To follow is brandmachine’s annual North American car show report. Upfront we cover some of the macro issues impacting the industry like policy, trade and regulation and the emerging landscape of autonomous vehicles. We then drill down to the shiny stuff on the show floor with insights and details about trends, new concepts and vehicles coming to market….
Let the Good Times Roll. For Now…
As the curtain goes up on 2018 NAIAS there should be a lot of smiles from manufacturers and consumers attending the show. The economy is solid with low unemployment and the Dow just setting a record of 25,000. Sales in 2017 didn’t deliver quite what they did in 2016 with a 1.8 percent decline, but 2018 is forecast at a still robust 16.7-16.9 million units. Our view of the 2018 show, and vehicle highlights follows.
Talk about change and an uncertain future requiring big bets. This is still a business fraught with risk and many questions about domestic policy impacting the industry. Indeed, the new administration isn’t talking up electric cars, gas taxes and greenhouse gases like the old one, but rather less regulation, cheap gas and a pro-business view on EPA mandates.
But while domestic carmakers cheer potentially relaxed EPA standards, President Trump’s NAFTA trade stance has many automakers concerned; especially those importing vehicles that may face higher taxes through protectionist policy.
Just days ahead of the Detroit show, FCA announced it plans to move Ram truck production to a re-tooled billion-dollar facility in Warren Michigan from Mexico based on the new corporate tax changes led by Trump. FCA also served up bonus checks of $2,000 per worker heralding the new tax savings. Still, automakers will be watching Washington policy on trade closely as this is a critical issue impacting the industry.
The theme of this show is transition.
The industry is moving quickly to new mobility. But…today’s vehicles (especially profit-rich trucks) will be the precious profit fuel to transition automakers there.
Where there used to be one big car show (NAIAS) we see a continual transition to two big American car shows with CES providing more hints about the mobility future and NAIAS the place for more mainstream vehicle launches.
Overall, this is yet another year where the NAIAS seems to be losing some industry impact at the hands of CES. Indeed, a couple prominent analysts we spoke with now put CES ahead of NAIAS as the more significant automotive industry announcement show given the sheer number of mobility announcements routinely made there. What’s more, on the NAIAS show floor, many manufacturers are again absent this year, including high zoot luxury brands like Porsche, Ferrari, Jaguar and Land Rover…even Mazda will skip this years’ show. Manufacturers increasingly see more returns with smaller, more regional and customer-focused events. And not just in Detroit. Other hallmark global auto shows are seeing similar shifts in participation.
Like car shows, the car business is also at an epic moment of transition; to many consumers, car ownership is still a central part of the American dream, but going forward we also see (and many fear) a more functional and commodity view of “the car as mobility”.
This year, instead of murky prognostication on autonomous cars, we are finally starting to see some tangible technology and concrete plans that make practical sense. For autonomous vehicles it appears that automakers are focusing on baby steps in more containable urban environments and commercial use like ride hailing fleets and delivery services.
As such, these initial “vehicles” won’t be available for consumers to buy and they will only be able to navigate prescribed routes in a city. Ford has partnered with Domino’s Pizza as delivery vehicles in Ann Arbor and their view is 2021 for commercial deployment. GM, for its’ part, has plans to launch Chevy Bolts in a ride-sharing service in 2019 around certain urban areas.
Toyota’s e-Pallette Concept received considerable buzz at the 2018 CES. It’s a configurable pod that can be outfitted with purpose-built interiors for parcel delivery, ride-sharing and on-road e-commerce. It strikes us as a driver-less version of a city trolley. It will be interesting to see the continual social media reaction to concepts like this and other autonomous vehicles as many consumer reviewers we have seen already remain skeptical about autonomous vehicles and the loss of their driving freedom. As such, it appears the autonomous community will have some significant communication work to do if these are early indicators.
The Big News at NAIAS Is Pickups
The numbers for new vehicle announcements at this show may be down, but the strategic importance of a few vehicles at this year’s show are huge. Full-size pick-ups carry the bacon for the domestic makers, often at profits exceeding $10,000 per unit. These vehicles, more than anything, will allow domestic makers to fund their future investments in new mobility. Not one but two of the big players rolled out their all-new full-size pick-ups at this year’s show. Chevrolet and Dodge both bring all new designs while Ford showed its’ long-awaited mid-size Ranger pick-up.
Chevy Silverado: The big Chevy is probably the most significant announcement at the show. GM has invested considerable resources into this truck and it shows. The exterior is bolder with a meaner face and a leaner, more sculpted body that uses a mixed materials strategy of steel for the bed and aluminum for body parts that swing open (doors, hood and tailgate). Incredibly, the truck weighs a full 450 pounds less than the outgoing model; an amazing accomplishment made possible by new materials. There’s big news in the bed too, with an industry-first key or button activated power tailgate and bigger capacity made possible with pushing the bed closer to the body panels. Chevy identified 3 different customer groups for the truck; high value, high volume and high feature to which they developed 8 different trim levels to meet specific customer needs and wants segments.
Ram: Like Chevy, Ram is looking at many different series of its’ new truck to target various customer groups. From the outside, the cornerstone “big rig” look has been made a bit more aero and in high trim level chrome looks more luxurious. In turn, the Rebel off-road trim is “in-your-face” with a tough, menacing matte-black grill. Overall, Ram looks to position their trucks to a more luxurious and premium territory perhaps in search of even higher transaction prices (no pricing information was announced). In addition to class-leading V-8 towing, the new Ram brags about the biggest touchscreen (a Tesla-like 12 inches), reclining rear seats and “the industry’s most luxurious pick-up” with “58% more leather than Chevy or Ford”. Look at the safety, tech and luxury option list and this new Ram has just about everything (if not more) than a luxury car. The Ram goes on sale Q1 in 2018.
