No. 964
September 19, 2018
 

About The Autoextremist

Peter M. DeLorenzo has been immersed in all things automotive since childhood. Privileged to be an up-close-and-personal witness to the glory days of the U.S. auto industry, DeLorenzo combines that historical legacy with his own 22-year career in automotive marketing and advertising to bring unmatched industry perspectives to the Internet with Autoextremist.com, which was founded on June 1, 1999. DeLorenzo is known for his incendiary commentaries and laser-accurate analysis of the automobile business, as well as racing and the business of motorsports. Author. Commentator. Influencer. The Consigliere. Minister of the High-Octane Truth. DeLorenzo is considered to be one of the most influential voices commenting on the business today.

DeLorenzo's latest book is Witch Hunt (Octane Press  witchhuntbook.com). It is available on Amazon in both hardcover and Kindle formats, as well as on iBookstore. DeLorenzo is also the author of The United States of Toyota.

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Monday
Jan292018

SELLING AIR TAKES ON A NEW URGENCY IN THE MOTOR CITY, PLUS FIVE (EXASPERATING) HIGH-OCTANE TRUTHS.

By Peter M. DeLorenzo

Detroit. Now that the auto show hoopla and manufactured hype from the associated events has cooled, it’s clear to me that the ugly reality of this business has set in – yet again – and it is cold and unforgiving.

The reality for the collective “Detroit” is that it finds itself right back where it was before the temporary euphoria of the auto show clouded otherwise semi-rational auto executives’ thoughts. Yes, for a moment everything was beautiful, but add up the sum total of the content in the speeches and bloviating that went on in Detroit over the last two weeks, and it amounts to pretty much nothing. 

The evidence of the nothingness that went on in the Motor City was rampant. Here is a sampling of those (paraphrased) thoughts. Fill in your favorite car company as you see fit: 

“We feel that we are clearly positioned to take advantage of the transportation future, no matter what direction it takes.” 

“We are making massive investments in electrification and autonomy, which will hammer our balance sheet in the short term, but we should be good about three to five years from now.” 

“We are buying companies left and right in order to accumulate intellectual property, which will protect us in the connected future.”

“We are preparing for the day when the automobile will supplant the smartphone as the life platform of the future, and we aim to play a pivotal role in this development.”

A lot of the blue-sky pronouncements made in Detroit over the previous two weeks went beyond the usual blather, because the level of delusional thinking being projected was downright scary. The Pope of Silicon Valley – Elon Musk – can get away with it because, well, Wall Street is enamored with anyone who bends reality for their own financial gain; it’s the gift that just keeps on giving. But auto executives spewing their views on the autonomous future and their companies’ role in it? Uh, not so much. Why? Because it comes off as an egregious form of audio-visual desperation, like freshly energized-for-no-reason nerds trying to be like the cool kids in high school. Projecting manufacturing-centric automobile companies as the solution for our transportation future is extremely difficult image-wise, especially when Silicon Valley theorists and people who specialize in “selling air” for a living are writing the “rules.” (More on this later.)

With that in mind then, here are Five High-Octane Truths about the car business right now that jumped out at me over the last couple of weeks:

1. Data is not the new oil. The car companies in a headlong rush to accumulate data on consumers are kidding themselves and it’s a fool’s errand. This goes back to the idea that some well-meaning executives actually believe down to their monogrammed shirts that the connected automobile will supplant the cell phone as the personal communication device of the future. They envision an idealistic, Shiny Happy Future where our automobiles remember our favorite restaurants, our favorite place for a cup of coffee, our favorite dry cleaners, the best place for organic snacks and so on, and that somehow this knowledge will drive owner loyalty and revenue back to the automakers that will translate into untold billions in profit. But the idea that we will all just lap this up like there’s no tomorrow is ridiculous. The automobile will never replace the cell phone on the human connectivity scale, because that ship has sailed. The auto manufacturers creating huge data farms in order to glean countless bits of information about consumers that in their minds will change the world are in for a rude awakening. This is unmitigated horseshit on a grand scale, folks, and the car companies who are immersing themselves in this pursuit are in for a rude awakening.

