Tuesday, 28 July 2015

Industry Practice – Volume Manufacturing – Call for a Paradigm Shift...Usual Rhetoric or Prescient Timing? (Part 4) Conclusion

This four part web-log has sought to provide much insight into the question of economic value creation – and so investment returns – regards the global auto-industry.

The major global manufacturers are in the process of releasing their Q2/H1 results for this year, with majority of Triad manufacturers continuing to enjoy an ongoing – slower growth but bigger volume – buoyancy in homeland and regionally entrenched consumer markets; this seen as an off-set to EM constraints, awaiting (likewise) a less voracious yet larger 'next phase' across EM nations.

The Call for Paradigm Improvement... -

Nevertheless, FCA Group's desire to invoke greater commercial rationality across the higher cost western producers is a valid prompt, albeit one in which the the process of actually crystallising cost-savings gaining vital 'value added' is fraught with complication. Inevitably, the greater the ambition of 'mutualisation', the deeper the complexity of the innate strategic, tactical and practical matters involved. Having thus far successfully combined FIAT and Chrysler, Marchionne views the task as achievable once more.

Capital markets however well recognise that the FCA Group's origination came about at a specific point in economic history, with its commercial rationality much enabled by what were very obverse PESTEL conditions of a specific post crisis period. Today, however, with the force of American QE now very apparent in a revitalised in US and UK economies, and a similar though expectantly slower QE experience re-run across Europe. This 3-phased improvement in the consumer demand has returned the perspectives of auto-executives and markets analysts to a validated position of cautious optimism, and with it a sense of a return to 'business as usual'.

...Tho Hardly a Structural Paradigm Shift -

As illustrated in Parts 2 and 3 by the accompanying graphic, even this seemingly radical call for a new round of auto-sector consolidation is in itself only continuation of an evolutionary process. Although seen now as unwarranted by most western executives, back in a pitched battle for market share, volume and profitability, the need and likelihood of an AM-EM corporate consolidation (as and when truly feasible) should now be firmly lodged in the minds of truly globally attuned sector experts.

Critically, “Confessions of a Capital Junkie” is in itself a useful prompter for continued debate. An element of that discussion regards the very thesis presented, the validity and possible hollowness of some of its facts and figures (esp autos vs other sectors at this point of the economic cycle). But the more so the major aspect being the need for 'big picture' debate. Something beyond the usefulness of industrial consolidation: itself proven both powerful agent for good and bad (value creation vs value destruction) very specific times in auto-sector history.

So as seen, although investment banks, management consultants and theoreticians call for a radical shift in the conventional structure of the auto-industry – so as to improve its 'investability' – primarily toward what might be called 'democratised' “unbundling”of the broad value chain. This however, as an action of 'creative destruction', whilst opening up new opportunities for theoretically improved ROI in typically horizontally structured new ventures, also invariably has the potential to fundamentally destabilises an historically engrained and well understood automotive commercial template.

In doing so the ruling power of its best recognised and most influential participants would be very much eroded. The adjoining argument presumably being that such released monies from the sale of specific divestments (ie Tier 1 supplier interests to captive retail dealer groups) would release funds to be put to more productive use, as would the saved monies from what are regarded as other inefficient commercial agreements.

Even though many of these incumbent brands/marques are described by investment activists as providing little more than commoditised personal transport products – this largely the premis for any envisaged structural paradigm shift – the unavoidable fact is that as historical markers of social progress and dynamism, as the most prevalent 'big ticket' consumer item, automotive marques still have sizeable degrees of societal influence. That influence has undoubtedly decreased in the west as credit fuelled what may be described as relative 'status saturation', together with the changing aspirational belief modes of younger people projecting experiences over ownership. Yet unquestionably, most of today's automotive marques have a rich social heritage; that heritage itself deployed as a product and service persuasion device.

