Welcome to the Daily 5 report for Tuesday, Aug. 19.
You can't question the importance of surveys to get a handle on the mood of the auto industry. It impacts investment, future product planning and the emotional direction of leadership. That's why we launched our inaugural Auto Industry Confidence Index this week.
Today's installment focuses on the confidence of executives at the automakers and it yielded a pretty compelling narrative.
As Larry P. Vellequette reports, automaker respondents were asked what would improve their current confidence in the auto industry. Several simply asked for a stable environment in which to work.
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"Certainty," one respondent wrote. "Tell me what the long-term policy is and I can adjust, but don't change policies every week or every month, or even every four years."
Another automaker respondent answered with "known government policy and regulations," while a third had a specific request: "Someone in the government that actually understands the automobile business and wants to enact policies that actually help OEMs have a chance to recover some of their sunk costs."
Longtime auto analyst Jeff Schuster said respondents' trepidation about the future is understandable, given the landscape they're navigating, Vellequette wrote.
"There is so much volatility, and has been for quite some time. But now you keep replacing the variables, so that you have a pattern of chaos in the industry," Schuster told Vellequette. "The current environment isn't bad, but there's a certain amount of headwinds out there and risk associated with the direction of the industry right now."
Nowhere is the need for consistent policy more salient than in product planning. As seen in our annual Future Product Pipeline report — today we're focusing on the Kia brand — planning cycles go out at least three years.
It seemed easy in 2021 for this industry to bet the ranch on electric vehicles. Policymakers incentivized EVs to where almost every automaker dramatically ramped up their EV plans.
The 2024 U.S. election changed all that. Now the industry is pivoting back to focus more on traditional internal combustion engines — yet still hedging on a more modest future for EV adoption.
As our index shows, this inconsistency does not breed a healthy or stable future for the industry.
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— Philip Nussel, online editor
