One must have a feeling of pity for the world’s vehicle makers as they try and plot a sane course through the current minefield of threats and promises for the rapidly changing industry in the future. First it was tighter safety and emission requirements. Then came the huge swing towards prioritising electric powertrains, which was followed by autonomous-driving cars.
If this was not enough, there is the ongoing mission-cheating scandal with many cities talking seriously about banning internal combustion (IC) engines, particularly diesels.
Amid all this furore many motor companies are trying to restructure and reinvent themselves as providers of mobility solutions and not just vehicle makers. This has lead to many of these vehicle makers seeking out tie-ups with companies such as Uber, Google, Apple, and the like.
Now to add more petrol to the fire we have several collisions involving self-driving development vehicles, including a fatal crash between a pedestrian and an autonomous Uber test car. Tesla electric cars, using their built-in Auto Pilot system, have also been involved in collisions. This has led to some authorities banning testing of autonomous cars on public roads.
In addition, more and more effort is being put into joint manufacturing ventures between Western car makers and automotive companies in China, as this market continues to boom. This is certainly not cheap, but also risky. Then there is the latest threat by President Trump to put more duties on vehicles imported into the United States to protect the local car makers.
The massive swing from three-box sedans to SUVs and cross-overs has caught out many manufacturers too. They are now battling to catch up on the early adopters of this versatile body style.
Even the way cars are being made is being re-examined. It is not just Lean Manufacturing, Just-in-Time and making increasing use of suppliers to provide complete systems and modules that continue to drive change. Now the human side is under renewed scrutiny. Both Toyota and Honda, who pioneered many of the advanced production engineering concepts, are now looking at increasing the amount of input from human workers and not just relying on robots and the like.
There is a realisation that robots don’t give feedback on possible production or product improvements that will lift quality levels or make the assembly process simpler and less costly. Human beings can do that and these two Japanese companies, as well as several others, are actively replacing some of the robots with real live people.
Being a senior executive in a motor company in the 21st century is certainly not for sissies!
The challenges for the motor industry don’t end with the OEM either. The retail traders are also in the middle of major disruption as to the way they sell cars. The environment is changing radically, with the digital world taking over many of the tasks from dealership sales persons and F&I representatives.
The facilities dealers occupy will also have to change. Rental costs and the growing range of models each brand offers means that a dealer cannot have examples of all – or even most – models on display. In fact, showroom areas will shrink as virtual reality takes its place in demonstrating a car’s features to a would-be buyer.
In fact, today more and more buyers know exactly what make, model, colour, and extras they want before they visit a dealership. Many buyers will have already dealt with a finance house too.
An increasing number of buyers don’t even want or ask for a test drive before signing the contract. Research shows that 60% of car buyers in Australia don’t want a test drive and in Asia this percentage climbs to 83%.
I did that with my last two car purchases, a Kia Sportage in 2012 and a Toyota C-HR last year. The first time I had been behind the steering wheel of a C-HR was when I drove my own car out of the showroom after the salesman had taken the huge red bow off the bonnet! I knew what I wanted from the first time I saw the concept version of this new model from Toyota which was a real mould-breaker for the brand in terms of styling.
The way OEMs and dealers do their marketing and advertising has also changed dramatically. Print advertising continues to decline, putting the future of several newspapers and magazines in danger as vehicle makers have been a mainstay of print advertising for so many years. Several have gone out of business already,
Vehicle advertising continues to be high profile on television but has a growing presence on social media such as Facebook, Twitter, Instagram and the like, as the impact of smartphones on our lives continues to grow.
Motor shows, which were traditionally static vehicle displays, have had to change too as new models are unveiled using the immediacy of the Internet instead of waiting to be unveiled at scheduled major motor shows.
Many motor shows have been discontinued in recent years, with the Detroit Motor Show, traditionally held at the beginning of each year, being one of the latest to be under threat. It continues to lose major companies as exhibitors and is even considering a date change to keep the show viable.
Show organisers are making their events far more interactive instead of being just new model launch platforms. This has happened here in South Africa with the Johannesburg International Motor Show at the Expo Centre, Nasrec, morphing into the SA Festival of Motoring at Kyalami, with the focus on test drives and “hot laps” spicing up the visitor experience. Shows are becoming shorter in duration too.
Now that profit margins on new cars have shrunk significantly it is vital for dealers to focus on client retention, offer top quality service and the sale of used cars to keep themselves viable.
Yes, this is certainly a time of radical change for the motor industry worldwide – and South Africa is right in the middle of it.