By Jeff Sanford
Toronto, Ontario — May 5, 2016 — This week we look into Canada’s cheapest car, big numbers for auto dealers and what Warren Buffett and Bill Gates think about the coming era of autonomous vehicles.
– A recent report in the Globe and Mail takes a look at Canada’s cheapest car, the Nissan Micra, which sells for just $9,988 before tax. There are reasons the sticker price is that low: the windows are rolled up by hand and each door is locked individually with a key. But as the Globe article points out the car sells for less than the tax on high-end Beemers!
– The Takata airbag situation has taken off to a whole new level. The US-based National Highway Traffic Safety Administration ordered millions more cars added to the recall list. The recall is already the largest in the history of the industry. This latest round of recalls effectively doubles the size of the recall.
– There are a heck of a lot of new cars out there to fix. According to well-known industry analysts, DesRosiers Automotive Consultants, Canadian monthly auto sales hit a record in April. For the first time in history monthly sales were 200,000 vehicles. The April sales bring the yearly total to 603,223 units. During the same period last year 557,645 cars were sold.
– A Phoenix auto body shop owner found over 100 pounds of marijuana packed into the bumper, fender and truck of a car he was fixing. The car had just been bought at auction. The marijuana was “hiding in almost every square inch of the 2013 Ford Mustang,” according to a report. The weed was duct taped to the car’s frame. Marijuana is legal for medical reasons in Arizona, but not recreational purposes. Presumably the former owner of the vehicle was very, very sick.
-The annual J.D. Power Canadian Auto Insurance Satisfaction Study is out and finds that Canadians are more happy this year with insurance than last. This is the first time in five years an increase in satisfaction has been registered. The ninth edition of the report “measures customer satisfaction with Canadian auto insurers, factoring in non-claim interaction, price, policy offerings, billing/payment, and claims,” according to a report. The report noted that in Ontario “where the Liberal government promised to reduce auto insurance rates by 15 per cent, the survey said the percentage of customers who experienced a rate increase rose to 21 per cent, up from 20 per cent in 2015. However, Ontario saw the most significant improvement in customer satisfaction.
– Lawmakers in New York are proposing the use of a device something like a breathlyzer that is called the Textalyzer. The roadside test can be used at the scene of an accident and would “provide police officers with the technology to gain access to a phone’s service history, allowing them to see whether a driver had been texting, e-mailing, or otherwise not abiding by distracted driving laws,” according to a report. To avoid privacy concerns police would not have access to the device’s content. “The equipment only has the capacity to determine whether the phone was in use at the time of the accident,” according to the proposed bill. The act is known as Evan’s Law, and is named after19-year-old Evan Lieberman who was killed by a distracted driver in 2011. The cause of that accident “was only discovered after the cellphone records were analyzed,” according to a report on the bill.
– Ontario is about to undertake a massive new infrastructure building program. A key part of this program will be $20 million that is going to be spent to build 500 electric vehicle charging stations in the province starting next year. The program could kick-off the electric car era in Ontario. Transportation Minister Steven Del Duca has said, “the government will work with 27 private and public sector partners to create a network of charging stations at over 250 different locations.” The charging stations will be “set up along highways, in cities, and at workplaces, condominiums and some public places.” Ontario also recently increased incentives for electric car buyers.
– Speaking of electric cars, Tesla has moved up the timeline on its production schedule. According to a media report the electric car company now “plans to produce 500,000 electric cars every year starting in 2018.” This would be ten times the number of vehicles Tesla produced last year. According to the report this kind of growth is a “faster production growth rate than Ford Motor Co. managed in the early 1900s. That’s when Henry Ford pioneered the production line with the Model T, the first mass-market combustion-driven car.” Tesla now hopes to have sold a million vehicles by 2020.
– China is said to be targeting the electric vehicle market. The world’s largest car market will see new low emission laws in 2017. The country is battling suffocating smog in many cities. Production of electric cars there is expected to double this year. Jia Yueting of LeEco is the Chinese national behind the Silicon Valley start-up electric car maker, Faraday Future. The company hasn’t produced a car yet, just a concept vehicle. But Jia wants to challenge Tesla to become the world’s number one electric car maket. Jia was recently quoted as saying, “… we’re not just building a car. We consider the car a smart mobile device on four wheels, essentially no different to a cellphone or tablet. We hope to surpass Tesla and leapfrog the industry to a new age.”
– Michigan, the home state of the big North American automakers, is taking a hardline on vehicle hacking. A bill making its way through the state legislature would give cyber criminals who hack a car life in jail.
