The Future of Engines Examined by James Martin of IHS Markit

By Gary S. Vasilash

Motor racing is a space where many OEMs have the opportunity to test out new technologies and to obtain learnings about performance at the edge.

Mazda Motor Corp. is participating in the Japanese Super Taiku Series, endurance racing that consists of seven rounds, including a race titled the “24 Hours of Fuji” (what a great name!).

Mazda is campaigning the Mazda2 Bio concept. This is a Mazda2 production car that has a Skyactiv-D diesel engine under its hood.

What makes this conceptual is that it will be running on bio-fuel, a product called “Susteo” that was developed by Euglena Co. Ltd.

This biofuel is made from things like microalgae fats and used cooking oil. Some biodiesels compete with food crops. Not this.

The fuel can be run in the diesel engine without modification.

The point is to help develop Mazda’s growing portfolio of vehicles that are meant to help the company reach climate neutrality.

There is a lot of discussion of powertrains for vehicles that can, like the Mazda2 Bio, use existing engines with varying degrees of modification rather than wholesale replacement, engines that can run on advanced liquid fuels or even hydrogen.

Let’s face it: There are lots of engine plants in the world, so keeping them running might be something that automakers would not be opposed to doing versus shutting them down.

However, as James Martin, associate director, IHS Markit Automotive Advisory Practice, an expert on powertrains, points out on this edition of “Autoline After Hours,” if there is combustion involved—whether it is spark- or combustion-ignited—there is going to be emissions.

So running hydrogen to power an engine and using hydrogen to power a fuel cell may both turn the wheels, but only the latter is going to be emissions-free.

Credit to Mazda for trying. But ultimately, the Super Taiku Series is likely to be powered by Tokyo Electric Power Co.

Martin says that there is momentum behind electric vehicles that is unlikely to be stopped, particularly as automotive companies announce billions of dollars of investments and investors announce their support of these advances by supporting the shares of the companies that are making the transition.

However, Martin notes, this isn’t going to be a flip-the-light switch phenomenon. Yes, Ford will sell you a Mustang with a 760-hp V8 under its hood. And Ford will also sell you a Mustang Mach-E with a 314-mile all-electric range. And that is likely to be the case for some time to come. (Yes, the same holds for an F-150 with and without an electric powertrain.)

This is what the future doesn’t look like–a Chevy LT5 crate engine. (Image: Chevrolet)

Internal combustion engines aren’t going away next week, but Martin points out that while there are likely to be some new engine programs, there are unlikely to be new engine platforms. That is, what’s there can be modified. What’s not there will not be designed from the proverbial clean sheet.

Martin talks with “Autoline’s” John McElroy, Lindsay Brooke, editor-in-chief of Automotive Engineering, and me on the show.

Among the areas visited are what becomes of some existing engines and how OEMs can wind down their production—which turns out to be a tricky proposition (Martin, when he was at GM, worked on the LT5 Corvette engine program, a 375-hp, 5.7-liter small-block V8 that was produced for GM by Mercury Marine; Martin was there when the engine was taken out of production: you’ll be surprised at the complexity of stopping production).

And, of course, the landscape of electric powertrains.

You can see it all here.

Another Straw on the OEM’s Back

As if COVID and chip shortages aren’t enough.

By Gary S. Vasilash

According to analysis firm IHS Markit, the automotive OEMs aren’t maintaining the level of loyalty with their customers that they once did.

In fact, the firm’s data show that brand loyalty dropped to a six-year low in June.

Looked at from a year-over-year perspective, the aggregate of April, May and June 2021 has a loyalty rate of 51.6% compared to 54% during the same period in 2020.

However, the type of vehicle that a person picks is something to which loyalty remains strong, reaching 55.5%.

In other words, if you have a Ford pickup truck and were out there in April/May/June for a new vehicle, there is a likelihood that you bought a pickup truck—not necessarily a Ford.

Or as IHS’s Tom Libby, associate director of loyalty and industry analysis, put it, “Households with a pickup in the garage like the concept of a pickup, and therefore will acquire another one.

“But their likelihood of their staying loyal to the brand of their pickup has diminished.”

One of the explanations that IHS has is that because of the chip shortage there are few vehicles on dealer lots. So if the theoretical shopper went out to a local Ford store for a new pickup and failed to discover anything that met their wants/needs, it very well may be that they’d go to a Ram or Chevy store, something that used to be uncharacteristic.

While the chip shortage undoubtedly plays a non-trivial role in this, there is another consideration: some buyers are simply more willing to try things that they may not have a few years ago.

Consider this the Amazon Effect: You put “wiper blades” into its search bar and it brings back some 8,000 results, brands you may have never heard of. So you try something new. It works. Then you search for something else. Again, lots of results. Maybe you’ve always only used Crest, but Colgate is something you’ve heard of, so you try it.

While this is not to say that a pickup truck and a tube of toothpaste are analogous, it is to say that if you can’t get the features you want on that Ford pickup that you can on the Chevy or Ram, there may be more willingness to take the option, especially as those are brands with which you’re familiar.

This doesn’t mean that brand loyalty is something that will disappear.

It is to suggest, however, that this is going to be an even-greater challenge for incumbent companies and challenger brands.

