Auto Monitor - 24 December 2012 by Infomedia18

I N D I A ’ S N O . 1 M A G A Z I N E F O R A U T O M O T I V E N E W S , V I E W S & A N A LY S I S

Auto Monitor

Vol. 12 No. 44

w w w.am o n l i n e.i n

24 December 2012

42 Pages

` 50

INTERVIEW

SPECIAL

EMERGING MARKETS Pg 20

THE NEW LIGHT HEAVYWEIGHT Phil Simmonds, Studio Design Director, Range Rover

Pg 24

Scan this code on your smart phone to visit www.amonline.in

Yamaha Gets Service Savvy Jagdev Kalsi New Delhi

ndia Yamaha Motor, the Indian arm of Yamaha Motor Co Ltd, Japan, is sprucing up its after-sales network and talent pool. Some of the initiatives the company has taken are 24-hour commitment plans, 8 to 8 schedules, institutional tie-ups and mobile servicing activities as it expects to perform 10 million services by 2014, a ﬁve times growth from 2012 with an increase in number of mechanics from 7,500 to 20,000. The company claims current retention ratio (customers coming back for servicing) to be 75 percent and is gearing up to reach the 90 percent mark soon with its customer-oriented initiatives. Yamaha’s 24-hour commitment plan is targeted at reducing the wait to deliver a repaired or serviced vehicle back. For this, Yamaha is working, with its dealers, to keep the right stocks in place and also improving its supply chain for quicker delivery of components. Yamaha has also started to feed the southern market from Bangalore, which earlier received parts from Faridabad parts centre. The company has also shifted its Faridabad parts centre to Surajpur plant which ensures it more space to cater to other parts of the country. Yamaha plans to start this activity next year onwards, with

DATA MONITOR Top 5 3W makers Company

Nov-11

Nov-12

Change

BAL

16,814

20,992

24.85%

Piaggio

15,567

17,809

14.40%

M&M

5,889

6,867

16.61%

ATUL AUTO

2,240

3,006

34.20%

TVS

858

1,701

98.25%

Top 5 3W-Exporters Company

Nov-11

Nov-12

Change

BAL

25,696

24,574

-4.37%

TVS

1,848

3,353

81.44%

Piaggio

1,426

486

-65.92%

M&M

460

135

-70.65%

Force Motors

-75.00%

* Source: SIAM/ ** Excluding exports/ *** all sub segments considered/ ^ excluding MRPL

Yamaha Bike Stations adopting the procedure initially in metro cities. Ravinder Singh, Group Head-Service, India Yamaha Motor Pvt Ltd, says, “We are working on the concept of same day delivery. It is a big project and parts supply is one of the major factors here. Whatever be the issue, even if some parts supply is required the bike will be corrected the same day.” He also maintained that it took 5-7 days previously to sort issues and for part-deliveries. While he didn’t specify the investment required for a successful operation, he maintained, “Yamaha

has already planned to invest Rs 1,500 crore in the next two years in all aspects related to capacity and dealer network expansion. This will be included in that.” Yamaha has also asked its dealers to open service centres for 12 hours. “The extended service centre timings will allow especially the working class to take the delivery of their 2-wheelers on the same day,” says Singh. The company has also started a mobile service initiative, which is speciﬁcally targeted at those customers who revert to unauthorized service centres after the free-services get over.

Explaining the activity in detail, Ravinder added, “In case a vehicle has been sold 40kms away, and customer is coming only for free services, we have developed a mobile service van. At dealerend this mobile service happens in a particular area and customers are informed.” Yamaha has also adopted the policy of placing stickers on the bikes mentioning the next service due-date, the way it happens with 4-wheelers. The company has also tied-up with DayalBagh Institute in Agra for a 1-year mechanic course and has provided Yamaha’s technical know-how. EP Sreekumar, Head of Department, Yamaha Technical Academy, says, “When students come out of that place (institute) after 1 year, they become silver engine qualiﬁed (Yamaha’s internal ratings). The 2.5 years training (to become silver-engine qualiﬁed) is therefore reduced to 1 year training. Then they reach the silver level.” While Yamaha on its own has 4 training centres in India, it believes that the tie-up with institute is a market requirement. Singh added, “Currently we have 7,500

mechanics in our primary and secondary networks. In the next three years, we expect to reach 20,000. Last year we did overall, 2 million services and we are progressing towards 10million. Our all strategies like network, training etc. are based on that.”