Ford Ranger: Ford sat on the sidelines while the midsize pick-up market nearly doubled from 244,857 units in 2013 to 452,335 last year. Unlike the more work-focused F-150, the Ranger is aimed at more lifestyle oriented pick-up buyers that want a truck for camping and kayaking trips and pulling small boats and ATVs. This truck has been a part of Ford’s global mix for some time but Ford has gone to considerable lengths to make it appealing to U.S. customer tastes. Some analysts have questioned only selling it in 4 cylinder turbo trim however. The Ranger goes on sale in early 2019 and will be built at Michigan’s Wayne Assembly. Look for the Ranger to also serve as the platform for the long-awaited return of the Ford Bronco.
All Hail the Mighty Crossovers… Again.
In 2017 the market continued to fuel the crossover boom accounting for 35 percent industry sales. Indeed, small crossovers accounted for 3 million vehicles or nearly one in five vehicles sold. Industry observers predict that in 2018 crossover volume could surpass cars.
Key vehicles:
BMW X2: An important vehicle for BMW that has been slipping in sales lately. The X2 will join all-new X4, X5 and the full-year sales of the X-3 (whew….that’s a lot of X’s). The X-2 is shorter and lower than today’s X-1 and with a standard 2.0L turbo looks to deliver 0-60 in around 6.3 sec. The X-2 goes on sale this spring.
Nissan X Cross: The Nissan Pathfinder has been a near icon SUV for Nissan and this design concept may provide a few hints at what the next one will look like. It sports a chunky and tough stance and the bold V motion grille and boomerang headlights we have seen on other recent Nissans. Inside is a 3 row x 2 seat configuration so everyone gets their own chair and what Nissan touts as the next gen of their Pro Pilot driver automation. Interestingly, a full screen spans the width of the dashboard with eye and hand motion sensors.
Acura RDX: The RDX Prototype shown here is further proof that Acura is getting the investment and attention it needs to be a bonafide premium brand. This is the first Acura styled and developed in the U.S. under the Precision Crafted Performance positioning. Unlike previous generations, this RDX contains real leather and real wood and looks to deliver.
Lexus LF-1 Limitless: This flagship crossover is another important vehicle for Lexus. While it is very much a concept, it signals yet again that the brand is taking chances by stretching its’ once boring designs. While some have commented that the Lexus grille is still a bit overdone, most feel Lexus is hitting its stride with this vehicle. It features “molten katana” design akin to a Japanese sword being forged. The long dash to axle proportions create a look that is unique; more sports car than is typical in crossover wagons. The limitless name is intended to express boundless luxury, technology and powertrain thinking. By 2025 Lexus is claiming every one of its global vehicles will be available as a dedicated electric or have an electrified option. The interior features touch responsive haptic controls and 4D navigation.
Are Cars Dead?… Not so Fast.
Ahead of the show there are rumors that sedans like the Ford Fiesta and Fusion will be put out to pasture. Rumors are also swirling about an end to the Impala. Yes, consumer tastes are favoring crossovers but a few cars in Detroit prove there’s still life in cars.
Key vehicles:
Toyota Avalon: The big Toyota is strategically significant in that, on the heels of the boldly styled 2018 Camry, we continue to see Toyota push their design envelope more aggressively based on the direct orders of Akio Toyoda. The big sedan market is still worth around 250,000 sales annually and Toyota wants a bigger slice of it by keeping its’ traditional customer in place but also bringing in a few younger ones with sportier styling and driving dynamics. Some are calling it a “baby Lexus” given the more premium design and a host of technology like a Lexus-sourced adaptive suspension, active noise cancellation, and a 1,200 watt JBL audio system and Yamaha wood trim.
KIA Forte: It’s hard to imagine in less than a decade how far KIA and Hyundai have come from their “cheap & cheerful roots. The new Forte is a crisp design with yet another leap forward in perceived quality and luxury level safety content. And like the Stinger, which has been getting great reviews for driving dynamics, KIA promises that the Forte will deliver a fun-to-drive nature which has been the last weakness for the Korean brands to overcome.
Infiniti Inspiration: Infiniti won a lot of buzz with this dramatic flagship concept which may preview the next generation Q70. Its’ sinewy shape and wraparound tail echo Jaguar cues to many eyes. And Infiniti talked up leading autonomy capability along with mechanical variable compression technology. Infiniti continues to win its’ way toward a more premium brand position with beautiful design and considerable investment from parent Nissan.
Bullitt Mustang: Kudos to Ford for putting some red-blooded American muscle car oomph into this show. Steve McQueen’s granddaughter rode out in the Highland Green Bullitt equipped with special trim like throwback wheels, cue ball shifter, Brembo brakes and a 15 horse bump over the standard Ford GT which also comes with some nice exterior and interior enhancements for 2019.
VW Jetta: VW has vowed they are making a real attempt, and a multi-billion investment to make the small U.S. brand a more viable competitor. The Jetta is the number one volume nameplate in the U.S. with over 3 million sold since launch and a very important model for the brand. The Jetta is bigger than before and comes with 147 h.p.and rear view camera as standard. Apple Car Play, Android Auto and Mirror Link are available along with an extensive list of luxury-level safety options. The interior looks to have re-captured VW’s once signature level of premium-ness compared to the outgoing model which appeared more built to a cost. Prices start at at $18,545 and it arrives in Q2 of this year.
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