By Jeff Sanford
Toronto, Ontario -- May 11, 2018 -- In today's Friday Fun: Australia’s king of collision repair, North Americans teach Saudi women to drive, the constriction in the number of vehicle models and much, much more.
An Australian newspaper this week ran a profile of Ray Malone, CEO, AMA Group. For those unfamiliar with the name, AMA Group is Australia's biggest collision repair company. As Canadian player Fix Auto targets the Australian collision repair industry, it’s worth knowing who the main competitor will be. The article discussed the current state of AMA. "We are growing fairly aggressively and I can't see it stopping. The company was worth $2.41 million, it's now at $530 million," says Malone. The company generated $264 million in revenue in 2015/2016 and now has some 85 stores. The report goes on to say that AMA, “has thrived as a consolidator in Australia's fragmented $7 billion crash repair industry. AMA's larger scale has brought better clout in buying parts for vehicle repairs, while the transparency of an [Australian Stock Exchange] listing means big insurance companies are more comfortable with dealing with a large group with solid corporate governance.” An interesting detail mentioned in the article: Malone was orphaned at the age of 11. He moved to the country to live with an aunt and uncle before moving to the Australian city of Melbourne two years later. He attended school until grade nine. After that he did an apprenticeship as a painter in a collision repair shop. Commenting on his rough upbringing Malone is quoted as saying, "I don't know if it does help you or it hinders you. The bottom line is I don't want to be a loser so I'll do what I need to do to be a collective winner in things. It's not about me, it’s about bringing everyone along. It's been a crazy ride and I've had a lot of fun. I was going to retire at 50, I didn't. I'm in it up to my eyeballs and I love it." Commenting on the speed of consolidation Malone said, "It’s actually getting easier for us. It's just now a matter of more. It's inevitable. We think we will become a gorilla." He was also quoted as saying he sees no signs of lessening demand for AMA Group's services. "They are always going to have smashes. All this stuff about electric cars etc., but in Australia with the tyranny of distance and the funds we have to put into infrastructure, it's never going to be an issue. People are buying more cars not less.”
One of the most fascinating stories in the auto world today is the imminent granting of driving rights to Saudi Arabia women. The reformist Saudi crown prince has declared that women will be allowed to drive this coming June. The announcement was only made this past September. And so now the entire auto sector is scrambling to get ready for a sudden influx of millions of new drivers. A newspaper report this week tells the story of three Americans who are on their way over to the kingdom to teach Saudi women how to drive. According to the story, “Louise Lents, co-owner of Gresham's Pacific Driver Education,” will travel to Saudi Arabia with two other women. The trio formed a new company, Driving Solutions International, to undertake the mission. One of the educators is quoted as saying, "These women would like to have some freedom. They used to have to wait for a male relative or call a driver – now we are helping teach them to do it themselves." Religious stipulations mean that only women can teach the estimated nine million women interested in learning how to drive. According to the story, the trio had to rush to brush up on driving in Saudi Arabia, as some of the signs differ from what we see in the states. According to Kuzmaak one of the most common causes of accidents on Saudi roadways is to hit a camel. The animals are the deer of the Middle East. "There are a lot of camel-crossing signs," she said.
In what is an extremely rare occurrence, charges are actually being brought against the CEO of a major global corporation. Federal prosecutors in Detroit on Thursday unsealed charges against former Volkswagon CEO Martin Winterkorn. The prosecution is accusing Winterkorn of conspiring to mislead regulators about the German automaker’s diesel emissions cheating. The indictment was filed in secret in March and was only unsealed in U.S. District Court on the same day as Volkswagen’s annual meeting was underway in Germany. According to U.S. Attorney General Jeff Sessions, the charges show “Volkswagen’s scheme to cheat its legal requirements went all the way to the top of the company.” As the scandal broke, Volkswagen officials initially suggested that only lower level executives knew of the cheating. But the indictment alleges Winterkorn was informed of VW’s diesel emissions cheating in May 2014. In July 2015 he is said to have agreed with other senior VW executives “to continue to perpetrate the fraud and deceive U.S. regulators,” according to the story.
