By Jeff Sanford
Toronto, Ontario -- December 17, 2015 -- Welcome to another collection of interesting items from the week that was:
- California has announced new rules around autonomous vehicles (AVs). Apparently Google is disappointed that the state is going to require that cars being used have at least one real human in the vehicle.
- Speaking of AVs, Korean car-maker KIA is getting into the game. The company just announced it is testing a self-driving car in partnership with Hyundai. The companies are investing $2 billion to develop AV tech. According to a media report, the engineers involved in the KIA program are testing technologies such as Traffic Jam Assist, Highway Autonomous Driving, Urban Autonomous Driving, an Emergency Stop System, and Autonomous Valet Parking. The tests are happening in Nevada. They believe “vehicle-to-vehicle and vehicle-to-infrastructure communications” have to be developed. Ford has also just announced it is testing its self-driving car.
- Last week car-sharing app provider Uber was dealing with protests on the part of Toronto cab drivers. This week the company managed to anger the public transit union. Uber announced a new service, UberHop, that will service pre-determined routes at regular times. People looking to get from, say, Liberty Village to Union Station, will just to show-up at a certain spot and an Uber vehicle will take them and up to four others to another pre-determined stop. That is, this version of Uber will act more as a public transit service. That outraged the public transit union, which called on the government to stamp out the service by enforcing the TTC's monopoly on public transportation in the city. The mayor has so far refused to do that. The service will cost a flat $5.
- Speaking of Uber ... According to a new report, so-called “usage-based insurance (UBI)” will radically restructure the insurance industry. UBI sees drivers only paying for insurance when they're using it. This so-called “Uber-ization” of the insurance companies will have huge impacts on existing auto insurance companies. The study was written by PTOLEMUS Consulting Group, a strategy consulting firm entirely focused on connected vehicle services and the Internet of Things. According to the study, by 2020, nearly “100 million vehicles globally will be insured with mathematics policies.” By 2030, nearly “50 percent of the world’s vehicles will be insured with telematics policies, generating more than 250 billion euros in premiums for insurers. With 230 active programmes and 12 million customers, usage-based insurance (UBI) is now a truly global phenomenon that reaches twice as many countries as two years ago,” according to a press release. According to the report, there are already 10 UBI programs in Canada. UBI is becoming mainstream, apparently. According to the press release, “Like Uber, [UBI] will radically transform the business model of auto insurance, from underwriting to claims management. The days of insurers who rely on purely statistical models are counted.”
- The Dallas-based chain of collision repair chains backed by the Ontario Municipal Employees Retirement System, Caliber Collision, announced this week it has donated a record 30 vehicles in 2015 through the National Auto Body Council’s Recycled Rides program. “Recycled Rides reflects our highest purpose, which is to restore our customers and the communities we serve to the rhythm of their lives,” said Caliber CEO Steve Grimshaw in a press release. “As we continue to grow and expand, our teammates across the country are equally committed to restoring hope to individuals and families by removing barriers due to a lack of transportation.”
- The Chinese car boom is going to weaken in the years ahead according to John Humphrey, Senior VP for Global Automotive Practice for J.D. Power. He is the author of a recent report on China’s Five-Year Plan for the auto industry. His report notes that the communist Chinese government is working on its next five-year plan for the economy. But it won't “be able to sustain the current structure of its auto industry.” The growth in the Chinese car sector has been massive over the last few years. But too many brands and too much capacity will become an issue. Humphrey likened the auto industry in China to the US auto industry of the early 1900s, “a Wild West where dozens of small car makers, many of them local outfits, were battling it out to see who survived—and got bigger.” China currently has 90 automotive brands—three times that of the US—battling to be the GM of China.
- Axalta Coating Systems recently hosted an “Analyst and Investor Day” in New York City. Members of management presented an overview of the company's prospects. The company execs said they expect the numbers for 2015 to come in as follows: Net sales growth of 5 percent; Adjusted earnings of $860-$870 million; an effective tax rate of 29-31 percent. For 2016 the company expects: Net sales growth of 4-6 percent; Adjusted earnings of approximately $180-190 million; an effective tax rate of 25-27 percent. - The Wall Street Journal reported this week that American auto parts makers are flush with cash after a solid year. With sales running at “more than a decade-high” the auto parts makers are preparing to “crank up their merger and acquisitions activity to advance their technology offerings.” This was according to an Ernst & Young survey that found nearly 60 percent of automotive executives said they would pursue an acquisition over the next 12 months.
- According to Sven Schuwirth, VP of Brand Strategy and Digital Business at Audi, within 20 years, autonomous vehicles will radically alter how people travel. Schuwirth speculated that cars that will be designed more like mobile apartments and will be a more favoured way to travel than airlines. Rather than face gropey TSA agents, tiny seats, massive ticket prices and no food on flights, people will begin travelling by car more often than they are now. “In the future you will not need a business hotel or a domestic flight,” Schuwirth was quoted as saying. “We can disrupt the entire business of domestic flights ... I think that vision is probably 20 years from now.” He went on to say that service stations along highways will evolve to support these travelling apartments. He speculated roadside facilities would offer bathing, dining and shopping. But drivers would return to their cars to sleep. The business model of hotels will change as well.