Yes consumers are increasingly price sensitive and brand promiscuous, but as even the wholly prosaic GM recognises through Opel's use of 'Adam' and 'Karl' nameplates, promoting brand heritage adds authenticity and so notionally adds perceived value.

Similarly, whilst the obvious marketing genealogy is not suited to all, the fact that many auto-makers hail from familial and community roots means that current family members (even when remote and “non-controlling” as shareholders) often view themselves as taking on a mantle for social improvement. Whether it be the Ford's to Porsche-Pieche's, Toyoda's, Honda's, Agnelli's or Quandts own descendants or their chosen senior executives, this sense of social responsibility has and will increasingly underpin the very persona of the 'commoditised' brands so as to make them an increasing part of the global social fabric.

Thus whilst it is very necessary to re-consider how one of the world's most prolific industrial sectors could be improved to provider better stakeholder returns; from investors to consumers to the statist desire for public good; it is perhaps overly optimistic to assert a theoretical, prescriptive recommendation for wholesale change as the optimum routeway to avoid 'graceless degredation'.

Instead the industry must fully recognise the multi-various PESTEL challenges presented by Maxton and Wormald in 2004, and create suitably optimised roads forward relative to their own specific conditions. Some may by a “copy+” of Maxton-Wormald concepts, others new in-house orientations on a then presented theme, its contemporary outcome and its future probable emergence.

That said however, given the potential for increased complexity by way of options and possibilities, it seems most likely that the major auto-makers will continue to seek to engage with possible external threats head-on so as to incorporate such trends under their distinct marques and corporate umbrella.

[NB This ranges from Peugeot's multi-choice 'mu' rental system to the presence of BMW and VW as fully fledged banking units in a reforms enhanced].

The conventional paradigm then appears unlikely to fundamentally shift, no matter how much external pressure is exerted, instead the paradigm has, and continues to, morph so as to become yet more entwined into the newly burgeoning further reaches of society

C21 Autos: Possible New Textures to the Social Fabric -

The automobile irrevocably altered the course of human existence soon after the turn of the twentieth century. Its affect upon society was profound and provided for the win-win of extended and convenient mobility for many, changing patterns of work, rest (domesticity) and play, and super-charging a nation's economic agenda with the building of various infrastructures (roads, express-ways, parking lots and fuelling stations), providing new downstream commercial opportunities as well as the very production of the vehicles themselves.

As is well recognised, with the influence of 'the internet of things', looking forward, the start of the twenty-first century promises what may be described as both a macro-economic and a micro-economic efficiency up-date, as the electronic inputs of many functional realms are fed into intelligent networks providing a 'cyber rationalised' output.

It is within this socio-economic context that the standard automobile will continue to evolve.

But just how conventionally, or radically, remains to be seen. There may be potential for both if AM and EM markets undertake very separate future roads to mobility, with the personal and logistics transportation natures of MegaCities as the conjoining, unifying influence.

Given the mass production and demand impetus of EM markets the car 'as is' looks likely to continue, since EM regions (whether defined as BRICs, MINTS or CIVETS) were themselves long ago raised upon and industrialised by the standard auto-sector model. Little change them likely there as tastes and expectations have already been deeply engrained.

As such, if the Triad regions ultimately reside in what some economists foresee as effective secular stagnation, then a marriage of lower cost foreign manufacture and free-flowing credit (enabled via devaluation) means the west would be the inescapable recipients of continued conventional vehicles. Under this scenario, even the expectation of ever greater electronic feature content may 'flat-line' as VM's main commercial focus upon EM consumers, including a phased IT content delivery approach to reach the already high level of Triad info-tainment provision.


There is a slim but arguably growing possibility that much increased PESTEL demands to meet eco-sustainability targets etc (as part of a regulatory and consumer-led economic agenda requiring fundamental change) that the very specifications and nature of vehicles themselves 'unbundle'.

That would mean that the specification of today's city-car alters to become not simply a small conventional car, but something far better suited to the urban city-scape.Japan's 'Kei-Car' segment is a useful parallel, as is France's Micro-Car segment, whilst Daimler has also led the way with Smart.

