Having invested hugely in facility upgrades, new management systems, personnel training, and more, as many of you have done, you might anticipate a period of relative calm for the next few years. But it is not going to happen. Your new bricks and mortar will no doubt serve for the immediate future, but everything else about the business will continue to change - quickly. And your only viable option will be to adapt, for the driving forces behind those changes will be outside your control.

The future - your future - will be shaped by an ever-changing gumbo of politics, technology, energy supply and demand, environmental issues, and economics. Even natural disasters can play a role, as the effects of Hurricane Katrina amply demonstrated last summer.

Thirty years from now, you may be selling time-shares in fuel-cell powered, transformable-bodied transportation modules, either on-line or from a boutique store-front in a city centre, and servicing them at co-op satellite facilities in the exurbs. Your technicians will have electronics degrees, and you will have no need for a body-shop, for technology will have made it impossible to crash a car.

Okay - maybe not. But such a scenario is feasible, and chances are you will have moved a considerable way in that direction. The further down the road you are able to see, the better you will be able to plan, so let's take a crystal-ball look into the future, with a focus on the vehicle itself, since the product is so central in defining the auto trade.

Diversification in the near-term
On the immediate horizon, product diversification is the dominant trend, with the range of choice expanding in all directions. Small is big here in Canada, where compacts and sub-compacts are the perennial best sellers on the car side of the market and represent the current engine of growth. But the luxury end of the market is strong and growing, too. While big trucks and SUVs are taking a bit of a hit, sales lost there are being taken up by expanded cross-over offerings of almost every size, and there are more of them to come.

The number of small-car offerings is on the increase and that will continue to be the case, as those automakers not currently represented at the entry level are keen for a piece of that action. Almost every corporate executive we have talked to admits to an active desire to add product at the bottom of the size and price range. If you don't already have such a vehicle to sell, chances are good that you will before the end of the decade. It might even be built in China - or even India.

You will have a cross-over, too - probably several - although that term remains a bit nebulous, covering everything from tall station wagons to mini-minivans to near SUVs. Industry analyst Dennis DesRosiers warns that these car-based vehicles with truck-like functionality may be just a blip on the long-term radar. If so, they are a significant blip, and your OEM is doubtless on or about to climb on that bandwagon. As with SUVs in the 90s, you can't afford not to be there.

Luxury is extending its reach as well. It is no longer a function of vehicle size or type as formerly low-end brands expand their model ranges upward, and luxury brands move down into smaller vehicles, and sideways into truck markets. Then there are the high performance variants, or those that emulate performance. Whatever brand you are selling now, you are sure to have more versions of it to sell in the future.

Playing the green card
That overall diversification trend is amplified by the green factor, exemplified right now by hybrid-electric vehicles (HEVs). Mere novelties when they were introduced five years ago, hybrids have captured the public imagination. They account for only about one percent of total sales, so far, but in many cases demand for them is running well ahead of supply. And it is growing.

Consumers perceive them as being environmentally responsible, even though in some cases the real advantages they offer in terms of either smog-forming emissions or fuel-economy advantages are minimal, and the payback for their extra cost may be years down the road, if ever. Hybrids are cool, and there is nothing easier to sell than a cool car.

Their technology is advancing rapidly as well, and their limitations are being addressed so they can come much closer to living up to their billing, even improving overall performance in some cases. For those reasons, manufacturers are scrambling to provide you with hybrids to sell. If you don't have one or more now, you probably will within the next year or two - almost certainly by 2010. In fact, projections suggest that at least one in every 20 new vehicles sold will be a hybrid by then. Perhaps a lot more.

Hybrids won't be the only green vehicles in your sales portfolio. There will be diesels too. That's right, diesels! Although the perception of noisy, smelly oil-burners lingers on from the 80s in some people's minds, the reality is that today's high-tech diesels are far removed from that stereotype. They offer significant savings in terms of fuel consumption, and that translates into real reductions in CO2 (carbon dioxide) emissions - the most prevalent of greenhouse (global warming) gases. If our politicians ever get serious about reducing CO2 levels, diesels stand to become major players in that quest.

They also offer low-speed torque levels that equal those of much larger gasoline engines and translate directly into driver satisfaction. That is why diesels now account for half of all new car sales in Europe, even in luxury brands. Improvements in our diesel-fuel quality, which will take place this year, combined with further advancements in exhaust after-treatment technology, open the door for a huge increase in diesel availability in this country. Almost every major manufacturer has one or more in its near-term plans.

Other alternative fuels will also gain greater significance - especially ethanol. Huge numbers of the vehicles you are already selling are "flex-fuel" capable. That means they can run on gasoline or E85 (85-percent ethanol) or any mixture of the two. It is not much of an issue right now, but as E85 pumps become more common, it will be.

Electronic technologies proliferate
You have seen it happening already, and the trend is progressing almost exponentially. Today's cars and trucks have become as much platforms for electronic devices as they are means of transportation.

It is not just the electronics needed to control vehicle functions, from engine management, to stability control, to adaptive cruise control or lane-departure warning systems. It is also the peripherals, such as navigation, DVD, video game, and satellite radio systems, as well as telephone, concierge, and emergency communication devices. Not to mention internet connectivity.

There is no end in sight, as keyless ignitions, rear video cameras, and automatic parking systems have now joined the scene. Car-to-car and road-to-car communications are just around the corner. And self diagnosis and repair, as well as automatic service scheduling are well beyond the experimental stage.

In short, vehicles are becoming more electronic than mechanical, if they are not already there.

And the implications are...
On the surface, all that diversification sounds like good news, and to a great extent it is. You will have a broader range of vehicles to sell - much broader - with an expanded range of functional technologies and entertainment devices. More choice for the customer, which means a greater chance of satisfying his or her individual needs. And thus of making a sale.

