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Book Review: Preston Tucker

April 17, 2017 by admin 3 Comments

…and His Battle to Build the Car of Tomorrow.

Preston Tucker may not be a name familiar to people outside of the auto industry or the business world, unless you happened to watch the 1988 movie, “Tucker: The Man and His Dream.”

I never saw the movie, but have been long familiar with the story. Or at least I thought so.

That is until I read the book, “Preston Tucker and His Battle to Build the Car of Tomorrow,” by Steve Lehto (Chicago Review Press; 272 pages; $27,99; ISBN: 978-1-61374-953-1). In effect, Lehto exposed the entire story, going well beyond the man’s aspirations to show how industry leaders, politicians, and regulators colluded to destroy the company and perhaps the man who ran it.

I must say that the author’s story was infuriating — not for how he illustrated it, but for the hard truths exposed. Tucker himself weathered injustice after injustice as the three largest automakers of that era — General Motors, Ford, and Chrysler — did everything they could to wreck Tucker’s dream.

Unfortunately, the Big Three succeeded.

Attorney and Industry Expert

Preston Tucker and His Battle to Build the Car of TomorrowTo his credit, Lehto brought not just an investigative touch to the story, but his legal expertise. Indeed, he is not only the author of the “Lemon Law Bible,” but he’s a practicing attorney based in Michigan. His website reveals his background in lemon law and consumer protection, areas where the auto industry has made significant changes following years of neglect or willful ignorance.

Preston Tucker was the consummate entrepreneur, born in 1903 just outside of Detroit. That proximity to Motor City meant that he had access to the emerging industry and everything related to it. Early on, he managed a service station near where he grew up with his wife, Vera. While Vera managed the station during the day, Preston worked on a Ford assembly line.

When the service station lease ended, Tucker quit Ford, joined the police force, then moved on to sell Studebakers, then Stutz and Chrysler. Stints at Pierce-Arrow and Dodge should also be counted, before his interest in race car development and military vehicles followed.

WWII: An Opportunity Emerges

During the Second World War, America’s car companies quit producing passenger vehicles and became assembly lines for all sorts of military vehicles and hardware. As the war labored on, pent-up demand for new vehicles surged and by the time the war ended, consumers were looking for new designs.

Unfortunately for the traditional manufacturers, the only “new” cars planned were based on designs used before the war. It would take several more years before the pre-war styles were retired.

A New Automaker: Tucker Corporation

Preston Tucker saw an opportunity and formed the Tucker Corporation even before the war ended. In quick succession, Tucker assembled a group of industry leaders to launch his enterprise, based on a 1946 design of the car. Soon, a “Tin Goose” prototype followed and the company acquired its first manufacturing plant.

But problems and opposition arose early on, including some of Tucker’s own making. Known as a consummate salesman, Tucker easily endeared himself to others and did an outstanding job of promoting the company’s stock. However, he soon found that the Securities and Exchange Commission (SEC) would scrutinize the company, launching a formal investigation.

It is at this point in the story that the Tucker Corporation was racing against time. The company needed to get vehicles produced to convince detractors that production-ready models were possible. At the same time, at least one Michigan politician was hell bent against Tucker, and quite possibly in the pocket of at least one automaker threatened by what the Tucker entity might become.

Tucker 48: The Car of Tomorrow

What became known as the “Tucker 48” was truly a state-of-the-art conveyance. Tucker envisioned a car that wasn’t just modern, but equipped with safety equipment not offered in that day.

A padded dashboard, disc brakes, a pop-out windshield, and a third headlight which swiveled when taking corners, were just a few of the safety features offered. Its rear-wheel, rear-engine design was unusual too — altogether, the Tucker 48 had the potential to not just shake up the industry, but to transform it. It became known as “the car of tomorrow” — a stark contrast to the aged designs offered by Detroit.

I won’t go into all the details about how the Tucker Corporation unraveled — you need to read the book — but I will say that there were enough doubters, backstabbers, and ne’er-do-wells to undermine the company. Sadly, the media was complicit, launching baseless critiques of the car or advancing a disproven narrative, e.g. — the car could not drive in reverse.

