The 2018 North American International Auto Show (NAIAS) continues to showcase why the automotive industry is a leader in product innovation and why 2018 is all about OEMs and dealerships mastering the 4Ps of Automotive Marketing™: product, price, place, and person. As discussed on our blog, OEMs have been unleashing major innovations since Day One. And the announcements continue. Recent highlights include:
- Cars Are Going Electric: Ferrari disclosed that the Italian carmaker will bring to the market an electric “supercar” as part of CEO Sergio Marchionne’s plan to adapt the company to changes in consumer preferences.[i] In an interview with Bloomberg, he discussed how vehicles are becoming more autonomous and electric – and Ferrari does not intend to be left behind. “This business has never been for the fainthearted,” he told[ii] “The technology changes that are coming are going to make it probably more challenging than it’s ever been.” Ferrari’s push into electric cars mirrors the moves of other OEMs at NAIAS. For example, Ford announced that it will invest $11 billion into electric vehicles by 2022[iii]; Volkswagen said it will bring a new all-electric car platform to production in the United States by 2020[iv]; and Mercedes-Benz announced the launch of hybrid Mercedes-AMG 53 models[v]. (Our blog post from January 16 contains more detail about those announcements.)
- Vehicles are getting bigger – and more fuel-efficient. Possibly because of the popularity of SUVs, OEMs are rolling out bigger, roomier vehicles that reflect consumer buying preferences. OEMs ranging from Kia to Volkswagen showcased vehicles that are not only larger than their predecessors, but also more fuel-efficient. Commenting on the rollout of larger cars, Audi U.S. President Scott Keogh told USA Today, “It’s very simple. It’s what customers want.”[vi] Our own Joe Wiesenfelder, executive editor, added, “Passenger cars are attempting to compete with SUVs. They’re trying to make up for some of the perceived difference.”
- CarPlay is coming to more OEMs. Recently I blogged that Amazon Alexa is making inroads in the automobile, based on developments at the 2018 CES. But the NAIAS demonstrates that Apple’s CarPlay, based on Apple’s Siri voice interface, is alive and well. For instance, Toyota is integrating CarPlay into Lexus and Toyota vehicles for the first time starting with the 2019 Avalon.[vii] The move marks a change on Toyota’s policy of trying to work around external voice-based systems such as Google Android Auto and Apple CarPlay. And just days ago, at CES, Toyota announced that it will add the Amazon voice assistant Alexa to select Lexus and Toyota vehicles in 2018.[viii] (The integration will occur through the Toyota Entune 3.0 and Lexus Enform 2.0 infotainment systems.)
- New business models are here. At NAIAS, both BMW and Mercedes-Benz disclosed that they are going to launch vehicle subscription programs in the United States in 2018. Subscription plans provide dealerships’ customers an alternative to owning a car.[ix] For a monthly fee, customers pay not only to drive a vehicle but also get associated services. The plans make it possible for consumers to experience driving without owning. As Mercedes global sales chief Britta Seeger told Automotive News, “We need to learn. In different markets, we want to try this out.” Added BMW of North America CEO Bernhard Kuhnt, “At the end of the day, the consumer is going to decide if that’s something they want to do.”
NAIAS also demonstrates that product innovations require an unprecedented level of collaboration between OEMs and technology companies. According to Forbes, NAIAS had booked more than 400 meetings among technology startups, financiers, automakers, and suppliers, which is more than double the number that NAIAS expected.[x] Ultimately, the consumer is going to decide which developments from NAIAS will become long-term product successes.
[i] Fortune, “Ferrari Is Planning to Bring an Electric Supercar to Market,” January 16, 2018.
[ii] Bloomberg, “Fiat Chrysler’s Marchionne: The Future of Cars Will Be Electric and Commoditized,” January 15, 2018.
[iii] The Verge, “Ford Is Throwing $11 Billion at Its Electric Car Problem,” January 15, 2018.
[iv] Electrek, “VW Announces New All-Electric Platform to Be Produced in the US by 2020,” January 15, 2018.
[v] Mercedes-Benz, “The New Mercedes-AMG 53-Series Models of the CLS, E-Class Coupe and E-Class Cabriolet,” January 15, 2018.
[vi] USA Today, “Detroit auto show: Cars get bigger to compete with SUVs, meet demand for roomier interiors,” January 17, 2018.
[vii] Apple Insider, “Toyota concedes, reveals plans to launch first cars with Apple CarPlay,” January 15, 2018.
[viii] Toyota, “Toyota to Introduce Amazon Alexa in its Vehicles,” January 9, 2018.
[ix] Automotive News Europe, “BMW, Mercedes to test subscription services in U.S.,” January 16, 2018.
[x] Forbes, Strong Start At Detroit Auto Show For Innovation-Partnership Matchmaking,” January 14, 2018.