I’ve attended the majority of the Automotive Forums sponsored by NADA and J.D. Power held in conjunction with the New York International Auto Show over the past four years; however, the conference’s fifth showing was likely the most informative and thought-provoking thus far.

Since a full day of presentations and panel discussion left too much usable content to be shared in a brief blog post, the following are condensed points and comments I found to be among the most interesting made during this year’s forum. Note that while many of these were derived from statements made by panelists and presenters, unless quoted directly they should be considered as my interpretation of what was said.

Forrest McConnell
Chairman
National Automobile Dealers Association

  • McConnell eloquently and passionately articulated how franchised new car dealers are the backbone of both the automotive industry, and by extension, pillars of national and local economies as a whole:
    • Dealers are job creators and investors in their local communities
    • Franchised dealers employ 1 million people nationwide
    • Dealers pay 15% of all sales tax in the United States
    • Stronger performing dealerships (meaning, not on average) make a 3% net profit from total new vehicle sales (this low figure relative to other retail businesses speaks to how highly competitive – and beneficial to consumers – the franchised auto dealer system is)

Nariman Behravesh
Chief Economist
IHS

  • U.S. growth will lead global growth over the next few years; not developing country growth as has been the case
  • U.S. risks include gridlock in D.C. and growing income/wealth disparity
  • U.S. tailwinds include unconventional energy boom (hydraulic fracturing for oil/natural gas), which leads to jobs, manufacturing competitiveness, domestic investment and reduces trade deficit
  • This has created an estimated 2 million jobs over the last five years and will create another 2 million more in the next five years
  • U.S. inflation and interest rates to remain low for at least another year
  • Low energy prices provide a competitive boon for the United States
  • Potential credit bubble in China more concerning than what is taking place between Russia and the Ukraine
    • China’s debt has grown twice the rate of GDP
    • A large rise in the role of shadow banks is a major concern (difficult to monitor/control)
    • No other country with such a rise in debt has avoided a financial crisis much slower economic growth
    • A drop to 4% GPD, from current pace of roughly 8%, would have huge global economic implications

John Humphrey
Senior Vice President, Global Automotive Operations
J.D. Power

  • New auto sales in China to grow from 21.8 million units in 2013 to 34.5 million in 2020 (light vehicle sales in the U.S. totaled 15.5 million in 2013)
  • New sales in China were only 8.8 million in 2008
  • There were only 14 brands selling new vehicles in China in 2000; last year there were 96 brands
  • 53% of new car dealers in China reported breaking even or losing money in 2013
  • Chinese OEM capacity utilization (not foreign/domestic partnerships) was under 50% in 2013; will require consolidation at some point to make businesses viable long-term

Joe Hinrichs
Executive Vice President and President of the Americas
Ford Motor Company

  • Ford is taking on a major risk with aluminum F150 production and repairs on such a massive scale
  • BUT, to be an innovative leader a company must take on risks of a larger magnitude
  • Dealers are imperative in supporting quality in new model launches; they are the first to report consistent issues with a new model
  • The average Ford dealer is investing between $30,000 - $50,000  in equipment to support the aluminum body of the new F150
    • Note: considering that more F Series vehicles are sold in the United States than any other country by far, it shouldn’t come as a surprise if dealer investments to support aluminum architecture are leveraged down the road; however, Hinrichs did not share future model plans relating to this
  • New F150 launch is on schedule, so far
  • Should be ready for launch by Q4 2014

Mary Barra
Chief Operating Officer
General Motors

  • Barra gave a speech prior to being interviewed by Jason Stein from Automotive News
  • Not surprisingly, both her speech and follow-up questions posed by Stein largely revolved around GM’s well-publicized recall of approximately 2.6 million vehicles for faulty ignition switches that have been tied to 13 deaths
  • Paraphrasing, Barra shared that GM will learn from this experience and be a better company because of it
  • Also, GM’s mindset is to build long-term relationships with consumers
  • To this end, GM has created a new Product Integrity Group, with the goal of ensuring the highest level of safety be included in every vehicle put into the marketplace
  • Barra stated that “the customer is our compass” and that “my pledge to customers, dealers, and suppliers is that this GM will be the very best it can be”
  • She also stated that replacement ignition switches began arriving at dealerships last week, and that three production lines will eventually be tasked with creating replacement parts
  • Barra’s closing comments: GM is working to ensure that every customer affected by the recall has been taken care of and that GM – as a whole – is dedicated to this effort

Between the Automotive Forum and the 2014 New York International Auto Show (NYIAS), this week has certainly provided much fodder for us to share. We’ve been sharing our initial impressions on Twitter (@NADAUsedCarGde) of each new model revealed throughout this year’s NYIAS and we’ll provide a more comprehensive recap of the auto show in a blog on Friday – so stay tuned!