– A report from the website Business Insider Intelligence examines the connected car trend. According to the report “over 380 million connected cars will be on the road by 2021.” The report also notes that there has seen a significant increase in “automakers plans to connect the majority of the vehicles they sell … Automakers are connecting the vehicles they sell because the connection offers clear business opportunities. Tech companies will play a major role in the future of the automotive market. The big question is whether tech companies will eventually manufacture cars?” The report also claims that fully autonomous cars are only a few years away. “Technological, regulatory, and consumer adoption hurdles still remain, but there have been many strides towards a car that can drive itself from point A to point B with little to no human interaction,” according to the report.
– The dead but famous rapper Tupac Shakur once owned a Hummer. The vehicle is about to go up for sale at an upcoming auction. The rapper was killed in a drive-by shooting in Las Vegas in 1996. He had only ordered the Hummer a couple weeks before that incident. The Hummer H1 was fully-loaded and customized by the rapper. Included in the sale is a license plate, “YAKNPAK,” honoring Shakur and late rapper Yaki “Prince” Kadafi; promotional cassettes for Michael Jackson’s Thriller and 2Pac’s All Eyez on Me. Also included is vehicle registration information listing Shakur as the original owner of the vehicle.
– Warren Buffett warned this week that auto insurance companies are going to feel the effects of automated vehicles. One of the holdings of his company, Berkshire Hathaway, is insurer Geico. According to one media report, over the “long term, Buffett thinks, insurers like Geico are going to be bringing in less money as self-driving cars start to take over.” Appearing on CNBC, Buffett said that autonomous driving would be “an issue” for the auto insurance industry. He thinks AVs are years from being in the market in a big way, but they will, someday, have an impact.
Here’s the full quote from the Oracle of Omaha: “The answer is yes. I think it’s a long way off, but there’s no question. Anything that makes cars safer is very pro-social, and it’s bad for the auto insurance industry. But nevertheless, the auto insurance industry has always worked on making cars safer. I mean, they’ve led the way on things like seat belts and all that. But if there are no accidents, then no need for insurance. And I think there will be a big reduction in accidents over a longer period of time. And of course there already has … cars have been made way, way safer, but now when you start making the driver safer, that would be a big, big jump, and that will happen some day, and when it happens there will be a lot less auto insurance written.”
– Microsoft founder Bill Gates has also weighed in recently on AVs. According to Gates, “It’s certainly more than 15 years off before it’ll be a meaningful percentage of cars driven.” Gates noted that while legislators have been moving rapidly this year to start the rule making process this is a process that “will take several years.” Earlier this year the Insurance Industry for Highway Safety helped broker a deal among automakers to have automatic braking on all cars in the U.S. by 2022. According to a report, “Early studies of that feature, which many consider a fundamental building block on the road toward autonomous cars, shows, they can reduce rear-end crashes by 40 percent, and in crashes they can’t prevent, automated braking can at least mitigate the severity of crashes.” Gates was quoted as saying he “believes it will be another 15 years before autonomous features “compel significant changes throughout the insurance industry,” according to a report. Even then, “there will still be collisions,” according to the report.
– Volvo chief Håkan Samuelsson also said this week that an 80 percent fall in crashes by 2035 could “put motor insurers and premiums at risk,” according to a report. “Volvo believes the insurance industry will have no choice but to react to these seismic challenges to its existing business model by fundamentally restructuring – or face competition from new entrants into its market from technology-savvy disrupting companies,” Samuelsson was quoted as saying.
– Research from insurer Swiss Re finds that insurance premiums “in the 14 largest car markets in the world are set to drop by $20bn (£13.5bn) by 2020 alone,” according to projections. “Car connectivity and the introduction of increasingly sophisticated driver-assist technologies and autonomous driving will lead to significantly improved road safety,” the report notes. The report predicts that by “2020, more than two-thirds of cars sold worldwide will have some form of connectivity to the internet and other cars.”
– Vehicle safety research firm Thatcham Research claims that existing technology such as Autonomous Emergency Braking (AEB) has “already reduced the frequency of road accidents,” according to a media report. Peter Shaw, CEO of Thatcham, said technology that “allows drivers to ‘drop out of the loop’ [of driving] for parts of the journey would be available as soon as 2021.” Shaw was quoted as saying that, “Without doubt, crash frequency will also dramatically reduce … While drivers will welcome tumbling premiums, motor insurance experts warned that the industry will need to be overhauled or face extinction,” according to the report.
– Britain is said to be counting on an odd regulatory oversight to be a home of autonomous driving research. According to a report this week, “The UK is one of the European countries not to have ratified the 1968 Vienna convention on road traffic that stipulates a driver must be in the front seat of a car.”
– It was leaked last week that Apple and Google has been meeting with Sergio Marchionne, the CEO of Fiat Chrysler. The company is said to be in “advanced discussions” with Alphabet’s (Google’s holding company) self-driving car division. The Associated Press and the Wall Street Journal have reported that the two companies are in advanced talks to form a technical partnership. That is, it could be Chrysler building the next generation of Google’s self-driving car.