Trends from the 2018 Automotive News World Congress: Electric, Subscriptions, Dealers, and Autonomous
Photo courtesy of Eric Totaro. Cars including the Mazda MX-5 Miata RF, Ford Mustang Bullitt, Mercedes-Benz S560 Coupe, and Nissan Rogue were on display at the 2018 Automotive News World Congress.
The 2018 Automotive News World Congress showcased the latest innovations and trends driving the automotive industry. With leaders from major automakers speaking about what they are doing to keep their companies on the leading edge of innovation, four key trends stood out:
1) Electric vehicles are front and center, but the US is not leading the way in adoption
Putting electric vehicles on the road was acknowledged by nearly every automaker at the Automotive News World Congress, although most emphasized the long-term need for hybrid technology, especially in markets with less infrastructure.
Porsche Cars North America President and CEO Klaus Zellmer commented that “there is no doubt the powertrain of the future will be electric,” while also saying that Porsche “will offer internal combustion engines as long as customers demand them.” Zellmer reiterated that development takes place at different rates across regions. Britta Seeger, head of Mercedes-Benz cars marketing and sales, remarked that plug-in hybrid vehicles will remain crucial in some markets. These sentiments were echoed by Nissan CEO Hiroto Saikawa. Ford CEO Jim Hackett, however, was less confident in battery electric technology. It is “premature to say that battery electric is the winner,” he said. “Hybrid is not at all out of the game” and “Ford wants to leverage that.”
AutoNation CEO Mike Jackson commented that “obviously the issues of range and charging still exist” for electric vehicles, but that countries like China are leading the way in government mandates to help overcome these hurdles. China’s ability to power vehicles through its abundant coal reserves means less dependence on foreign oil, Jackson explained. Saikawa estimated that more than 50% of the cars sold in Japan and the European Union may be electric by 2025, compared to 30% in the United States
2) Vehicle subscription services highlight how the definition of car sharing is evolving…
Porsche, Cadillac and Volvo rolled out subscription services in the United States in 2017, offering – in the words of Zellmer – an “alternative to finance and leasing, not a replacement.” Porsche’s subscription service – called Porsche Passport – offers customers two membership levels costing $2,000 or $3,000 per month and access to up to six Porsche models. The cheaper option is a 20% mark-up over cost for Porsche. Tax, registration fees, insurance, maintenance and detailing are included with a membership, as is the ability to swap out a Porsche Passport vehicle as often as desired. Zellmer explained that the majority of its Passport customers are younger than the average Porsche buyer, chose the higher-priced membership option and have not owned a Porsche before. BOOK by Cadillac offers one membership level for access to five models; its average subscriber is 39 years old, also younger than Cadillac’s average. Care by Volvo is currently available only on the new XC40, though Volvo’s subscription service is available nationwide unlike Porsche’s or Cadillac’s.
3) …But automakers continue to laud their dealer networks
Despite the introduction of vehicle subscription services and rising online vehicle sales, automakers were quick to point out the importance of their dealer networks. The “physical dealer network is key to Mercedes-Benz,” said Seeger. “We don’t have the competence and we don’t have the structure,” to take over the dealer network, Volvo North America President Anders Gustafsson said. Audi of America President Scott Keogh concluded that he is “confident in new car sales” and that there is only one way to buy a new Audi – through a dealer. Gustafsson made references to the sometimes tense relationship Volvo corporate has had with its dealers and emphasized that Care by Volvo was in no way meant to cannibalize sales, though he did not go into detail regarding how Care by Volvo would avoid doing so.
4) Despite widespread media attention, fully-autonomous vehicles remain far-off
Most speakers at the Automotive News World Congress showcased their companies’ autonomous vehicle development initiatives, while the discussion remained less tactical than with electric vehicles or car sharing. Jackson equated putting the most advanced autonomous vehicle on the road today with putting a man on the moon, while putting an autonomous vehicle on the road that does not require any human intervention with putting a man on Mars.
Zellmer said he could not foresee a day when a Porsche does not have a steering wheel, although he acknowledged that in many circumstances an autonomous system would save the driver time and stress. Most automakers highlight their autonomous offerings as a premium feature that makes driving easier. This contrasts with electric vehicles, which will soon be mandated in certain markets.