Grooming Local Talent On Daimler’s Agenda Nabeel Khan Chennai

here is a lot more to India than the call centre and outsourced accounting, said Marc Llistosella, Managing Director & CEO of Daimler India Commercial Vehicles Limited (DICV). The company backs this statement by adopting a strategy for India. DICV has adopted a policy to groom local components suppliers not only for local requirement but also upgrading them so that they are ready to supply to the global market as well. The company has 240 Indian suppliers of which over ﬁve percent have been upgraded to be global suppliers for Daimler. Currently the company has around 85 percent localisation in the three models of vehicles they have launched and hope to con-

tinue similar percentage of local content in upcoming models. “We think the country has great talent and it needs to be utilised. We are working with them very closely to help them improve their standard,” Marc said. “We take into consideration the sound management of the supplier while selecting them as that is very important, we can help them in terms of technology but management is very important as it plays crucial role in deliver of the component on time,” he added. DICV has a team working on training the components makers and to check the quality at their plants. The company follows stringent global standards of quality check. Each product is checked at the suppliers unit. Simultaneously, the company also picks and checks the components of the Daimler plant components randomly. For the ﬁrst time in the his-

tory of Daimler, the company has chosen to outsource cylinder block and heads, which are critical components, to an Indian supplier Craftsman Automation. Earlier Daimler produced this component at its own plant. “The development work happened together. We worked on all the development process and Daimler’s global engineering team was observing the product,” said S Ravi, Managing Director, Craftsman Automation. Craftsman currently supplies for the Indian requirement and hopes to supply for the commercial vehicle’s foreign markets also. The company has also got engines for some of the models of trucks from an Indian supplier. Avtec, a Birla Group company, supplies engines to some of the models of the trucks. “When we came to Daimler to be one of the suppliers, we focused on our association with

foreign partners to pitch for the deal, but ironically Daimler said, why not do by yourself? They trust us and helped us in terms of technology. We now supply gears for the transmission,” said Deep Kapuria, Chairman & Managing Director, Hi-Tech Gears Ltd. Llistosella launched a strong offensive to the heavy discounts being offered, saying, “Discounts are not the answer to the depression in the market. A better communication channel will play an important role.” Daimler has sold over 1,000 BharatBenz trucks and currently manages 20-plus dealerships. It hopes to extend the same to 120 dealers for its range of 17 trucks. “We are focusing on better efﬁciency and emission norms throughout the life cycle unlike other vehicles which fail to maintain the emission norms after a certain number of years,” Llistosella added.

EDITORIAL End Of Kicking Tyres

t is a completely natural urge among car owners, especially young, to seek out auto gadgets that enhances one’s car and thus empowers them to stand out from among peers. One often sees plenty of Johnny-comelately shops that have sprung up on highways and in several residential areas offering to make your car a home away from home. Credibility for the unassuming consumer is offered through much announced OEM tie-ups and relevant advertisements. The degrees may vary. While you may have installed a GPS system in your vehicle, surely the one offered by Ferrari may be beyond your reach. But that is not what we are talking about. Soon there will come a time (a couple of years, maximum) when government regulations will make it mandatory that your car possesses what are now termed as luxuries. For instance, anti-lock braking systems, more number of airbags, navigation systems, etc will come with every car. Your car may not resemble a CR-V, but yes it will have all the pop culture stuff you’d want at a lower price.

turers to increase prices. Now with the increasing number of gadgets, one can imagine the boggled mind of the manufacturer as well as the buyer. But some OEMs are ready with replies. One says that the stiff competition in car brands are keeping manufacturers busy with features that they have to contend with and later consent. So when does the buyer decide the right time to buy his car? When you buy a car today and check out a model six months later, you are bound to see better features that will make you envious. What good does that do? Comments can be sent to jayashree.mendes@network18publishing.com

What does this mean for the buyer? A higher car price, much likely. It’s bad enough that increasing input prices and a global ﬂuctuating currency is compelling manufac-

QUOTES Stephen Girsky, GM Europe President

We’ve made progress in our alliance with PSA. Both partners have the possibility of realising projects they wouldn’t have been able to see through alone.

FOUNDER & EDITOR, NETWORK 18 Raghav Bahl PRESIDENT & EDITORIAL DIRECTOR, TV 18 Senthil Chengalvarayan EXECUTIVE EDITOR Jayashree Kini-Mendes EDITORIAL TEAM Abhishek Parekh, Features Editor SENIOR CORRESPONDENTS Nabeel A Khan Anand Mohan Pradeb Biswas CORRESPONDENT Jagdev Kalsi ASSISTANT ART DIRECTOR Varuna Naik SENIOR DESIGNER Mahesh Talkar CHIEF PHOTOGRAPHER Mexy Xavier PHOTOGRAPHERS Neha Mithbawkar, Senior Photographer Joshua Navalkar BUSINESS CONTROLLERS Akshata Rane, Lovey Fernandes, Surekha Karmarkar, Deepak Bhatia, Ashish Kukreti, Shwetha ME, Jayashree N, Shefali Mahant

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Shekhar Khot

PRODUCTION TEAM Surekha Karmarkar Sanjay Shelar, Ravikumar Potdar, Ravi Salian

MARKETING TEAM Ganesh Mahale, Akshaya Jadhav

Gerard Detourbet, Renault executive and the ‘Logan’ developer on low priced cars to The Times of India

India is the only country where you begin to see modern cars at this kind of price.

