Northeast Indiana Must Prepare for the Future of Automotive Manufacturing

By: Chad Ruston on September 4th, 2018

Automotive Trends from the Center for Automotive Research Conference

The Center for Automotive Research (CAR) is on the cutting-edge of national automotive trends that impact the region’s economy and vehicles industry. To compete in the global marketplace and prepare for the innovation flooding the industry, members of Northeast Indiana’s business development team traveled to CAR’s four-day conference in Traverse City, Mich. to understand the changing landscape of the industry.

Below is a summary of key takeaways from the conference including trends, statistics and future implications on the vehicle industry.  

Top Two Trends

  • Connectivity and Autonomous – The buzzword at the conference was automobility. Today customers continue to demand more of a service than a product. Vehicles were originally designed to get people from one place to another. As we look into the future of the industry, transportation is a secondary benefit with the main benefit being the connectedness and livability of the vehicle. Furthermore, the “love” for cars is eroding. Specifically, millennials are more interested in the service than they are the asset. The cell phone is a strong an analogy. It is not the phone that is valued, it is the service and what the phone can do. This trend will continue to emerge with vehicles. Additionally, more people are working from home, and the need for transportation is not as great as what it was historically. 
  • Shared and Integrated Transportation – Given the continued migration of people to urban areas, transportation will become far more integrated and advanced. People are looking for shared rides like Uber and Lyft. People will simply view vehicles as a part of the overall experience of getting from one point to another, while doing so with services that are specialized for each individual like buses, bikes, scooters and other types of transportation. The result of this is far less vehicle ownership by individuals and more ownership by companies. Additionally, people may look for a “single-pay transportation” model where all forms of transportation are included in a monthly bundle.

Industry Report

  • Profit – The last few years have been very profitable for the auto industry.
  • Electric Cars – Electric cars will continue to emerge. Furthermore, there is also a longer-term vision with hydrogen-fueled vehicles.
  • SUVs, Crossovers and Trucks – These platforms are far more profitable for the auto manufacturers and customers continue to demand them more.
  • Specialization and Customization – Customers are demanding more specialization in vehicles, which is driving up manufacturing costs and complexity.
  • Connected, Autonomous, Shared, Electric (CASE) – These are “guiding principles,” if you will, for vehicle manufacturers.
  • Intersection of Auto and Technology – Tesla, Google, Apple, Dyson, Silicon Valley – all are entering in the auto market.
  • New Entrants to Market – There are many new entrants to the industry. Examples of this are Beijing, Tata and Great Wall.
  • Used Autos – Due to more stringent financing requirements, there has been an increase in used car sales.
  • Experiential – This automobility trend is leading to more complicated cars and creates major challenges for manufacturers.

Interesting Statistics

  • Urban Trends – In 1960, 15 percent of the United States population lived in an urban area. In 2000, 50 percent of the United States population lived in an urban area. It’s predicted that in 2020, 60 percent of the United States population will live in an urban area.
  • Auto Usage – Cars are only used 4 percent of the time. The remaining 96 percent of the auto’s life, it is parked.
  • Parking – To park a car, approximately 110 square feet of land is needed. In urban areas, this can equate to approximately $200,000 - $500,000.
  • Customization – In Europe, 60 percent of cars are built to order.
  • Economy – It was predicted by a few presenters throughout the conference that a recession will begin in the U.S. in 2020-21.
  • Auto Manufacturers – There are 25 companies that manufacture over a million automobiles annually.
  • Auto Ownership – In a recent survey of residents in San Francisco, 50 percent of those surveyed use Uber or Lyft. Of that 50 percent, 11 percent said they may get rid of their cars and 10 percent said they do not have a car.

Future Implications

Near Future (5-10 Years) 

  • Although the future of the automobile is drastically different than what it is today, the trend to automobility should not have a major impact on the region within the next 5-10 years.

Longer-Term (10+ Years)

  • Economic developers and industry leaders must factor in the intersection of technology and vehicles. Driven by customer needs and the need to constantly be connected, this means we need to be proactive in our approach with auto suppliers, original equipment manufacturers (OEMs) and our works with colleges and universities.
  • As the powertrain moves more toward electric and hydrogen, this will dramatically impact the types of suppliers necessary. This will also have a major impact on utilities as there will be a substantial impact on electric grid requirements.
  • Auto trends will have an impact on every community’s industries and economy. In the future, parking lot footprints and availability will be reduced while services provided at a parking lot will be more like a “mobility hub.” The future of transportation also involves walking paths, bus lanes, autonomous car lanes and other innovations that should be considered in future community planning.

We found this conference valuable, and going forward, this input will feed into our overall strategy for our vehicles industry.

For more information on the Regional Partnership’s business development efforts, please contact Vice President of Business Development Chad Ruston.