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Detroit Auto Show Stars Fund Future Promised at CES
For many of us that keep tabs on the automotive industry for a living, the first 2 weeks of January are among the most grueling of the year. The North American International Auto Show in Detroit has kicked off the year for several decades. And in the past 10 years, International CES in Las Vegas has become an increasingly important addition to our schedule as the two events run back to back. The announcements at 2018’s shows illustrated some of the crucial interconnections between the growth of technology and the transportation business.
For automakers, CES has largely been a place where they talk about future technologies and try to shift the media’s perception of them from being old-fashioned metal benders to forward-thinking visionaries. They rarely show actual new products, instead focusing on automated and connected concept vehicles. The Detroit show, like most other auto shows, targets consumers that are buying vehicles in the coming year.
For an industry that is facing the biggest transformation in more than 100 years, this is a crucial time. While many recent auto shows have highlighted new plug-in and hybrid vehicles, there were almost none in Detroit this year. Instead, the biggest announcements came from the Detroit-area manufacturers, and they were all pickup trucks—mostly full-size. Fiat Chrysler unveiled the redesigned 2019 Ram 1500. Chevrolet brought out a new from the ground up Silverado, and Ford launched a diesel version of the F-150 and a midsize Ranger pickup.
Profit in Pickups
Pickups are a segment that is likely to be among the last to gain highly automated driving capabilities, as discussed in Navigant Research’s Market Data: Automated Driving Vehicles forecast and its Leaderboard reports. However, those automation technologies were a major topic of conversation in Las Vegas, particularly in the context of whether manufacturers will build new business models around these costly, complicated, support-intensive vehicles.
That’s why pickups are so important to Detroit. They are the profit engines that keep this industry humming along while indirectly funding R&D efforts that will create the next big things. Part of why Ford is bringing the Ranger back to North America is that the average selling price of an F-150 is now more than $58,000. Pickups and large SUVs generate far more profit per vehicle than any small car and they sell in far larger volumes than any other segment in the American market. Ford is projected to make a full-year 2017 profit of more than $9 billion, largely thanks to sales of nearly 900,000 F-series trucks. Even the third place Fiat Chrysler sold more than 500,000 Ram pickups in 2017.
All three manufacturers are adopting fuel efficiency technologies such as 48 V mild-hybrids, dynamic cylinder deactivation, diesel and active aerodynamics in order to meet fuel economy requirements, as discussed in Navigant Research’s Automotive Fuel Efficiency Strategies report. However, until they all figure out how to make sustainable profits in the new age of mobility, we can rest assured that they will continue pressing ahead with enhancing the customer appeal of these trucks in order to keep the cash flowing to develop the promises made at CES.