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Johan de Nysschen Interview


rmc523

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It feels like car companies are operating today on two almost diametrically opposed prerogatives. The stock market, which is all-important, wants companies to be all over autonomy and electric vehicles and the future. At the same time, it wants them to deliver record profits now. Any interest in market share for market share’s sake or having a diverse model range or having a global footprint has gone out the window.The stock market’s short-term focus is troublesome not just for the auto industry, but also across all sectors. It is problematic. Because it really does force management to optimize the short-run results. When you do that, then you can just steer for the best possible long-term outcome that ensues from all the short-term optimization. If you are a leader now at any one of the world’s auto companies, you are facing a set of circumstances, which in terms of the complexity, probably exceeds that that’s ever gone before.

You have to manage your conventional car portfolio with entries that are developed to a point of being highly capable and competitive in terms of both product substance and cost. To allow you to compete on the world’s stage. And those vehicles have to generate profits. On the other hand, you also now have to face the reality that the industry is experiencing incredible disruption that’s primarily driven by technology and advanced connectivity. The increased connectivity speeds and ability to take computing off-board is transforming the automobile and its use case.

You also have to deal, obviously, with artificial intelligence and autonomous-vehicle technology. You have to get your arms around developing the capabilities, the technical ability, and competitive products in the zero-emission space, an area where there is still very little consumer demand.

 think companies are being forced to make some trade-offs. They have to continue investment in their conventional portfolio, but contain that investment to only product type securities and segments that are putting money in the bank. And with the shifting consumer demand away from sedans, that pure rational logic is what has seen companies like Ford, for example, decide to vacate certain passenger-car segments. But doing that enables them to focus on the conventional segments that will make the most money.

Manufacturers will have to decide. They can’t double up their investment and both maintain the conventional portfolio and develop all these new-technology vehicles. That’s because the conventionally powered cars are still going to be around a long time. People almost get offended when I say this. But people tend to think of the world and define it by their own experience, their own environment. If you’re sitting in California, it’s very easy to imagine that the EVs already here and that there’s this global demand and you just need more charging stations. Go to the Midwest—good luck with that idea. Remember, the auto companies all have global footprints and their geographies transcend the borders of the United States. There are many markets that are far less mature than even the U.S.’s embryonic EV market. You therefore have to still imagine that you’re going to be investing in internal-combustion-engine vehicles until 2035, or perhaps even beyond. So that’s a given.

[On the other hand,] if you want to play in China, you have to, quite clearly, make sure that you are able to take into account all of these regulatory requirements.

Do you feel that some companies are not being as aggressive as they ought to be?

Yeah, well, not everybody is. Everybody realizes where the future is leading by now. But some started late. I think Ford, for example, is getting punished by the stock market for being late, not just in electrification but also mobility. What Ford’s strategy is going forward, I just don’t know.

What about Cadillac can you talk about? I learned recently that it wasn’t your idea to move its headquarters to New York, but that is certainly not the way that story was told in the press and that’s seemed kind of unfair.

That’s true. When I was recruited, I was informed that the company would relocate to New York. In fact, I met with Dan Ackerson at the Detroit Athletic Club, after Mary [Barra] had already been appointed as CEO. He said to me that that decision had already been taken by him while he was CEO. It predated me quite considerably. When I arrived at the company, it was the worst-kept secret and I will have to say that the morale of the Cadillac team wasn’t great. I had the joy of announcing the relocation internally, and of course once you announce it internally, it’s external. And I think in that way, my name got attached to it. I didn’t mind. Somebody has to announce it.

I will say that the principle of putting some distance between an empowered semi-autonomous Cadillac division and the rest of the corporation to me to this day makes a lot of sense.

I think the issue was up until that stage, until the Cadillac division had been created and empowered to control its own product manning, marketing, and distribution, all of those things had been done corporate generically for all the brands. I always said that the rules of the luxury market are different than the rules of the mainstream market. What’s good for Chevy isn’t necessarily good for Cadillac.

The thing is if you didn’t have geographic separation, the meetings and the decision makers and the faces won’t change. Did it have to be New York? I don’t know. It’s an expensive place, which I encounter every day of my life [living in nearby Hoboken]. But it’s also clear that folks who rooted for Detroit felt betrayed. Cadillac had an enemy. The truth of the matter’s quite different. I always say that it felt to me that Cadillac had its roots in Detroit, always will be from Detroit and Detroit’s their hometown, and we wish that our hometown would be rooting for us as we go and challenge the world to become what we used to be.

The way I saw my job at Cadillac was to grow the company again. To achieve that by addressing the constraints in the product portfolio, in terms of powertrain availability. Engines were generically developed with the Chevy brand in mind and, then, “Okay, well, yeah, it’s good enough for Cadillac.” The strong U.S.-centric focus that so characterized Cadillac’s entire existence was precisely what inhibited it from getting the products that it needed because the volumes just weren’t there to justify the investments, and every one of the [proposed] projects would bomb out on the financial evaluation. GM—having gone into bankruptcy and emerged from it very successfully—has a very vigorous set of requirements for new investment. There are no pet projects.

There's a lot more at the article, but there are some interesting points.

https://www.automobilemag.com/news/johan-de-nysschen-interview-gm-cadillac-autonomy/

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