REGULATION: 2016 Mazda MX-5.
Former General Motors CEO Dan Akerson once confessed that in all his 40-something years in business – running telecoms, managing investments and takeovers for the well-connected private equity Carlyle Group – no industry challenged him more than the car business. What a monster, he said.
This is the biggest, most complex, most demanding and often most fickle business. An investment in one new model can run to $1 billion (U.S.) or more and success or failure shifts on the whims of consumers and the dictates of politicians and their regulators. Profits are almost always based on big-volume sales. A hit model car that sells in the millions per year spins cash like nothing else; a flop can sink an entire company.
What's an iPhone worth, $700? The cheapest new car in Canada, the Nissan Micra, starts at $10,000. What's at stake here is obvious. Making this game more difficult still: what's in showrooms and at this year's Toronto auto show was first planned five-to-seven years ago, and will need to remain current for another 10-15 years. What other product has a lifespan of perhaps 22 years? None. You're lucky if your smartphone lasts two years before breaking or becoming obsolete.
Here are the five elements that must be considered for every new model, with hundreds of millions or billions on the line with each decision. You'll find new models that reflect these realities displayed at the Canadian International Auto Show in Toronto.
Consumer tastes
They've always been in flux, but at no time in history have consumers flitted about so quickly. This is going to get trickier as predictable baby boomers give way to spoiled, impatient, tech-savvy millennials as the most important industry demographic.
What was once a mid-size and compact car market is quickly morphing into one dominated by light trucks and luxury cars. Nearly 58 per cent of Canadians bought a light truck last year, reports DesRosiers Automotive Consultants. Canada's best-selling vehicle is a pickup and the biggest single segment is compact sport utilities (more than 400,000 sold last year).
New models that point to the future: 2015 Jeep Renegade, 2016 Nissan Titan, Porsche Cayenne GTS, Volkswagen Cross Coupé GTE.
The Renegade is the new made-in-Italy small Jeep from Fiat Chrysler. The Titan is the latest effort from a Japanese company to crack the full-size pickup code that allows Detroit-based car companies to earn billions in profits. The Cayenne is an SUV that roars like a car but can go off-roading. And the VW shows that even Europe's biggest car company has conceded that SUVs and crossovers are the future.
Technology
Auto makers must balance the demands of consumers for infotainment and safety with demands for more power, better fuel economy and lower emissions. What the newest models can do in terms of communicating through on-board link-ups while also allowing owners to customize their entertainment choices is stunning.
Oh, and car companies are moving ahead with lightweight materials, fuel-cell technology, and the electrification of the automobile.
New models that point to the future: 2016 Acura NSX, 2016 Chevrolet Volt, 2015 Hyundai Tucson Fuel Cell, Range Rover Sport Diesel.
The NSX is a sexy super sports car made of lightweight materials and powered by an all-new six-cylinder engine and three electric motors. The Volt is a second-generation plug-in hybrid. Range Rover has an efficient and relatively clean diesel and it hints at a diesel hybrid down the line.
Regulation
Every car company executive will tell you that governments are always right in the middle of the car business. Nissan-Renault's CEO says that regardless of what oil prices do, emissions and fuel economy regulations are here to stay and will get tougher. Safety regulators have already mandated crash-test standards, rollover standards, and such, and soon they'll be regulating self-driving or autonomous vehicles.
Oh, and regulations from country to country and region to region differ. It's a patchwork of government controls through which global car companies must navigate while meeting consumer demands.
New models that point to the future: 2016 Hyundai Sonata Hybrid and Plug-in Hybrid, Toyota i-Road, 2016 Mazda MX-5, 2016 Mercedes-Benz GLE Coupe.
The two Sonatas are here to help Hyundai meet fuel economy and emissions rules that ratchet up the Corporate Average Fuel Economy standard. The i-Road is what Toyota calls a redefinition of personal mobility for a low-carbon future – fuel-efficient, fun-to-drive, with tandem seating for two in a three-wheeler the size of an apartment refrigerator.
Take note of the Mazda design. Luscious, but also aerodynamic (for a roadster) and that hood, while low to the ground, meets pedestrian safety standards that dictate the front-end design of every vehicle. The GLE is a small Mercedes that also helps this German luxury car maker meet fuel economy and emissions rules.
Sales
Most people despise shopping for a new vehicle. However, technology – especially the availability of information and easy communication via the Internet – has shifted purchasing power to consumers. The 21st-century dealership is a place where the typical car shopper goes after doing a mountain of online research. There should no longer be an overpowered car shopper.
So the dealership, if it is to survive and thrive, must have skilled sales staff and an integrated approach to selling and servicing customers. The 45-minute sale is possible thanks to technology and good business planning. The consolidation of dealer groups means the end of the mom-and-pop shop, which allows car shoppers to take advantage of the benefits a large dealer group can offer in terms of brand choice, vehicle selection and after-sales service.
New models that point to the future: 2016 Maybach S 600, Infiniti Q80 Inspiration and Q60 concept.
The Maybach is a technology and luxury showcase that demands a dealer experience second to none. Keep in mind that Maybach is being sold out of the same Mercedes dealer that also sells the affordable B-Class. The two Infiniti concepts point to what is required to be competitive in the premium market. The Infiniti stores, from which future Infiniti models inspired by these will be sold, must reflect the design and technology here.
Design
It will be tough to find a homely car at the Toronto show. What you will find are aerodynamic shapes that disguise practical and beautiful interiors. Car companies have discovered the importance of comfortable, supportive seats, clever cargo arrangements and smart technology interfaces that are so intuitive, you'll never need to crack the owner's manual.
A car designer's job is three-fold: make it beautiful, meet consumer needs and adhere to the regulations discussed earlier. And use materials that are cost-effective and work with engineers who are stuffing more technology into every vehicle. Designers remain stylists, but they are more than that today.
New models that point to the future: 2016 Audi TTS Coupe and 2016 TT Roadster, Mini Superleggera Vision, 2015 Dodge Charger SRT Hellcat, 2015 VW Touareg.
The two Audis are part of what is expected to be a TT family that will include a TT crossover likely called the TTQ. The latter was previewed by the TT Offroad Concept at the 2014 Beijing auto show. The basic TT design, then, was created to start as a sports car and then expand to include a crossover and perhaps a four-door hatchback, all the while being loaded with an easy-to-operate technology interface inside. The Mini points to where BMW's youthful brand might go.
Today's designers must also do modern muscle cars like the Hellcat and practical wagons like the Touareg. There are no easy days in the design houses of the world's auto makers.
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