Why Automakers Love That People Are Treating Cars Like iPhones

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1st Gear: Upgrade Envy, But For Cars

Harley Earl was fond of saying that in the '30s everyone kept their cars for five years, but by the '50s they'd gotten it down to three years. In the future, he'd say, they'd design cars so alluring people would want to upgrade every year.


It didn't quite work out like that, and for the last decade or so people have been holding on to their cars for longer periods of times.

No more! The rapid improvement in design, technology, and performance has people trading in cars faster than ever, with Edmunds reporting that the average lease is now 36 months or less, which is about how people treat smartphones.

From Bloomberg:

For years, U.S. drivers were starved for technology because struggling Detroit automakers couldn’t afford to bring promising advances to the showroom. Then came the bailout of General Motors Co. and Chrysler, and soon a newly profitable industry was stuffing vehicles with transformative gadgetry.

It all happened so fast, many 10-year-old cars seem like time capsules. Infotainment and safety features that are commonplace now were virtually nonexistent as recently as 2005. Less than a third of 2005 models had anti-skid technology and less than 12 percent had rear-view cameras, features found in almost all 2015 models, according to IHS data. In many cars, you couldn’t play an iPod through the stereo. The navigation system was usually stuck on the windscreen with a suction cup.


Welcome to the future, where you can even get navigation in your old 911.

2nd Gear: Technology Can Be A Threat, Too


Mark Fields clearly thinks that, while it's great people are trading in their cars like iPhones, it puts a huge amount of pressure on automakers to keep up with that change of pace. To do so, Ford has brought in outsiders to help with data and technology.

From Daniel Howes:

Fields' moves are implicit recognition that technologically driven change is bearing down on the global auto industry and its customers, and Ford does not intend to be left behind. The winners in the next round will be the automakers whose leaders can anticipate change wrought by disruptive technologies and can act quickly enough to gain early-mover advantage.

The tech and auto spaces are melding inexorably into one another — from product development and infotainment to customization and advanced powertrains. Profit margins, price/earnings ratios, share price and brand halos? Not so much.


No one is guaranteed success in this new world, least of all a Detroit automaker.

3rd Gear: Infiniti Has About One More Chance To Define Itself


Infiniti swaps identities at roughly the same intervals as Bjork, which works if you're a multi-media Icelandic art pop start but kind of sucks if you're a car company. Infiniti's latest American chief, Michael Bartsch, is out and Randy Parker, formerly of GM, is in. That's one boss roughly every three years on average since 2001.

From Automotive News:

In the recent interview, Ghosn showed less patience when asked about leadership at Infiniti worldwide.

"You change CEOs when things are not delivered," he said. "When you overpromise and underdeliver, you go. This is the rule in our industry."


Ghosn replaced de Nysschen with Roland Krueger, hired from BMW AG in September.

"I trust him," Ghosn said. "He is a man with a high level of integrity between what he promised and what he can deliver. I feel confident that under his leadership, Infiniti is going to limit its promise to what it can deliver."

Ghosn added: "We're patient. We have time. Infiniti is an opportunity for us. Ultimately what I want is to make Infiniti another engine of growth and an engine of profitability for Nissan."


Horses. Streams. Et cetera.

I'm sure the folks on the Nashville-to-Atlanta Delta regional flight are going to miss old Mikey.


4th Gear: Chinese Cars Are Failing In China


The Chinese are learning quickly what American automakers learned decades ago: You better be at the top of your game to compete with the foreigners. In this case, the Japanese, Koreans, Europeans, and especially the Americans are snapping up market share like a freaky octopus body slamming an unsuspecting crab.

This is the story of the Xiali, a mediocre but popular car that was the go-to brand for Chinese consumers until everyone else showed up with vastly superior rides.


The WSJ has a good take on the Xiali:

In January, Xiali’s parent warned it expects to report a loss of as much as 1.75 billion yuan, or $280 million, for 2014. That would mark its second consecutive annual loss. After three such years, its shares could be delisted.

The Xiali is losing customers such as Liu Jiaxiang, who says he grew tired of glitches ranging from broken door handles to faulty interior lamps over three years. “When it was passed by a big truck on the highways, I could feel it shaking,” said the 28-year-old engineer. Last year Mr. Liu bought a Peugeot 508.

Xiali’s maker, state-backed Tianjin FAW Xiali Automobile Co., will offer its first automatic transmission model this year as part of a planned comeback. “I’m confident that Xiali will survive,” said Zhang Zhigang, a spokesman for FAW Xiali. “When people are aware of the benefit of small cars, such as fuel efficiency, they will come back.”


First automatic transmission! It's like the car-of-many-colors.

5th Gear: The Unions Are Winning


Some industries are learning that the best way defense in terms of labor relations is a good offense. Wal-Mart is offering more money to employees, for instance, which is a smart move since you know most of them will do what the rest of us do and turn around and spend that money at Wal-Mart.

The big Pacific port shut down and U.S. refinery strikes show how confident labor unions are that they can get a bigger share of an expanding economy:


From Brent Snavely:

This year, UAW leaders and the management of automakers must figure out how to deal with the rising expectations of more than 140,000 autoworkers. They agreed to concessions in recent contracts but have watched auto companies book billions in annual profits as the industry recovers.

“What we are seeing is — with the recovery — people are seeking to regain some of what they have lost. And we are seeing that play out in the longshoreman dispute and the oil refinery strike,” said Harley Shaiken, a professor and labor economist at the University of California, Berkeley. “I think we will see more attempts by workers, where possible, to gain back some of what they gave in the midst of the economic crisis.”


It'll be fun to watch how this plays out.

Reverse: Senna Was Born Faster

Alain Prost, the four-time Formula One (F1) champ, is born on February 24, 1955, near Saint-Chamond, France. Prost's four championships in the mid-1980s and early 1990s were bested by only two other drivers: Germany's Michael Schumacher, who collected seven championships between 1994 and 2004, and Argentina's Juan Manuel Fangio, who won five championships between 1951 and 1957.



Neutral: How Long Will You Keep Your Car? Does it feel old already?

Photo Credit: AP/Getty Images

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