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CONTENTS EMERGING MARKETS Building Blocs: Growth Potential of China

For investors who are interested in investing in the auto industry anywhere, the growth potential for companies in China’s auto industry exceeds the potential in any other country.

CORPORATE Auto Expo Gets New Dates, Venue

SIAM has announced that the 2014 Auto Expo will be organized at Greater Noida from February 6-12 instead of the regular venue Pragati Maidan.

Estilo, Spark Rank High In JD Power Study

GLOBAL WATCH

New vehicle satisfaction is increasingly being driven by the vehicle interior, according to the r ecent JD Power Asia Pacific 2012 India Automotive Performance, Execution and Layout Study.

UK Car Industry Defies European Slump

The automotive sector flew the flag for the UK in 2012, becoming Europe’s second largest new car market and producing almost 10 percent more vehicles than it did last year.

Why Quick Innovation Is Critical

A Mixed Bag – Brazil’s Auto Industry In 2012

A “decentralized” and “rapid approach” to innovation will be the critical drivers of success for the automotive industry in the near future, according to a Booz & Co report.

There’s time for a little reflection on the performance of the automotive market in Brazil, a market which has delivered a mixed bag of results.

Iconic MINI Arrives In Hyderabad

MINI India has opened KUN Exclusive, its exclusive dealership in Hyderabad that will display the MINI Hatch, MINI Convertible and MINI Countryman.

GM India appoints Rajesh Singh as VP Marketing, Sales & After- Sales GM India appointed Rajesh Singh as VP - Sales, Marketing & Aftersales and he would be responsible for the complete Vehicle Sales, Servicing & Marketing (VSSM) functions.

Auto Monitor

24 DECEMBER 2012

NEWS

Ashok Leyland Changes Track Tractors Chug To Eyes non-cyclical business; settles for strong joint ventures to spruce revenue Our Bureau Mumbai

Our Bureau Mumbai

shok Leyland is looking to ride out the impending downturn in the CV segment by diversifying revenue base. It is also looking to launch a few products in the eight to fifteen tonne GVW (Gross Vehicle Weight) segment under its Next Generation Inter med iate Com mercia l Vehicles (NGICV) programme. With this, it will cater to the demand for lighter vehicles with hub-and-spoke model making deeper inroads across major towns and cities, according to a presentation to analysts by the company. As an indication of its intent, it has reduced the share of the cyclical truck business from 60 percent in the first quarter last fiscal to around 50 percent in the first quarter this fiscal in value terms. The non-cyclical business includes bus, defence related businesses, spare parts, generators or engines and exports. The company has over the last three to four years established a slew of joint ventures and made acquisitions in order to better withstand the downturn. It has a

New Rhythm

A joint venture with Nissan Motors for manufacturing LCVs. It had established a joint venture with agricultural and construction equipment major John Deere for manufacturing construction equipments. The company has also been gradually growing its scale of operations and presence in defense, spare parts distribution and power solutions business over the last decade even as it has made acquisitions in bus body building and telematics business. In order to reduce its dependence on external sources and offer better performance to customers at competitive costs, the Chennai based truck maker has developed and deployed ‘Neptune’ range of engines comprising four and six cylinders inline engines giving 160 to 230 HP and 270 to 380 HP respectively. It is currently working on redesigning and development of spacious and customer friendly cabins aimed at better NVH (Noise Vibration and Harshness) and enhanced comfort. The company has been working on network expansion initiatives over the last few years. It has expanded its distribution reach by around 15 percent

this year by establishing over 400 full service outlets including around 60 odd new outlets added during the last fiscal. The company added nine outlets in the first quarter this fiscal with focus on enhancing presence in the Southern India. The company newer facility at Pant Nagar manufactured around 40,000 vehicles last fiscal. Its production reached around 4,000 units in March this year and it is expected to churn out around 50,000 units per annum. The company indicated that it is likely to manufacture around 36,000 vehicles this fiscal and hopes to get tax benefits of up to Rs 60,000 per vehicle. Though the current localisation level of trucks manufactured at the Pant Nagar facility is around 37 percent, this level is likely to grow significantly in the coming months. The company is looking to export around 12,000 units this fiscal and the share of exports in the total sales is expected to reach around 15 percent over the next two to three years. It has entered new markets including West/East Africa, Russia, Ukraine and Latin America over the past couple of years.

