Amazon, others have potential to disrupt auto industry

Jim Lynch
The Detroit News

Traverse City — What will the auto industry do if Amazon looks to start selling vehicles online?

The potential disruption of direct internet sales and other influences by technology companies was a topic of discussion this week as automakers, suppliers and engineers gathered in Traverse City for the Center for Automotive Research’s annual Management Briefing Seminars.

Amazon already has a major presence selling parts, and Toyota Motor North America CEO Bob Carter listed the company among several “disruptors” potentially challenging the automotive status quo.

“I’m sure all of us remember a time when simply the idea of sitting at home on your computer, sitting on your couch and purchasing a car was absolutely ridiculous,” Carter said. “But today, that’s our new reality. The world of business is always changing and so are the players.”

Along with Amazon, Carter listed Uber, Apple and Google as outsiders forcing change on traditional automakers. He said Amazon is retailing cars in Europe now, but not in the U.S. “yet.”

Tesla, generally considered one of the largest disruptors of the industry, was not often mentioned directly. But many of those speaking this week indirectly touched on changes that might be forced when technology-based companies pushing into the automotive sector and even large-scale car manufacturing.

“We do have an understanding of what it takes to bring the new product to market,” said Don Walker, CEO of Magna International Inc., a major automotive supplier based in Canada. “And people outside the industry have no idea how complicated this us. People inside do. So when I hear projections that somebody new is going to come in to the industry and disrupt it ... they don’t understand that this is the most technologically advanced, very expensive, high-volume safety product in the world — bar none.”

“It’s a huge, huge growth opportunity for tech,” he said. “But at the end of the day, tech needs the automakers because they can’t make cars.”

A long-standing problem for the industry has been its perception as an old and dirty business that lies far from the cutting edge of technology. It’s a key factor in automotive’s challenge to attract the “best and brightest” talent for the workforce, said Matt Simoncini, president and CEO of Lear Corporation.

The auto industry, he said, plays in areas that should be of interest to a younger generation, including mobilization, urbanization and safety. And oh, by the way, we provide jobs,” he added.

A more “old school” type of problem touched on by a number of industry officials this week has been the U.S. tax code and its impact on businesses. Several speakers at the CAR seminars targeted the 35 percent corporate tax rate as a barrier to growth.

The Republican majority in Congress has set its sights on tax reform. In Traverse City this week, several industry leaders spoke of the need to take action. .

“When the economy is strong, consumer confidence is up and people buy more cars,” Carter said. “However, we believe, and I believe, to keep the momentum going we need to reform our taxes. The 35 percent corporate tax is the highest in the world. And it undermines U.S. competitiveness.”

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