Annual ‘Car Wars’ Data Reveal Industry Challenges Ahead, Recovery in Sight

Bank of America recently unveiled its 30th annual Car Wars report – a proprietary study that quantifies industry product trends, measures competitiveness of original equipment manufacturers’ (OEM) product plans, and provides historical perspective. John Murphy, Bank of America Global Research’s lead U.S. auto equity analyst shared this year’s finding with MICHauto stakeholders, painting a picture of what is in store for the industry as it moves through and beyond the impact of COVID-19.

COVID-19 is driving a decisive downturn across the industry.
Globally, the industry is facing a 20% year-over-year decline in sales and production volume. Despite this globally synchronized decline, a v-shaped recovery – or return to pre-COVID-19 conditions – is expected by the mid-2020s. Companies are now forced to explore more aggressive cost-cutting measures. Murphy acknowledges that because the industry has been experiencing a boom in recent years, some discipline has been lost. These measures, though, will pay off by the mid-2020s, producing strong margins and renewed buy-in.

Product activity among OEMs will vary.
Over the next four years, 50% of vehicles will be launched as internal combustion with the remainder being alternative powertrain variants (electric vehicles, hybrids, etc.). Consumer pull and market dynamics are driving pricing and production of these alternative powertrain vehicles and autonomous technology in the U.S., as opposed to the regulatory influence seen in Asia. Differences in these production rates will stem from allocation towards traditional model launches versus alternative powertrain development.

The technological evolution underway poses both issues and opportunities.
Companies must remain diligent now in optimizing their core businesses. However, it is important to invest in future businesses to fortify their longer-term industry position. Projections show that volume levels will bounce back post-COVID-19 as electric and autonomous vehicle demand increases. These vehicles are being treated as a luxury technology in the U.S., so this surge of demand at higher price points will help support the U.S. market.

Ultimately, the report demonstrates that though the industry will endure a difficult few years, it will emerge stronger with increased production and advanced technology.

Glenn Stevens Jr. Discusses Industry Recovery Outlook During ‘Navigate 2020’ Webinar with The Right Place

A deep dive into new structures driving automotive supplier strategies in the current and post-COVID-19 era was the focus of The Right Place’s “Navigate 2020 Webinar” on Wednesday. MICHauto Executive Director Glenn Stevens Jr. led a conversation with IHS Markit’s Michael Robinet, executive director for automotive advisory services, who provided data and forecasts that described challenges and consolidations for mid-level suppliers globally.

“The rebound from COVID-19 will be slow and paced differently throughout the world,” said Robinet, while also noting China “already has a head start.”

During a Q & A with Stevens, Robinet encouraged west Michigan-based suppliers to “expand their presence or reduce risk.” When Stevens asked about the likelihood of NAFTA’s replacement, USMCA, being enforced starting July 1, Robinet predicted: “There will be a little bit of leeway” given the pandemic.

Discover Auto: How MICHauto is Continuing Student-to-Business Connections Amid Uncertain Times

The COVID-19 pandemic has changed the way we all conduct business, socialize, and learn. These adjustments have been especially evident within the education system. As advocates and supporters of Michigan’s up-and-coming automotive workforce, MICHauto is committing to the continuation of the Discover Auto program, which connects high school students with automotive industry leaders to learn about career opportunities and company culture.

As the school year closes out, the MICHauto team has been planning for Discover Auto programs in the fall. While hopeful to resume in-person tours, the team has opted to move forward in a virtual format to ensure adherence to health and safety guidelines of both schools and host companies. This transition was met with excitement due to the opportunity to expand the reach of the program across the state.

To test this virtual platform and provide a final learning opportunity before students leave for summer break, MICHauto held a virtual Discover Auto session last week with our MICHauto member, Brose. Partner, Project Lead the Way (PLTW), recruited an engineering class from AGBU Alex and Marie Manoogian School in Southfield to participate. Students who were unable to attend were able to watch the recording of the presentation. Presenters from Brose discussed their work, career path, and favorite things about working at Brose. Students participants found the presentation enlightening and learned a lot.

MICHauto excited to continue to engage with students and members via virtual Discover Auto in the fall. If you are interested in becoming a host company, please contact Jenny Orletski-Dehne at jorletski@michauto.org.