Why the decline and fall of the motor show can help transform the ailing auto industry
The global motor show is a cathedral to a religion in decline. A rolling global calendar of shows, each assembled to preach the cult of the motorcar, it allows auto companies to bring new offerings to the gods of transport. Yet the motor show, once a representation of a Byzantine power, which heralded and supported the progression of the greatest symbol of economic growth and personal mobility, is increasingly at risk.
As the world faces up to its biggest challenges, a global health crisis, declining consumer sentiment and a shift in political momentum due to increasing activist pressure to save the planet, the motor show could become a dying civilisation.
An outdated model
While the extinction of the motor show would be missed by some for the product glitz and industry tub-thumping, the reality is today’s motor show event has a patina of distress that makes it look outdated against the major changes occurring in personal mobility. Nostalgia and maintaining the status quo are no longer valid reasons to justify the cost, environmental impact and continuity of such a global circus. The longer the motor show continues in its current form, the greater the erosion of the auto empire – a continued oxidisation that will eventually be irreparable as the motor show remains out of step and out of touch.
History has taught us that many an empire starts to crumble and self-destruct when an ideology is steadfastly maintained, its power waning, as the tide changes and the momentum of progress continues outside its domain. The cancellation of the recent Geneva motor show may just prove to be a seminal moment in the history of how this great empire projects itself to the world.
Coronavirus highlights a greater threat to the industry
Following the advice from the Swiss government to ban gatherings of 1,000 people or more, the organisers of the Geneva Motor Show were left with little choice but to cancel outright the 90th staging of the event just three days before it was due to open.
As one of the big five global shows (along with Paris, Frankfurt, Detroit and Tokyo) the Geneva Show wasn’t the original motor show (that title is held by Paris, the first show being held there in 1898, thanks to industry pioneer Albert de Dion) it has arguably become the leading motor show in the world. With no domestic auto industry in Switzerland, the Geneva Show was able to remain neutral, levelling the playing field between large and small, encouraging the mainstream and the more outlandish to be exhibited side by side.
The cancellation may have been caused by the Coronavirus pandemic, but it underlines the bigger crisis striking at the heart of one of the most important global industries for economic growth, technological innovation and environmental impact. It is also a harbinger for what is yet to come for the auto industry.
The end of an empire?
The cancellation has to be placed into a wider context about the auto industry as it braces for a third year of recession. Global disruption, market polarisation, weaker consumer confidence, over supply and over capacity from an incumbent industrialised industry footprint and disruptive supply chains have already hobbled the industry.
Add to that the challenges of stricter emissions targets, the move to electrification, evolving product design and platform requirements, plus the fundamental shift towards to autonomous mobility as a service and integrated modes beyond the car, and it becomes clear that the auto empire is now fighting most challenging and complex battle it has ever had to face.
So, could the cancellation of the Geneva show start to turn the tide away from large, multi-brand physical events that showcase the legacy of the car, towards a new opportunity for the car to lay claim to a diversified and valuable role in a brighter and better future of mobility?
For too long, motor shows have been better-the-devil-you-know for global auto manufacturers. For some, there is no more effective alternative way to achieve their ambition of ‘five minutes of fame’ on a global stage. For others, with the resolve and deeper pockets to achieve it, they have more frequently gone it alone. The new entrants (like Tesla) often don’t even bother with motor shows, eschewing traditional channels in favour of other, arguably more effective ways to spread a new gospel about mobility.
Today it says something when the headlines at shows are gathered more by the brands who don’t turn up than those who do. For too long brands have been looking for alternatives to the motor show but have never demonstrated the confidence to fully let go. Some brands disappear for a while, skip a show or two, but then they always seem to return. Just last year all three German luxury brands pulled out of the Detroit auto show. Several key brands also opted out of the Geneva, Frankfurt and Paris shows in 2019, with some due to return to events this year – should they ever take place.
Other car companies have decided it’s more effective to host a private event where they take centre stage, often held before the motor show so they can maintain the spotlight on their brand(s) and new vehicle introduction. A separate event allows manufacturers to control the narrative and ensure a deeper engagement with the stories they want to tell.
Questioning the ROI
The cancellation of Geneva on the calendar provides incumbents the perfect opportunity to re-evaluate the merits of preaching at the pulpit of the past. Like lancing a boil, the undoubted pain of a cancelled motor show could instead lead to a positive outcome, a necessary consequence of the dramatic shift taking place in the auto industry.
Firstly, it’s necessary for auto companies to overcome the impact and financial losses generated due to the cancellation of the Geneva show. Car manufacturers make significant investments in stands, vehicles and personnel to make their show presence a success. The organisation takes months of disciplined planning and several weeks of even more diligent and, often fraught, construction from an extensive network of partners and suppliers.
Every show is a colossal undertaking, requiring an army of people for every event, the execution of which they now have down to a fine art. Then there’s the economic impact of a motor show. According to a recent Reuters report it’s estimated that 660,000 people attended the Geneva motor show in 2019 and it generated approximately $250m of business.
Secondly, with the costs of the Geneva motor show sunk and the economic impact lost, for future shows it’s worth delving deeper into the trade-off between costs to attend and the return generated. Costs depend heavily on the venue, floor space, number of introductions etc. but it’s typical for a show to cost anywhere from $1m upwards for the stand, hospitality, and floor space. This excludes staff travel, so it’s more in the region of $5m all-in to be present at a major show.
Automotive News, in an article about the seismic changes taking place at the Detroit auto show, quoted former Cadillac President Johan de Nysschen as saying “Auto shows have become very expensive. Just doing press conferences is some staggering cost. I don’t know why they’re that expensive.” It’s therefore not surprising to see that the auto industry can spend upwards of $250m collectively on staging a motor show.
