Sergio Marchionne on the future of the auto industry
Sergio Marchionne is one of the auto industry’s longest serving CEOs, and his position at the top of the pyramid for both Ferrari and Fiat Chrysler gives him a unique perspective on its future. And, despite his contention that Ferrari has to protect its brand from some of the trends sweeping through the industry (he has famously ridiculed the idea of an electric Ferrari), Marchionne is not opposed to those trends more generally. In fact, he says, carmakers will have to get with the program, or be left behind by disruptive tech titans like Google’s Waymo and Tesla Inc.
Auto Industry Holdings in Dominion’s Managed and Luxury Funds have skyrocketed over the past 30 days, between 11% and 12% each
SOURCE: Yahoo Finance
The two big areas of speculation, of course, are electrification and automation. As carmakers move towards more sustainable forms of power, and self-driving vehicle solutions, Marchionne says they need to “quickly separate the stuff that will be swallowed by commodity from the brand stuff.” By this, he means that “premium brands” will be able to survive the onslaught of disruption, while “mere people-transporters” will struggle.
Within a decade, Marchionne expects that there will be “widespread adoption” of cars at “level 4 autonomy” (that means cars which can drive without human intervention in restricted geographic areas). He also sees 2025 as a tipping point for electrification and hybridisation, saying:
“By 2025 more than half of the power units you see on the road will have some relevance of electrification. There may be a base combustion engine, but it is combustion and electrification that will make the machine run. Electrification will happen not necessarily as full battery‑electric vehicles but in combination with other forms of power. It’s going to be a very interesting time.”
What is the biggest risk to carmakers over the next decade? Marchionne returns to the theme of failing to distinguish oneself and becoming a “mere people-transporter”: “If you provide basic transportation,” he says “it is like buying a generic phone.”
Dominion holds Ferrari in its Global Trends Luxury Fund; Alphabet, the parent company of Waymo, in its Global Trends Ecommerce Fund; and Aptiv and Delphi Technologies in its Global Trends Managed Fund.
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