The spread of COVID-19 kept us from hosting the Automotive News World Congress last month. But we still wanted to bring our speakers together to share some of what would have been discussed if we had gathered at Detroit’s TCF Center to share ideas about how to face the challenges of today — and those we’ll see tomorrow.
The industry still has enthusiasm for transformational technologies and how they can best serve customers. But during this pause from traditional routines, leaders are also working together to protect and strengthen our communities: where we live, where we work and where we congress.
“This moment, of course, was never in the plan.
“Our main concern now is for the health and safety of our communities, employees, dealers and other business partners. For several weeks, every action we have taken at GM is driven by this imperative. This crisis is testing the fortitude of our people, our company and our industry around the world. I’m once again amazed and proud to see how the automotive industry pulls together in times of crisis.
“While the end to this crisis is still uncertain, we are cautiously encouraged to see life in China slowly beginning to return to normal. The Chinese word for crisis consists of two characters, the second of which means ‘opportunity.’ Perhaps that’s a reminder to all of us that out of this crisis will come opportunity and hopefully a heightened resolve to take on big challenges together.
“At Cadillac, opportunity begins with recapturing our momentum. After two straight years of record global sales, we look forward to seeing what Cadillac can do with one of the freshest luxury portfolios in the market, followed quickly by the first of five all-electric Cadillac models. The excitement created at the EV Day event at the Design Dome earlier in March was palpable. The breadth and depth of what was on display was compelling and just a glimpse of what is to come. We are very much looking forward to sharing more of our story but not until the time is right.
“While our immediate focus is squarely on the health and safety of our colleagues and communities, make no mistake, Cadillac has a road map back to leadership. Please take care of yourselves and your families.”
“Electrification, ride hailing, tariff wars, smart cities, micromobility, connectivity, income inequality, autonomy, etc. — an unprecedented, torrential storm for the auto industry. How can we make sense of this? That’s the question I asked myself during the energizing sabbatical I took after three years as an executive at Ford.
“Well, it turns out that this torrent is not unprecedented at all; it’s just unprecedented for the auto industry. Today’s storm resembles ones that have occurred every 50 years or so, transforming the entire economy and changing the way we live: a ‘habit-breaking hurricane,’ according to economist Carlota Perez. Those hurricanes were the Industrial Revolution, the steam age, the age of steel and electricity, the mass-production age. Today, we are in the eye of a storm called the digital technological revolution.
“Digital technologies, from chips to AI, have finally become powerful enough to transform the car into something entirely new: an electric, connected, intelligent device. Creating these devices is catalyzing a convergence of the auto industry with the telecom (connected), technology (intelligent) and energy (electric) industries. The history of technological revolutions suggests an entirely new industry will emerge from this Venn diagram. Maybe we will call it the mobility industry.
“A profitable future for auto companies in this revolution requires a dual transformation: optimizing the core business, which pays the bills, while building the new business, which is the future. Dual transformations are underway all around us.
“Think Disney and streaming, Walmart and Jet, Amazon and Whole Foods, GM and Cruise, Ford and Argo AI.
“The COVID crisis will very likely intensify the hurricane, enabling leaders to accelerate their transformations and forcing followers into each others arms, or worse, out of business.”
“One of our company values is, ‘We’re all in this together.’ While tough times generate a lot of stress and difficulty, they do have at least one positive consequence: they tend to expand the ‘we’ and bring people together.
“The entire supply and distribution channels of automotive have been severely impacted by COVID-19. Our entire industry is managing through a lot of stress and difficulty. At Carvana, we spend a lot of time thinking about what the future holds.
“Our current thought is simple: This too will pass. We wish everyone in this industry the best as we all manage through this. We’re all in this together.”
“My message for Automotive News World Congress was about leveraging innovation in marketing, which is underpinned by technology, and the evolution of the connected car and the approach we are taking at Ford Motor Co. From designing and engineering to sales and service, we are leveraging human-centered design to not only meet customers’ needs for both Ford and Lincoln, but also to deliver the moments that matter as a way to surprise and delight. At Lincoln, this approach has served us well as we continue to build momentum with our brand transformation. And, at Ford, we are leveraging these approaches as we develop new products, services and experiences.
