Posts By: Mike Smitka

By on April 20, 2015

IROX Polymer-Coated Engine Bearing

Suppliers are integral to new technology in the auto industry to an extent not true since the early years of the 20th century, when ventures such as Ford began as mere assemblers, not manufacturers. That will be highlighted on Monday at the 21st PACE “academy awards” for supplier innovation. (For those not in the know, Monday’s the opening night of the SAE [Society of Automotive Engineers] in Detroit.)

(Read More…)

By on January 2, 2015

TakataHarness_Installed_04

車輸送カルテル罰金、日本郵船71億円で合意

OK, you probably can’t decipher that. The news – this headline from Yomiuri – is the latest in the supplier antitrust cases that ring the world, from Japan and Korea through the US to Germany. Even China has gotten into the act, slapping fines on firms that charge “excessive” prices for OEM aftermarket parts, though that is a reflection of price discrimination (selling for what the market will bear) rather than collusion.

(Read More…)

By on December 24, 2014

AIRBAGS1-master675

The Takata airbag inflator problem illustrates a fine dilemma: quality standards across the auto industry are good, those for safety-critical devices are exceptional. The higher the standards, the more difficult it is to spot, much less address, potential problems. If there are only a handful of “incidents” reflected in accident or warranty reports, it requires luck to spot a correlation. Such reports aren’t necessarily high in quality. So even when there does appear to be a potential issue, small numbers and limited information make tracing the root cause(s) challenging and potentially impossible.

(Read More…)

By on October 24, 2014

tesla-store-opening-in-westfield-mall-london-oct-2013_100444200_l

Bloomberg’s op-ed “Detroit Fights Innovation — Again” is not about the Detroit Three of GM, Ford and Fiat Chrysler [merger consummated Oct 12th] or even manufacturers, but about Michigan and (indirectly) automotive dealers. It makes the very tenuous claim that a ruling blocking Tesla from running company stores (which is in fact in line with existing state law) is tacit protectionism that represents a step backward. Indeed, the article implies that the restriction is ultimately aimed at preventing a Chinese invasion. In fact the policy is misguided because history shows that there’s no need to fear factory stores, at least as long as they’re not set up by a car company so as to undermine their own existing dealers.

(Read More…)

By on October 7, 2014

940e2a30f75b1ec040b567fcb4679272

I don’t normally post about vehicles themselves, but I am endlessly fascinated by the industry, and constantly surprised to learn of new niches. On the finance side, I’m amazed at the variety of vendors that show up at conferences such as those sponsored by Auto Finance News. One of these years I’ll make it to SEMA (the Speciality Equipment Market Association), which by reputation has both the credible and the incredible. But back to my topic: once in a while I do find products – or rather niches, I’m not a “car guy” – that intrigue.

(Read More…)

By on October 3, 2014

FEDERAL-MOGUL CORPORATION LOGO

ZF Friedrichshafen is buying TRW; JCI sold its automotive business to Gentex and Visteon. Are we in a new era of supplier M&A activity? The previous wave didn’t work out well – Dana, Tower, Dura, Lear and others ended up in Chapter 11.

So how about Federal-Mogul? They too went on an acquisition binge in the late 1990s, including the British firm T&N. In the process they took on debt, with a $2.75 billion package just for the T&N purchase. As with others, they bit off more than they could chew. Federal-Mogul’s downfall however wasn’t operational issues but one T&N factory that had used asbestos. The accompanying $1 billion-plus in costs tipped them into Chapter 11, and it took until 2007 – 6 years – for them to emerge. So where are they heading?

(Read More…)

By on September 5, 2014

OLYMPUS DIGITAL CAMERA
Jack Baruth has a very thoughtful post on selling his green stick, apparently an Audi. (See No Fixed Above: Stick it to ’em.) Here I delve into his logic as a devil’s advocate.

A key observation throughout his post is that most (newish) used cars move through dealerships, and for many there is an auction through a Mannheim or Adesa in between the trade-in and the used car lot. The same is true in Japan: the graphic above is of a car auction in Osaka, though on-site buyers sit at computers with a huge display of the two virtual “lanes” with no audible action. (For more see my post on a June 2014 visit at Auto Auctions, Japanese Style.)

