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CAR Discusses This Week's Hot Topics

Michigan Business Network
May 31, 2022 2:00 PM

carsConsumer pain at the pump continues to be a hot topic in the news as the average national price reached a record high, leaving many to reconsider fuel alternatives and EVs. We also saw exciting headlines in the vehicle software space as many automakers continue to invest in software solutions. Lastly, we review the latest automaker investments in EVs.

As the microchip crisis continues to plague the automotive industry and beyond, we have migrated all news updates related to the shortage to our website. You can stay informed on the automotive impact of the global chip shortage by visiting here.If you missed Carla's previous Hot Topics email, you can read it here.We would love to hear from you and welcome your questions at any time. If you're interested in sharing your thoughts with us on hot topics, or if you would like to ask us a research question, please reach out to Katie Ramsburgh.

Hot Topics of 5/23/2022 - 5/27/2022

Fuel Prices and Fuel Alternatives

My thoughts:

Inflation is real and permeating everyone's pocketbook. There are jokes about needing loans to fill up your vehicle, but I'm shocked with every fill-up, trip to the grocery store, and more! Many Americans have extra in their bank accounts due to COVID and no vacations, eating out, etc. But, many other Americans live paycheck to paycheck, and those paychecks haven't kept up with the cost of living increases.What does this mean for the automotive community? I strongly caution that if you are only thinking about demand and the top household income buyers, you will be happy for a year or so. Even top earners see their retirement and investment accounts dwindle. People will stop this buying spree, and we already see signs of a slowdown.We must think about making more affordable products (the mini-city car!) and offering vehicle users packages, more ride-sharing, and more public transit. Think beyond ownership to secure your future and start doing it now. The signs are not good when we've priced a good chunk of our buyers out of the market.

Vehicle Software

My thoughts:

The car of the future is all electronic – "the computer on wheels." I'm not too fond of this euphemism as I love driving, BUT I don't love driving in most of the conditions I experience today. Put me on a winding mountain road, and it's a great time. Put me on a highway at rush hour, and I'd rather be anyplace else.Software, data, and data analytics must be used to make the best user experience possible for the customer. A positive customer experience will cause a person to select your product. If they allow you to use their data, you better give them something great. If you don't, they'll be unlikely to opt in to share their data with you.The whole idea of who owns the data is an excellent discussion because whoever owns it must keep it secure. In today's world of cyberattacks, this is not easy and quite a task. This topic will be debated in earnest as customers seek to control their data, decide who can service their vehicle (which requires access to the data), and the potential benefit of using this data. More to come on this topic in the Hot Topics newsletters and at CAR MBS 2022.

EV Investments

My thoughts:

It's like a constantly flowing waterfall of announcements! EV investments are surely needed to meet the big announcements made by automakers regarding new models and battery plants to supply these models. BUT, please refer to my 1st hot topic. If automaker's selling of profitable models begins to slow, these announcements and subsequent launches may face some delays. Right now, free cash flow is not an issue, nor are lines of credit, but there are warning signs there. I recommend that all companies secure maximum lines of credit now to support their growth plans or their sustainability plans. CAR will continue to follow this economic situation and keep you all apprised.

Bailo-2 (1)-1Best Regards,

Carla Bailo
President and CEO
Center for Automotive Research

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