Automotive News turns 90 this month.
Nine decades and, to the best knowledge of anyone old enough to remember, we have never done what you see printed in this issue and what you'll see in the five installments of "Industry on Trial" that follow.
In a nutshell, we have devoted enormous time and resources and turned the mirror on the industry -- questioning whether the entire structure, the bones of the business, needs a rethink.
We have explored the thesis that the industry burns too much capital, wastes too much effort and is beautifully inefficient at what it professes to do so well.
We decided to challenge the notion that this is a healthy industry -- that in the sixth year of recovery from the Great Recession, it is sustainable as structured.
This spring, in his PowerPoint manifesto, "Confessions of a Capital Junkie," Fiat Chrysler Automobiles CEO Sergio Marchionne challenged analysts and the industry to ponder those questions.
Some high-ranking executives within the industry whispered that Marchionne was desperate.
But no one appeared to put his thesis to the test. So we did.
Starting with this issue and continuing with the next five, we reveal the findings from our deep-dive exploration into the viability of this capital-crazy world.
Virtually every editor and reporter in the Automotive News world had a hand in the process.
The results from dozens of on-the-record and off-the-record conversations are fascinating.
Our findings will appear in the print and online pages of Automotive News.
And, in a first-time effort, we also have the view of six industry experts filmed over 90 minutes in our Detroit TV studios. That video begins running today, Aug. 3, online.
In essence, that conversation resulted in broad agreement that:
- The industry burns through too much capital, destroying value.
- The valuations of automotive giants are "pitiful" compared with other industries.
- At least half of product engineering is needlessly duplicative because it involves components car buyers can't distinguish.
- The industry is headed toward an inflection point; new non-auto giants with high valuations are poised to become auto industry players.
- There must be more standardization -- from EV plugs to safety regulations -- between Europe and the U.S.
- It's an irrational industry. For example, there is general agreement among all six participants on our panel that consolidation is needed now but much cynicism about whether it will happen.
- No merger can work without a strong leader, or, in the words of former GM executive Bob Lutz: "a boss ... not overly compassionate."
Maybe our findings were best summed up by Aston Martin CEO Andy Palmer, a man at the center of the most successful alliance to date while a top executive at Nissan-Renault.
"The rational time to be looking at consolidation is probably on the up cycle when the company has got money," Palmer told us in the videotaped roundtable, "but we're an irrational industry."