Featured Center for Automotive Research report on product mix

Source: http://www.cargroup.org/wp-content/uploads/2018/02/The-Great-Divide-What-Consumers-Are-Buying-vs-The-Investments-Automake....pdf

The U.S. automotive industry is in a critical period. U.S. light vehicle sales are plateauing at a high level that includes a rich mix of pickup trucks, SUVs, and CUVs. Sales of these high-priced and high-margin vehicles are producing record profits that companies are pouring into new products, processes, and technologies. Some technological developments—including automated driver assist systems (ADAS); connected and automated vehicle technologies (CAV); and advanced powertrains—have the potential to transform not only the vehicle but also the entire automobile industry. Alone or in combination, these technologies can enable new mobility paradigms and business and revenue models that could dramatically alter the way consumers purchase transportation and interact with vehicles.

Even while the industry is making substantial bets on the future of automotive technology and the automotive business more broadly, companies must continue to develop and sell vehicles to make a profit in today’s market. The mixed fleet—personal ownership and shared mobility—will likely persist for decades. Developing and manufacturing a light vehicle is a costly endeavor with uncertain paybacks. Automakers must justify their platform and powertrain business cases over a multi-year time horizon to meet internal rate of return (IRR) hurdle rates or the targeted level of return on invested capital (ROIC). Capital and human resources are typically constrained, and current technology trends have tightened the constraints even further. The United States’ technological leadership is at stake.

Most automakers and suppliers agree that the “three revolutions” of automated, shared, and electric vehicles will be transformative (Sperling, 2018). However, it may take decades for this idealized future to take hold, and even then, automated, connected, electric, and shared vehicles (ACES) will not make sense in every region of the country or every climate. This briefing addresses the challenges automakers and suppliers face, the tension between consumer demand and regulatory mandates on electrified powertrains, the impact of CAVs on personal vehicle ownership and mobility, and the implications for the nation’s engineering and technological leadership in the world. ​

Bob Wilson