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“New Auto” Was a Key Theme at SAA’s 2018 Outlook Conference

SAA members, guests and media heard from thought leaders on economic and industry considerations, key powertrain trends, sales and production levels and investment considerations for today and beyond at the 31st Annual Automotive Outlook Conference held January 14 at the Gem Theater in Detroit.

The event kicked off with a business outlook panel that featured:

  • Emily Kolinski Morris, Chief Economist, Ford Motor Company
  • Kevin Riddell, Senior Manager, LMC Automotive
  • Mark Fulthorpe, Director, LV Production Forecast, IHS Markit
  • James Albertine, Senior Analyst-Automotive, Consumer Edge Research, LLC

“This year’s Outlook Conference was packed with insights,” said SAA President Chris Brower. “A lot of discussion centered around the sharp focus on technology as the path to differentiate.  No matter what the topic was though, I truly believe the attendees left with new data and opinions to help them make better, more informed decisions.”

“The impact (of technology) is more real than ever,” said panel moderator Abey Abraham of Ducker Worldwide. “Take Lightweighting for example, everyone understands what Lightweighting is today — from the board room to the kitchen table.  Self-driving technologies are advancing; to electrification, from full battery offerings to plug-ins, to start-stop.  All these technologies are all converging.”

Other notable takeaways included:

Abraham discussing the current state of economics:

  • “We are seeing a time when the industry is back on a solid economic footing.”
  • “Consumer confidence reached cycle highs this year.”
  • “We’ve had a strong labor market.”

LMC’s Riddell on market conditions:

  • “Oil prices are coming back – no immediate indicators of a spike to hit.”
  • “Japan is more of an early adopter in electrification.”
  • “Battery prices have declined by +20%.  Further price reductions will be an enabler for sales growth.  Parity with ICE powertrains should be reached by 2025.”
  • “Significant demands for capital allocation exist today.  A lot of capital going into new developments.  Many competing technologies and paths to growth — electrification, self-driving, user experience, etc.…”

IHS’ Fulthorpe on global markets:

  • “The post recovery is underway.”
  • “Further out, the growth emphasis will move to emerging markets.”
  • “Global risks are overarching, but not overbearing.”
  • “Pace of change demands flexible response.”
  • “Electrification will be supported in many forms.”
  • “More and more – it is about modularity of powertrains.  It is a multiple energy approach.”

Ford’s Kolinski Morris discussed the macro economic outlook and trends.  “It is a good time to buy as the statistics suggest,” she said, “”We’re coming off of a strong economic backdrop.”

A deeper dive into fleet, retail and lease sales were examined, as well as used vs. new vehicle price spreads as indicators for the 2018 industry outlook.

“A post recovery is underway,” Fulthorpe said. However, Outlook attendees also heard a case being made for a less optimistic scenario of a 16.2M 2018 sales outlook.  “All industry stakeholders are looking at the same pieces of the puzzle, but where differences exist, it comes down to the timing and degree of the inputs and variables,” Kolinski Morris said.

Albertine noted that the pace of industry change demands a flexible response.  He highlighted three fundamental focus areas that exist today:

1) Affordably (monthly payment matters)

2) Investability (can you convince investors you are in the lead and will make money doing it?)

3) Feasibility (product viability and customer interest)

“With all of the new programs and technology advancements, we heard the sizzle is in the narrative. Today, we are in one of the most exciting times in automotive,” Albertine said.

Keynote speaker Chris Thomas, Founder and Partner of Fontinalis, said that it is clear that business models across the value chain are indeed evolving.

“Autonomous will change the industry significantly in the next five years,” he said.  “People are realizing that their vehicle sits idle 90 percent of the time.”

Thomas discussed other trends including that “today, only 15 percent of the U.S. population has used UBER.  Think about it when that number hits 30 percent.”

He also noted that mergers and acquisitions are still strong as there have been seven mega deals in the last 18 months, totaling over $32 billion.  “The amount of capital going into these new areas points to the level of interest in new technologies and new paths to growth that stakeholders are seen pursuing,” Thomas said.

Presentations from the speakers are located in the “members” section of the SAA website at www.SAAauto.com.  SAA thanks Ducker Worldwide which served as the 2018 Outlook event sponsor.

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