Howes: Need for new kind of speed drives automakers

Daniel Howes
The Detroit News

Detroit’s automakers are touting good ol’ Motown muscle at their hometown auto show, but the real force driving the industry forward is speed.

And it’s running at the pace set by Silicon Valley’s demonstrated bias for continuing technological innovation, seeping steadily into consumer consciousness worldwide. The result is a business free-for-all testing the ability of traditional automakers, their leaders and government bureaucrats to keep up.

Two auto industries are sharing the floor of the Detroit auto show, which opened Sunday at Cobo Center to some 5,000 journalists from around the world. Familiar automotive hardware with household names is co-existing with sophisticated software providers and startups angling to deliver smartphone functionality and customization to cars, trucks and SUVs of all shapes and sizes.

“There is going to be much more pressure for us to move faster,” Ray Tanguay, automotive adviser to the the governments of Ontario and Canada and a former Toyota Motor Corp. executive, said at the show’s AutoMobili-D expo. “We need to be able to evolve. We need to be able to change.”

He likens the challenge to the one that swept the electronics industry, where “if you didn’t keep up, you died. That is a revolution. That is a speed of change we have not seen in the auto industry.”

“It is important for us not to be complacent,” he continued, to understand the industry’s competitive metabolism must quicken to meet rising consumer expectations. “I don’t think” skeptics are “getting it. They still think it is like a model change every five or six years.”

Couldn’t be more wrong. For every Chevrolet Silverado pickup General Motors Co. touts, as it did Saturday, there’s the automaker’s bid to become the first industry player to field a fully autonomous vehicle, the Cruise AV, sometime next year.

For every mid-size Ranger pickup Ford Motor Co. revives, implicit acknowledgment that the Dearborn automaker misjudged the truck market, there’s the pledge to expand its investment in electric vehicles to $11 billion — and to bring “performance” electric vehicles to market by 2020, starting with something the Blue Oval calls the Mach 1.

“We all know vehicles are changing rapidly,” Ford CEO Jim Hackett said. “They’re becoming infinitely smarter. This evolution is not just about creating tech for tech’s sake.”

That evolution is not limited to the industry itself. In just two years, auto show organizers have transformed the mother-of-all U.S. shows into a venue showcasing apparently contradictory sides of the global auto industry today. The trend will continue, pushed by regulatory pressure aimed at emissions and congestion.

Automakers fielding large, powerful trucks and SUVs for their home market also are racing to deliver electrified self-driving vehicles for limited use in ride-hailing services. Ford, maker of the nation’s best-selling truck, says it will introduce an F-150 hybrid pickup.

“The technological developments are happening very quickly,” Transportation Secretary Elaine Chao said. “Data science is rapidly transforming the auto industry.”

And that transformation could prove to be the makings of a virtuous circle for Detroit, its hometown automakers and a burgeoning tech sector slowly gaining traction in places like Ann Arbor and downtown Detroit.

“You can see the convergence of the auto and tech industries right here,” said Glenn Stevens, executive director of the Detroit Regional Chamber’s MICHauto unit. But the near-term challenge: “How do you satisfy the industry of the today — profits and shareholder pressure — and step into tomorrow?”

Exactly right. If there’s one construct to explain the seemingly contradictory signals issuing especially from Detroit automakers at this year’s auto show, it’s that they need to make lots of money today on products the market wants to fund bets on the future.

That’s why Ford is filling out its SUV lineup with a powerful new Edge ST; why it’s introducing the Mustang Bullitt, a 475-horsepower modern revival of the car first driven by Steve McQueen in the 1968 movie; why Ford reversed itself an repatriated the Ranger pickup to a market ripe for a midsize truck from an American automaker.

It’s better than the alternative. That would be a reprise of the Old Detroit whose leaders ignored mega-trends in midsize cars, manufacturing excellence, even gas-electric hybrids that Asian rivals seized and built into commanding positions.

The industry in general, and Detroit in particular, does not face an binary choice between investing in traditional segments serving the vast majority of consumers or the emerging segments of electrification and autonomy. It’s got to be both, because the data and mobility services enabled by advanced technology represent potentially massive gains in profitability and revenue growth.

It’s not your father’s auto industry, and that’s precisely the point.

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Follow Daniel Howes on Twitter @DanielHowes_TDN.