Recovering Auto Makers Get Feisty

LOS ANGELES – The red meat of better times seems to make auto makers more hungry.

“OEMs are becoming extremely aggressive as light-vehicle sales continue to rise,” says Patrick Reininger, a vice president at data-cruncher R.L. Polk. “They are trying to outpace the industry and get back what they had before.”

WardsAuto predicts LV sales of 15.4 million units this year, with the potential to go higher if the current brisk pace of deliveries continues.

That level of deliveries would come close to pre-recession numbers, but the industry “is not quite there yet,” Reininger says, forecasting auto sales will reach 16 million by 2015, then level off.

LV sales reached 16.2 million units in 2007, but then plunged to 13.4 million in 2008 and bottomed out at 10.6 million in 2009 as the economy worsened.

As the industry recovers, auto makers are introducing “great new products and investing heavily (in product development),” Reininger says at the Automotive Customer Centricity Summit put on here by Thought Leadership Summits.

“Major redesigns continue to pour in,” he says. “There has been a proliferation of new products.”

Heightened OEM competitiveness is one of five automotive trends Reininger cites.

Another one: The high number of aging vehicles on the road today creates a pent-up demand and sets the stage for an imminent burst of new-car buying.

The average length of ownership for cars originally bought as new has climbed to a record-setting 71.6 months, according to Polk. That compares with 47.5 months in 2001.

Trend No.3 is that cross/utility vehicles and midsize segments are driving much of the LV sales recovery. Deliveries of those vehicles increased from 35.1% in 2008 and 42.1% through March of this year.

Trend No.4: Auto makers are accelerating their global use of common platforms for different vehicles.

Volkwagen is an example. The German auto maker makes widespread use of its MQB platform for vehicles ranging from the VW Passat sedan to the Audi 3 to an impending CUV unveiled as the CrossBlue plug-in hybrid electric concept car at the Detroit auto show.

By 2020, VW expects to make 10 million vehicles sharing that one platform. “Fewer platforms reduces complexity and allows OEMs to invest more in technology,” Reininger says.

A fifth trend he sees is auto makers’ use of advanced technology both as a point of competitive differentiation and as a way to meet rising U.S. government fuel-efficiency targets.

The government calls for corporate average fuel economy to reach 35 mpg (6.7 L/100 km) in 2016 and 54.5 mpg (4.32 L/100 km) in 2025.

“Think of the challenge to get to 54.5 mpg,” Reininger says, adding it will require lighter vehicles, alternative powertrains and smaller engines that can squeeze out power.

“But it is most important not to lose sight of customer emotions when it comes to vehicles,” he says. “While it is important to be efficient, it’s also important to be relevant.”

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