Even more compelling is a major rebalancing of functional capabilities, with reduced overall performance capabilities to suit city speed regulations, whilst size-wise and packaging-wise better suited to occupancy numbers and volume requirements, whilst possibly gaining as much improved external functionality as internal functionality.

Whilst there will always be a need for a number of broadly capable vehicles, there is an argument that under the totem of efficiency-seeking most vehicles could be better configured to suit their primary tasks, (much as a truck is dedicated to its role or an F1 race car the engineering result of FIA rules and circuit environment).

However, it must be noted that the very ideology of aspirational consumerism would need to be 'educated' regards this logic, and so re-directed from much of the consumer impulse for today's interpretation of status. Since there would be little room for the irrational vehicles such as road-bound SUVs or even more irrational large cross-over coupes, which make-up sections of today's premium (and not so premium) car market. It would be a case of reversing society's present mindset, towards consumerism based more upon intelligent substance, less upon marketed life-style.

However, this is not to say that vehicles become little more than future reflections of their yesteryear Eastern-Bloc counter-parts with 'type' classification numbers, and an absence of consumer compelled variation.

Thus it is here that the importance of better visions and relationships regards the research and development of advanced technologies should perhaps be better recognised.

Tentative beginnings regards the introduction of 'left of field' products, and associated business models have been underway for some time: here again mention of GMD's T-series as leading light. With this come possibilities for creating new commercial relationships reaching outward from the traditional auto-sector into other product and service spheres and segments; so new relationship dimensions up-stream and down-stream within an altered value-chain.

Whether this occurs via truly radical incursions into the sector by new entrants or via VM producers themselves so as to head-off any external threat (acting as 'integrators' or 'integrator-assemblers'), remains to be seen.

But essentially, in varous ways and to differing degrees, vehicles are both leading and following those inter-mingled trends which slowly alter the everyday fabric of society.

Ongoing Programmable Futures -

Ironically it will be the adoption of standardised electronic systems and mass volume production of “under the skin” eco-tech solutions that will enable this to grow yet further.
Thus far the 'black-box' electronic age for cars is about 40 years old, initially with relatively simple devices such as electronic ignition (replacing 'points'), the intelligent circuitry of vehicles has evolved enormously. It impacts virtually all vehicle systems: from early phase 'invisibles' such as EGR valves sensing acute emissions levels, to the (thus far) mid phase of the very 'visible' and safety critical, such as reactive power windows (for children's hands and dog's heads) and occupant weight sensors which inform internal air-bags of the correct inflation size.

These then specified by the manufacturer, yet for some years now, that low level 'artificial intelligence' has also been provided for the user. 'Memorised' power-seat positions and similar HVAC settings have been around for decades, so raising innovation expectations. Thus premium vehicles now have a basic buyer expectation of alternative “behavioural modes”, as selectable by the driver. The wizardry of 'mode engaged' gearboxes, drive-trains and suspension settings - once the preserve of top-end sports-cars and premium 4x4s - have, in the race for competitive advantage, begun to trickle-down into more mainstream products; into initially what was previously labelled the 'executive class', and expected to spread into lower segments as scale volumes decrease vehicle on-cost. Similarly automated convenience features – which have effectively merged into a 'service' function – now span a broad range of brands. BMW's offers the 'stand aside - garage self park' function on new 7-series, the car able to remotely drive into a tight space or garage on its own; and likewise self-starts and exits the space before the driver's entry. (This then partially mimicking the self-driving 7-series from the James Bond film 'Tomorrow Never Dies' from almost 20 years ago). Whilst at the in mainstream segment, Ford offers (a variant of, or option on) Focus with 'hands-off' reverse parallel 'self-parking', a manoeuvre which many people with less attuned spacial recognition abilities have found problematic. (This seemingly especially helpful to Northern European women*, who typically experience greater problems than more 'space aware' men, and to both sexes in in North America, where parallel parking - like roundabouts - is far less prevalent).