“However, things have changed in the last [month], and during this unprecedented time, the health and safety of our customers, dealers and employees is our No. 1 priority. And we are leaning into who we are as a company and a brand to reassure and help our customers. At Lincoln, we are working in partnership with our dealers to offer assistance to our customers during this time of uncertainty. Now more than ever, we understand that our client’s home is now their sanctuary, so we are leveraging our effortless Lincoln Way services like pickup and delivery to provide clients with a convenient and safe way to service their vehicles, remote sales processes and providing payment assistance programs.
“At Ford, we are ‘Built to Lend a Hand’ and are responding to dealers and customers by providing them with payment support while also launching tools to help customers service their vehicles remotely and facilitate online sales with home delivery. With both Ford and Lincoln, we are offering a little extra help, allowing customers to focus on what truly matters most — the health and safety of their families.
“And as a company we are focused on ensuring the health and safety of our work force and have joined forces with others such as 3M, GE and the UAW to support manufacturing and engineering to expand production of urgently needed medical equipment and supplies for health care workers, first responders and patients fighting the coronavirus.”
“McLaren has always been an innovation and technology incubator and the combined power of our three complimentary businesses — supercar company automotive, along with racing in F1 and IndyCar and applied for data and technology — allows us to create world firsts and new applications in materials and technologies faster than the mass market. Witness the world’s first hybrid hypercar, the P1, and our pioneering use of lightweight carbon fiber across our racing and supercars.
“So from a McLaren perspective, we believe that our future lies not in a power race, but in a weight race to ensure that we are in the best possible position to maximize both the efficiency and performance of future powertrain solutions, such and hybridization and electrification.
“As we move towards 100 percent hybrid supercars by 2025 and explore full electrification options, it’s essential that we focus on exploring more ways to further reduce weight — the enemy of performance — and hence our heavy investment in our own composites innovation and production facility in Sheffield, England.
“The massive growth of the global SUV market has almost offset the efficiency improvements in smaller cars and the carbon savings from electric vehicles. So reducing mass, not just in our own supercar segment, is essential if we are to fully realize the true benefits of switching to new powertrain technologies.
“That collective talent across McLaren [that] I mentioned earlier has quickly been mobilized to help fight COVID-19. We have teams who would normally be testing cars designing ventilator tests. We have teams who would normally crash-test McLaren Elvas crash-testing the trolleys the ventilators will sit on in hospitals. Our innovative culture comes to the fore when we face a common challenge like the one we are facing right now.”
On the challenge of repurposing empty factory space, reconfiguring assembly lines and redeploying machinery to make equipment to fight COVID-19: “First what you have to do is find out what the current situation is with those who are experts in building health care equipment — and some health care equipment is more complicated than others.”
On Toyota reaching out to medical device manufacturers to see if it could lend manufacturing expertise through the Toyota Production System: “To us, that seems like a faster way of getting more ventilators on the market.”
On how his family background will influence how he, along with other Toyota Motor North America senior leadership, will approach the decision to begin making cars again: “I’m the only nonmedical person in my family. My family back in Michigan? They’re all in the medical field. I’m the kid who was told by Mom growing up that, if you’re not bleeding, go to school, because she had a very clinical view of health.
“But that aside, nothing prepares you for this except going through other crises, and Toyota has been through a few in recent years, and we’ve emerged stronger each time. I have no reason to believe that this time will be different.”
“The ability to be calm and project calm and confidence and rely on data rather than gut is really what gets you through, and we’re doing that at Toyota.”
What I was going to say:
“With the global markets slowing, [transaction prices] at record highs, incentives at record highs (as a percent of MSRP) and the onset of a growing EV market that will have fundamentally lower margins than [internal-combustion-engine] vehicles, it is going to be imperative that every OEM scrutinize every cost and look for every opportunity to partner to prepare for a tougher market going forward. EV success will hinge on products and services that truly deliver a unique experience that is much different than an ICE vehicle. It is clear that an approach of taking an ICE model and just electrifying the propulsion system while keeping the product the same is failing. This is the one area in which Tesla has been very successful.”
