RAGING AGAINST THE DYING OF THE LIGHT.
Tuesday, October 9, 2018 at 11:27AM
Editor

By Peter M. DeLorenzo

Detroit. Almost six months to the 20th Anniversary of this publication it’s clear to me that many of the issues that vexed the auto industry two decades ago are still present. Yes, they may have different terms and executives’ names attached, but remarkably enough the same three steps forward and five back dance of mediocrity continues.

And it still pisses me off just as much as it always has. I often get asked – or it’s just assumed – that I have mellowed and that I can’t possibly continue to rage against the machine like I have. But then again, “they” said the same thing when I first attached my real name to this publication in the fall of 1999 three months after its start. I distinctly remember hearing “oh, he’ll get tired of it in about six months” more than once.

Well, I didn’t. Sure, there have been times when the sheer tedium of this business drove me crazy, and the relentless cadence of a weekly deadline threatened to swallow me whole, but dedication, perseverance, focused consistency and my inner drive prevailed, and as long as I had something worthwhile to say – and people wanted to listen – I was going to continue the writing.

Having a Voice is an interesting way to go through life and being a nationally recognized columnist covering this industry can be more than a little surreal at times. One week I'm a hero and the next I'm an asshole, depending on whether people agree with me or not. It just comes with the territory and I am definitely used to it by now. Having established a reputation with this website that has only grown in stature over time comes with a sense of responsibility, because people have come to expect a certain level of quality here. And that’s definitely gratifying. But as I’ve said many times over the years, once you set that kind of a bar “phoning it in” is not – and never was – an option. 

Back to being pissed off. It’s pretty close to a perpetual state for me. Why? Because when an entire industry presses the reset button each and every day and has to learn the hard way all over again, it’s more than a little disheartening. It’s infuriating, in fact. When so many (allegedly) smart people repeat the same mistakes over and over again in this business you begin to wonder about that definition of insanity.

For instance, the current swirling maelstrom that defines this business is well and truly on fire. To wit? The rumbling that higher transaction prices – a very good thing for the car companies – is running up hard against the rev limiter and that people are beginning to be priced out of the market is one of those warning signs that the industry is conveniently ignoring en masse. Understandably so, especially given the fact that the automakers are churning out $60,000 (and up) pickup trucks and buyers are scarfing them up like loss-leader compact cars from a bygone era. This is the classic Alfred E. Neuman-esque, “What, me worry?” industry mantra on display. This business is so thrilled with cranking out money-making trucks and the profits that come with them that the notion that this might not go on forever rarely if ever occurs to anyone.

But this just in: It never does. Luxury trucks are the show ponies of the American landscape. For now. But what’s going on is just not sustainable. Which car companies are preparing for that inevitability? Will the new Ranger be Ford’s hedge against the F150 money machine slowing? Maybe. But no one really knows for sure. What about Chevrolet, GMC and FCA’s Ram? What’s their plan? And what will replace the lost profitability?

Could these companies crank out decontented pickups in a hurry? Sure. But then again, the successful companies in this business tend to get out front of shifting market conditions instead of reacting to them. When the Great Slow Down hits the red-hot pickup truck market, watch out. The impact to these companies’ bottom lines could be swift and devastating.

As dire as even a minor collapse of pickup sales could be, even a bigger unknown could be the looming sink hole that defines the electric vehicle push in this industry. As readers of this website well know, this industry is lavishing billions upon billions on the Promised Land of Electrification. This land will offer consumers untold freedoms from the drudgery of Internal Combustion Engines, and we’ll all lead Shiny Happy Lives as the industry basks in a brand spanking new era of profitability.

Except it’s not going to exactly work out that way, is it? Electric vehicles are expensive, and it could be several years – if not more – before you will be able to buy a fully electric mainstream car without government incentives that makes realistic sense. Because right now electric vehicles are reserved for, if not the “1-percenters” at the very least the “10-percenters.” The upcoming new Audi E-Tron SUV is a perfect example of what I’m talking about. It comes in around $70,000 (and up). That’s luxury SUV territory and it’s the size of a Q5. Audi clearly won't be able to flip a switch and have these vehicles be an instant hit overnight.

And what about the other fully-electric vehicles from the VW Group? They’re between two and five years away, depending on the segment. The fundamental question persists: VW hasn’t announced the price of its fully-electric I.D. BUZZ van as of yet, but will it be as hip and desirable at $60,000? Even if battery development – and reduced cost – accelerate, will it still be desirable at $50,000? Those are billion-dollar questions that the entire industry will have to face with their fully electric product entries.

As I’ve said repeatedly, the marketing of electric vehicles will be one of the marketing challenges in automotive history. Getting consumers to pay $15,000 to $25,000 more – and up – for a fully electric vehicle over a traditional ICE vehicle is far from a given. And the marketers are going to struggle mightily to convince consumers that electrification is exactly what they need and want. 

Some marketers are taking steps to get out in front of this push (see what Ford is doing in this week’s “On The Table” -WG), but the same assumptions – and mistakes – are bound to be made. Because automotive marketers all want the same thing: a brilliant new idea that’s absolutely proven to work. And there’s no amount of money in the world that can guarantee that, even though there are plenty of automotive marketers out there who are convinced that they can do exactly that. That stunning level of hubris never ends, in fact.

Yes, I can still find plenty of things to write about when it comes to this business. When I see the same serial incompetence, the same unbridled arrogance, and the same conviction that somehow this time it will be different and that executives are smarter than any automotive historical context, well, it’s the same as it ever was.

And with all due respect to Dylan Thomas, I don’t plan on going gentle into this or any other good night anytime soon. 

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

Article originally appeared on Autoextremist.com ~ the bare-knuckled, unvarnished, high octane truth... (http://www.autoextremist.com/).
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