BMW executive tells students about government’s role in car industry

For Russ Lucas, of BMW North America, the federal government’s intervention in the car business is a mixed blessing.

Lucas, a 1979 graduate of Lycoming College, recently spoke to a group of economics and political science classes as part of the college’s James W. Harding Executive Series.

Regulation and government oversight has resulted in costing car companies billions of dollars, he said, but he added it has also resulted in saving lives with recalls and product refinement.

Such is the case with the sweeping recalls of Takata airbags.

BMW was among 18 other car manufacturers in the massive recall list.

“Takata,” he said, to those listening, some of whom likely drove or knew someone who drove a car that had that brand of airbag in them, was a big deal, especially for a company that made the “Ultimate Driving Machine.”

The airbag recalls became a necessary part of the product refinement, he explained, and it was needed.

Sadly, the malfunctioning airbags were linked to at least 23 deaths and 300 injuries, according to the National Highway Traffic Safety Administration, an agency that Lucas said his company worked closely with.

Such airbags contained a propellant and heat could rupture the canister it came in, spewing metal fragments into the vehicle and occupants.

People were getting the metal pieces in them during crashes.

While this was happening, the safety administration admonished many of the manufacturers for not doing enough.

It was a recall to make sure airbags are replaced — including BMW — and the response was a wake-up call.

In May 2018, the administration sent a letter to a dozen major automakers, warning them that they had not met the December 2017 deadline for completing repairs, according to Car and Driver Magazine.

Not long after that, the administration publicly urged all automakers involved in the recalls to publicize their plans for replacing all defective airbags on their websites and to be innovative in their efforts to reach owners who were at risk and may not have received the recall information.

Over the years, there have been failures that were supposed to be the next innovation.

Among those, Lucas said, was the proposed Hydrogen Highway in California, that, he said, never got built.

Lucas asked the classes if they had heard of the highway, but while it was proposed when Arnold Schwarzenegger was governor, not many could say they knew what it was.

The Hydrogen Highway was a proposed chain of hydrogen-equipped filling stations and other hydrogen infrastructure along a road or highway, which would allow hydrogen-powered cars to travel.

Instead what happened was the introduction of the lithium ion battery-powered electric vehicles. Lucas said BMW was not prepared for the onslaught of the e-vehicle and had no real strategy.

The company best minds had felt it more necessary to invest in lighter weight carbon fiber built cars, Lucas said.

Lucas described them as ugly, but noted how the company’s 3 series was a 400-pound differential than other models, and saved the business by using the lighter material.

Still, Lucas was critical of government not requiring a uniformity in the electric car business in terms of power stations and equipment.

“There are different cables at the various battery charging centers,” he said.

While those at BMW take pride in the performance, the electric revolution has resulted in Tesla, which has been able to reach higher brand rating then BMW, Lucas said.

Then there is the recent tariff announcements by the Trump administration.

Trump’s proposed tariffs on all Mexican goods, where BMW invested $2 billion in a plant, is going to change the calculus, according to Lucas.

Such plants require at least five-to-seven years out in order to site, he said, and with China, getting hit hard by the tariffs, and BMW exporting the car to China, it will affect the bottom line.

Lucas said innovation is happening as a quick rate.

During a recent conference in London, Lucas said a British guest told him, “Your industry has done the same thing over the last 100 years.”

He continued, with guest saying, expect more to happen in the auto industry over the next five years than happened in the last (100 years) century.


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