[NB * The exception being Paris, where historically a combination of small cars and hectic city parking meant parallel parking became second nature to many women. Similar urban environments previously across Southern European, Barcelona to Rome to Athens, created many skilled female drivers].

Likewise today, back in the 'invisible' realm, all these years after 'active EGR', other forms of 'machine intelligence' have become de-facto. These expectantly focused on emissions reduction, such as increasingly adopted 'Stop-Start' engines; in even small cars like FIAT's 500 (naming it a very notional “mild hybrid”. Whilst the large capacity engines of full-size pick-up trucks and luxury cars have adopted cylinder de-activation technologies, enabled in high-momentum conditions, such as highway cruising or down long declines.

Yet today in an eco-age, a time when citizens are 'nudged' to track their personal carbon-footprint, even that responsibility has itself long been turned into a small experiential joy. Toyota led the way with the digital energy-flow console of original Prius Hybrid, far more absorbing and less frustrating than the norm to date: the analogue fuel-efficiency needle as seen in 1980s German and Swedish cars. Toyota then merged the mentality of the user with the mentality of the vehicle, whereas previously driving in an efficient manner felt like a battle of wills, car vs driver. Prius then could be said to have likewise cognitively programmed the driver.

Since 1997, over the last decade and well into the smart-phone era, vehicle interfaces have become very sophisticated at both coaxing the user and fulfilling expectations, (having been through learning curves such as BMW's much berated old generation 'i-Drive').

What was once a 'master-slave' relationship between driver and vehicle, has transmuted into something far more symbiotic, thanks to the combination of advanced computing, semiotics appreciation, and increasingly brand attuned interface-function delivery.

These days those emotional engagement devices, such as the 'Engine Start' button and the start-up welcome message (Aston Martin's “Power, Beauty, Soul” best known) appear almost naïve.

The public at large, and perhaps new car drivers especially, have seemingly become almost as programmable as the product. No doubt this state of affairs will generate a counter-culture movement as some people create a backlash – a rage against the machine. Yet even this challenge has the seeds of opportunity depending upon exactly how innovation and commerce is able to mould relative to any prevailing 'e-culture-jamming'.

Mass Customisation From Standardised Bases -

The very concept of mass-customisation harks back to the mid 19th century factory-led beginnings of modern consumerism, with standardised items of pottery, furniture etc embellished variously according to price and taste. In automotive circles, although others had sought a similar approach on niche volumes, the first to extensively deploy this wholly rational approach was Ford's Model T; the legend about the colour black very much over-stated. Greater subtlety and so commercial leverage seen from the early 1930s when Alfred P Sloane's GM led the way in creating variously styled 'top hat' body structures to befit marque and model, and an assortment of what today is called 'plug and play' features for customers, then simply named 'add-ons'.

Yet it was not until electronics begat computing, and software programming begat the cyber-age, that consumers could be truly bedazzled by a veritable universe of predetermined and customisable options.

All provided by what are typically standardised electronics packages; be it laptop, tablet, smart-phone, watch or spectacles. Seemingly endless variety enabled through savagely cost reduced (ie commoditised) electronic and electro-mechanical hardware and critically, highly 'tunable' software.
Whilst IT engineering as known provided the operational backdrop, the leading actors with far greater commercialisation potential were the new realm of 'portals' (typically apps and 'enablers).

[NB twenty years ago the so called internet 'portals' were website home pages, accessed via a browsers web address bar, today's 'portals' increasingly the personally held cache of 'applications'].

The 'internet of things' is being heavily marketed to younger consumers ostensibly born into the internet age, most prevalently toward 16-35 year-olds, and within this broad span of people and places, specifically to those inner-city urbanites who have long been labelled 'Hipsters'. Though an unfortunate catch-all name for a group undoubtedly with specific 'culture layered' sub-sets, they do however appear to have the similarity of viewing themselves as social- creatives; no matter what their actual role: musicians to accountants. Heavily cyber-led in most of their activities and seeing themselves as the natural citizens of an 'augmented reality' tomorrow.

