TRAVERSE CITY, Mich. — In his hospitality suite overlooking the manicured Michigan bayside resort where hundreds of auto industry thought leaders gather each year to consider the future, consultant Dietmar Ostermann is reassuringly upbeat.
"U.S. GDP has been growing at between two and three per cent," said Ostermann, U.S. automotive advisory leader for PwC. "That's fantastic. As long as the economy is that strong, I just don't see a million more units of vehicle sales dropping out of the picture. People are spending money. We're in good shape."
But his views are not the majority sentiment this summer. In fact, the industry is showing signs of stress cracks and fatigue — not outright crisis, but at least moments of self-doubt after a decade of bullishness.
"The risk to auto sales globally is rising," said Jeff Schuster, president of global forecasting at LMC Automotive. Schuster's forecast for an industry audience last week at the Center for Automotive Research's annual Management Briefing Seminars: Key regions of the world are hitting headwinds at the same time, which means that the global auto market looks dicey for the next seven years. And, he said, that will mean more pressure on industry executives to find profits in other corners of the business.
While Ostermann believes U.S. economic vitality will overcome the market worries now darkening corporate boardrooms, production planning offices and dealer showrooms, many others are identifying concerns.
Among the worries expressed here last week:
- Weakening American new-vehicle sales are causing automakers and suppliers to throttle back factory lines and lay off workers.
- Washington's use of punitive tariffs against China and other countries is raising the industry's blood pressure. The activity is not only inflating prices for critical items such as imported steel, it is unsettling some supply chains, sending purchasing managers looking for price cuts, causing manufacturers to ponder new sourcing solutions and turning up the heat on parts makers to find new ways to cut costs.
- Some in the auto business are expressing concerns that the industry's new obsessions — creating electrified and self-driving vehicles, including robotaxis — are proving more difficult and expensive than imagined.
"The whole industry is rethinking their strategies and what they want to do with this," said Farid Khairallah, ZF Friedrichshafen's portfolio director for safety domain control units, speaking of "the road to autonomy."