August, 2015
By Jenni Crenshaw and Adam Herndon
With a solid foundation in auto manufacturing, technology, and vehicle services, the Peach State could easily unseat Michigan as the automotive industry’s epicenter.
When we think of the epicenter of the U.S. automotive industry, we automatically think of Detroit. In recent years, business friendly policies, a focus on workforce training programs, and readily available, inexpensive real estate have driven an increase in the number of vehicle production plants throughout the southeast.
Georgia is poised to be the new epicenter of the auto industry, thanks to industry innovations such as mobile connectivity; changes in wholesale and consumer buying behaviors; innovations in alternative-fuel vehicles; and changes in government financing regulation. According to Georgia Power Community and Economic Development: 2014 Automotive Manufacturing Report, the Peach State has more than 150,000 auto-related engineers and production workers employed by 296 auto-related facilities, and has created more than 6,800 industry-related jobs in the last five years.
Automotive production is not all that is positioning Georgia to lead the industry. With the abundance of companies specializing in mobile technologies, and strong university programs offering skilled technology resources, the state offers access to leaders in connected-car technologies. These resources have led innovators in the field to locate labs in Atlanta: the Panasonic Innovation Center, AT&T Drive Studio, GM Innovation Center, Hitachi Automotive Systems, Verizon Telematics, and several others.
Along with the large, established companies, there is considerable growth occurring in startup companies. For example, MetroTech Net is working to create a data-publishing business for real-time traffic data using the existing network infrastructure. Vehcon Inc. is capturing vehicle-use information through mobile phones, which can be made available across the industry, from insurance providers to maintenance providers, and possibly ride-share programs. In recent news, Roadie is partnering with Waffle House to become the “Uber of package delivery” by letting travelers earn money by delivering packages to locations along their routes. Players such as these in the market can propel Georgia to substantially influence the auto industry.
While these changes are great for bringing new technology to Georgia, the state has an increasingly skilled workforce capable of providing automotive companies the manpower they need. In addition, our large university system continues to produce innovative and entrepreneurially-minded students who are finding success in both process-based and technology optimized careers – ideal for companies looking to the future.
The innovation labs and entrepreneurial ecosystem in Georgia have benefited Kia Motors, which has a substantial presence here, and has compelled Porsche and now Mercedes-Benz to establish headquarters in the state.
Automotive services is also strongly rooted in Georgia. Atlanta-based Cox Automotive offers the most holistic set of end-to-end automotive services for automotive remarketing. Cox’s offerings include companies serving wholesale needs such as Manheim and NextGear Capital; retail needs, such as AutoTrader.com; and Kelley Blue Book.
Government regulations have favorably positioned Georgia to become a leader in the auto industry. One example is the Fair Credit Act, which affects how some auto inventory is bought and sold on smaller car lots. Those businesses now have the same credit restrictions that other dealers have. Georgia’s blossoming financial technology industry positions the state well to serve this growing market need.
Additionally, Georgia has adopted significant tax credits for the purchase or lease of alternative-fuel vehicles. According to Edmunds, Georgia has the fourth-highest market share for electric cars in the nation. It is also the fastest growing state in the United States in electric car sales, with 239 percent growth in the past nine months. Atlanta is the No. 4 city market in the country for plug-in cars and was the No. 1 market for the Nissan Leaf in the last five months of 2013.
Additionally, government regulations are encouraging the popularity of alternative-fuel vehicles, thus growing the infrastructure to support their use in the city. This acts as a breeding ground for advances in the technology, but requires continued legislation to encourage the sale of these vehicles.
While Georgia is poised to become the epicenter for the new auto industry, roadblocks remain. The automobile industry is changing, and while Fortune 500s are playing their part, these changes will require startup companies to fuel the charge. Georgia must maintain its focus on finding and enabling venture capital funding for startups.
Finally, the connected-car movement highlights the need for mobile data security- in both protecting data and access to and control of a vehicle while it is in use. Georgia will need to have more people with deep data security knowledge available locally to solve this challenge.
Georgia has shown its ability to respond to similar industry opportunities over the past few years, beginning with the changes in telecommunications and recently with growth in the financial services and health care industries. Georgia has learned – and, to some degree, perfected – the path for supporting changing industries. Additionally, the state’s community of executives has experienced similar changes and has the know-how to support one another. Universities and private organizations are supporting startup companies and bringing focus to the venture capital needs. Leveraging its experience and technology communities, Georgia is on a path to be the next epicenter of the automotive industry.