A new year begins. A new U.S. government is seated in Washington, with new attitudes about trade and industry and the environment. New vaccines are being distributed to begin unshackling the marketplace from a year of pandemic.
In short, January 2021 represents a potential turning point — a window opening on an opportunity to start afresh, to reset, to straighten up old accounts, to improve.
“How would you make the most of this moment?” Automotive News asked executives and thought leaders around the industry.
What improvement would you make? What lingering industry frustration would you most like to tackle and resolve? What issue would you invite colleagues and competitors to join you in attempting to fix at this moment, as 2021 dawns, in a bid to improve your business, or the auto industry as a whole?
One answer is so obvious that it goes without saying: We would end the COVID-19 pandemic and return to our normal lives. And indeed, the entire world agrees on that.
But in addition to that, we pressed: Given this opportunity of a new year and a new moment, what wish would you have to make the auto business a better place?
These are the answers.
Autonomous vehicles are coming to the market, iteration by iteration. And one issue the Alliance for Automotive Innovation would like policymakers in 2021 to prioritize is establishing a clear path to deploying them at scale in the U.S. as more automakers and technology companies move into the next phase of development.
Hilary Cain, vice president of technology, innovation and mobility policy for the alliance, said regulatory consistency around the U.S. would be a big gain for auto companies and other AV developers as they transition from R&D to product planning and make decisions about where and when they are going to deploy the emerging technology.
The alliance, which represents most major automakers in the U.S. as well as some suppliers and tech companies, released a four-year action plan in December to guide federal policies and advance AV testing and deployment.
That road map makes 14 specific recommendations to help the U.S. Department of Transportation and Congress “safely and responsibly” open U.S. roads to AVs in larger volumes, said Cain, who joined the alliance in April.
The alliance is asking federal policymakers to create a new vehicle class for AVs, establish a national pilot program for testing and deployment, raise the 2,500-vehicle cap on temporary exemptions that can be granted to AVs, and several other policies outlined by the auto industry.
“If these 14 recommendations are acted upon,” she said, “that would allow for auto companies and other AV developers to begin the process of deploying these vehicles at scale in a safe and responsible way.”
Diversity, inclusion and equality were on the minds of many auto industry leaders last year, but there is still much work to do, said Carla Bailo, CEO for the Center for Automotive Research.
The entire industry must foster a more diverse work force, she recommends. It’s an issue the industry executive has been promoting for years.
“If I could wave a magic wand and entice young girls and diverse ethnicities to come racing to automotive and mobility because it is so very exciting and sexy, I’d do it tomorrow,” she said. “We all need to work together as an industry to make this dream come true.”
When Bailo, who has been in the auto business for more than three decades, speaks with young girls who are unaware of opportunities in engineering, she reminds them that almost all of the products they use were engineered somehow.
“The material your jeans is made out of — somebody had to figure out how to make that, and somebody had to make the machine that made the material,” she tells them. “Their eyes get wide open when I start talking about that, because they start to see that tech is in everything. We have to continue to talk about that.”
Bailo said that the industry needs to better explain automotive career opportunity and the spectrum of evolving needs in the field, including manufacturing, engineering, new technologies and the quest for positive customer experiences.
She believes a diversity of backgrounds and experience will be crucial to stimulating new ideas.
But making systemic change in the way companies are operated and managed will require everyone to “take a good, hard look at yourself to make sure you don’t have blinders on,” Bailo said. Standing up for what’s right is crucial, she urged.
“Don’t hesitate,” Bailo said. “Now is the time more than ever to fix what has plagued us for so long.”
Tim Hovik is excited about new Ford Motor Co. products such as the Bronco, Bronco Sport and Mustang Mach-E.
But the chairman of the Ford National Dealer Council is worried his customers soon may not be able to afford what Ford — and other automakers — are bringing to market. Hovik, owner of San Tan Ford in Gilbert, Ariz., said the most pressing issue he’d like to turn the industry’s attention to in 2021 is affordability, noting that the rising costs of vehicles has far outpaced the increase in average household income.