That Tucker was able to get 51 cars to the market before the whole thing crumbled is a tribute to the man. That there were only 51 cars built is a crying shame — without much interference, the industry could have transformed much faster, delivering safer cars and saving thousands of lives.

But consider this: safety features are costly and manufacturers long put share values above consumer safety, a problem that isn’t as prevalent today, but it still does exist.

The End of the Road

After several years of wrangling with the opposition, Tucker found himself without a company and with people launching civil suits against the company and himself, including dealers who lost their investment.

Though Tucker prevailed, he was destitute, yet he maintained the dream of launching a new company. At the same time, he was never quite himself and was later diagnosed with lung cancer, passing away at age 53 — just eight years after launching the Tucker 48.

Shades of Musk and Tesla?

There is much that can be gleaned from Letho’s work, which I think has an important place in chronicling Tucker history, even without the foreword by Jay Leno.

Some compare Tucker’s rise and fall to Elon Musk, founder of Tesla Motors. Although Musk is similarly imbued with entrepreneurialism, his personal wealth and the very favorable government backing for his electric vehicle initiative means comparisons between the two stops there. Indeed, although Musk’s long-term success is still in doubt, at least he hasn’t faced the same insurmountable headwinds as Tucker.

And that’s putting it all very mildly.


See Also — Book Review — The Allure of the Automobile

Filed Under: Book Reviews Tagged With: auto industry, Chicago Review Press, ELON MUSK, INNOVATION, Jay Leno, Preston Tucker, regulators, safety, SEC, Steve Lehto, TESLA MOTORS, Tucker 48

Auto Industry Shines, Ending Successful First Half

July 3, 2013 by admin Leave a Comment

Auto Industry: It is halftime, baby. Auto sales for June 2013 are in and the news is very good nearly across the board. Last month, pickup truck sales helped carry GM, Ford and Chrysler, while Toyota, Nissan and Honda enjoyed strong demand for the usual car lines. In all, sales are on pace to top 16 million units this year, perhaps reaching the highest sales mark we’ve seen since 2007.

GM, Ford and Chrysler

GM reported its highest monthly sales totals since Sept. 2008, the very month that Lehman Bros. collapsed and the recession began to take hold, punishing the auto industry. Through the first six months of 2013, Cadillac sales rose by 33 percent, the fastest growth of all luxury brands. The Chevrolet Cruze had its best month ever with 32,871 units sold. Year to date, Chevrolet has sold 242,586 Silverado pickup trucks, for a 24.7 percent increase.

Auto Industry: 2013 Ford Fiesta

The Ford Motor Company continues to ride the crest of demand for its F-150 pickup truck. Sales were up by 23.6 percent in June and 367,486 units have been sold through the first half of the year. Fusion, Escape, Focus and Explorer round out the Ford brand top five with its hybrid C-MAX topping 20,000 units sold. The Lincoln brand fell slightly for the month and is down by 8.8 percent year to date.

“In June, we continued to see strong demand across the entire lineup,” said Ken Czubay, Ford vice president, U.S. Marketing, Sales and Service. “We’re particularly encouraged by strong retail share gains, especially in coastal markets, where the combination of great design and fuel economy is resonating with customers – including many buying a Ford for the first time.”

Chrysler’s sales streak continues as the company reported its 39th consecutive month of month-over-month sales increases. A number of models had record-selling months including three Jeep, two Dodge and the Ram Cargo Van C/V. Sales of the Chrysler 200 also broke a record. Chrysler Group sales, including Fiat, are up by 9 percent for the year.

Volkswagen, Kia and Hyundai

Volkswagen sales fell by 3.2 percent for June and the German automaker is now down by 0.9 percent
year to date. VW’s drop can be attributed to discontinuing the Routan and customers waiting for the next generation Golf to roll out in early 2014.

Auto Industry: 2015 Volkswagen Golf

Kia has finally plateaued after several years of strong sales and expanding market share. Despite the introduction of the full-size Kia Cadenza sedan this spring, sales fell by 1 percent in June and are down by 3.6 percent through June. Kia’s cousin, Hyundai, continues to battle capacity constraints, but still managed to record its best June ever. The Elantra is now outselling the Hyundai Sonata, helping the larger of the two Korean manufacturers to stay on the plus side through June. YTD Hyundai sales are up by 1 percent.