That opportunity will carry a price, however. A broader model range to cover means more inventory, and more room required to store and display it. It means more advertising to take advantage of the broadened market. It means more product training for your sales-people. And especially where advanced technologies are concerned, it means more specialized tools and training for your service staff. You may even have to add specialists just to deal with some of those technologies. In a word, it means more overhead.

In addition, if the move towards smaller, lower-priced vehicles continues - and most indicators suggest that it will - you will probably net fewer dollars per unit sold. That has historically been the case, and there is no reason to believe it will change. Unless you change it.

One opportunity to do so is the potential for accessory sales. It is one of the truly spectacular growth areas in the market. More than ever before, studies show, today's buyers want to personalize their cars and trucks, and that is especially true at the bottom of the market. Toyota says dealer-installed accessory sales for the Echo Hatchback averaged over $1500 per car.

The same opportunity is there further up the food chain, especially with trucks and performance models. If customers are going to spend the money on personalization anyway, it makes economic sense for them to do it as an integral part of the purchase, where they can roll the extra cost into their monthly payment schedule, rather than buying it elsewhere and paying for it in one shot.

The bottom line is, the dramatic product diversification that is already underway will create significant opportunities for increased sales. But it will also bring with it inherent increases in costs that will have to be balanced by added sales or improved efficiencies if you are going to see any improvement in your bottom line.

Looking further ahead - the big picture
As we move into the next decade and beyond, the picture becomes murkier. Too many unknown factors could dramatically affect the direction the market, the industry, and your business takes to be definitive with any projection. As it appears now, however, two macro factors will be the major influences on them all: energy supply, and the environment.

The roller-coaster ride gasoline prices took in the wake of Hurricane Katrina highlighted two key issues: 1) - just how precarious the world's oil supply and refining capability is, on a very short-term basis; and 2) - just how volatile the vehicle market is in the face of high and unstable fuel prices. Both are causes for concern.

There is much debate over "when" but not "if" we will run short of oil. It is widely accepted that reserves of easily accessible crude will peak within the next 20-to-40 years, if not much earlier. At the same time, world demand is increasing at a feverish pace, primarily due to the explosive development of China and India. It is a case of "four into two won't go." Increased demand and diminishing supplies - or at the very least less-accessible supplies - just don't jibe. As a result, although there will undoubtedly be peaks and valleys in the price due to short-term factors, oil prices have nowhere to go but up in the long term. And that is certain to affect consumers' buying patterns.

At the same time, the evidence is now incontrovertible that our world is in the throes of significant climate change, and that dramatic increases in the levels of greenhouse gases - primarily CO2 - are significant causative factors. Whether or not man-made CO2 emissions are the primary cause, an argument that arouses passions on both sides of the issue, the need to minimize further such emissions is obvious. And that need is now being addressed, to various degrees, at political levels around the world.

Transportation is one of the major sources of CO2 emissions, especially in North America, and personal transportation vehicles - the cars and trucks you sell - account for almost half of all transportation-related CO2 production. You can see where this is going.

Shaping the vehicle future
The combination of potentially higher oil prices and the pressure to reduce CO2 output, both social and political, are driving the world's automakers to develop ever more efficient vehicles, and to seek out alternative energy sources. Currently, 95-percent of the fuel used by vehicles is derived from oil.

The most desirable alternative fuel is hydrogen (H2), which contains no carbon and thus emits no CO2 when it is burned or otherwise chemically converted. For that reason, the hydrogen-powered fuel cell has become, for many, the Holy Grail that will remove the automobile from the environmental equation.

Just when that will happen, if it happens, remains a matter of significant conjecture. Several automakers expect to have commercial designs complete by 2010, and they could be on the market by 2015. But many experts think it will be the following decade, perhaps longer, before they have any significant presence in the market. There are other factors to consider, beyond just the development of fuel-cell powered vehicles (FCVs), including the production and delivery of hydrogen in commercial quantities, and the price of both the vehicles and the fuel.

In the interim, hybrids are seen as a bridging technology that is certain to become even more popular, if for no other reason than it uses many of the same electrical components as FCVs, and will promote their development. Electric wheel-motors, for example, are likely to be developed in hybrids for ultimate use in FCVs.

Don't count out the internal combustion (IC) engine, however. It will continue to be around and not just in hybrids. IC engine technology is progressing at a furious pace, with such features as Gasoline Direct Injection now becoming commonplace. On the near horizon is another technology called Homogenous Charge Compression Ignition (HCCI) that combines the best characteristics of gasoline- and diesel-fuelled engines. Other novel methods of improving engine efficiency could include the use of steam generated from waste exhaust heat to drive a turbine power booster. Throw in equally significant transmission advances, such as CVTs to mate it with, and there is a lot of life in the IC engine yet.

Both gasoline and diesel engines will also benefit from the rapidly increasing availability of bio-fuels, ranging from ethanol and bio-methane (such as natural gas from landfills) to bio-diesel derived from a variety of sources. Coal gas might also play a role as a future fuel, and hydrogen can be burned in IC engines as well.

Even pure electric vehicles could make their way into your showrooms as viable alternatives for niche markets. Advances in quick-charge Lithium-ion battery technology have given them a new lease on life, especially in city centres and gated communities - perhaps even as single-occupant vehicles.

Beyond just its powertrain, the vehicle of the future will become even more dependent on electronic and computer controls, even to the point of becoming semi-robotized. Using GPS signals, it is technically feasible right now to prevent suitably equipped vehicles from ever running into each other, for example.

 A complex future
Whatever direction the more distant vehicle future takes it won't be dull. In fact it promises to become ever more complex, and that means your business is bound to become more complex, from the sales floor - or screen - to the back shop. As is the case today, continuous change will be the only constant.

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