Consumer interest in diesel engines continues to decline as a result of the VW scandal. This week it was also reported that Nissan will stop selling diesel cars in Europe. The car maker said it is adapting to a sharp decline in diesel vehicle sales. Workers at a U.K. plant that produces the diesel engines will be laid off. With the U.K. still tending toward Brexit, it’s probably smart to begin to shutdown production at the factory. If the U.K. ends up outside the European trading zone auto production will leave the U.K. and head to elsewhere in Europe anyway.
It seems the 2017 peak in car sales is also working to reduce the number of car models on the market. Ford has also announced that it will reduce its line-up of models to the SUVs, pickup trucks and just two cars, one being the Mustang. Consumers continue to choose SUVs over smaller cars, and so the decision makes business sense. Of course, with the price of oil climbing there could be a shift away from gas guzzling SUVs as has been the case in the wake of other spikes in the price of gasoline.
U.S. vehicle deaths barely declined in 2017 but remained notably higher than in 2015, according to the National Safety Council (NSC). The organization estimates that automotive fatalities topped 40,000 for the second consecutive year. The NSC estimates are not the official federal figures. Those come from the National Highway Traffic Safety Administration (and those will be released later this year). But the NSC data suggests what many have known: “While automakers have dramatically improved car safety in recent decades, with advances such as strategically placed air bags and high-tech collision avoidance systems, other factors have kept the death toll high. Key to the crisis is distracted driving, speeding and people who still don't use their seat belts.” According to a news story, the NSC estimated that 40,100 people were killed in 2017 accidents, down about 1 percent from its 2016 estimate but up about 6 percent from 2015. "We're treading water, essentially. We're not making progress,” the NSC spokesperson was quoted as saying.
Global materials producer 3M displayed a new sheet molded composite (SMC) at the recent National Plastics Expo. According to the company, SMCs are a viable alternative to metals in certain applications such as auto bodies. The new 3M product mixes glass bubbles into the material to help OEMs achieve, “up to a 40 percent weight reduction of composite parts while still enabling a class A paintable finish. This innovation makes SMCs an attractive option in automotive design for OEMs.” The vice president of 3M Automotive Electrification was quoted as saying, “A typical automobile has about 300 kg. of composite parts. With ultra lightweight SMCs enabled by our glass bubbles, OEMs can significantly improve a vehicle’s energy usage, while saving money – one less bump in the road in the race to automotive electrification.” The hollow glass ‘microspheres’ can reduce the weight of molded parts without sacrificing strength or aesthetics. “For the first time, 3M has been able to break the density barrier, making ultra lightweight SMCs more competitive to steel and aluminum, opening up new possibilities for the material mix in automotive applications,” according to a press release.
An Ontario news website, blackburnnews.com, ran a story that is not often seen these days. The subject of the article, a lawyer, makes the case that, “Personal Injury Victims Need More Compensation” (as the headline has it). At a time when high auto insurance rates have become a political issue there are very few calling for more money to be dumped into victim compensation funds. Politicians across Canada are capping and reducing the amount victims of accidents can receive in compensation. Nevertheless, a Windsor lawyer is calling for change when it comes to compensating injured Canadians. According to the story, “Steven Wilder is also a member of the Ontario Trial Lawyers Association and says compensation in Canada is unfair because it’s capped at just under $400,000 if a lawsuit is successful. He says private insurance companies are not paying their fair share but make millions in profit.” Wilder is quoted as saying, “I’ve seen young clients who are never going to work, and their injuries, their damages and what they can sue for is capped, and it’s very frustrating.”The news story goes on to say that, “A report commissioned by the Ontario Trial Lawyers Association shows that Ontario auto insurance profits in 2016 were $1.5 billion, Ontario auto insurance profits are up nearly 60 percent in the last four years, and Ontario drivers have over-paid by $5 billion in the last five years.”