2. The UAW is toast. The ugliness of the pay-to-play scandal that has grabbed this business by the scruff of the neck is not going away anytime soon. In fact, it is growing, with more indictments expected. The news that FCA officials paid more than $1.5 million to UAW officials and employees to sway union contract negotiations is part of a wider $4.5 million corruption scandal involving the foreign-owned automaker. The Feds said last week that the FCA executives’ actions were intended to corrupt UAW contract negotiations to favor Fiat Chrysler and that the corruption was more widespread than previously disclosed. In fact it lasted for years. Perhaps this type of payola may be standard operating procedure in Corporate Italia, but it doesn’t fly here, and with the UAW on very thin ice as it is, the outcry from the rank and file is growing louder by the day. Wouldn’t be ironic if on Sergio’s way out of town his henchmen were responsible for destroying the UAW too?

3. Are these guys really that stupid? Why yes, yes they are. The news, reported by the Stuttgarter Zeitung newspaper and Bloomberg, that the Volkswagen Group, Daimler and BMW sponsored tests that exposed 25 people as well as monkeys to diesel exhaust fumes – which can cause respiratory illness and cancer – at a clinic used by the University of Aachen, rocked the auto world on Monday. The report, citing annual reports from the European Research Group on Environment and Health in the Transport Sector, or EUGT, which closed last year, followed a report from the The New York Times that confirmed the tests using monkeys. Daimler immediately condemned the experiments “in the strongest terms” but, really? As in WTF? Were theses companies that driven to save the Diesel that they would acquiesce to such nonsense, or were they just following orders?

4. The Answer to the Question that Only a Few People Are Asking. The mid-size truck segment is as flat as a pancake, yet Ford and Jeep are jumping in (albeit in over a year) to go up against the Toyota Tacoma, Chevrolet Colorado, GMC Canyon, Honda Ridgeline and the Nissan Frontier. What gives, exactly? Is the demand there? Not really, but the automakers playing in that segment are afraid of being left behind. Of what, I’m not really sure. If a car company really wanted to make a splash in this segment it would come in with a product entry that was bare bones and priced aggressively, costing thousands less. That’s not happening and it’s the wrong move.

5. Buick’s station wagon to nowhere. Buick operatives are positively giddy about its new Regal TourX, its “don’t-call-it-a-station-wagon-call-it-a-crossover” entry into the market, insisting that they will attract buyers from Audi, Subaru and Volvo, except that I can assure you that buyers/drivers of those cars are about as likely to visit a Buick showroom as the Lions are of winning the Super Bowl next year, no matter what Buick marketing operatives have talked themselves into believing. On the one hand I can actually appreciate the kind of unbridled optimism displayed in small doses here, but on the other hand I recoil at the sheer, flat-out lunacy and delusional thinking. In fact it’s frightening when you spend too much time thinking about it. 

Aw well… getting back to this aforementioned “selling air” business. It’s not that auto executives aren’t proficient in “selling air,” some are quite adept at it as a matter of fact, but still, suggesting that the automobile manufacturers can pivot with a dramatic certainty and become technology companies overnight is simply not going to happen and is a totally unrealistic notion. 

And frankly, they don’t have to either. Instead of trying to become something they’re not and will never be, the auto companies need to maximize their expertise in manufacturing and mass production and be an essential part of the solution for our transportation future without being marginalized into irrelevance by it.

But this is anathema to the current "Detroit” mindset. How dare I have the temerity to suggest that the collective “Detroit” doesn’t have the talent or the wherewithal to compete in this arena, right? Let’s back that up a bit because this is not what I’m saying. There’s no question that the talent in this region is prodigious (as the denizens of Silicon valley have become well aware of). What I am saying is that yes, of course, “Detroit” could become experts in this arena well down the road, but at what ultimate cost? Does that mean “Detroit” should subjugate its knowledge accrued over a century to all of a sudden become what they really don’t have to be, or should be?

The short answer? No. We are going to be living with cars and trucks powered by ICEs (Internal Combustion Engines); Hybrid electric vehicles with ICEs; and Battery Electric Vehicles (BEVs) for decades to come. Let me say that again, for decades to come. Yes, autonomous and ultra-connected vehicles will play a role in the overall transportation equation going forward, but it will not be the dominant role. Instead, their impact will be confined to urban centers, delivery vehicles, and other select situations where favorably applicable

Does this suggest that the car companies throwing around money like drunks at a bottler’s convention in the hopes of catching up to Silicon Valley is a smart strategy? Are car companies that ignore their areas of expertise in the hopes of being part of a transformative transportation initiative guaranteed untold riches and success? Clearly they are not.

The automobile companies who keep things in perspective going forward will be the ones that survive, plain and simple. The auto companies that get caught up in the frenzy will be crippled if not eliminated all together.

And that’s the High-Octane Truth for this week.

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