“As an industry, if we do not take very real steps to address this, we are going to wake up in the not-too-distant future and realize that our customers can no longer afford to buy our vehicles,” he said.
Part of the solution, at least for Ford dealers, could soon be revealed. The automaker has publicly said it plans to add an affordable, “white space” product in 2021, which Automotive News has previously reported will be a compact pickup. CEO Jim Farley recently reaffirmed to Hovik and others during a virtual dealer meeting that the company was committed to adding an entry-level vehicle since it discontinued affordable sedans such as the Fiesta and Focus.
The company also plans to beef up its used-vehicle sales, rolling out a new online platform in the coming months to offer customers another option on its slate of its increasingly more expensive pickups, crossovers and SUVs.
“It’s not a problem that is unique to Ford, as it is a challenge for all brands,” Hovik said. “It will require out-of-the-box thinking as we become creative with different ways and options to own and drive a new vehicle.”
When COVID-19 struck, it forced the industry to retreat into unfamiliar ways of working from home. Many considered it an uncomfortable, temporary necessity.
But Peyman Kargar, global chairman of Infiniti, has a wish for after the pandemic passes: Let the remote- work revolution continue and help it work better.
Infiniti is now renovating its world headquarters to embrace the new norm.
“I believe 2020 has proven that work should be measured by output, not geography,” Kargar said. “Gone are the days of counting seats in cubicles. My hope for the industry is that office environments, like the one we are building right now at Infiniti, will treat the virtual office as the norm and save physical office space for collaboration and in-person connections.”
Auto companies discovered in 2020 that much of the industry’s work can be handled just as easily from home as from the office. Virtual work could become the new norm, with many functions requiring only occasional office visits.
Flexibility and fluidity would be the key for office environments: No more assigned desks; files and individual items could be stored in lockers; meeting rooms and interactive brainstorming areas become the dominant spaces, Kargar proposes.
The idea could help stimulate productivity and employee morale.
“With the standard workplace being virtual, the new redesigned office will have more meeting rooms and casual collaboration spaces. While there will be some traditional desks and places for individual work, they won’t be assigned,” Kargar said of his company’s vision.
The automaker will roll out its global headquarters revamp in Yokohama this year. If the transformation works, it might be adopted at other Infiniti offices or even within other units of its parent company, Nissan Motor Co.
A boost in electric vehicle development also calls for a reinvented customer experience, says Mahmoud Samara, vice president of Cadillac North America.
The move toward EVs offers the industry an opportunity to rethink how customers shop and purchase, Samara proposes.
“In preparation for our all-EV future, we would like to see customer experience reimagined to empower customers to do business on their own terms,” he said. “In order to do this, Cadillac will be pioneering solutions that are personal, predictive, efficient, innovative, simple and transparent in both our dealerships and contact centers.”
Cadillac plans to have an all-electric lineup by 2030, provided the market is ready, starting with the Lyriq midsize crossover in early 2022.
Samara, previously GM’s global director of customer experience before assuming the Cadillac VP post last year, believes the end-to-end car-buying experience should be simpler.
“To make it easier for buyers to buy, we have to make it easier for the sellers to sell,” he said. “How do we take complexity out of the business? How do we take complexity out of the process for the customer, and how do we take complexity out of the process with our dealers?”
When the pandemic began, GM enhanced its Shop-Click-Drive digital retail tool to make shopping more transactional. Since then, dealers’ Shop-Click-Drive leads increased threefold, he said.
The updated version includes pricing transparency with third-party websites, an option for customers to test drive a vehicle on their own terms and a real-time credit application.
Cadillac also launched Cadillac Live, a virtual showroom designed to generate leads for dealers and answer customers’ vehicle questions. The tool was especially helpful during the pandemic when dealerships in some states were closed and many customers preferred virtual appointments.
Jay Feldman, CEO of Feldman Automotive Group, would like to see an end to stair-step incentive programs in 2021.
