Wes Lutz on mobility tech assumptions: “Each one of these narratives might sound right. But the truth is that each one is built on false or unproven pretenses.” Photo credit: HANNAH LUTZ
DETROIT — As new technology and transportation services emerge, Wes Lutz, chairman of the National Automobile Dealers Association, cautioned the auto industry — and the press that covers it — to take the prognostications of how primary transportation models will change with a grain of salt.
Lutz, president of Extreme Chrysler-Dodge-Jeep-Ram in Jackson, Mich., objected to three refrains that have become common in the industry:
- People will no longer buy personal vehicles.
- Autonomous vehicles will eliminate traffic fatalities.
- Dealers will have to be dragged into the electric vehicle revolution.
“Each one of these narratives might sound right. But the truth is that each one is built on false or unproven pretenses,” Lutz said at an Automotive Press Association luncheon here. “And these narratives are put out there by stakeholders that have an obvious incentive for them to be true — even if they aren’t.”
The developments are exciting, and they are “shaking up the industry,” Lutz acknowledged. “But many of those individuals and entities are also, for lack of a better phrase, sort of having their way with the press right now.”
Personal ownership
Consumers will continue to own vehicles for personal transportation and use ride-hailing services when it makes more sense than driving, he said.
The cost of using ride-hailing services as a primary mode of transportation was at least twice the cost of owning a new midsize sedan in 20 of the largest metro areas in the U.S., Lutz said, referencing a study by the AAA Foundation for Traffic Safety.
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“That certainly doesn’t sound like the spin we hear from Silicon Valley, or mobility think tanks, or Wall Street,” he said.
AAA found that the average cost of relying on ride-hailing services as a primary mode of transportation was $20,118, compared to the annual cost of $10,049 to own and operate a vehicle in the same urban area. The study accounted for fuel, maintenance, repairs, insurance, licensing, registration, taxes, depreciation, loan interest and parking over an average of 10,841 miles a year.
Without a parking cost, the annual cost to own and operate that vehicle dropped to $7,321, nearly three times less expensive than the ride-hailing figure.
The study “disproves one of the central pillars holding up the argument that people are going to stop buying cars, which is that it’s cheaper to use ride-hailing services.”
Consumers want the flexibility and control that come with vehicle ownership, he said. “The whole country didn’t wake up today and just take a taxi to wherever they were headed. And it’s the same reason they aren’t going to do it tomorrow, or the next day.”
Safety debate
Lutz’s second point: There’s not enough data to know whether self-driving cars are truly safer than vehicles driven by humans.
“On the surface, the notion that self-driving vehicles will ultimately be safer than vehicles today certainly feels true,” he said. “But that argument is built on the premise that humans are lousy drivers.”
Last year, Americans drove more than 3.2 trillion miles, and there were 37,000 traffic fatalities, he said. That’s a high number, but nearly 90 million miles are driven in the U.S. for every motor vehicle fatality, he added.
With the technology in vehicles today, such as automatic braking and lane assist, people are becoming better drivers, he said.
Ask automakers, regulators and safety advocates, Lutz urged an audience of reporters: “What technologies are coming online in the next five years that will reduce driving fatalities, and that don’t involve removing steering wheels, and brake pedals, and humans?”
“In the discussion over autonomous vehicles, those answers should matter, don’t you think?” he said.
Dealers and EVs
For years, Lutz said, he has heard that one of the primary reasons electric vehicles aren’t selling more is that dealers don’t want to sell them.
“I want to sell anything my customers want to buy — period. It could be powered by turtles. I don’t care,” he said. “If there’s demand for it, I want it in my showroom. In fact, there is nothing I would want to do more than sell every American a new electric vehicle.”
Electric vehicles are more expensive than vehicles with internal combustion engines, have a lower residual value and can’t be refueled as easily or quickly. Plus, gasoline is cheap right now, Lutz said.
Lutz makes his service revenue on tires, brakes, suspensions, alignments and electrical systems, which all electric vehicles have. He would sell them, but consumer demand is missing.
“We are not only living in exciting times, but also in an era that rewards bold predictions more than gritty reality, especially when reality isn’t that exciting,” he said. “But I don’t think it’s a bridge too far to expect reporting on our industry to always be rooted in the reality and facts as we know them today — not the spin that gets Wall Street all jazzed up.”
“Question the hype, ask for proof, and find out what they’re not telling you,” Lutz told reporters. “The future will work itself out regardless. I just want us to be informed in the meantime.”
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