Howard wrote:This is a hard-hitting article outlining the challenges to the German car manufacturing industry and it touches on much of the discussion on this forum.
I think it has flaws, which isn't to say it isn't worthwhile, it would certainly act as a much more concise primer for those joining the thread...
What will happen to the premium car market? I’ve picked out one quote from the Spiegel article which I think is perceptive.
And there is much to suggest that BMW isn't planning to abandon its hesitant course any time soon, despite its planned introduction of new electric vehicle models. CEO Zipse isn't a fan of taking incalculable risks, neither with the production of electric vehicles nor when it comes to mobility and car-sharing services. BMW's core competency, he says, is "building the best cars in the world." That, he continues, "is the real challenge facing our industry."
A key question for me then is, (making a huge assumption) if our society doesn’t change dramatically over the next twenty years, what kind of car will a consumer who wants a premium brand be purchasing? And what kind of after-sales service will they require?
I’m completely biased. At the moment, I believe BMW do build the best kind of (sensible) premium cars in the world. They are a joy to drive on today’s congested roads. (Along with some other premium cars.) But will they be able to do this in twenty years time? The challenge for them and the other premium brands is to continue building cars which discerning buyers will pay for. To do this, they will have to harness BEV skills and IT capabilities which don’t exist today. Will they do this by linking with IT companies? Probably!
I think at that point we need to look away from the technology and look at the consumer. There will be a luxury car segment, it is the nature of people for a variety of reasons to want more than 'basic'. So at what point will the premium be added? Tiffany doesn't have to mine and smelt their own gold, and they don't seem to have difficulty making money selling stuff made with the same ingredients Ratner's used. So even if there were only one company on the planet making electric drivetrains there's no reason why BMW couldn't make a profit refining them and sticking a nice snug cabin on top.
The article is very caught up in the supplier/producer relationship and a quest for dominance. Maybe it comes down to a matter of specialisation, and how many specialisations your size permits you to adequately fund. Given the choice between being third best at everything, or ruling one thing and getting paid for it whilst letting others get on with what they do better which offers the longest average time to failure. The sun sets on all empires, every company we discuss will one day go to zero. The best chance of a longer life for some of the smaller beasts might not be to try and rule the jungle, but to make sure that they are taking a percentage whoever does rule the jungle. If you produce 2.5m cars are year is it really realistic to try and take on Waymo and APTIV at AD, whilst trying to out platform VW, and inject your lifestyle client in to consumers lives more effectively than Apple, Google and Amazon? I would suggest it isn't.
Khan wants to make sure people to use "Hey Mercedes" when they order a pizza on the go and not other companies' services.
...really made me cringe. Is this really the best use of Daimler's resources? It isn't even credible. I'm not sure how many pizzas you order from your car, but the reason why Amazon, Apple and Google have reach in this area is because they are ubiquitous. I'd put money on the fact that 90% of people reading this are within 10 feet, of a device equipped with google assistant, alexa or i-thingy, many will be reading this on one. Mercedes sell under 2.5m cars a year. They are not ubiquitous. A Mercedes driver's next car might be another Mercedes, but it might well not be. An Android users next phone will almost certainly be an Android, same with Apple. Massive, stable user bases who are entrenched enough to invest their lifestyle in to one infrastructure. My phone is made by Samsung. It has a dedicated Bixby button which they've done their very best to prevent people reassigning much to the annoyance of many. It only ever gets hit by accident while your picking up the phone. Mercedes are not going to succeed where Samsung have failed. This is pure hubris.