“With all of our plants continuing to operate at maximum capacity, sales of the U.S.-built Elantra soared 26 percent over June 2012,” said John Krafcik, president and CEO of Hyundai Motor America. “Our Hyundai Assurance Connected Care program, now free for three years on most Hyundai models, continues to draw customers to our website and showrooms.”

Toyota, Nissan and Honda

Toyota has vowed to continue to defend its auto industry leading Camry from all comers and managed to ride 35,870 Camrys sold to an 11.9 percent increase for June. Camry sales, however, are still down by 2.3 percent for the year as sales of the Honda Accord, Nissan Altima and Ford Fusion strengthen.

Auto Industry: 2013 Toyota RAV4

Nissan brand sales rose for June while Infiniti fell, a trend that continues from earlier this year. The Nissan Altima continues to set the pace with Rogue and Sentra following. Infiniti is the midst of a product naming convention overhaul and is finding stiff competition from European manufacturers, from its Japanese competitors and from Cadillac. Year-to-date combined sales at up by 8.1 percent, however.

Honda counts the CR-V, Pilot and Odyssey as its “light trucks” and that segment saw an 17.6 percent increase for June. Honda Accord and Civic sales combined topped 60,000 units as sales rose by 16.9 percent for the month. Honda sales are now up 7.2 percent year to date.

“Honda was firing on all cylinders in June with the hot-selling Accord joined by the Fit, CR-V, Odyssey and Pilot all posting their best sales of the year,” said John Mendel, executive vice president of sales at American Honda. “Our goal for 2013 is to be the leader in retail sales for all four of our highest volume models: Accord, Civic, CR-V and Odyssey. These solid results further showcase Honda’s pure, market-driven momentum achieved by customers choosing Honda vehicles one at a time rather than relying on fleet sales to drive volume.”

Best of the Rest

Subaru sales rose by 42 percent on the strength of Forester and Outback demand. To date, Subaru sales are up by 24.5 percent and the company is on track to crack 400,000 units sold for the first time.

“We are thrilled to close the first half of 2013 with such record numbers,” said Thomas J. Doll, president and chief operating officer, Subaru of America, Inc. “Our products are being well-received and we are looking forward to adding Subaru’s first-ever hybrid vehicle to our product line-up later this year.”

Auto Industry: 2013 Subaru XV Crosstek

BMW and Mercedes-Benz continue to duke it out with BMW Group sales up by 21.4 percent while Daimler sales rose by 7 percent. The BMW Group outsells Daimler, but Mercedes-Benz is currently ahead of BMW for top luxury marque.

Auto Industry: Through June 2013

GM remains the top-selling automaker in America, having sold 1.42 million units through June, just ahead of the Ford Motor Company at 1.289 million units. Toyota follows with 1.108 million units followed by Chrysler coming in at 908K. Honda at 742K units and Nissan at 624K unit round out the Big Six.

To date, Motor Intelligence reports 7,829,141 units sold, up from 7,272,160 for 2012. That represents a 7.7 percent increase. If the current auto trends hold we may see the 16 million unit mark cracked this year.

Auto Industry: 2013 Ram 1500


See Also — Auto Industry Buzzword: Collaboration

Auto industry photos copyright of the respective car manufacturers.

Filed Under: Automotive News Tagged With: auto industry, BMW, CHRYSLER, Ford, GM, HONDA, Hyundai, Kia, Mercedes-Benz, NISSAN, Subaru, Toyota, Volkswagen

Polk, Owner of Carfax, Acquired by IHS

June 11, 2013 by admin 2 Comments

Business information service IHS announced this week that it has agreed to acquire R.L. Polk & Co., an automotive analytics company, for $1.4 billion. The Polk acquisition, which includes its vehicle history service CARFAX, will be completed at an unspecified time.

Polk and CARFAX

The CARFAX side of Polk’s business may be what is best known to consumers. With CARFAX, car buyers can obtain a used vehicle’s history report, information that may warn shoppers of potential problems.

