which might ambush a complacent industry. Theres the question of future power-trains, with the agenda set by governments convinced that carbon dioxide (CO2) emissions from cars endanger the planet, and insist fuel use must be curbed. Meanwhile, plug-in hybrid electric vehicles seem to have stolen the inside track for the time being over battery-only solutions, while fuel cells gather strength in the wings.

New entrants like electric car leader Tesla might disrupt the rest of the industry if it can turn its lead in luxury vehicles to the mass market.

Then there is the latest fad of so-called connectivity and communications technology. Its not that the industry isnt keeping pace. New automobiles are dripping with new computerized devices, and manufacturers now brag about how big their new touch screens are, even before bragging about blistering acceleration, raucous, sexy engine noise, or even fuel consumption. Connectivity comes before performance. Last week in London, British luxury car maker Jaguar launched its new XE sedan, and it seemed to be most proud of the fact that it was apparently a WiFi-transmitter on wheels.

Attitudes

Arguably the biggest threat of all though comes from sweeping changes facing the industry because of new attitudes towards car ownership and mobility itself.

A recent report from investment bank Morgan Stanley calculated that cars are only used for about four percent of their lives.

The worlds $20 trillion car fleet achieves only four percent utilization, leaving 8.4 trillion hours a year not used. What a waste!!!. It said.

If car buyers are moved by that argument, that could trigger a sea-change in attitudes towards their expensive vehicles.

We are told that consumers around the world, excluding China of course, are becoming less enamored with expensive cars as a reason of pride, and are more likely to think of their wheels as simply a way to get from A to B. Some of us think this apparent change of attitude among western young people will soon disappear when economic growth returns and car ownership resumes as a classic signal of an individuals material progress. Since when were young men happy to take their date out on the bus? Connectivity is clearly being embraced by the makers of cars, but the assault will come from outsiders who reckon they can either make new technology battery cars better, or have a business plan which will force them in between the car buyer or user and manufacturer, and from that position cream off the profits.

Car2Go

This new world is already being tackled by car makers like Mercedes and BMW of Germany. Mercedes Car2Go operates in European and U.S. cities leasing its little Smart city car with charges by the minute. BMWs Drive Now is pursuing a similar idea. Non-automotive companies like U.S.-based chauffeur service Uber threaten to invade manufacturers space. Experts say that the traditional form of car acquisition buying with cash or bank loan is beginning to be replaced by this new model. New entrants will seek to intervene between the car buyer and manufacturer to offer mobility services like a car on demand, or an integrated door-to-door journey which might include driving a car to the train station or airport, another car at the destination which can be driven into the city and left for the car hire company to pick up. Clearly, if this business model thrives it will threaten the car manufacturers as the rental company creams off the profits, and by its massive purchase volume, can bid down manufacturers profits to zero or less.

What we are seeing right now is a redefinition of the automobile, said Thilo Koslowski, lead automotive analyst with technology consultants Gartner, although he doesnt think it necessarily ends in tears for traditional manufacturers.

On the phone from Santa Clara, California, Koslowski said the new challenges to the industry will force it to improve rather than threaten its existence.

The automobile will not just be differentiated by engineering excellence. We are entering the era of smart mobility. The car will have more capabilities, and will harness communication to bring a future life style into the vehicle. Leasing, not owning, might become a threat to the industry, but for the most part I see it as an opportunity to redefine the automobile as it becomes part of the connected universe, Koslowski said.

Change

This connected universe will re-emphasize the importance of automobiles; I dont think cars will go away any time soon, on the contrary, they will become more important because of these technologies. Manufacturers have to change the way they think about the automobile; its not just about selling, but understanding and embracing what mobility is, Koslowski said.

Car ownership wont be as important, and it doesnt have to live in your garage. It will leave when its not being used anymore, says Koslowski.

Anil Valsan, automotive global lead analyst for consultants Ernst Young (EY) agrees that consumers will move away from buying to leasing and renting, and it will gain momentum in new mega cities as well as smaller ones. Car pooling and ride sharing is increasing with the likes of Uber and regular taxi companies too, which will create their own apps to enable access and book services.

Notwithstanding BMW and Mercedes, Valsan said mainstream manufacturers have been slow to react, as new entrants try to connect car sharing to urban citizens.

There is certainly a risk for auto manufacturers as newcomers identify niches and grow from that. But the most fundamental shift is away from vehicle ownership to access, the shift to mobility services, Valsan said.

