IT'S TIME FOR DETROIT TO FACE THE MUSIC.

Editor's Note: This week, Peter takes on the two main issues that are front and center right now in the business - the possibility of Chinese-based automakers entering the U.S. market, and the question of AI and the potential for job elimination. In On The Table, we have news from Porsche in terms of the 911 GT3 S/C, with the big news being a manual gearbox! And we have other product news from Mercedes-Benz and Rolls-Royce. Plus, we have an update on Peter's book. Our video of the week features the late Jim Pace doing a hot lap at Road America in an expertly prepared McLaren M6B Chevrolet. Do you want to know what the Can-Am was like? This video gives you a really good idea. Our AE Song of the Week is "Lucky Man" by The Verve. In Fumes, Peter presents the next chapter of his series, "The Great Races" covering the infamous Nassau Speed Weeks. And in The Line, we'll have INDYCAR and IMSA results from Long Beach. Enjoy!  -WG

By Peter M. De Lorenzo

Detroit. That churning sound you’ve been hearing emanating from the Motor City is the relentless hand-wringing going on over two specific things: The possibility of Chinese-based automakers entering the U.S. market, and how many jobs AI is going to cost this industry.

On the first point, Ford’s CEO offered his assessment last week that abundant caution would have to be used before Chinese automakers are allowed in this market – this while he’s in the midst of constantly lobbying the current occupant of the White House to favor the collective “Detroit” at every turn.

 

I should point out that Jim “I’m a genius, just ask me” Farley has launched the second major “redo” for the Dearborn-based automaker during his tenure. The first one aggressively positioned Ford as an EV company, which would lead the industry by the time he was finished remaking the automaker. How did that work out? Ford took a $19.9 billion dollar hit last fall to its bottom line, and then promptly followed that up with its fourth-worst quarter in company history.

 

The latest directional shift, announced on April 15 by the Ford CEO, promises to remake the company yet again, with a series of changes designed to boost the company’s profitability within three years, while launching new, more competitive vehicles. This organizational redirect, called the Product Creation and Industrialization team, will unite Ford’s advanced technology and global industrial teams under one leader, COO Kumar Galhotra. 

 

This all sounds good, except that this kind of transformation was supposed to happen when Ford led the charge to an EV-dominated world just a few years ago. What makes this relaunch of the company any different? By any measure, this is a last-gasp effort by Farley to “fix” Ford and cement his legacy as the “switched-on” leader who saved Ford from ruin. To say that this will be a giant “We’ll See” is the understatement for this, or any other year. Needless to say, given Ford’s dismal track record, I remain unconvinced that this latest effort to remake the company will succeed.

 

As for the AI “thing,” we were unfortunately treated to a media event last Thursday in Washington, D.C., that paired liberal firebrand Bernie Sanders, the Independent U.S. Senator from Vermont, and UAW President Shawn Fain, the stumblebum labor leader who manages to shoot himself in the head on a regular basis, with the stated purpose of warning anyone who would listen on the dangers of allowing the integration of Artificial Intelligence into the U.S. economy. These two were joined by labor leaders from other unions, including the National Education Association, the National Nurses United, the Association of Flight Attendants, the American Federation of Teachers, and the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO).

 

Sanders has authored a bill with Rep. Alexandria Ocasio-Cortez, D-New York, that calls for a moratorium on the development of AI data "to ensure the safety of humanity."

 

This all sounds well and good, as unbridled AI will have many negative consequences throughout our society, but there will be undeniable positives too. Talk about another giant “We’ll See.”

 

In Fain’s case, the onset of AI indeed may cost some factory jobs, but by far the most critical and overwhelming issue facing “Detroit” – aka the U.S.-based automakers – right now is that the Chinese automakers are poised to overrun this market. So that Fain would be better served to focus on this goes without saying, but since he never passes up an opportunity to regale the media with his brilliance, here we are.

 

Full disclosure? I used to be an advocate of keeping “China Inc.” out of this market, but I have changed my position entirely. I encourage that the Chinese automakers be allowed to build plants here just like the Japanese, the Germans and the Korean automakers have before them. If Shawn Fain and his minions are left holding the bag with this development, then so be it.

 

Will this development decimate Detroit’s standing in the U.S. market like Farley and others have suggested? There’s a chance of that, of course. But beyond setting up factories here, the Chinese automakers will have to establish dealer networks, key suppliers and everything else required to operate as a legitimate automobile manufacturer here in the U.S. That’s not only a lot, but it means a lot of employment opportunities too.

 

One Doomsday scenario is that “Detroit” would be relegated to building SUVs, Crossovers and pickup trucks, in a sense becoming niche manufacturers in their own market. That could happen, yes. In fact, it is very possible that the Chinese automakers could control upwards of 30 percent of this market - or more - in ten years.

 

But I also believe that the True Believers at the U.S.-based automakers have a lot more to offer in terms of engineering and design talent, resolve, advanced technical prowess, willingness to compete and that they have no intention of ceding their standing in this business and going quietly into this good night. And that is a very good thing.

So, let the Chinese “thing” happen – with establishing U.S. manufacturing plants being the key proviso – and let the chips fall where they may.

 

Because it’s time for Detroit to face the music.

 

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

Editor's Note: Click on "Next 1 Entries" at the bottom of this page to see previous issues. - WG