IHS PolkBesides registration and title information, CARFAX reports include odometer readings, total loss accident history, frame and structural damage, service and repair information, accident indicators, vehicle usage, lemon history and recall information. CARFAX reports are not bulletproof, but are recognized as good tools for used car shoppers as they consider any purchase. Single reports are available for a one-time fee or customers may obtain up to five reports within 60 days. In addition, unlimited reports may be obtained within 30 days for a flat $54.99 fee.

Polk Data and Reports

The Polk side of the house is responsible for assembling vast quantities of automotive data including tracking the average age of vehicles owned by Americans. Other studies conducted look at such auto trends as brand loyalty, commercial vehicle purchases and global forecasting.

Polk also publishes “Polk View” which offers detailed subject-related articles and reports such as, “What Comes After SUVs?” In that October 2012 report, Polk senior consultant market analysis, planning & forecasting Gunnar Gaedke, outlined the segment’s growth beginning in the mid-1990s through today. Gaedke noted that the segment has yet to peak, expecting SUV demand to rise from the 9 million units sold annually worldwide in 2012 to 14 million units by 2016.

However, new body styles such SUV coupes will change that dynamic and all-wheel drive may not always be part of the mix. Such coupes are expected to keep demand for SUVs growing strong, thus Polk has forecast that, “the end of the SUV boom is not yet in sight.” It is such reports from Polk that IHS will acquire, raising this company’s own influence in the automotive sphere.

IHS Buying Spree

IHS has been on a buying spree in recent years, snapping up from five to seven businesses annually reports the Wall Street Journal. Company Chief Executive Scott Key explained to the Journal that IHS would likely “take a pause” as it absorbs Polk. IHS, based in Douglas County, Colo., also owns Jane’s Information Group, Screen Digest, CERA and Global Insight. Its IHS CERA division, for instance, analyzes energy markets including industry trends, geopolitics and strategy. Polk’s headquarters are located in suburban Detroit. Additional offices are located in New Jersey, California and Virginia. Polk also has a presence in Canada, Australia, Europe and Asia.

CARFAX has been a strong point for Polk, but it isn’t without its critics. Automotive dealers have cried foul, alleging that its vehicle history service is anticompetitive and violates antitrust laws (see Automotive News). A $50 million lawsuit filed in U.S. District Court for the Southern District of New York is still pending and may ultimately have some bearing on the sale’s progress.


See Also — Lemon Law Guidance for New Vehicle Owners

Filed Under: Automotive News Tagged With: ACQUISITION, auto industry, CARFAX, IHS, R.L. Polk & Co., reports

Auto Industry Buzzword: Collaboration

April 23, 2013 by admin 4 Comments

The global auto industry is collaborating as never before. This week, GM and Ford announced that they are once again teaming up to develop transmissions. Toyota and BMW are building fuel cells together. Ford and Toyota are working on hybrid systems for large vehicles including pickup trucks.

Collaboration on special projects seems to be more successful than outright alliances, e.g., Daimler and Chrysler or Volkswagen and Suzuki. Some alliances such as Nissan and Renault do work, but much evidence points to difficulties that seem nearly impossible to surmount. DaimlerChrysler unraveled because of strong cultural differences. The same can probably be said about Volkswagen and Suzuki.

Ford Toyota collaborationGiven that collaboration is one of the auto industry’s buzzwords, we thought that wed pose a few questions to some of the people involved in decision-making, individuals that may have a stake in cooperating with other companies including those across industry lines.


See Also — Emerging Alliances Point to Further Auto Industry Consolidation


Our Questions

Is collaboration the way for industry stakeholders to go?

Fred Thomas, Industry Director of Apriso answered, In many instances, yes. The immense cost of bringing new products to market at the pace demanded in todays globally competitive automotive industry, is driving a whole new look at collaboration opportunities from product development through manufacturing. This holds true for both components and vehicles.

Added Thomas, But, collaboration in the global automotive industry is not new. It has been going on for years. I think what youre seeing today is a renewed focus on finding ways to work together for a common good, while remaining fierce competitors on the global automotive playing field. That common good may include jointly developing hybrid drive systems, a joint effort that can reduce fuel consumption and lower vehicle emissions.

