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Dealers Watch Detroit for Industry News and New Launches

2019 was the last year the global automotive industry’s leadership had to brave Detroit’s January weather to participate in the North American International Auto Show (NAIAS) and the Automotive News World Congress. The events move to June in 2020, but left their final midwinter imprint with a variety of news and announcements of interest to dealers:

Ford & VW Join Forces

The biggest high-level industry news out of the two weeks in Detroit was the announcement of a partnership between Ford and Volkswagen to collaborate on commercial vans and midsize pickups, with potential future joint development of next-generation autonomous and electric vehicles. The alliance, which does not involve any exchange of ownership equity, aims to deliver medium pickup trucks manufactured by Ford on the Ranger platform in the European, African and South American markets beginning in 2022; followed by European-market commercial vans in 2023. Ford plans to manufacture commercial vans for this market, while Volkswagen will focus on passenger vans. The companies also say they are “open to considering additional vehicle programs in the future.”

While the implications for North American dealers may be few and far between in the short term, the partnership does have long-term implications both for the overall sustainability of both automakers as well as potential for future new product development that would result in new vehicles on showroom floors.

Midsize Market Moves

The hot midsize SUV market, which has been a key profit center for automakers and dealers, got even more competitive at NAIAS.

Ford announced the new 2020 Ford Explorer, with the biggest news being its move from a FWD platform shared with the Taurus to a RWD platform it shares with the new Lincoln Aviator. Even 4WD variants – which Ford expects to make up roughly 70 percent of its sales – will default to RWD. The new Explorer is also the first to feature a 10-speed automatic transmission that Ford jointly developed with General Motors.

Kia unveiled the 2020 Telluride, which the company calls its “flagship SUV.” Kia’s leadership say it is aimed at the Ford Explorer, Toyota Highlander and Honda Pilot market and predicts it will join other new and relaunched vehicles to increase the company’s U.S. sales figures up above 600,000 in 2019 compared to two flat years just under 590,000.

Coming Soon to Showrooms

Other important vehicle launches at NAIAS with competitive implications for dealers included:

2019 Ram HD: At the same show where the 2018 Ram won the North American Truck of the Year award, FCA unveiled the newest version of its heavy-duty variant.

Cadillac XT6: The Escalade’s newest “little brother” shares a platform with the GMC Acadia, Buick Traverse and Chevrolet Enclave.

2020 Volkswagen Passat: VW hasn’t given up on sedans and has updated the Passat for consumers who haven’t either.

2020 Toyota Supra: After almost two decades, Toyota is bringing the beloved enthusiast sports car back to North America in a low-volume production model it hopes can be a “halo” car to get traffic into its showrooms.

NADA Watches Affordability

While new products are great for dealers to have, customers still have to be able to afford them. At the Automotive News World Congress, National Auto Dealers Association (NADA) CEO Peter Welch said affordability is "probably the biggest thing” he is concerned about for the auto industry. He told Automotive News, “People buying $55,000 pickup trucks with $1,000-a-month payments — I’ve never seen it. A lot of people don’t think that’s sustainable.” However, said Welch, NADA’s forecasters don’t necessarily think the good times are over just yet. "I don't know why we can't have a few more good years on a plateau," he told the World Congress attendees. "I'll take a plateau between 16.5 million and 17 million for as long as we can get them."

Toyota Bets on Truck Growth

Toyota Motor North America CEO Jim Lentz told Automotive News that while Toyota expects its light-vehicle share to slip in the U.S. in 2019, the company projects strong Tacoma and Tundra truck sales to more than make up for decreased car sales and result in an increased overall market share. This would be a continuation of existing trends, as Toyota’s car sales fell 12 percent in 2018 while light-truck sales increased 8 percent.

Toyota is investing to increase truck production in Mexico and the U.S. to meet demand, said Lentz, adding "If I could build more Tundras today, I could sell them.”

 

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