Changing Buyers to Drive Interior Innovation update from May 2011

Special Coverage

2011 Wards Interior Conference

DEARBORN, MI – Economics, demographics and electronics are driving consumer change and, with it, the way automotive interiors will look and function, experts here predict.

Although panelists addressing “What Consumers Need” at the Ward’s Auto Interiors Conference here admit auto makers are reluctant to make dramatic changes to interior design overnight, they all say a new direction is unmistakable, as buyers demand more and more features without adding significantly to the bottom line cost of their new vehicles.

“A lot of OEMs want another OEM to take the first step” in revolutionizing interior design, says Jeff Rodgers, lead engineer-interior systems for Inteva Products. “They’re very skittish.”

John Oilar, vice president-engineering for Magna Seating, agrees. “A lot of times, we find (innovative solutions) are a difficult sell to our customers. But now is the time to take the risk. (And) we’re getting more requests for innovative products than we have in my 26 years (in the business).”

Propelling the new direction is an evolving buyer base that will see younger Gen Y’s take over from Baby Boomers as the key market influencer.

Gen Y’s are tech savvy, multi-taskers who are environmentally aware and – like most consumers following the 2009 global recession – cost conscious, panelists say.

Auto makers will have to fight for their attention, and discretionary dollars, in a U.S. new-vehicle market that is smaller and more fragmented than in the last decade, says Mike VanNieuwkuyk, executive director-global vehicle research for J.D. Power and Associates.

“We don’t see (the market) returning to 17.5 million (units annually) in the near future,” he says, noting Power’s forecast of 13.0 million new-vehicle sales this year, 15.0 million for 2012 and 15.7 million for 2013. “And there are more models sharing this space.”

Auto makers still “very skittish” about innovative interior designs, Jeff Rodgers says.

In addition, this smaller set of buyers has been permanently affected by the recession, Oilar notes.

“Consumers are not going to be where they were before. There’s no more conspicuous consumption,” he says, pointing to a survey in which 81% of respondents report they won’t go back to their pre-recession purchasing habits.

But because they now spend so much time inside their vehicles – more than 18 hours a week – they do want more out of their automotive interior, panelists say, and breakthrough designs and content may be one of the best ways to capture attention.

High on buyers’ want lists is quality, VanNieuwkuyk says, though the definition of what that means is changing.

The measuring bar is no longer about whether something works as designed, as every auto maker and supplier has to offer that much today, he says, citing Power statistics indicating defect rates have improved dramatically over the last 20 years.

Where the gap between the worst and best auto makers was a whopping 334 problems per 1,000 vehicles in 1987, the industry now averages overall just 87 defects per 1,000.

As a result, basic reliability is no longer a key product differentiator. Auto makers now must make sure advanced technology devices operate intuitively and features and functions consumers want are not “flat out missed,” VanNieuwkuyk says.

“The only places where quality has not improved are multimedia and navigation,” he says. “Those scores are getting worse because they are becoming more complex and there’s a greater opportunity for things to go wrong.”

Still, customers will demand more, not fewer, electronic devices for entertainment, social networking and communication, and they’ll want to operate these features while driving.

Future buyers will “want to do what they want, when they want and where they want,” VanNieuwkuyk says. “And they’ll expect the car to be designed so they can do that safely.

“We have to look at the complexity of driving,” he adds. “It’s scary.”

Rodgers says he is confident the driver-distraction hurdle caused by advancing technology also will be solved. “I think we’ll get past this,” he says, pointing to improving voice-activation systems and other less-distracting opportunities for communication with the driver.

Inteva is unveiling an interior concept for 2025 here that uses a removable iPad-like device for a steering wheel and an electronic network that allows occupants to use other portable entertainment and communication devices inside the car.

With less built-in electronics, there’s more room for innovative cargo storage solutions, Rodgers says, “and there are fewer components, so manufacturing and logistics is easier.”

It also represents a lower-cost opportunity for buyers who can purchase three iPads for the price of one in-dash navigation system, he says.

Vehicles with interiors designed around portable electronics will be plying U.S. roads in less than five years, Rodgers predicts.

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