For US Luxury Automakers, Mexico Matters

Courtesy of
Courtesy of

As BMW, Mercedes, Cadillac, and Infiniti turn their focus to the lucrative compact premium market, they all seem to have the same way of getting there – Mexico. Unlike most other plant locations like Spain or France or the US, Mexico is fast becoming the best place to produce cars.

Besides the obvious cheapness, international manufacturers are taking note of how far the Mexican government has gone to make their country fertile for foreign investment. They have undergone radical public works projects to drastically improve the country’s infrastructure. They’re a part of NAFTA, and have free-trade agreements with 45 countries (compared to America’s 20). And they have a highly-skilled workforce able to produce higher quality cars than practically anywhere else in the emerging Americas.

That’s why it comes as no surprise that luxury car makers looked beyond Texas in order to compete profitably in the booming compact corner of the US premium market. The likes of the Audi A3/4s, BMW 2/3s, and Mercedes C/CLAs for starters will be produced in Mexico in the coming years, with billions more in foreign direct investment towards additional production increasing Mexico’s auto exports for the long-term. In carmakers’ minds, Mexico has the ideal mix of low manufacturing costs, few transaction costs, and low shipping costs and times to their primary North American markets.

How are US consumers impacted? Well, quality is supposed to remain high as a result of the skilled labor force, and carmakers have a more central distribution point for some of their key markets. This could potentially allow them to further expand and test new product offerings while reducing price tags, which could be the needed nudge for many economy car buyers to make the splurge to pretty luxury compacts.

Original information provided in this post can be found here.


Mercedes Banks On America’s Little Pink Houses For Future Growth


Back in May, Fast Company questioned whether Mercedes’ focus on catering its lineup to a suburban America was a shrewd tactic or wishfully daft. It didn’t gain a lot of attention, but the impact of shifts in people’s living situations on car companies’ product planning and overall strategy cannot be understated.

“The myth is that people are tired of suburbs and moving into cities. That is simply not true,” stated a blunt Eric Larsen, director of Mercedes’s society and technology research group.

The Brookings Institute explains that the recent slump in suburban growth can be mainly attributed to a still-rebounding housing market. They conclude, somewhat blandly, that the general cycle of city-dwellers eventually moving to suburbs will continue to occur as it has in the past. Over the next decade, they forecast suburban growth to potentially climb higher, with urban areas continuing to experience growth as well. The below graph from Brooking can be misleading – suburbs aren’t shrinking, they’re definitely growing. Just not at the rate of certain urban cities.

Courtesy of Brooking Institute via Fast Company
Courtesy of Brooking Institute via Fast Company

Mr. Larsen summarized, “The U.S. is a unique market, with the rise of mega-suburbs, not mega-cities. It’s good news for our company.”

Later, I posed Fast Company’s question to Neil King, an automotive contributor at EuroMonitor. He agrees with Mr. Larsen that the US is a distinctive market in which Americans love owning all four walls for some reason. Shifts in urbanization notwithstanding, he believes that changing demographics of the inhabitants to be the most important changes for companies to adapt to.

Mr. King explains that more women in the workforce, lower birth rates, and later marriages mean smaller households which translates into smaller car needs. Shifts towards home delivery and online retailing further decreases the need for large SUVs, paving the way for the likes of the Audi A3s, BMW 2s, and Mercedes CLAs to make up a much larger volume of the yearly luxury purchases.

Interestingly though, new Chevy Tahoe sales are growing at healthy rates, BMW continues to bear down on the luxury SUV market with the massive X7, and S-Classes are practically selling as fast as Daimler can make them. Whatever the case may be, some variable is seriously missing in this equation.

To view the original article from Fast Company, click here.

Diverging from Google, Toyota Empowers the Driver

Lexus LFA in Geneva

In the past decade, Toyota and Google have both sunk sizable sums of money into the driverless car game, with Nissan, Ford, and most recently GM reluctantly following suit. Toyota and Google are arguably the most serious players in this space, and until recently seemed to agree on the future relationship of the car and driver. However, Toyota stated earlier this month that they have no intention of making a truly automatic car. Rather, they believe that neither computers nor humans are independently ideal, and both working in tandem creates the most safe environment for driving.

Whether Toyota started its trek into the auto-driving space with the same mantra, we’ll never know for sure, but Toyota’s new rhetoric is telling of what they believe will resonate with customers. Instead of framing car technology as taking away that which humans cannot do as effectively as computers, a notoriously Google-like approach, they see their R&D efforts as equipping humans to react to situations with the immediate and necessary information to make an informed reaction.

Toyota’s stance is that humans are still the essential ingredient in safe driving, and computers can never truly do away with us. Google’s car sometimes comes off as a warning about creating a car that doesn’t even have a steering wheel, a scary thought to non-Gen Y-ers and um, people who like driving. Unlike with its search engines, phones and many other products that free up time and enable humans to perform tasks easier, this automated car program has a subtle Big-Brother undertone, where nothing besides the music and air conditioning is within the driver’s (occupant’s) control.

Toyota understands that people want more control, not less, especially when it comes to something life-or-death like driving a car. No one has a problem with automating every process having to do with phones, homes and computers because they aren’t giving the control over their physical wellbeing to an unapologetic object. Particularly in the current age of recalls and faulty car technologies, computers have a large challenge of gaining the full trust from average people.

Toyota gives drivers the most control possible, whereas Google’s technology appears to take all the control away. Which company’s car are you going to buy (disregarding the laughably atrocious designs of the Google car)?

Exploring the shifts in how we move people and things from point A to B through a business, technological, and societal context.