Product Liability Pitfalls

Of course, working directly with other businesses to co-develop a product, a key component or other supplies is not without risk. Exclusive intellectual property rights may be compromised and then there is a matter of personal liability. That led to our second question is there a potential downside such as shared personal liability for co-developing a product that might fail?

Sarah Lee Marks (MyCarLady.com), an independent auto buyers agent and car consumer advocate who also works with dealers and manufacturers on training, brand marketing and digital positioning offered the following response: Today so many components are supplied by one supplier to many brands, when it fails it fails for everyone, so all the products are tainted by a recall campaign. A joint venture at the manufacturer level might actually insure a better product down the line.

Auto Industry Cooperation

Beyond the high-profile news-making collaborations of late, we also wondered are there other areas where companies might cooperate? Torsten Maschke, President, Automotive Sales and Marketing, Freudenberg Sealing Technologies, offered his input.

Said Maschke, While collaboration has become, in my mind, a business imperative, it also remains a complex, complicated means of leveraging research, talent, systems and solutions. Suppliers are protective of their independence but need to very clearly understand and communicate their position in the market. When they collaborate with their customers, there is a mutual expectation that their intellectual property will be protected and secure in the relationship. When a customer is concerned that collaboration might lead to a loss of competitive advantage, even if this concern is unfounded, the relationship is likely to go awry. For example, when Magna tried to become an OEM by taking over Opel, other OEMs were extremely concerned about their IP falling into the hands of a potential competitor and they abandoned projects with Magna.

He added, There are, of course, examples where this kind of thing has worked. SGL Carbon in Europe is an example. The company is jointly owned by BMW and Volkswagen and supplies both companies with critical technology solutions. In general, however, these kinds of collaborative arrangements work best when the technology the supplier brings to the table is unique and arrives early in the life cycle development process. In the case of mature products, just the opposite can occur OEMs can sever their relationship with their own in-house supplier development organizations (GM-Delphi, Ford-Visteon) because they cannot leverage enough capability, cost savings and profits from these relationships.

The Consolidation Factor

Collaboration may not always be possible especially in an industry that is also consolidating. PRISM Plastics has grown its business from $9 million in sales in 2009 to more than $25 million in booked business this year and has done so as other suppliers have consolidated. This injection molding company is a Tier 2 supplier that works with Takata, Autoliv, Key Safety, by providing difficult to mold parts that keep its customers coming back for more.

PRISMs co-owner and vice-president, Gerry Phillips, is confident that even if an OEM switches Tier 1 suppliers that it will pick up enough business elsewhere to maintain its position. Instead of collaboration and consolidation being driving factors, maintaining a competitive edge may help niche manufacturers such as PRISM not just survive, but thrive.


See Also — Toyota and Mazda Collaboration Will Lift Both Automakers

Filed Under: Special Tagged With: auto industry, BMW, COLLABORATION, Ford, GM, Toyota

Policy Makers, Industry Leaders Weigh In at National Journal Summit

January 30, 2013 by admin 1 Comment

Washington Auto Show
Hundreds were on hand at the Affordable Mobility policy
summit that kicked off this year’s Washington Auto Show.

The National Journal and the Washington Area New Auto Dealers Association co-hosted a policy summit today to kick off the 2013 Washington Auto Show, bringing together policy makers and automotive industry officials to discuss several matters. Titled, Affordable Mobility: A Roadmap to Energy Efficiency, the two-hour summit was split evenly between an expert panel discussion and a report from the automakers.

Panel Discussion

National Journals Fawn Johnson moderated the panel discussion. Participants were: Mitch Bainwol, president and chief executive officer of the Alliance of Automobile Manufacturers; Don Chalmers of the National Auto Dealers Association; Gina McCarthy, Assistant Administrator, EPA Office of Air and Radiation; Mary Nichols, Chairman, of the California Air Resources Board; and Rebecca Lindland, Director, Automotive Research, IHS Automotive.

