Current State of the Automotive Industry - from an engineer's perspective

Author: Steve Miller, BSME '02, current board member
Much has been said about the automotive industry lately, particularly General Motors and Chrysler. It’s a very challenging environment for anyone working in the industry today, to say the least. Consumer demand has contracted significantly in the past year as the global economy declined. Layoffs abound throughout the entire industry, including the supply base. Gas price skyrocketed in the summer of 2008, but then plummeted, followed by a slight rebound in 2009. Large companies throughout the industry are filing for Chapter 11 Bankruptcy, while several smaller automotive companies have simply closed their doors. Additionally, government regulations for emissions and fuel economy are becoming increasingly strict.

What does that mean to an engineer?  Overall, two words that everyone dislikes sums up the current state of the industry: uncertainty and risk.  On one hand, emissions and fuel economy regulations can potentially provide the impetus for new innovations and products.  However, on the other hand, the global economy has caused a perfect storm of tight credit markets and decreased consumer demand. 

Automotive based companies face severe trade-offs between spending funds to meet new regulations and saving funds to manage themselves through the worst market downturn in 25 years.  Engineers could be working on projects to meet new requirements for years, only to have a program delayed or cancelled on short notice just to insure a company’s short-term survival.  

For companies, and their engineers, the door is open to whoever is able to come up with simple, cost-effective, solutions for today’s myriad of issues.  Consumers will demand vehicles that can perform on par or better with what is on the market today.  Regulations will require that performance comes with less harm to the environment.  It’s up to engineers to come up with a happy medium that doesn’t add thousands of dollars to the price of a vehicle in a cost sensitive environment. 

Additionally, there is opportunity for engineers working on more long-term solutions, such as alternative fuels and powertrains.  Many of the potential alternative fuel solutions require additional partnerships since more challenging obstacles for infrastructure and delivery to consumers are in the way.  It’s very easy for people outside of the industry to criticize automotive companies for moving “too slow”.  What’s not usually comprehended is the years of development work done by the engineering community to insure quality and safety standards are met.  The automotive industry, unfortunately, has long product development cycles compared to many other industries.  There are simply too many competitors in the automotive world today with high quality for a company to take a risk on a potentially un-tested, rushed, product. 

Overall, from an engineering point of view, the automotive industry has multiple challenges today that would have not been predicted even a year ago.  However, there are still many opportunities for engineers to provide new ideas for the future of the world’s automotive needs.

I welcome everyone’s comments and discussion.