Feldman, who became a Chevrolet dealer in 1996 and has 12 franchised dealerships, a used-only store and an Airstream dealership, with locations in Michigan and Ohio, said many manufacturers paused stair-step programs during the coronavirus pandemic. But he’d like to stop chasing the targets for good.
“A, it erodes profitability, and B, it just makes managing our business difficult,” said Feldman, who sells Chevrolet, Buick, GMC, Hyundai, Kia, Genesis, Chrysler, Dodge, Jeep and Ram vehicles. “It eased up a lot or went away during the whole COVID situation, and we found out we could still turn cars and gross profits are decent.”
Feldman said stair-steps — long loathed by many dealers — also lead to perplexed and angry customers.
The programs “cause confusion with customers and dissatisfaction because different customers are paying different prices for cars,” Feldman said. “And so they go from one dealership to another. They don’t understand, ‘Why could I buy it for this number at ABC Motors, and I went to XYZ Motors and it was [a] completely different price for the same exact vehicle, same year, same equipment?”
The Alliance of Automobile Manufacturers, which represented a dozen automakers before merging with Global Automakers a year ago to form the Alliance for Automotive Innovation, has called stair-step programs a useful tool that rewards performance.
Feldman, whose New Hudson, Mich., group ranks No. 57 on Automotive News’ list of the top 150 dealership groups in the U.S. and who expects to sell more than 33,000 vehicles this year, said stair-steps come up daily at his dealerships.
“There’s no need for them. They harm customer satisfaction,” he said. “They make managing our business complicated. It’s just not healthy for the industry.”
Among the auto industry’s current challenges, few are more worrisome to manufacturers than the outlook for attracting and training talent.
Automakers and suppliers need more software engineering talent to keep up with advancing technology — but they also need more skilled factory workers, said Julie Fream, CEO of the Original Equipment Suppliers Association.
The shortfall of competent workers needs to be addressed quickly, Fream urged. It’s an issue of education, aptitude and technical skills.
Her wish: for a new federal initiative to focus on work force development nationally to support competitive manufacturing.
Fream expressed hope that the incoming Biden administration and Congress can agree on the need for help.
“It’s important that this is recognized on a federal level for the overall competitiveness of the U.S. manufacturing environment, to initiate and fund education and training efforts to get employees to the level of next-generation manufacturing,” she said.
“The longer we wait, the more difficult this is,” she added.
“The technical needs for U.S. manufacturing are considerable. We can build the facilities, but if we don’t train the people, we won’t be able to run them.”
Gary Silberg, global head of automotive for KPMG, believes creating a single, homogeneous federal rulebook on autonomous vehicle testing and development on public roads will help charge the U.S. economy.
He proposes that both political parties come together in 2021 to help move the emerging technology forward.
“We were close to getting this under the Obama administration, and we also had a chance under the Trump administration,” Silberg said. “I think both parties wanted to do it but just never got it done. So maybe now we can move forward.”
The regulations over autonomous vehicle testing vary from state to state. And that checkerboard of rules has held back innovation and investment, said Silberg, whose global financial service company works with clients around the industry.
“You currently have to pick which states you want to go drive in for testing,” Silberg said. “That’s slowing the pace of development. It’s very costly for a startup.”
Adopting clear, consistent rules would unleash new investment by automakers and technology suppliers, he predicted.
Mary Nichols, the long-serving top air and climate regulator for California, who retired at the end of 2020, wishes that automakers would “wake up” in 2021. Her recommendation: move faster to electrification.
“They can’t transition to all EVs fast enough to meet climate needs without also reducing emissions from conventional engines,” said Nichols, who was chairman of the California Air Resources Board since 2007. “They have to do both.”
Nichols said the industry should agree to her state’s framework as a “compromise path to 2026.” With most of the conventional vehicle market catering to SUVs and light trucks, Nichols said, automakers can still make a profit selling those models and use that to invest in zero-emission vehicles.
