Notes From the Detroit Auto Show: Connectivity is King

1/17/12Follow @XconomyDET

Though the North American International Auto Show just opened to the public Saturday, I was able to preview it last week with other reporters from around the world. Unlike the past few years, which were dominated by austerity and green tech, the feeling I got this year is that the car companies are seeking to reignite our love affair with automobiles through sleek designs and endless connectivity features. Essentially, they want to make it fun to drive again.

According to research data from Polk, the average age of U.S. vehicles is a record 10.8 years, which means there’s huge pent-up demand. But in this shaky economy, consumers still expect their cars to justify their price tags by saving them money at the gas pumps; playing the songs off their iPods; and telling them when they’re about to back into a shopping cart, which is forcing auto manufacturers to become ever more innovative and cost-conscious. At the same time, manufacturers are feverishly trying to improve efficiency through advances in engine and materials technology in order to comply with the looming 2025 emissions-standard deadline. So what are automakers doing to capture the hearts of consumers?

As hybrid cars whizzed almost soundlessly around the adjacent test track in the basement of the Cobo Center, the Wall Street Journal hosted a panel discussion last week about the future of the business as it pertains to the environment, urbanization, and mobility.

The challenge that exists, agreed speakers Jim Farley, Ford’s group vice-president of global marketing, sales, and service, and Tom Bologna, BMW’s vice-president of engineering, is to get consumers to like and pay for the features that will be necessary to meet tough government standards.

“To get people to accept new technology, you need to give them a heads up so they can absorb it,” Bologna said. “People don’t like surprises.”

Bologna was discussing BMW’s Start Stop engine technology, which has been used very successfully in Europe among drivers with manual transmissions. BMW is bracing for push-back from American consumers who mostly have automatic transmissions, some of whom report the experience of Start Stop engines as “disconcerting.” (After all, BMW’s consumers are buying “the ultimate driving machine,” not the most fuel efficient.)

“The challenge is preserving our core DNA while adding efficiency,” Bologna said.

Farley said Ford’s strategy in introducing new technology includes emphasizing second and third delivery of the vehicle, where dealerships will hold special introductory classes or even conduct product-demonstration sessions in a customer’s driveway. He also noted the importance of customers educating one another through social media and other forums.

Ah, yes … social media. It’s expected that today’s 10-year-olds will demand seamless connectivity between their computers and their cars by the time they’re old enough to purchase an automobile, and vehicle manufacturers are preparing for that reality.

Farley said Ford is learning about the concept of social graphs by observing Facebook’s business model in action. Through consumer response to its SYNC system, Farley said, Ford has learned that the next iteration must involve better app deployment, and, eventually, social media.

“There are patterns of our life in the digital world that cars don’t yet know,” Farley says. “Generationally and occupationally, people want that connectivity. They want to know where their friends go and how to get there. We’re exploring how to take advantage of that.”

Farley hinted that Ford will partner with Facebook in the future, and pointed to the Evos, a concept car unveiled last year that would be able to access a driver’s personal cloud of data, as a blueprint for future models.

For its part, BMW has established i Ventures, a $100 million New York-based entity seeking to expand mobility services by making Series A investments in early- and mid-stage tech startups. BMW is also arguably at the global forefront of technology specifically for urban markets with its Alpha City car-sharing program, as well as a European “park in my driveway” plan, where people can use smart phones to search for rentable parking spaces in some of Europe’s most congested cities.

Bologna said it’s been a pleasant surprise to see those offering the parking spaces look at the program not only as a money-making opportunity, but also a civic duty. BMW is currently looking at expanding the program to the United States.

General Motors is meanwhile implementing lessons it learned from the OnStar system—consumers prefer technology that is intuitive, for example—into its new infotainment platforms, according to Alan Taub, vice-president of global research and development.

“The goal is, how do we seamlessly connect third-party devices and use them intuitively and safely?” Taub said in a phone interview. He was on a break at the Consumer Electronics Show (CES) in Las Vegas, where the company had just unveiled the new Cadillac CUE, a Linux-based infortainment system. (CUE stands for Cadillac User Experience.) “Or, even better, how can a connected vehicle enhance safety?”

Taub says that automobile companies have spent the past 20 to 30 years learning how to protect passengers from crashes, and now they’re entering an era of preventing the crash in the first place. Some GM cars are already equipped with adaptive cruise control, in which a vehicle will automatically adjust its speed according to the vehicle in front of it, but Taub explained that vehicle technology is advancing so rapidly that we’re not far from the days when cars will be able to communicate with one another on the road to prevent crashes.

“Vehicle to vehicle [technology] must be a cooperative event with other [automakers], and you’ll see that start to roll out mid-decade,” he said. “When I have vehicles capable of not crashing, that’s the beginning of an era where vehicles can drive themselves. The technology for that will also start converging by mid-decade.”

The bottom line, Taub said, is that GM, like most other car companies, is in the midst of reinventing almost every part of the vehicle, with the goal being fully electric, small, light-weight, connected cars that are able to negotiate the “mega cities” of the future.

“That reinvention requires technology and innovation,” Taub said. “We’re getting some of our best ideas from suppliers and non-conventional players, which is one reason we’re at CES. We need to make sure we make vehicles that are sustainable, as well as retain the love affair people have with personal mobility.”

Judging by the vehicles showcased at this year’s auto show, the industry is well on its way.

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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