[NB investment-auto-motives (ie Turan Ahmed) labels this seemingly easily influenced, often herd-like and already much satirised group, as 'customemers'. In recognition of the now entrenched sound-bite meme ideologies across MacLuhan's global village].

“The internet of things” is still in its early stages, and presently typically over-hyped because of the plethora of relatively easily smart-phone linked, Hipster orientated, everyday item adaptions. These often marketed through youtube and elsewhere alongside other supposed modern innovations, which in reality are simply re-inventions or novelties; the bicycle and clothing arenas being prime targets because of their personal nature.

Nonetheless, the good, truly value-adding, concepts should rise to the top of a very crowded social media. And it will be these true life-enhancers – on a personal level and for the public good - that perpetuate further advances.

Herein, the old incumbents of the automotive industry have perhaps made greater strides forward than in many instances elsewhere. As they seek to re-raise the prized rational and emotional value of the car, and similarly the transport efficiency advantage (with likewise emotional overtones) of the van, pick-up truck and heavier commercial vehicles.

As Marchionne has re-highlighted, where feasible design, development and production cost-savings should be sought, and the deeper under a vehicle's skin, the greater the potential to achieve both an 'invisible' standardisation whilst concurrently engineering-in – through sophisticated systems programming and brand attuned man-machine interfaces – product differentiation and uniqueness.

Across the vehicle spectrum, such a move is justified. Closely coupled technical under-pinnings have been successfully deployed across mix and match approaches to platform / module utilsation, for BIW (body in white) structures, chassis items, power-train and electrical systems. Given expense and complexity, the latter as a 'high-value' system has proven ever more problematic. It is part of the reason that Renault Nissan's Infiniti division created a JV with Daimler, and likewise why Aston Martin Lagonda too has done likewise with Daimler's AMG division.

If such marriages regards electronic systems can be harmonized (ie standardised) within the supposed ivory towers of premium and luxury, then mainstream producers and their suppliers have an obligation to their investors to not absorb expense in the duplication of such electronic systems.

Just as new enhanced standards came to pass decades ago regards alternators over generators, or 12 volt circuits replacing the 6 volt, so a far better standardised 'computing platform' to suit 21st century demands (including probable 18V and 24V systems, with CANBUS reliance) and provide the necessary tailoring of brand experience, is ultimately unavoidable.

The Inevitable Obstacles -

The journey there will inevitably include challenges and opportunities.

Quite prescient then that after Marchionne's call, that FIAT Chrysler group should now face a recall of 1.2m – 1.4m vehicles which have been identified, through independent test exercises, as exposed to the threat of computer hacking of critical vehicle controls The fix will be applied in the form of a software update to the 'U-Connect' system, but the news reports of targeted test vehicles being prone to such attacks, will weigh heavily upon the owners of the vehicles, and will be of concern to those who drive other marques.

However, the vital facts are that the attacks were wholly orchestrated and only achievable through (to quote FCA group) “unique and extensive technical knowledge, prolonged physical access to the subject vehicle and extended periods of time to write the [necessary] code”.
Thus, whilst a concern in this seemingly wholly electronically controlled era, the likelihood of such a problem affecting more than a small number of vehicles, appears remote. And critically, FCA was quick to recognise, admit and react to the very marginal public problem.

If anything, the occurrence might actually serve the cause of greater standardisation and commonisation, since whilst specific problems would indeed affect more multi-brand vehicles, likewise an accordingly larger brigade of independent authorised hackers, should be better at identifying 'back-doors' in the systems which require improved security.

Such a scenario could be argued as better for manufacturers and consumers.

Automotive 'Version 3.5':

The previous web-log instalment demonstrated how – through logical demonstration - the authors of 'Time for a Model Change' (2004) envisaged how the auto-industry should be better re-structured by way of a “4th Revolution”; to avoid a decline of 'graceless degradation'.