That Old Vehicle Is Now. . .Older

Yes, another consequence of COVID

By Gary S. Vasilash

During 2020 probably one of the last things on anyone’s mind was buying a new car or truck unless, of course, they had a feeling of being locked in and locked down so they wanted to get out there and do something with the money that they were not spending on cruises or long weekends in Las Vegas.

Light vehicle sales went down.

And according to research from IHS Markit, a consequence of that is that the age of vehicles in people’s driveways went up.

Up by almost two months.

According to the research firm the average age of a light vehicle is 12.1 years old.

(Image: IHS Markit)

Another thing happened, IHS found. The number of vehicles that were taken out of active service went up. Known as “scrappage,” some 15+ million vehicles—or 5.6% of all vehicles in operation—were, well, scrapped.

One would think that this would have made the average age go down, but the reduced overall sales and a drop in vehicle miles traveled caused, in the words of Todd Campau, associate director of Aftermarket Solutions at IHS Markit, “a radical departure from the norm.”

On the subject of vehicle miles traveled, they were down over 13% in 2020.

One result of that is that people may have allowed their registrations to expire because they weren’t going anywhere.

And if they kept it, they may be in for a happier 2021.

Campau: “The microchip shortage and subsequent inventory levels for new vehicles have created a situation in which used vehicle values have gotten extremely high, so a vehicle owner who may have kept a vehicle in the garage that they were not using in 2020, now instead may take advantage of the opportunity to either reduce the number of vehicles in their garage, or trade up to something newer while the demand and value is extremely high on their used vehicle.”

Of course, this means being able to find a vehicle that they may actually want if said vehicle isn’t a high-end SUV or loaded pickup, which is what OEMs are focusing on building as they meter out their silicon to vehicles that provide them with the highest margins.

IHS anticipates that the aging fleet will, however, get younger, as more people get in the market in 2021.

Not a fountain of youth. But a move in the right direction.

Audi’s Approach to Electric Vehicles

The Audi RS e-tron GT produces 590 hp, net. Just sayin’. . .

By Gary S. Vasilash

There are 14 vehicles in the Audi of America lineup. The best-selling model during Q1 was the Q5 crossover, with 14,731 units delivered. The vehicle that had the least amount of sales is the R8 sports car, at 148 units. This gives you a sense of the spread from top to bottom, as Audi sold 54,840 vehicles.

What is surprising is how well the e-tron and e-tron Sportback—electric vehicles—did for the brand, with the former accounting for 3,474 units and the latter 850.

Put another way, electric vehicles are a solid contributor to Audi’s overall sales.

The Audi Q4 e-tron. Part of the company’s electric offensive. It plans to have more EV models for sale in the U.S. by the end of 2021 than any other OEM. (Image: Audi)

And that number is likely to do nothing but increase. This summer the e-tron GT electric sports sedan will launch. With a starting priced of $99,990, odds are the numbers will be low. But there will be numbers.

But before the year is out, there will be two more models added to the electric Audi lineup, the Q4 e-tron and the Q4 Sportback e-tron.

Notably, the Q4 e-tron, a compact crossover, will have a starting price of under $45,000. And then there could be incentives and credits that could put people in an electric Audi for much less.

To learn about what Audi is doing in the EV space, on this edition of “Autoline After Hours” we talk with Matt Mostafaei, the Audi e-tron product manager. (The “we” consists of “Autoline’s” John McElroy, Stephanie Brinley of IHS Markit, and me.)

Mostafaei explains that one of the biggest challenges that they face with regard to getting more people to buy an e-tron is a lack of familiarity that they have with EVs. He suggests that once they’ve an understanding of the advantages that can be realized—like plugging in one’s vehicle at night, analogously to plugging in a phone, so as to have a full charge every morning—as well as the driving dynamics that are provided by an EV*, this will change.

While Tesla is certainly the dominant player in the category, and while Mostafaei says that they’d be glad to have Tesla owners or intenders come into Audi dealerships, he maintains that there is a far greater number of potential customers than just those who have gone the Tesla route.

Just think of all of the people who fuel their vehicles with gasoline. That’s a market.

Audi isn’t adding all of those EVs to its lineup just to be au courant.

As Mostafaei puts it, they see where the market is going and they’re going to help drive it forward.

In addition to which, McElroy, Brinley and I discuss a number of other vehicles, electric and otherwise, as well as the benefits OEMs—and consumers—can realize from tech like Ford’s just-introduced BlueCruise hands-free driving technology, and autonomous driving tech that will be shuttling people in Dubai—and which is shuttling pizzas in suburban Houston.

And you can see it all here.

And How Do Others Compete With That?

Tesla signifies more than an electric vehicle. . .

“Many consumers perceive Tesla as a leading-edge, high tech, environmentally progressive brand driven by a charismatic leader who not only builds cars and crossovers, but also sends rockets into space and is a global industrial visionary. That combination is hard to beat and has gotten the attention of the entire global auto industry.”  –Tom Libby, associate director, automotive industry analysis, IHS Markit 

Here’s something to consider: there are about 880 Mercedes dealerships in the U.S.—and just some 130 Tesla outlets (Image: IHS Markit)