Equivalent Advertising Value – the metric for motors
On the other side of the equation the returns can typically be broken down at a high level into impact and car sales generated. The auto industry typically measures, like others, impressions, share of voice and equivalent media spend, often referred to as ‘Equivalent Advertising Value’ (EAV). That is, how much coverage across the various channels (online, social, print etc.) was generated from a show and what would have been the equivalent spend to achieve that coverage.
The auto industry has always focused on output, on increasing value-add and its contribution, which makes EAV a great metric for justifying the cost of and post-rationalising the reason for being present. While EAV is criticised frequently in PR circles, the reach and impact of a motor show is hard to ignore. And with that “what gets measured, gets done.”
Motor shows were originally established to sell the latest cars, the automotive equivalent of “show on Sunday, sell on Monday.” And while Geneva still remains one of the shows where direct sales are still effective for the smaller, niche brands the reality is that motor shows have a less significant effect on sales in today’s digital age. It is therefore increasingly challenging for auto companies to justify the cost when they measure any investment against the net return – either by sales or PR impact, both of which are nebulous at best.
Time to measure the total impact
There is another fundamental impact that motor shows are neglecting, however. That is environmental. With the carbon footprint of the global car industry equalling 9% of annual global greenhouse gas emissions according to a new Greenpeace report ( “Crashing the climate: How the car industry is driving the climate crisis”), and with consumer awareness of climate at an all-time high, the environmental cost of staging motor shows is placing the auto industry under significant reputational risk.
Dr. Andrea Collins, a lecturer at Cardiff University in the UK, is an expert in the measurement the environmental impacts and legacies of events and festivals, with her studies showing that visitors ‘create a carbon footprint 8.5 times larger than if they didn’t attend at all’, with almost 50% of emissions generated by travel. Other research studies have shown that an average three-day, 1,000-person national conference, generates approximately 585 tonnes of CO2 emissions.
It is therefore estimated that the Geneva motor show, running over a two-week period with a two-week setup and one-week teardown, could create between 790,000 and 1.15 million tonnes of CO2. Extrapolating this analysis indicates that the largest show on the calendar, the Frankfurt motor show, which at its peak attracted 931,700 attendees in 2015 (but has fallen to 810,000 in 2017 and 560,000 in 2019) according to the VDA, could generate between 1 to 1.5 million tonnes of CO2 per show.
A carbon tyre-print…
These numbers represent a potentially staggering carbon footprint and environmental impact, which, when placed into context, would need to be offset by selling an additional 38,900 to 57,000 electric vehicles per show. This figure is calculated based on a ten year lifecycle, driven for an average of 10,000 miles per year whereby the emissions are approximately three times lower for an EV (0.96t CO2e) than for an average petrol car (2.99t CO2e), even before accounting for the falling carbon intensity of electricity generation during the car’s lifetime. To put this into context, 14,156 electric vehicles were sold in Switzerland in 2019!
Therefore, a significant part of the problem is not only re-evaluating and accounting for the true impact of the event, but also what is measured and what a desirable outcome looks like. In a world of increasing constraints, moving to a system of measuring not only a different type of impact, but a reduction in impact and not an increase, a saving not a spend, may just start to help auto manufacturers make the shift away from the traditional auto show and along their journey towards future mobility.
Imagine if the saving in CO2 and the $250m spent by all manufacturers could be deployed elsewhere to make a better impact, not just for the individual auto company but the industry as a whole. This collective responsibility by the auto industry would ensure that the underlying role of all companies in transitioning towards future mobility and improving the environmental impact the industry has on the planet is made a lot more meaningful and impactful to achieve its goals.
The question is therefore no longer, ‘Should motor shows be consigned to history?’ but ‘When should motor shows no longer be part of the equation as to how auto manufacturers present themselves and take new products to market?’
The post motor show landscape
So, what does the future look like, and what will take the place of the motor show to allow auto companies to strengthen their commitment to a new electric and autonomous future?
The auto industry has already experienced significant levels of polarisation, in many aspects of the market – product, customer, price – whereby the middle and mainstream are often squeezed. No doubt motor shows will suffer the same fate with the inevitable consequences of the auto industry polarising between more experiential, interactive showcases at a local level, that appeal to defined audiences, while also rethinking the ‘traditional’ launch across a much broader digital channel to increase awareness and generate engagement, both for new product launches and new modes of mobility.
For example, the UK’s Goodwood Festival of Speed has seen significant growth over the last 10 years, both in terms of auto companies in attendance and the number of attendees. Compared to Frankfurt, it costs three times less to attend but with only 200,000 visitors that are more tribal and aligned in their enthusiasm for the motor car. The event is self-selecting.
While some motor shows such as Detroit try to transform into experiential events, using Goodwood as their inspiration, this won’t fundamentally try to address the challenges already outlined. So instead of finding a replacement for the motor show, perhaps it’s about totally rethinking the approach, and understanding how virtual events can reach a much broader audience, without the carbon footprint their physical attendance might have.
In the future the majority of the auto companies who planned to unveil their cars physically may well do so digitally instead. At present these so-called “digital press conferences” are effectively a Plan B but they should become Plan A. Virtual events are more open and inclusive, featuring live streams and video recaps across multiple social channels. They will provide the perfect opportunity to evaluate their effectiveness as a stand-alone event against the physical exhibit plus digital stream and demonstrate how less can be more.
So, in the near term, perhaps the best motor show is one which doesn’t exist. When every end is a new beginning, and the journey for auto companies towards a new horizon of mobility is getting ever closer, it requires bigger and bolder steps in the transformation of this great industry if the players are to survive.
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