[NB The 1st Revolution being Ford's deployment of 'Taylorism' for standardised volume production, the 2nd being Sloane's corporate creation of a “ladder of brands and models”, and the 3rd being Toyota's introduction of 'lean manufacture'].

But as also noted, these 'revolutions' were introduced from the 'inside' of the sector, critically from seeking competitive advantage. Whereas Maxton-Wormald's “4th Revolution” appears only practically feasible through enforced global level regulatory change; most unlikely given the importance of the conventional auto-sector to the USA and many EM countries.

Importantly, whilst at the time of writing the book (around 2002) Europe did indeed embraced the beginnings of a 'block exemption' ideology - so as to free-up downstream sales, servicing and retail activities - the detail of the 2010 and 2013 rulings regards 'Vertical Block Exemption' was far from revolutionary, indeed arguably protective of in-situ value chains.

Thus too all intense purposes the historical auto-sector's innate commercial model remains in place.

Instead it seems that any approximation to a 4th Revolution should be actually termed 'Version 3.5'. This an enhancement of consumer targeted innovation made possible through the the process of a quickened electronics evolution.

A merging of micro and macro directed consumer electronics has inevitably set the backdrop to yet further deepened influence upon vehicle functionality, across convenience provision and performance improvement and convenience provision, via 'visble' and 'invisible' vehicle systems. The former for product and so consumer experience enhancement, the latter for (typically eco and safety) regulatory applications. Whilst the emergence of driving monitors / aids, often marketed through auto-insurance companies, bridge the previous chasm between private and public).

'Version 3.5' then is best explained as the continued, long since digitally enhanced advancement of the historical automotive Revolutions to date. However, just as there came tipping-points for the design and manufacturing of the product itself, via CAD and CAM from the early 1980s onwards, so recent years have witnessed a tipping-point regards the morphing of technology and user behaviour, given the former's cognitive – absorbing and habit forming – effect. As mentioned, the entrancing dashboard graphic of 1997 Prius was amongst the first 'smart-tech' devices to pull the “subject” (user) into the “object” (product). Ever since, the combination of the massive levels of info-tainment, absorbed through smart-phones and now smart-wearables means that people have obviously been long drawn ever deeper into the cyber-physical, into 'augmented reality', and thus into a new chapter of (perceived) reality.

This is of course recognised by most, to varying degrees, depending upon age, back-ground, objectivity etc.

But the critical issue for nearly all brands, and specifically e-enabled consumer products manufacturers and service providers, is the ability to judge to what degree a group type or indeed n individual consumer is happy to subsume him/herself.

Given personal background and experiences, each person will be slightly different, the business of 'big data' and 'data mining' companies to create personal profiles for (ideally) the global population by which their commercial clients can guide their own mass, niche and personal customer interactions.

Hence, the 'brand equity' and associated societal influence of auto-makers are at the forefront of medium to long range consumer interpretation; just as super-markets and FMCG firms intensely study the short view.

The breadth of the digital universe stretches from the seemingly very remote regards everyday consumer behaviour patterns, through to the preferred manner by which a driver (and passengers) interact with the car itself....typically from yesteryear's 'master-slave' to today and tomorrow's 'eco-equitable relationship' to the far horizon's possibility of (time-cost related) 'nudged mobility'.

In Conclusion -

This lengthy four part weblog has sought to provide improved understanding regards the real-world issues which exist behind calls from more idealistic investors, consultants and academics, for major commercial restructuring of the mainstream producers within the VM portion of the automotive sector.

Within institutional investment houses - amongst the rafts of all too formulae led administrative managers - there are those who (typically via self-education) maintain a close eye on the automotive sector, and are very aware of the traditional pros and cons. Likewise for the self-taught retail investor. They will recognise the immense drag of economic recessions and the cash burden of large CapEx projects, and the necessary balancing act during the worst of times, versus the endemic boost provided by returned broad economic spend, itself boosted by the efficiencies gained through well conceived and executed corporate 'turn-arounds'.