“The winners will be those who figure out how to take advantage of new opportunities,” she said, “working with cities and states that are forging ahead with plans for full … electrification.”
A top-of-mind wish for many in the industry this year would be to bring the nation’s fuel economy regulations under a single, consistent rule book.
Two executives from different sides of the spectrum agree on that.
Longtime Toyota executive Bob Carter believes the industry, consumers and the environment could all benefit if they could agree on a single set of fuel economy and emissions standards.
As head of sales in North America for Toyota and Lexus, which pioneered the hybrid powertrain and fuel cell vehicles, Carter understands that electric propulsion is the industry’s future. But mapping out the industry’s transition to that future has been messy and full of infighting among automakers.
“The long-term future of the auto industry is electric — hybrids, plug-ins, fuel cells and battery electrics,” Carter said. “My wish is that the auto industry, working with the incoming Biden administration and California, can rally behind one fuel economy/emissions standard for the entire country.”
BMW’s New Jersey-based chief for the Americas is in agreement.
“We would like to see the industry come together with the federal government on a clear and achievable national target based on the California framework agreement that was formally signed in August 2020,” Bernhard Kuhnt, BMW of North America CEO, told Automotive News.
A national standard would “not only facilitate the reduction of greenhouse gases but also provide for better long-term planning, and ultimately benefit both the environment and consumers,” said Kuhnt, who is also head of the BMW Group Americas region. Kuhnt has held the roles since 2017.
But the auto industry has been divided on the matter in recent years.
Ford, Honda Motor Co., Volkswagen Group and BMW in July 2019 struck a voluntary agreement with California on reducing vehicle emissions through the 2026 model years. The targets would be lower than Obama-era rules but higher than the Trump administration’s rules.
In October 2019, General Motors joined Toyota Motor Corp., Fiat Chrysler Automobiles, Nissan Motor Co. and other automakers in backing the Trump administration’s effort to bar California from setting its own fuel-efficiency rules, or zero-emission requirements, for vehicles — separate from federal requirements.
But with a new Democratic administration in the White House — and one that favors the adoption of zero-emission electric vehicles — the auto industry is finding some consensus.
GM and Nissan late last year reversed course and said they will no longer back the Trump administration’s effort to bar California from setting its own vehicle emissions rules. Ford, meanwhile, has urged other automakers to back the California framework as a way to move forward.
Carter said the industry can take a key role in creating the way forward.
“We can assist in crafting policy that is good for the environment, the consumer, the auto industry and the economy, without passing on extraordinary costs and complexity,” the executive said. “Working together on long- and midterm issues, while fiercely competing short term, this industry has brought amazing safety, performance, technology and value innovations to consumers. We can make great progress on environmental issues if we work together.”
The wholesale vehicle sector went through an unprecedented 2020, but KAR Global CEO Jim Hallett looks beyond the auction lanes when hoping for change in 2021.
“The problem I’d like to see fixed is the way our government and society approach addressing challenges,” the auction executive said.
Hallett lamented what he called a climate of hostility and division, and an apparent inability for many people to engage in healthy dialogue on important issues as obstacles to navigate past.
By contrast, every corner of the auto industry worked together to solve challenges in 2020, Hallett said.
“I’d like to see that same approach across the catalog of social, economic and public health issues facing our nation and world,” he said.
Hallett’s own sector faced significant challenges last year. In the spring, wholesale auto auctions were forced to close or go completely digital as the coronavirus spread across North America.
Hallett believes that fixing larger ills will start with individuals and companies taking more responsibility to be open to dialogue, and accepting personal accountability.
He also pointed his words at the nation’s elected officials.
“I’d like to see both parties start putting our people and the future of our country above the future of their office or their respective party,” Hallett said. “If we can do that, I think we’ll start to see some real, meaningful progress.”
Marco Philippi would like to turn the wheel of Audi’s diverse global supply chain and get each piece pointed in a single direction: toward the automaker’s aggressive goal of achieving carbon neutrality.