(Read More…)

By on August 28, 2014

Chevrolet_trio_2011_WTCC_Race_of_Japan_(Race_2)

Well, clearly racing does make money for someone, at least enough to be a mini-industry. Does it though make sense for the Fords and Hondas of the world? Two students staked out roughly opposite positions on racing’s value as a technology driver; I’ll leave my thoughts to the end.

(Read More…)

By on August 21, 2014

Autos3I’m an economist, and do more than think about the industrial organization (IO: “structure, strategy, conduct and performance”) of the auto industry. Here I present overall employment data and then focus on the automotive component. For a recent item on inflation and interest rates see here at my blogspot blog, Autos and Economics.
(Read More…)

By on August 12, 2014

1965_Rambler_Classic_660_Cross_Country

Discussions of GM’s “small” pickup touch on several deep issues. One is the nature of competition in the industry at the OEM level: to what extent is it an oligopoly, in the sense that each firm takes explicit account of the anticipated behavior of rivals in their product planning? The other is as murky, what is the cost structure of the industry? Neither is readily observed, even by executives at the Toyotas and GMs of the world.

(Read More…)

By on August 8, 2014

By Louisa Ortiz (Junior, Ketchikan Alaska) and Mike Smitka (the Prof, Detroit Michigan and Lexington Virginia) edited from her post of May 11th, 2014 in Economics 244 (link here). This is the latest in a series of (edited) posts by my students, many of whom got into blogging and all of whom performed well in a class that while on the road or with a visiting speaker could begin with an 8 am departure and not end until a 10 pm return. Kudos to them!

Disclaimer: we have no particular knowledge of these EOBR services; they were chosen for their decorative value.

Truck accidents can be horrific, and Washington and Lee is just off I-81, which has some of the highest density truck traffic in the country. My son was forced off the road while commuting to school – with a police car there to witness it. A Japanese tourist passing through the county was less lucky, rear-ended by a truck as he tried to merge. His wife in the rear seat didn’t have her seat belt on (typical in Japan), and was thrown from the vehicle, dying later that evening. (I was called in as an interpreter, small town networks being what they are.)

 

In many ways it was the quintessential accident, a chain of chance events. The truck driver was under lots of pressure. Driving big trucks was the only profession he’d ever had. He’d never had an accident, indeed he’d never had a ticket, but the Canadian company that employed him was in bankruptcy. He’d driven more than the legal number of hours; likely he’d dozed off. The driver of the car was lost, and it was getting dark. Again, there happened to be a policeman there who saw the accident; he claimed the car was traveling at a normal speed, but I got to know the driver and suspect he was likely going closer to 35 mph, not 55+ mph. Oh, and before I forget, the driver and the daughter who was traveling with them both had their seatbelts on and were uninjured: buckle up!
(Read More…)

By on July 28, 2014

1024px-Mitsubishi_Delica_D5_001

 

 

In April, when they released their FY2013 annual results, MMC (Mitsubishi Motors Corp) reported record profits; see Reuters and Automotive News for stories.

Don’t get too excited.

(Read More…)

By on July 22, 2014

81EbHc-EfRL._SL1500_

TTAC’s had periodic posts about car theft, from a recent news item on a student project disappearing in the night (here) to hacking into a car (here and here). A recent book however provides a, well, book-length treatment.

(Read More…)

By on July 15, 2014

early-vehicle-lores

Please welcome TTAC’s newest contributor, Professor Mike Smitka. Mr. Smitka teaches a course on the Economics of the Auto Industry at Washington and Lee University in Lexington, Virginia and is regarded as an authority on the automotive world. He also makes time to read and comment on TTAC.

Google’s senior executives are busily touting the wonders of autonomous vehicles. There’s the technological marvel, at least in the eyes of Silicon Valley. There are the economic benefits – no more congestion, no more accidents. Wonder of wonders! – and great for the Google empire, and for its stock price.

(Read More…)

Recent Comments

  • Tstag: JLR have built a Defender that is designed to be supreme off-road, but at a price. They aren’t interested in...
  • SuperCarEnthusiast: JLR should built this style for the retro 2021 i stead of their “crazy” no style rounded bland...
  • RHD: Ford, not wanting to appear to be copying someone else’s good idea, is now reconsidering its hush-hush...
  • Varezhka: Toyota already have a battery R&D and manufacturing joint venture with CATL, BYD, and Panasonic. Given...
  • EBFlex: “ I have yet to clip another vehicle or object with my front bumper so is this technology for the sake of...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber