Future of the Auto Industry

As this is a time of rapid change for the North American auto industry, it's interesting to think about how things might be improved.

Standard Parts

Say to the industry: Either agree on standards for each part in the cars you sell, or you've got to make onerous accounting provisions for supplying those parts for the next twenty-five years. There's both a stick and a carrot here, as the replacement period is substantially increased, but it can be avoided entirely if the part is standard. To be standard, a part must be royalty-free, and must actually be used by many manufacturers.

Replaceable Subsystems

Once subsystems become standard across manufacturers, it becomes easier for third parties like Tata or Magna to offer a replacement air conditioner or transmission. It also becomes easier for garages to service vehicles whose manufacturers they don't have a relationship with. Replaceable subsystems will lengthen the life of vehicles, which are now being written off whenever something major breaks down, because the cost of replacing the damaged part approaches the cost of manufacturing a new car.

Internet Configuration and Sale

Any car sold in NA should be purchasable through a single internet-based market listing all configurations and financing options. Any financing institution capable of making an auto loan, including credit unions, should be able to bid for car buyers' business on this site, which would also list used cars. If there's a class of people who deserve not to come back after the current downturn, it's car dealers: their business model is based on scarcity of information.

Long-Term Goal: Mix-and-Match Automobiles

Once subsystems are standardized, the buyer should be able to build a car out of subsystems from different manufacturers. This completes a trend that has been going on for decades, in which the big manufactures outsource more and more of their production; it's just that the end buyer will have more control over the process.

Manufacturers can still differentiate based on quality: Volvo can say that its version of standard auto body A3 performs better in crashes than Chrysler's A3.

If this works, expect small brands to emerge, using mostly custom parts and bolting on a few custom pieces.

Power Train Flexibility

Over the next few decades, there will be shifts in the kinds of fuels, engines and motors used in cars, as regulations and technologies provide new design freedoms and constraints. Ideally it would be possible to optimize for these conditions without replacing the whole fleet of cars on the road, through standardization and replaceability of power train parts.

Longer minimum warrantee.

In the NA auto market, the cost of any manufacturing defect found in the first five years must be borne by the automaker.

Waste Disposal

Continuing in a Californian direction, build the cost of recycling cars into their purchase price. This gives the maker an incentive to make cars more easy to recycle. This is necessary to make environmental accounting work for hybrid cars with environmentally questionable battery technologies.

By making new cars more expensive, we give drivers an incentive to keep their existing car going longer, and to shop for something that's going to last.

Will automakers be able to make money under these rules?

Not so much as previously. A transparent internet market would increase competition, and eliminate the need for automakers' financing divisions. Road tolls and internalization of environmental costs will make driving more expensive, so over the decades to come, the population is likely to live closer to work and telecommute more. Longer-lasting cars will drive down the fraction of the population involved in making cars.

My expectation is that the typical family will own the smallest possible car and rent larger vehicles for big trips.