As head of procurement strategy for Audi AG in Ingolstadt, Germany, Philippi, 43, is helping the German luxury brand drive carbon emissions out of its business. By 2025, Audi plans to have all of its global manufacturing plants achieve a carbon-neutral manufacturing footprint to help the world achieve the climate targets established in the Paris Agreement.
But Philippi knows Audi can’t act alone, nor should it. So his wish as 2021 starts is for like-minded supplier partners to join the crusade.
“In an ideal world, everybody would have [carbon neutrality] as a top priority unless they have that already, because then I won’t have to go out and convince people, or support them with financial funds,” Philippi told Automotive News in November.
“But if every company were to drive this, and have this as the top priority of their strategy, of their agenda, then I think many things will become a lot easier. Then you have what we will call an intrinsic motivation, with every business partner to act just the way we do.”
That would mean achieving carbon neutrality, he said, “to achieve the Paris climate accord targets. That would be my wish when it comes to the supply chain.”
Dirk Walliser fears the auto industry is losing some of the public’s trust. He wants 2021 to be the year the industry begins to earn it back.
To do that, the senior vice president for corporate R&D, innovation and technology at ZF Friedrichshafen told Automotive News: “Let’s return to talking about issues based on facts, and let’s have a serious conversation about what we must do to prevent global climate change.”
Walliser believes that, for whatever reason, the industry has fallen short in the difficult discussion about what the transportation sector needs to do to reduce CO2.
“The auto industry is based on facts,” he said. “And I’d like for us all to talk openly and objectively about what’s in society’s best interest. And by that, I mean all of it. Let’s look at the whole issue, even across industrial sectors. We’ll talk about where energy is coming from, at issue like aerosol and how vehicles are used for different purposes.”
Walliser said automakers and suppliers should be motivated by their desire to preserve individual mobility as the main form of transportation around the world.
“We need to decide how society can achieve what it wants to achieve, in the next two years, the next five years and the next 10 years,” he said. “Let’s get back to talking seriously about what are the best technologies to get us where need to be. Let’s deal with the facts.”
Alexis Garcin witnessed something at Michelin last year — and indeed, all around the auto industry. When the coronavirus struck and offices and factories were thrown into chaos, employees stepped up and addressed the crisis with innovative responses, figuring out how to get assembly lines moving, how to get business back up and running, how to work outside the office and how to protect co-workers.
“I’d like to see us all make greater use of that talent next year,” said Garcin, chairman of Michelin North America, headquartered in Greenville, S.C. “I’d like to see us harness the leadership skills we just saw during the pandemic and use it to continue improving operations in the future.”
Michelin employs 22,000 people in North America. Each one of them, Garcin said, has eyes on their job and understands it and how it could be improved.
“I’m not able to see everything or to know everything,” he told Automotive News. “But they are. And collectively, we showed extreme resilience over the past nine months in getting through what we faced.
“I’d like to continue that spirit,” he said, “to use that knowledge to challenge what we are doing and improve on it.”
Unleashing the ideas of employees, he said, will help the industry progress faster.
“Globally, one of the key learnings of the pandemic is that we have to become more humble as industry leaders,” he said. “I believe the new generation of employees will ask leaders to be more accessible and open to ideas.
“We need all their energy.”
As the new head of North America’s largest supplier, Magna International CEO Swamy Kotagiri knows a thing or two about the enormous cost of developing advanced new technologies for automakers around the world.
His wish: Find a way to reach better capital efficiency for the benefit of everyone.
He doesn’t mean merely cutting costs — he means reaching a new consensus about what costs are really necessary for individual companies and which ones might be shared across the entire industry.
“A lot of players in the industry are spending individually,” Kotagiri told Automotive News. “I don’t know that that’s really for the larger good, because it doesn’t get us to the point of economic viability of the new technologies sooner.”
Kotagiri believes the industry should be discussing more of a consensus approach to technology development.
“Whether it’s electrification or autonomous driving or something else, having a model where everybody is not spending is my wish,” he said. “There are certain aspects — like collecting data for driving cars, or mapping, the validation of data — that are not really a differentiator at the brand level.”