What I would say now:
“The cratering of the markets short term will necessitate a fanatical focus on liquidity. In addition to decreased revenues from a lower SAAR, OEMs and the supply base will need to learn to live with more cash tied up in buffer stocks for production parts to compensate for sporadic downtime in the supply base due to COVID-19 infections. Productivity across the industry will decrease as the industry learns to deal operationally with social distancing measures. For example, shift changes will take longer and manufacturing cells will need to be adjusted for appropriate social distancing separation. One of the casualties of the coronavirus will be a slower market acceptance of EVs. The combination of reduced consumer purchasing power and much ‘lower for longer’ gas prices will shift the ‘cost of ownership crossover’ metric further out.”
“At Aston Martin, our team’s guiding mantra has been, ‘It’s personal.’ In this digital age, it’s easy to forget that luxury customers deserve more. We want to consistently deliver something more thoughtful. In our case, finding inspiration doesn’t necessarily require data crunching. It’s easier: We listen to our customers.
“As an example, a few years ago one customer wrote to us, lamenting the ‘thrill of the chase.’ The moment he’d bought his Aston, we’d moved on. He wanted proof that we were still interested. Upon reflection, we realized he mustn’t have been the only one — ‘It’s not you, it’s us!’ — and we were determined to change.
“Thanks to our size, we are nimble. We love finding ways to execute what others might view as unscalable. At Aston Martin the Americas, we turned a ‘mea culpa’ into a campaign; every new customer now receives a series of celebrations of ownership. Other brands would have replied with a letter. And while it might have satisfied the one customer, it wouldn’t have made him feel part of anything bigger.
“Now, we’re all isolating, and with good reason: We are protecting ourselves, in an effort to keep our communities strong. There’s a greater good at play. Only now, in the absence of community, do we realize communities aren’t a luxury; they’re critical to our survival.
“Our team is using this time to ensure our Aston Martin family feels ‘heard’ and that our actions reflect their needs, so they feel part of something bigger that we’ve been aiming to grow all along: a community.”
“When we started to prepare for the World Congress, our world was a very different place. As we have shifted our focus to the health and safety of people around the world, this all seems a bit unimportant. But had I been offered the chance to speak … I’m sure we would have focused on topics such as:
- How I’ve been working to infuse new talent into our leadership ranks. We’ve added a strong group of people and I’ve never worked with a more talented team in my career.
- I would have spoken about what a great start we had to the year with sales up 11 percent overall and 24 percent at retail.
- How proud I am with the work done with our dealers in launching the Accelerate program and complimentary maintenance.
- I certainly would have wanted to talk about the all-new Elantra coming later this year and that we revealed last week during a global livestream event from Hollywood.
- I would have talked about the momentum coming out of Genesis and the strong leadership team we have there led by William Lee and Mark Del Rosso.
- This discussion wouldn’t be complete without mention of the work that has been done in conjunction and collaboration with our dealers.
- One of the best surprises to me since I joined Hyundai is our Hope on Wheels initiative that targets eliminating childhood cancer. With every Hyundai sold, both the selling dealer and the company make a donation to HOW. In 22 years, more than $160 million and 800 research grants have been made to children’s hospitals across the country. I’m just so proud of that.”
I’m “really making sure we’re leaning in with some optimism for all of us, and so I think first of all, I would make the point that retail sales [haven’t] stopped. … Sometimes people classify autos as just a whim purchase, but usually it’s a utility purchase that’s driven by sometimes months of online research and digital research and understanding things. And so we’ve stayed bullish here at Cars that even through the roughest times, there’s a certain amount of baseline commerce that’s going to continue to go on. And even though some states might shut sales off intermittently or for a week or two or for a month, there’s still all this demand.
We recognize that there’s just a lot of activity, a lot of commerce, and our message back to the dealer body and to the OEMs is: Stay confident. There is a lot of business here to be had.”