Tuesday, 25 july 2017 | Redacción CEU
José Manuel Garaña: <I am sure that in the next ten years we will live a third revolution that will change the sector's profile 180 degrees>
Today, the Professor of Business Management and Administration at the San Pablo CEU University and Director of the Master in Automotive Business Management of the Institute for Advanced Management, José Manuel Garaña, answers our questions about the automotive world. Among his extensive curriculum, we found that he was the Marketing Director at Subaru Spain and the Communication Director at Chrysler-Jeep Iberia. He has in-depth knowledge about the motor business and many years of experience. We talked with him to take a look at the present and to forecast how the future of the automotive industry is presented.
The automotive industry represents 10% of the gross domestic product and 19% of the export activity of our country. In the year 2016, Spain was the eighth world automobile manufacturer with almost three million vehicles manufactured, consolidating itself as an international reference of the sector. Certainly, together with the tourism and agri-food sector, the automotive sector is key in the Spanish economic and industrial activity. The purchase of cars will keep rising considering that the estimated figures for this year are almost 1,200,000 units with a growth above 5%. In short, the sector is in full splendor with a future projection more than favorable and with an extraordinary health that, in the short and medium term, it makes the whole sector –manufacturers, distributors and dealers– appears really optimistic.
The Spanish buyer has many "common" features with the rest of European buyers in their growing interest in vehicle safety, technological advances or the new forms of combustion that are being introduced –hybrids, electrical, plug-in–. But, they present significant peculiarities. There is still a predominance of diesel engines. The consumption of vehicles, the proximity of authorized dealers, the seminal importance of the after-sales services and, above all, the concept of relationship with their lifelong brand, influence in the decision to buy. For the Spanish buyer, the feeling of "possession" of a vehicle remains important. In fact, after housing, it is still the most important purchase in the family and personal environment of the individual. Likewise, the concept of price or savings still "weighs more" over the concern for the environment, although there is a visible and generational change in the new younger buyers that are being incorporated.
Undoubtedly. Technology is an essential element for the car buyer and, especially, like I mentioned earlier among the new generation of buyers between 25 and 35 years who are entering into the market. They are accustomed in their daily life to manage through digital information systems where everything is at your fingertips –mobile phones, tablets, laptops, ...–. They use TV platforms like Netflix, HBO or the Internet of Things (IoT). Not only they know how to use it and see it as absolutely essential, they no longer contemplate another way of managing their time and their demand for leisure and life in general. The automotive sector is increasingly taking this into account and its drift towards it is unstoppable. I am sure that in the next ten years we will live a third revolution that will change the sector's profile180 degrees.
Not just diesel, also pure gasoline engines. I am going to give two very significant data. Two weeks ago, VOLVO officially announced that, from the year 2019, it will no longer manufacture any other model that is not hybrid or electric. It will no longer manufacture more traditional combustion models. And the most significant data, occurred a few days ago. Paris will not let its gasoline or diesel vehicles circulate throughout its city or its provincial area in 2049. The consumption in cities and the use of vehicles in metropolis are an increasingly studied social and political issue and its rational use as mobility element, not as property, is unstoppable. Indeed, I reiterate, we have a totally different perspective of the automobile coming ahead.
The truth is that the most controversial cases had a great momentary impact, but very temporary by the rapid response of the brand involved. Answering very sincerely, at this point, practically it has no effect. The homologated reviews are being fulfilled and there are no cases in court, nor there has been any subsequent social alarm. Diesel consumption remains stable and, although now the consumer asks much more and is much more concerned about the details of the purchase, is not particularly worried or uneasy.
Definitely yes, but also definitely in a gradual way. That is, no one knows with precision what "imbalance" will occur, but I might dare to say that it will be more in the medium term, than long. If I force myself to set a date, I would say that it will be in the next generation of buyers –in fifteen or twenty years–. In the big capitals, it will be another chapter. There, I could indicate that in five or ten years the access to cities of non-electric vehicles will be increasingly restricted.
The electric car still has two big unknowns. On one hand, the autonomy of the batteries and, on the other, the network of recharging points. They are aspects that still cause the buyer to look with certain reservations the purchase of the electric car, if it refers to traveling between destinations. To the latter, it is added that all after-sales services will change because new components, parts, power transmission systems or electronics will entry. Brands garages should be very prepared.
Right now, there is already a first advance fully implemented that is the system of parking assistance that many brands offer and where the vehicle literally parks by itself. The next step, that the vehicle would circulate absolutely on its own, has a slightly more uncertain route. Yesterday, walking with my nine-year-old son, I told him that he would see it. I am sure, but it will be necessary to travel a very thoughtful way so that the safety of the occupant, the other drivers and the rest of pedestrians are absolutely safe. But, again yes, I think it will certainly come.
More than an ethic, the cars, like refrigerators, irons, mobiles, televisions, will be connected by the Internet of Things (IoT). There will be no ethics as such, because they are machines, but a system of connectivity and artificial intelligence as powerful as protocols, safety and performance standards will be fully regulated.
The car will be an extension of people's daily activity. I will have the same connectivity, the same entertainment, the prominence of new energies and new ways of understanding the possession of things. It will be a "utility" rather than a possession. The car must adapt to the society demand and not vice versa. An exciting journey awaits us.