In some cases, he acknowledged, R&D spending may be taking place in pursuit of a distinct brand or corporate differentiation. But in general, he said, “if there could be a consensus approach, it would be good for the industry as a whole.”
As construction of the first phase of its new Arizona assembly plant finishes, auto startup Lucid Motors wants the incoming Biden administration and federal leaders to get behind an increasingly timely idea: supporting investment in the electric vehicle supply chain in the U.S.
That will help the U.S. maintain vehicle manufacturing competitiveness with Europe and China, contends Daniel Witt, public policy lead at the California-based auto venture.
Lucid plans to start production of its Air luxury sedan in the spring. Developing and marketing EVs are one thing — creating the capital intensive manufacturing base to produce them competitively is another. Witt hopes to see financial support for electric vehicle manufacturing. While Lucid has completed enough plant capacity for 30,000 vehicles a year, its longer-range plans are to increase to 400,000 vehicles annually over several years.
Federal support would hasten EV production to achieve a cleaner environment and create high-quality manufacturing jobs to bolster areas such as Lucid’s location in rural Arizona, he said.
“Fast-tracking low-interest loan applications, and refundable tax incentives on manufacturing equipment for companies who commit to in-sourcing or repatriating parts of the supply chain, are meaningful policies that will not only stimulate domestic production and job growth but also quicken the transition to a zero-emission transportation sector in the coming years,” Witt said.
“These changes will help make this decade a breakthrough for the American electric vehicle industry and a renaissance for American manufacturing,” he added. “The EV industry is on a strong growth trajectory, but policy changes will further buttress that growth.”
Trade is normally top of mind for the American International Automobile Dealers Association, the group that represents 9,500 international nameplate franchises. But Cody Lusk, CEO since 2006, believes there is an urgency for a “clear and consistent U.S. trade agenda” in 2021 that allows the industry to grow and innovate rather than stagnate.
To achieve that, there must be a functioning government and Congress working together with the executive branch, Lusk said.
“These days, that seems to be a tall task,” Lusk, 52, told Automotive News. “But you need the government working together, and Congress has to reclaim some of its constitutional authority when it comes to the trade arena.”
Lusk said he hopes Congress and the Biden administration will work together to eliminate the looming threat of Section 232 tariffs on U.S. imports of automobiles and auto parts and focus on lowering trade barriers globally, so the industry can operate more efficiently and constructively.
“When you have a clearly defined agenda, the industry knows what’s ahead of it,” he said. “It can focus on what it does best, and that’s manufacturers building and dealers selling vehicles and giving customers what they want at an affordable price.”
Building a digital retailing tool at a dealership is similar to decorating for Christmas. Combining various technologies is difficult, especially across multiple stores. So many strings to connect, and wires to plug in, and all it takes is one broken fuse to spoil the effect, says Asbury Automotive Group CEO David Hult.
Hult wishes that automakers, retailers and vendors could come together in the new year to find consensus on how to create a digital experience for consumers across brands and across retail organizations.
“There would be no need for Carvana if those solutions existed,” he told Automotive News, referring to the new buy-via-Web used-vehicle chain that is challenging traditional retailers. “Look at the manufacturers’ power and the dealer body power, and what they could have produced a long time ago if we weren’t so competitive.”
Simple, transparent digital tools have given online retailers a new edge over physical stores in recent years, a trend that has been accelerated by the stay-at-home orders of the coronavirus pandemic. In some U.S. markets, such as Detroit, brand loyalty runs so deep that it may be enough to overcome a dealer’s cumbersome digital process. But for many areas, “that loyalty is gone,” Hult said.
“It’s really about technology. There’s so many people trying to guard their fort, it’s made it difficult for the customer to navigate the woods to get what they want.”
“It would be nice,” he proposed, “if we could find general tools.
“The better the technology we all have in the franchise world, and the more it’s simplified for a consumer, the better we’re all going to be.”