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Home / Business / Stricken carmakers stall at the crossroads of a radical future | Business

Stricken carmakers stall at the crossroads of a radical future | Business

Automotive executives of come down to Detroit this week for its annual auto show, the icy winds that sweep away from the Great Lakes will not be the only thing that will send a thrill below zero to their bones .

The International Motor Show of North America (NAIAS) of 2019, to give it the title, will return to the Motor City on Monday in what many consider the most crucial ̵

1; and perhaps the most dangerous – period in the history of 39; automotive industry.

Experts are not tracing their words. "There will be more changes in the next 15 or 20 years compared to the last 100 years", said prof. David Bailey of Aston University.

According to prof. Karel Williams of the Manchester Business School: "The car as we know might be about to become history, the way [photographic company] Kodak became history."

Apart from that, there is abundant evidence of a looming crisis. About 100 billion pounds have been wiped out the value of car companies last year, with the pain experienced in the production lines and in the boardrooms all over the world.

Last November, General Motors in Detroit announced that it was losing 14,700 jobs and closing its plants, it is responsible for reporting sedan sales in a US market that many expect to slow down in 2019 and 2020. [19659003] Just last week, Britain's largest carmaker, Jaguar Land Rover, announced 4,500 job cuts, citing the weakening of demand in China and slipping diesel vehicle sales in the wake of the scandal of Dieselgate emissions

The spectrum of a contract-free Brexit also locks on JLR and many other manufacturers with major operations in the UK.

On the same day as JLR's announcement, Ford revealed that it would scale its European operations dramatically, having recklessly exaggerated. The cuts are expected to include 1,000 job losses at Bridgend – more than half of the workforce at the carmaker's engine factory in Wales.

Other issues, less structural, have further rocked the industry. The death of former Fiat headline Sergio Marchionne has increased personal pain on top of professional sadness in 2018. And when the head of the Renault-Nissan alliance, Carlos Ghosn, was arrested in Japan and charged with crimes of illicit financial conduct – which he denies – has shown that even a figure seen as superhuman in some circles could be suddenly reversed.

  The jaguar factory in Solihull.

The jaguar factory in Solihull. Jaguar Land Rover is cutting 4,500 jobs as sales decline in China. Photograph: Leon Neal / Getty Images

There may be more pain to follow – and in a short time. An expected Chinese economic slowdown means that the engine of growth on which some companies have become dependent is stalling. At the same time, President Trump's apparent willingness to engage in commercial wars overflowing with Beijing offers another industry risk.

But it's the long-term structural issues that throw the longest shadows. Electrification, autonomous vehicle development and the threat posed by personal vehicle sales guidance services pose challenges that not all companies will be able to meet.

According to Williams, the industry did not see anything like it from Henry Ford's T model off the production line in 1908. "At that time [following] the US industry defined the idea of the people's car – an internal combustion engine with a gearbox and so on, "he said.

"What happened after the Second World War was that the Europeans and the Japanese scaled down the model, but European cars like the Volkswagen Beetle, the Fiat 500, the Mini, would all be recognized by Henry Ford. big is that the car, like Ford and General Motors invented it, will be reinvented with electrification and autonomy. "

As to underline this tectonic shift, the main European brands including Audi, JLR , Mercedes-Benz and Mini have come out of the Detroit show this year, turning their noses into the city that gave birth to the industry.

Starting next year, the show will move towards the summer, perhaps mindful that the gala evening of the new shining models inside the cavernous buildings that protect the delegates from the cold of Michigan he is losing his luster.

But the seasonal switch will hardly be enough to restore the former glory of Detroit, especially with Silicon Valley which becomes equally important for the future direction of the industry. "It is not at all clear that manufacturers whose experience is in petrol and diesel vehicles are well positioned to benefit from electric and autonomous vehicles," Williams said. "The likely beneficiaries are data companies, like Google, or mobility providers like Uber."

Several automakers have already followed technology giants as an insurance policy against a future in which personal vehicles take a back seat to a wider range of transportation options. Toyota, the world's largest vehicle manufacturing automaker, has invested $ 500 million in a driverless auto partnership with Uber, while Volvo also has a partnership with the company and JLR has unveiled a long-term relationship with Waymo, part of the Google parent company, Alphabet.

  Toyota car at a motor show.

Toyota has established a technology partnership with Uber. Photograph: Steve Marcus / Reuters

Driverless technology is not without problems, including several fatal accidents. The survey, at least in the United States, shows that most drivers still do not trust the autonomous cars, with 73% of American drivers saying they are too afraid to drive in a completely autonomous vehicle.

This could create annoying doubts about an industry spending billions on robot vehicles, especially considering that investments are harder to sustain when traditional vehicle sales do not hold up well. But most pundits have little doubt about the final direction of the trip. Citigroup analysts think the stand-alone features will become standard in personal vehicles in the early 2020s, with services that will diversify later by including self-service subscriptions.

"A rent for an AV subscriber would include the use of the car plus insurance and maintenance," analysts write. "In addition to the additional AV safety features on this car, the car will drive autonomously to get services in the middle of the night, or a new car with enough seats to take the whole family at the airport can be sent home overnight . "

Ultimately, Citigroup analysts predict a global" Robotaxi "market with a corporate value of around $ 1 tn.

Autonomous or not, the cars of the future will be powered by electricity. This poses the umpteenth existential threat to operators in the sector who do not manage change well.

"China will become the center for global production of electric vehicles," said Bailey. "Unless the industry gets transformed, big parts could be wiped out, the Renault-Nissan are ahead and BMW has invested a lot, so you have Tesla as a new entrant and companies like JLR recovering.

"Those who are really late are companies like Ford, which is far behind and is going in cooperation with Volkswagen, which must reorient in the wake of Dieselgate. "

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