Valsan said smartphone based apps will allow customers to plan journeys and offer a range of options which might be part shared car, public transportation like train or bus, and part autonomous vehicle. Three elements need to be taken care of for this to happen:

Real time information and a data platform

A smart payments platform

Access to public transport and cars

Valsan said this will be rolled out slowly, not globally, and the biggest obstacle is what he calls the complexity of the back end the need to manage fleets of vehicles and have them close to the consumer.

Who would want to do this?

A recent survey showed that one in six people would be willing to give up ownership, if they have access to shared cars, Valsan said.

There are some interesting variations on these themes. One model calls for a lease which would guarantee various cars for different jobs. One for daily commuting, another for long-distance vacation driving, another for when the sun shone, or a nifty sports car if the mood took you.

Big barriers

Valsan also doesnt expect current mainstream manufacturers to be under threat from new entrants.

I think it will be difficult for a new wave of manufacturers to compete with traditional ones, which certainly present significant competition with big barriers to new entrants like their huge distribution networks and after sales structures, Valsan said.

Professor Karel Williams of Manchester Business School points to the book industry as an example of an industry devastated by new technology. Williams doesnt predict this happening to the auto business, but says the changing perception of the industry by car buyers poses a problem.

Theres a growing indifference to cars and motoring, and the rise of leasing in the personal market produces completely different relationships to the product. Nobody ever felt defined by a rental car they picked up at the airport. A combination of western indifference and the rise of leasing is fertile soil from someone who cracks a more radical approach to renting cars, Williams said.

If car companies cannot differentiate their products by their branding, this bodes ill for profit margins. Anyone ordering a car with their smartphone will get perhaps a Citroen or a Toyota, it wont really matter. This scenario suggests leasing companies will have massive price leverage over auto manufacturers, which would also concede direct contact with their customers. Given the devastation this would reap on automakers bottom lines, expect them to move heaven and earth to make sure its them in control.

Article source: http://www.detroitnews.com/article/20140914/AUTO0104/309140021/1362/OPINION0339/Could-new-technology--changing-attitudes--devastate-auto-industry

Could new technology devastate auto industry?

Communications technology has shaken the book business to its foundations, not to mention newspapers, and automobile manufacturers might be the next industry ripe for attack.

When the global automotive industry gathers in Paris next month for the biennial car show, you will hear the usual soothing claims about how healthy the industry now is, and how its poised for long-term healthy growth. The trouble is there are some sinister issues festering away behind the scenes which might ambush a complacent industry. Theres the question of future power-trains, with the agenda set by governments convinced that carbon dioxide (CO2) emissions from cars endanger the planet, and insist fuel use must be curbed. Meanwhile, plug-in hybrid electric vehicles seem to have stolen the inside track for the time being over battery-only solutions, while fuel cells gather strength in the wings.

New entrants like electric car leader Tesla might disrupt the rest of the industry if it can turn its lead in luxury vehicles to the mass market.

Then there is the latest fad of so-called connectivity and communications technology. Its not that the industry isnt keeping pace. New automobiles are dripping with new computerized devices, and manufacturers now brag about how big their new touch screens are, even before bragging about blistering acceleration, raucous, sexy engine noise, or even fuel consumption. Connectivity comes before performance. Last week in London, British luxury car maker Jaguar launched its new XE sedan, and it seemed to be most proud of the fact that it was apparently a WiFi-transmitter on wheels.

Attitudes

Arguably the biggest threat of all though comes from sweeping changes facing the industry because of new attitudes towards car ownership and mobility itself.

A recent report from investment bank Morgan Stanley calculated that cars are only used for about four percent of their lives.

The worlds $20 trillion car fleet achieves only four percent utilization, leaving 8.4 trillion hours a year not used. What a waste!!!. It said.

If car buyers are moved by that argument, that could trigger a sea-change in attitudes towards their expensive vehicles.

We are told that consumers around the world, excluding China of course, are becoming less enamored with expensive cars as a reason of pride, and are more likely to think of their wheels as simply a way to get from A to B. Some of us think this apparent change of attitude among western young people will soon disappear when economic growth returns and car ownership resumes as a classic signal of an individuals material progress. Since when were young men happy to take their date out on the bus? Connectivity is clearly being embraced by the makers of cars, but the assault will come from outsiders who reckon they can either make new technology battery cars better, or have a business plan which will force them in between the car buyer or user and manufacturer, and from that position cream off the profits.

