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Paranoia

The industry has recovered quite well. Not even the Polar Vortex could put an on-going chill on auto sales, which showed strength as March closed.

The Mozart Automobile Collection in Mountain View, California (no, it has nothing to do with the Austrian composer, but was established by Silicon Valley developer John Mozart) is full of an array of wonderful cars. Among them are vehicles from Dusenberg and Cole, Simplex and Stutz. (Of course, there are also Ferraris, Bugattis, Mercedes, etc.)

I was there related to the cover story in this issue on the Audi A3 Sedan.

Scott Keogh, president of Audi of America, standing among the 60-some cars, said to the group of us assembled amid the collection that people sometimes wonder why executives of auto companies often appear driven, “almost paranoid.” (Interestingly, and coincidentally, I think, Keogh was about six miles away from Intel HQ in Santa Clara, whose legendary leader Andy Grove once cleverly observed, “Only the paranoid survive.”)

Keogh went on to explain that in the early days of the auto industry there were some 5,000 companies building cars. “You all know how many exist today,” he remarked. Nothing near that number. Lots of names that are now in museums and other collections. Dusenberg and Cole, Simplex and Stutz.

We all know that there is tremendous churn in Silicon Valley. While there are some companies that are long-lived stalwarts—like Intel or HP, although that is far from being what it once was, and the new Apple HQ is being constructed on a site where there were once HP buildings—there are plenty of companies that have risen, existed, and vanished. It is Schumpeter’s “creative destruction” in spades.

But when it comes to the auto industry, there seems to be a sense that everything is steady and stable. It wasn’t all that long ago, however, that Chrysler was owned by, well, Chrysler, before it was owned by Daimler and then an investment firm and now Fiat. (Yes, there was the government in there, as well.) It wasn’t all that long ago that you could buy a Plymouth.

Nor was it all that long ago that you could buy a Saturn or an Oldsmobile or Pontiac or a Mercury.

Sure, those brands are still on the road and in used car lots. But it won’t be all that very long until they, too, are gone or in museums.

While Keogh noted the certain levels of anxiousness that may exist among the upper ranks in the auto industry, I wonder whether there isn’t a more wide-spread condition that is pervasive among those in the ranks below the executive suites. This is a condition that is actually more deleterious to the people and the companies at which they work.

It is complacency.

The industry has recovered quite well. Not even the Polar Vortex could put an on-going chill on auto sales, which showed strength as March closed. According to Autodata, the total U.S. light vehicle market in March was 1,537,288 units, which was up 9.8% compared to March 2013. And for the year through March, the sales were 3,743,742 units, up 2.7%. Arguably, the aforementioned weather did take its toll, as January sales were off 3.1% compared to a year earlier and February sales were flat, so the March performance, bringing up that percentage, was solid.

While people shouldn’t mope about the past—a past which saw more than its share of cardboard boxes and empty desks and cubicles, of shuttered plants and empty parking lots—and while one shouldn’t be fearful of the future, a sense of complacency—“All of that bad stuff is behind us and so it will be the status quo from here on out”—is exceedingly hazardous.

The levels of competition are going to continue to get higher. Although the Great Recession caused capacity to be taken out of the market, more is being added, and with that means that the number of cars and trucks looking for customers is going to rise. Then there are factors like fuel efficiency standards that are going to be causing non-trivial changes in the way things are done when it comes to designing, engineering and producing cars and trucks. Think only of the ramifications and implications of the 2015 aluminum F-150 and what it means to people ranging from materials suppliers to joining technology providers. If you were part of the status quo, you know that you’re not in Kansas anymore. And there will be more changes coming at a faster pace, changes that will upset “the way things are done around here.”

Maybe a little paranoia is a good thing.

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