The health of many of our businesses rises and falls (at least to some extent) on the trends in the automotive industry. So how is the industry doing? What’s the buzz out there, and what is driving growth?

    Several topics occupy the key news of the day, but they are all interrelated. Fuel economy seems to be driving growth with its commensurate job increases, and all of the other topics – materials, design, innovation and new fuels – are related to the overarching goal of attaining a CAFE-mandated fleet-average 54.5 MPG by 2025.

Materials

    Some analysts say that steel is winning in the material wars, and others say that aluminum will be triumphant. We’re not here to decide that, but it’s true that advanced high-strength steels (AHSS) offer the largest efficiency per dollar spent than any other fuel-economy material technology. AHSS can provide a 7.2% mileage gain at little or no additional cost to the automaker. This is up to six times more cost-effective than aluminum. Because steel production is less energy-intensive than other materials, it also provides a smaller carbon footprint.

    A forecast by Ducker Worldwide predicts that automotive steel usage will fall by 11% to 46% by 2025, and aluminum will nearly double to 16% in the same time period. Magnesium is also being considered for truck applications.

Design Changes Drive Investment, Jobs

   In addition to material considerations, automakers are redesigning their engines, transmissions, wheels and other things to reduce weight. Ford recently announced plans to invest $200 million in its Cleveland Engine Plant to increase production of its 2.0-liter EcoBoost engines. The investment will add 450 new jobs at the facility. This is good news for the U.S. because these engines are currently being manufactured in Spain. All of the engines used in North American production will be made in Cleveland beginning in late 2014.

    Beginning this quarter of 2013, Chrysler plans to invest a total of $374 million at four transmission plants in Indiana. This will increase production of its fuel-efficient eight- and nine-speed transmission and add 1,250 jobs. They will also be investing in aluminum foundry, but details were not released. GM will be making similar powertrain investments.

    One of the ways to remove weight is to produce lighter wheels. As a result, Superior Industries International Inc. will be investing $125-135 million to build a new aluminum wheel plant in Mexico. The facility will add more than 2 million wheels to its current production capacity of 12.5 million wheels a year.

    All of these jobs have had a positive impact on the U.S. economy. March reports of February activity indicate that the biggest production gains were in autos and auto parts, increasing 3.6% after a drop in January. New car and truck sales rose 4% in February for an annual pace of 15.4 million. This compares favorably to the 10.4 million in 2009, but it’s still short of the pre-recession peak of 17 million in 2005.

Fuels

    The big potential for growth here is for natural-gas-fueled transportation. There is a $1.75 per-gallon price differential between diesel fuel and natural gas. This is a huge driver for large-fleet companies to turn to natural gas. As an example, Waste Management already utilizes 1,700 natural-gas trucks and indicated that 80% of new-truck purchases will run on natural gas. One of the developments in this area is natural-gas fueling tanks with a plastic lining that’s wrapped in carbon composite. These tanks can increase the fuel-storage capacity by 20% while reducing the tank weight by 20%. This holds promise for bringing the technology to automobiles.

    Electric vehicles (EVs) are another fuel-related automotive development. A recent report by Pike Research indicates that annual sales of electric vehicles will reach 3.8 million by 2020. It’s believed that sales of plug-in EVs will grow at an annual rate of 40% for the remainder of the decade. Not all EV manufacturers are faring well, however. Fisker Automotive – the maker of the $107,000 Fisker Karma – is unable to pay its bills in spite of the U.S. government’s $192 million in loan guarantees. It appears that two Chinese companies are vying for a majority stake in the company.

New Technology

   Here’s a cool car to watch for in the next couple of years. The URBEE 2 (very catchy) will be the first road-ready, fuel-efficient car built using additive-manufacturing (AM) technologies (3-D printing). The finished two-passenger vehicle will comprise 40 large, intricate AM parts compared to hundreds of parts in the average car. The lightweight vehicle will be able to go 70 MPH on the freeway and will use biofuel, like 100% ethanol. The goal is for the URBEE 2 to drive from San Francisco to New York on a record 10 gallons of fuel. Any volunteers? IH

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