Car2Go

This new world is already being tackled by car makers like Mercedes and BMW of Germany. Mercedes Car2Go operates in European and U.S. cities leasing its little Smart city car with charges by the minute. BMWs Drive Now is pursuing a similar idea. Non-automotive companies like U.S.-based chauffeur service Uber threaten to invade manufacturers space. Experts say that the traditional form of car acquisition buying with cash or bank loan is beginning to be replaced by this new model. New entrants will seek to intervene between the car buyer and manufacturer to offer mobility services like a car on demand, or an integrated door-to-door journey which might include driving a car to the train station or airport, another car at the destination which can be driven into the city and left for the car hire company to pick up. Clearly, if this business model thrives it will threaten the car manufacturers as the rental company creams off the profits, and by its massive purchase volume, can bid down manufacturers profits to zero or less.

What we are seeing right now is a redefinition of the automobile, said Thilo Koslowski, lead automotive analyst with technology consultants Gartner, although he doesnt think it necessarily ends in tears for traditional manufacturers.

On the phone from Santa Clara, California, Koslowski said the new challenges to the industry will force it to improve rather than threaten its existence.

The automobile will not just be differentiated by engineering excellence. We are entering the era of smart mobility. The car will have more capabilities, and will harness communication to bring a future life style into the vehicle. Leasing, not owning, might become a threat to the industry, but for the most part I see it as an opportunity to redefine the automobile as it becomes part of the connected universe, Koslowski said.

Change

This connected universe will re-emphasize the importance of automobiles; I dont think cars will go away any time soon, on the contrary, they will become more important because of these technologies. Manufacturers have to change the way they think about the automobile; its not just about selling, but understanding and embracing what mobility is, Koslowski said.

Car ownership wont be as important, and it doesnt have to live in your garage. It will leave when its not being used anymore, says Koslowski.

Anil Valsan, automotive global lead analyst for consultants Ernst Young (EY) agrees that consumers will move away from buying to leasing and renting, and it will gain momentum in new mega cities as well as smaller ones. Car pooling and ride sharing is increasing with the likes of Uber and regular taxi companies too, which will create their own apps to enable access and book services.

Notwithstanding BMW and Mercedes, Valsan said mainstream manufacturers have been slow to react, as new entrants try to connect car sharing to urban citizens.

There is certainly a risk for auto manufacturers as newcomers identify niches and grow from that. But the most fundamental shift is away from vehicle ownership to access, the shift to mobility services, Valsan said.

Valsan said smartphone based apps will allow customers to plan journeys and offer a range of options which might be part shared car, public transportation like train or bus, and part autonomous vehicle. Three elements need to be taken care of for this to happen:

Real time information and a data platform

A smart payments platform

Access to public transport and cars

Valsan said this will be rolled out slowly, not globally, and the biggest obstacle is what he calls the complexity of the back end the need to manage fleets of vehicles and have them close to the consumer.

Who would want to do this?

A recent survey showed that one in six people would be willing to give up ownership, if they have access to shared cars, Valsan said.

There are some interesting variations on these themes. One model calls for a lease which would guarantee various cars for different jobs. One for daily commuting, another for long-distance vacation driving, another for when the sun shone, or a nifty sports car if the mood took you.

Big barriers

Valsan also doesnt expect current mainstream manufacturers to be under threat from new entrants.

I think it will be difficult for a new wave of manufacturers to compete with traditional ones, which certainly present significant competition with big barriers to new entrants like their huge distribution networks and after sales structures, Valsan said.

Professor Karel Williams of Manchester Business School points to the book industry as an example of an industry devastated by new technology. Williams doesnt predict this happening to the auto business, but says the changing perception of the industry by car buyers poses a problem.

Theres a growing indifference to cars and motoring, and the rise of leasing in the personal market produces completely different relationships to the product. Nobody ever felt defined by a rental car they picked up at the airport. A combination of western indifference and the rise of leasing is fertile soil from someone who cracks a more radical approach to renting cars, Williams said.

If car companies cannot differentiate their products by their branding, this bodes ill for profit margins. Anyone ordering a car with their smartphone will get perhaps a Citroen or a Toyota, it wont really matter. This scenario suggests leasing companies will have massive price leverage over auto manufacturers, which would also concede direct contact with their customers. Given the devastation this would reap on automakers bottom lines, expect them to move heaven and earth to make sure its them in control.

Article source: http://www.detroitnews.com/article/20140914/AUTO0104/309140021/Could-new-technology-devastate-auto-industry-

Automotive Mission Plan 2016 Targets to be Missed by up to 25%: Report

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Article source: http://profit.ndtv.com/news/industries/article-automotive-mission-plan-2016-targets-to-be-missed-by-up-to-25-report-663109

Cannot Protect Domestic Auto Industry Forever: Commerce Secretary

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Article source: http://profit.ndtv.com/news/industries/article-cannot-protect-domestic-auto-industry-forever-commerce-secretary-663177