WANADAs Gerard N. Murphy introduced Johnson who queried the panel. Chalmers noted the importance of the auto industry to the national, indeed the global economy, citing that 15 percent of US retail sales is made up of car sales volume. The industry, including manufacturers, suppliers and dealers, also employs tens of millions of Americans.

Government Mandates

Chalmers expressed concern about both the pace of the new 54.5 mpg fleet mandates required by 2025 and consumer willingness to accept the changes. He noted that the US is a very, very diverse country with very, very diverse consumers. What the city dweller might be interested in driving is far different from what the consumer in Oklahoma, New Mexico and elsewhere might want.

He also raised an issue that has heretofore received scant attention: the impact of consumer financing. With 90 percent of new vehicles leased or purchased, loan underwriters such as banks are not concerned about fuel mileage and emissions standards, rather about loan-to-value ratios, a point that Lindland reiterated.

Regulatory Accomplishments

Both McCarthy and Nichols stressed the accomplishments of their respective government agencies EPA and CARB with successfully helping manufacturers build more fuel efficient vehicles while also reducing greenhouse gases. The EPA is in the process of adopting Tier 3 rules for the control of air pollution from motor vehicles, a sulfur reduction initiative pioneered by the Golden State.

Throughout the panel discussion and again with the industry report, mid term review came up numerous times. Groups such as Auto Alliance have called for one or more reviews especially as the rules extend out by 13 years. Reg Medlin, Director Regulatory Affairs for Chrysler, called for a robust midterm review, one that would evaluate where the market has come from and to adjust accordingly for the intervening years.

Unintended Consequences

Lindland noted that policy makers and industry leaders should be alert to certain unintended consequences that could adversely impact the changes that are rolling out. She noted that affordability is the biggest issue for many consumers, while also citing that personal wealth is an important factor for the adoption of EVs and other advanced powertrains. Indeed, the average income of Chevrolet Volt and Nissan LEAF buyers is about $150,000, compared to $68,000 for all car buyers. Lindland asserted that the greening of the US consumer fleet could be stymied if the cost of vehicle ownership rises.

Bainwol, on behalf of the AAM, took a more middle of the road approach. He noted that automotive manufacturers want certainty over time especially as they seek to invest billions of dollars in new technologies. Still, there is much risk involved as consumers adapt to new vehicles with no one really knows how they will respond. Bainwol reiterated calls for a mid-term review to gauge what consumers are buying.

Industry Panel

The second part of the policy summit included Reg Modlin who was joined by Robert Bienenfeld, Senior Manger, Environment Energy Strategy, Product Regulatory Office, American Honda Motor Co., Inc. and Tom Stricker, Vice President of Technical and Regulatory Affairs, and Energy and Environmental Research for Toyota. National Journals Amy Harder moderated.

The industry leaders stressed that the 2025 fuel economy standards are ambitious for reducing greenhouse gases and in improving fuel economy. The three gentlemen agreed that there needs to be clear rules, that the rules must be technologically neutral and competitive. Once again, what consumers will do for the short-, mid- and long-term remains the unknowable part of the equation, something that lawmakers and industry leaders will need to keep in mind as they move forward.


See Also — Natural Gas Vehicles and a National Energy Policy

Filed Under: Automotive News Tagged With: auto industry, CARB, CHRYSLER, EPA, FUEL ECONOMY, HONDA, NATIONAL JOURNAL, POLICY SUMMIT, Toyota, WASHINGTON AUTO SHOW

KPMG Survey: Automotive Executives and Electric Vehicles

January 21, 2013 by admin Leave a Comment

Widespread EV adoption not expected before 2025.

KPMG 2013

Automotive executives are pouring tens of billions of dollars into vehicle electrification, but the most important advancements in automotive technology will come from engineering and technological advancements made with internal combustion engines. That is one of the findings shared in the 14th Annual Global Automotive Executive Survey conducted by KPMG LLP, the U.S. audit, tax and advisory enterprise, and released this month.

Auto Industry Executives

The annual survey of more than 200 C-level auto industry executives (i.e., CEOs, COOs, CFOs and the like) found that 26 percent said that their companies will invest resources to shrink the footprint of their internal combustion engines while optimizing performance.

