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The Entrant’s Guide to The Automobile Industry

Like a siren, it calls.

The Auto Industry is significant. With gross revenues of over $2 trillion, production of over 66 million vehicles and growing[1] it seems to be a big, juicy target. It employs 9 million people directly and 50 million indirectly and politically it must rank among the top three industries worthy of government subsidy (or interference). Indeed, in many countries–the US included–government interference makes it practically impossible for a producer to go out of business, no matter how poorly it’s managed or how untenable the market conditions.

But this might be the tell-tale sign that danger lurks. Theory suggests that incumbents going out of business is an essential indicator of industry health. Without their exit, entrants are never allowed to bring disruptive ideas to bear and innovation simply stops. Is this interference with mortality the only indication of entrant obstacles? Are things about to change? Is there pressure for innovation? Can we spot other indications of a crisis in this industry?

Taking the US as a proxy, here is a graph of the number of new car firm entries (and exits):

Screen Shot 2015-02-23 at 6.58.54 AM

The total number of firms[2] that entered the US market is 1,556. The blue line graph shows the entries and the orange line shows the exits. This sounds impressive, but note that the year when the peak of entries took place was 1914, exactly 100 years ago.

Notes:
  1. The industry continues to grow, registering a 30 percent increase over the past decade, mainly due to Asia and China in particular []
  2. counted as brands []

Asymcar 21: Where we’re going, we don’t need roads

Gartner asserts that “connected cars or smart cars are poised to play a pivotal role in the Internet of Things (IoT)”. We say “Hah!”

Also,

  • Who levies automotive platform taxes?
  • What in the world could “over serving” transportation mean?
  • Using the Automatic app in a Porsche.
  • BMW’s  “sounding the alarm” over tech companies efforts to collect auto data.
  • China’s car industry and other unimportant details relative to declining interest in driving among young people.

via Asymcar 21: Where we’re going, we don’t need roads | Asymcar.

Asymcar 20: Iconic Design

I recall details of a recent Tesla Model S test drive while evaluating their innovation on jobs to be done, form factor, design, production methods and their business model.

(Also, other goings on with Uber, BMW and Porsche).

via Asymcar | Learn about the future of the automobile.

Asymcar 19: About that Ferrari SUV…

What motivates a company to destroy its brand?

We start with Mini’s plans to sell 100,000 cars in the States by 2020, nearly double today’s pace and remember how Cadillac destroyed their brand and how Mercedes, Porsche, Ferrari et. al. can’t wait to do the same.

Also, might retail power in the form of strong dealer regulation limit brand’s ability to improve or address customer experiences? What motivated Warren Buffet to enter the American car dealer business? (With a long aside on what Buffett investment logic is all about and why it’s not contradictory to a growth investor).

 

via Asymcar 19: About that Ferrari SUV… | Asymcar.

Asymcar 18: Cars of the People

Why did the Tata Nano fail? What is the future of low end disruption in the auto industry?

What does sharing mean for cars? What are the jobs that spaces in cars are hired for that their makers don’t understand?

Is Elon Musk an Industrialist?

via Asymcar 18: Cars of the People | Asymcar.

Asymcar 17: 27 Quadrillion BTUs

Part I is a review of the “automotive stack” and note how there is no singular event that seems to affect disruptive change. From changing jobs to be done, modular design and manufacturing processes, powertrain evolution, urbanization, environmental interests, regulation and taxation.

Part II is a review of a framework of analysis based on sources and uses of energy.  Inputs, efficiency/losses, network effects and inertia, what can change and what can’t change.

For a shot of theory, Horace reflects on the dichotomy of efficiency vs. efficacy when it comes to predicting change in the sector.

via Asymcar 17: 27 Quadrillion BTUs | Asymcar.

Asymcar 15: Sunray Sedan

Sun-Car

Matt Grantham joins us to discuss electric vehicles, renewable energy, smarter software, solar opportunities and economics. Matt introduces us to Solar X, the solar car challenge. He reflects on these emerging technologies in light of Australia’s nearly extinct auto manufacturing sector.

We explore the concept of a car as the home power source and consider possible EV disruption of traditional power generation and distribution concerns. The potential business models arising from these emerging technologies makes us pause in light of solar firm’s stock performance.

via Asymcar 15: Sunray Sedan | Asymcar.

Asymcar 14: Grand Prix. An interview with Ossi Oikarinen

Ferrari in Montreal

An interview with Ossi Oikarinen, Technical Director at Team Rosberg, a 30-year veteran of motorsport, Formula One TV presenter and deep insider.

We cover Grand Prix racing and DTM touring cars from the point of view of business models, jobs to be done and technical innovations. We touch on many other fine points.

This is a good one.

via Asymcar 14: Grand Prix. An interview with Ossi Oikarinen | Asymcar.

Asymcar 13: Pilgrimages and Fundamental Evil

IMG_8829

On continental trips, diesel engines and autobahn speeds, pilgrimages to Porsche and BMW’s brand meccas.

How to understand the world through toy cars, from Matchbox to Hot Wheels, Siku, Majorette to Tomica.

On the business of car distribution, “channel stuffing” and the origins of state franchise regulation.

Reflections on Apple’s routing around now-defunct computer retail channels via its highly successful stores.

via Asymcar 13: Pilgrimages and Fundamental Evil | Asymcar.

Asymcar 12: Cycle Times

We discuss the zeitgeist of automotive decline.

We marvel – again – at the industry’s glacial pace of change and contrast the auto industry’s tiny volumes to smartphones and personal computers.

via Asymcar 12: Cycle Times | Asymcar.