Ten Trends That Are Steering The Auto Industry's Future

#BMW, #Ford

200. That's the number of new and updated cars that are scheduled to debut over the next twenty-four months. You don't really want to read about every reskin or 5-hp bump, so we've filtered that list down to the twenty-five cars you most need to know about. Much of our information is hard fact, while some of it is educated guesswork or pure conjecture. We have included a "speculation meter" for each car to indicate what's what. Here, then, is the scoop on the cars you will be hearing a lot about over the next two years.

This is the fourth of four articles that appear in our June 2012 print issue. On Monday, we told you what to expect from American automakers and Tuesday we told you what to expect from their Asian counterparts. Here, European bureau chief Georg Kacher identifies the forces driving what we drive.

1. Car design's programmatic cul-de-sac

If possible, please turn around.

Bruno Sacco for Mercedes-Benz, Walter de'Silva for Alfa Romeo, Claus Luthe for BMW -- those were the days. In 2012, it is very difficult to compile a list of brands that offer compelling design across the entire model range. Aston Martin, Kia, and Land Rover do better than most, but the big names slip up at an alarming rate. Why? Primarily because eye-catching ornamental and decorative elements have taken priority over style and proportion. Common stylistic incongruities include garish LED fireworks; a glut of gaudy, in-your-face grille treatments; cutlines seemingly created under the influence; and a messy mix of chrome, all-black accents, and matte paint. Since every brand religiously enforces its own style compendium, the end result is more often than not a generic body shape casually dressed up with a dozen brand-defining must-haves. Even yesterday's greats have lost the plot: BMW has embarked on an unpredictable, hit-or-miss course; Audi has chosen a strangely static, one-look-fits-all, cookie-cutter approach for its sedan and crossover lineups; and Mercedes swapped graceful timelessness for flamboyant superficiality. Back on track are Cadillac and Volvo. Volkswagen is all about straight-edged, functional, and nice-to-touch design. GM has finally managed to fuse style and design, but Ford keeps devaluing its classy exteriors with flashy, pachinko-style cockpits.

2. Size doesn't matter

How the premium brands plan to conquer the mass market.

Prestige is more important than ever, but thinking big is no longer a key to success. Quite the contrary. For example, Mercedes-Benz will stuff S-class ingredients into smaller new models such as the 2013 A-class, the 2014 four-door CLC coupe and its frivolous wagon sidekick, and the 2015 CLC compact crossover. Audi is about to put the finishing touches on the A3 sedan (see facing page), and BMW is developing a taboo-breaking, front-wheel-drive platform that will yield the 1-series GT, touring, and commuter minicar for Europe. The big challenge for all three carmakers is to make sure that the more affordable fresh metal earns enough cash to fund technology for the more profitable but increasingly complex upmarket brand-shapers.

3. The empire no longer strikes back

The Japanese car industry needs a fundamental rethink.

Although the Fukushima tragedy hit Japanese automakers hard, mother nature's ire has little to do with their decline. Among the true culprits are a saturated home market that refuses to grow, wafer-thin profit margins in North America, a lack of investment in China before the boom began, and no firm foothold in prospering South America. As a result, all makes except Toyota, Nissan, and Honda are strapped for cash and hunting for international alliances. Subaru is on a drip-feed from parent company Fuji Heavy Industries, Mitsubishi would have disappeared long ago without the support of the bank of the same name, Suzuki's hasty alliance with VW has led the brand nowhere (except to court), and Mazda is without a partner in an increasingly competitive environment after its divorce from Ford. Where do the big three -- Toyota, Nissan, and Honda -- stand? Toyota piled up enough reserves in better years, Nissan went to bed with Renault, and Honda is cultivating its crumbling underdog image. But even the market leaders are guilty of building anonymous cars let down by boring design, ho-hum interiors, and indifferent dynamics. What Japan needs are new star cars like the Toyota Prius, Nissan GT-R, Mazda Miata, and Mitsubishi Lancer Evo -- as well as one or two generations of really desirable volume models.

4. Going from strength to strength

How Hyundai and Kia intend to shake up the middle ground.

Last year was a rebound season even for former ailing giants like General Motors, but the Koreans made monumental gains by securing solid double-digit growth rates in just about all the major markets, including Western Europe, which is particularly tough to conquer. As a result, Hyundai and Kia climbed to the number-five spot on the list of the world's largest car manufacturers. At the same time, profits reached record heights -- Hyundai alone earned well over $7 billion. After selling 6.6 million vehicles in 2011, the Koreans intend to pass the 7.0-million-unit barrier this year. While most rivals sit on two, three, or even more mothballed plants, the Koreans cite capacity constraints as their main growth inhibitor. After having previously established links to Mazda and Mitsubishi, the dynamic duo is now a self-sufficient enterprise that runs its own steel works, banks, battery production, and alternative-energy providers. Design, engineering, and quality get better with every model change. The only area that still needs improving is vehicle dynamics. Inspired by Mini, Kia is contemplating turning the next-generation Soul into a family of lifestyle-oriented runabouts while Hyundai prepares to take on Lexus with a full range of luxury cars.

5. The urge to merge

The cooperation carousel is gaining momentum once again.

Straightforward mergers like the Fiat/Chrysler deal are the exception to the rule. In nine out of ten cases, the link automakers seek is a project-related cooperation. While Daimler and Renault exchanged shares to cement their partnership, GM bought a seven percent stake in PSA (Peugeot-Citroen) to help its new French ally fund the first joint ventures. Trouble is, although synergy helps to cut costs, it doesn't create higher combined sales volumes. And when both firms share the same strengths and weaknesses, the trip from the altar to the divorce court may be shorter than anticipated. That's why the GM/PSA link makes less sense than the BMW/PSA engine program or the proposed alliance between Fiat/Chrysler and a top-secret Asian nameplate (did someone say Mazda?). The premium brands in particular are always eager to connect with a make that promises high volume and attractive economies of scale. Audi is taking full advantage of the mildly tweaked low-cost components provided by parent-company VW. Mercedes is about to start using small engines supplied by Renault. In return, Mercedes will let Infiniti use its B-class matrix. Further out, Mercedes, Renault, and Nissan plan to pool their small-car architectures and increase aggregate output to 1.5 million units a year. BMW is building engines with PSA, has agreed to swap diesel know-how for hybrid technology with Toyota, and is talking to GM about joint fuel-cell and range-extender activities.

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Eitan Rosenberg
Great thorough, encompassing current analysis of the auto industry. I would have added a further elaboration regarding weight reduction technologies (materials, processes, costs etc..). by the way, I find chapter 9 (alternative propulsion systems) the most interesting and intriguing issue of all list. I think nobody in the industry can really predict what will be the prevailing technologies in the near decade, hence the 15 question marks.. one thing for sure, it's not easy as Betamax vs. VHS . it reminds me, however, the early 1990s audio war between the Digital Compact Cassette (Philips) and the MiniDisc (Sony). the end is well known - both sides had immense success in the war..
Harley Livingston
these cars nowdays are OVERENGINEERED
Thank you Georg, this is an excellent article. Very informative. Regards

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