At the investment coal-face are the investment bank auto-sector analysts, the more 'sophisticated' realms of investment, such as hedge funds, and those very few specialist consultants who have a truly rounded appreciation. These economic agents keep a watchful eye on the quarterly performances of VM firms, recognising their respective positions relative to each other, and in comparison to broader capital market dynamics, such as vis a vis broad retail (white goods, holidays etc) and other B2C and B2B general industrials.

More critically these proactive agents are - within their own limits of individual expertise – able to recognise when perhaps a CEO has over-stretched the plausibility of an envisaged commercial strategy story, or whether a CFO has relied upon accounting ploys to either boost the bottom-line or indeed, as sometimes practised through volatile periods, to smooth-out otherwise 'choppy' quarter on quarter earnings, or indeed stated over-heavy 'extra-ordinaries' to intentionally reduce bottom-line profitability, so driving down a share price, before staging a seemingly remarkable return at a later date.

Thus although capitalism itself is a general force for good (when morally orchestrated) the fact is that the investment arena itself is a far more ethereal entity than (typically American) media commentators would have the public, and indeed 'silo'-located “investment professionals” believe.

Thankfully, especially so for institutionals with heft future obligations, unlike the market's highly reactionary behaviour – whether via the media-fuelling of high potential growth sectors or the heavy shorting of commodities - it is the maturity and relative commercial clarity and overall conservatism of the auto-motive sector that helps to provide a sense of security for pension funds etc. Autos represents a true economic cornerstone for many countries and regions, under-pinning international trade and helping to provide, for the increasingly globalised investment community, international economic off-sets and equilibriums; USA vs China the obvious present illustration

As this cornerstone, such nicely boring, yesteryear measures of investability are welcome.

Yet, quite rightly, within the broad automotive value-chain, as Maxton-Wormald indicate and promote, where at all feasible, those areas convincingly demonstrated as holding untapped investor potential should be explored and exploited.

Such areas will demonstrate a probability to:

1. Progress the critical 'inner-mechanics' of the leviathan sector (eg as did Budd or CAD/CAM)
2. Begin any wholly rational and feasible 'unbundling', at small scale level to evaluate.
3. Generate truly compelling new products, not simply (sometimes unjustified) model proliferation
4. Generate compelling new services – increasingly enabled through 'cyber-assistance'.
5. Advance personal mobility, mass mobility and logistics mobility solutions for society
6. Include high levels of technical standardisation (ie the lessons of history)
7. Innovate at a new venture business model level, creating in-house 'incubators' etc.
As what appear 'all-powerful' global entities, the major auto-makers are typically necessarily cautious, with an innate need to maintain broad control of the value-chain given their responsibilities to share-holders and as international economic giants.

Yet the best have also demonstrated a willingness to take big leaps forward to help create and gain from the future; from Daimler's lengthy 'under-writing' of its initial SmartCar project, to latterly BMW's radical i-series city-car, and in a very different revolutionary manner, Ford's new aluminium F-series full-size pick-up truck. And of course those previously typically incremental technical steps – particularly in powertrain – have become far more strident in ambition and achievement.

Applying that level of strategic thinking to the very industrial and commercial basis of the sector is what is required. It is a far cry from many of the “bluff” actions of the past where a VM was only seen to be attempting something new and provocative, without true intention.

All too ironically, the previous sector 'revolutions' came from within: by influential people who were astute observers, lateral thinkers and able exploiters etc, not from the all too theoretical external pressures of Wall St seeking 'creative destruction'.

As GM's re-birth illustrated there is a time for such 'creative destruction', but with the wounds of the financial crisis slowly healing and a much altered socio-economic landscape, proper and realistic consideration is needed as to what (primarily 'self-moulding') shape the next-generation auto-sector might ultimately become.