Some 36 percent of executives acknowledged that most of their research and development costs will target ICE development, while 71 percent stated that improvements in ICE engineering and technologies will bring forth more efficiencies and reduced emissions potential than investing in EV technologies, at least over the next six to 10 years.

Vehicle Electrification

Still, the KPMG survey did reveal that ICE investment is not coming at the expense of alternative drivetrains. Noted Gary Silberg, the National Automotive Industry leader for KMPG, manufacturers will continue to …intensify investment in electric technology, fully appreciating what is at stake in a very competitive industry.

Indeed, 26 percent of executives stated that their companies will invest chiefly in plug-in hybrid fuel systems over the next five years with 17 percent stating that hybrid fuel systems will get the nod. For the same period, 13 percent said that the main investment will be in battery electric vehicle technology with range extender, 11 percent with fuel cell electric vehicles and 8 percent with pure battery electric vehicles.

Not surprisingly, some 87 percent of executives believe that BEVs will not be able to match the range of gasoline- and diesel-powered vehicles for at least five more years. Most also believe that vehicle electrification gains over the coming years will come from systems that are not purely BEVs including PHEV, HEV and FCEV models.

Spreading the Cost

“What’s interesting is that automakers are placing bets across the board, and large bets at that, especially hybrids,” added Silberg. “In addition, although not part of our survey, automakers continue to explore powertrain opportunities that would allow them to capitalize on the U.S. abundance of natural gas.”

Automotive executives do not expect that the entire spectrum of EVs will top 15 percent of new car sales in 2025, although the surveyed U.S. executives seemed more optimistic than their global companions, with 45 percent expecting the EV adoption rate to come in at 16 percent or higher for vehicle registrations.

Survey Says

The 64-page KPMG survey delved into other areas of the industry tackling such issues as urbanization, globalization, customer behavior, capacity and global dominance. The four BRIC countries Brazil, Russia, India and China are expected to account for nearly 1 in 2 new vehicle sales by 2018, representing more than 40 million units for those countries alone.

Despite the growth, a key concern remains capacity, a problem that is most apparent in Japan and across much of Europe. Yet, 21 percent of European and Japanese executives believe that overcapacity in those markets can be solved by exporting more vehicles. Most executives believe that todays overcapacity issues will be reduced over the next five years.

Besides the BRIC quartet, the survey revealed that there are four more nations with much potential for growth: Malaysia, Indonesia, Mexico and South Africa. Mexico, for example, continues to add capacity as this country along with the three others offer lower labor costs than found in mature markets.

Winners and Losers

Ask any executive about industry growth and you will find that market share is always a big concern. Every executive desires more sales, but that does not mean that market share will increase with it especially as the industry pie expands.

If the KPMG survey is a good indicator of future auto trends, only Volkswagen and BMW stand the best chance among Western car manufacturers in gaining market share. A full 81 percent of executives believe that VW will continue to increase its share while just 3 percent believe that its share of the pie will shrink.

BMW and Chinese car manufacturer BAIC were tied for second with 70 percent of executives expecting these companies to gain market share with just 5 percent expecting them to drop. Toyota, Hyundai/Kia, SAIC, FAW, Geely, Nissan and Tata rounded out the top 10, with at least 50 percent of the executives expecting these companies to gain market share.

While Ford, GM and Chrysler may fare rather well, the latter thanks to its partnership with Fiat, there are some car manufacturers that may struggle. Notably, four Japanese car companies Suzuki, Mazda, Mitsubishi and Subaru offer the least confidence among executives. In each case, more executives predicted that the bottom four would retain or lose market share, accounting for more than those believing that each would see an increase.

Moving Forward

Clearly, the automotive market will continue with its rapid-fire changes. More efficient vehicles are coming and emerging markets will continue to shape what car manufacturers build. Smaller manufacturers will most likely be acquired or forge strong relationships with industry leaders in a bid to survive.


See Also — What Makes Today’s Internal Combustion Engines More Efficient?

Filed Under: Auto Shows Tagged With: auto industry, AUTOMOTIVE EXECUTIVES, BMW, BRIC, ELECTRIC VEHICLES, HYBRID VEHICLES, KPMG LLP, PHEV, Volkswagen

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