The changing automotive landscape

To spin a familiar saying: What is good for China is good for General Motors. In fact, this line was used by a recent LA Times article on the rapid growth of General Motors in China. Last year, General Motors posted an astonishing 29 per cent sales growth in China and sold more trucks in China than in the United States. In the United States, car sales grew an anemic six per cent.
General Motors is not alone in seeing strong overseas growth. Other North American and European car makers are moving quickly to have products ready for China’s growing numbers who can afford and want a new vehicle. This trend also points to something else, not really touched upon in the article, but one which will likely have a profound influence to service providers here.
Much of the overseas sales growth for vehicles is coming on the heels of changes happening in the North American vehicle market. While analysts are excited about recovering auto sales here and the adding of extra shifts in some Ontario and U.S. plants, the truth is sales of new vehicles will never again return to what they once were in the late 1990s. While this recession has certainly taken a toll, long-term trends suggest the downward pressure on household incomes and changing demographics will mean fewer new cars being sold in the coming years across Canada and the United States. The days of people owning three or more vehicles are gone.
One can look at this trend as something to embrace. Service providers will likely see many holding onto vehicles longer and greater investments made in ongoing vehicle maintenance. Smart, business-savvy shops should see steady, even improving profits, for a while. The downside is that cars, much like their owners, age; and with age, there comes a time when retirement looms on the horizon.
This is where things get interesting. When that vehicle owner decides to buy a new vehicle, that vehicle is going to be something radically different. I’m not speaking about the emerging all-electric vehicles. I’m looking at how complicated many of the vehicles coming off the line are and will be in the future, both in their mechanical and electronic systems. Many of these vehicles come with such complicated electronics, operating everything from the seat heaters to the onboard entertainment systems you need a Ph.D. in computer science to even turn the radio on.  It will only get more complicated in the future.
These electronics will be a challenge to the service industry. More will need to be spent on training and tools just to diagnose problems, let alone fix the vehicle. I recently saw one technician struggle for two hours trying to get codes for an electrical issue on a new vehicle, then struggle some more trying to fix the problem because of how complicated the vehicle’s design was. The complexity of vehicle design and electronics will also mean more fierce competition with dealer service operations who will sell aggressively on the notion that they are the only ones who have the tools and the knowledge to fix the vehicles. Welcome to a new year of challenges.