lthough living in the city does not enable one to see too many tractors, and the reason one would be ignorant of what is happening in that segment, there are some negative developments afoot for tractors. According to various industry sources, the tractor segment will not witness the double digit growth it is used to seeing for the last several years. This year it is likely to witness single digit growth due to the higher base effect and a slowing rural economy. “The tractor industry has almost doubled in unit terms over the last three years and it is unlikely that the industry can maintain the growth momentum in double digits year on year,” said Bishwambhar Mishra, Chief Executive - Tractor & Farm Mechanization, Farm Equipment Sector at M&M. He added that going forward the industry may witness high single digit or double digit growth in the lower HP segment (18 to 22 HP). M&M is looking to launch a few products in the low HP segment. Tractor sales are expected to be tepid in the third quarter this ﬁscal, in light of weak Kharif output and concerns over the delayed sowing of Rabi crop. Growth rates are however expected to see some improvement during Q4 2012-13 supported by weak base in the corresponding quarter last ﬁscal and likely reversal of interest rate cycle. Overall, the tractor sales

may witness flat volumes (0-2 percent decline) for full year FY13; while maintaining a volume CAGR of 8-9 percent over the next five years, according to ICRA. The report pointed out that having grown at a moderate pace of 11.5 percent to touch around 0.6 million units in 2011-12, volumes in the Indian tractor industry continued to be in a phase of cyclical correction during H1 2012-13. While industry volumes grew at a modest rate of 2.8 percent in the first quarter 2012-13, growth slipped into the negative territory during the Q2 with lower than expected precipitation impacting sentiments in the farm community. Further, Industry demand continues to be held back by firm interest rates, extended bout of high inflation and hike in tractor prices by OEMs. “Economic slowdown is also having an impact on the demand for tractors from non agricultural segment,” said an official from VST Tillers Tractors. There has also been no significant pick-up in construction and infrastructure activity. A lthough the industr y is beset with these near term challenges, long term prospects continue to derive strength from factors such as support from the Government of India (GOI) towards rural development and agri-mechanisation, scarcity of farm labour especially during the sowing season, increase in credit f low to agriculture, moderate penetration, shortening replacement cycle; besides healthy exports.

24 DECEMBER 2012

NEWS

CR-V Crowned 4x4 Of The Year

f Santa is looking for a capable, reliable and award winning mode of transport this Christmas, he should get himself the new Honda CR-V. The British built sports utility vehicle (SUV) has scooped the prestigious ‘4x4 of the Year’ honour from respected publication Total 4x4 Magazine. It’s the new CR-V’s ﬁrst award win since arriving in dealerships only two months ago. The competition was ﬁerce and the magazine’s test team pitted the Honda against several key rivals in the ‘Medium SUV’ segment. Sweeping them aside it took class honours, making it a contender for the overall ‘best of the best’ title... which it duly won.

Auto Monitor

It’s an outstanding achievement for such a new vehicle, which is manufactured in the UK at Honda’s state-of-the-art production facility in Swindon, Wilts. Total 4x4 Magazine’s testing process is comprehensive, ranging from interior quality, comfort and practicality to repeated drives of a set road route by different judges. The publication’s editor, Alan Kidd, commented: “Never before have there been so many likely candidates for the overall title. However, from the moment we started crawling around inside the CR-V, it was clear Honda had hit the jackpot. The quality of its interior is on a par with the best,

and its flexibility is exceptional and that was before we actually drove it.” He continued: “Seldom has a new 4x4 put such a big tick in so many boxes. It takes an awful lot to impress us these days. The new CR-V didn’t just impress us it made our jaws drop.” Dave Hodgetts, Managing Director of Honda (UK), was thrilled with the honour. “For the new CR-V to take its first award so soon after launch is a real festive treat for everyone and a fantastic way to end the year. We hope it will be the first of many.” The new CR-V is in dealerships now with prices starting from £21,395 OTR for the entry level 2.0 i-VTEC S grade 2WD model.

Audi Takes A Seat - Turns It Into The R18 Ultra Chair

ightweight construction technolog y is embraced in the future of furniture. The seemingly humble household chair has just undergone a Vorsprung durch Technik makeover inspired by the Audi sports prototype that competed in the Le Mans 24-hour race this year, resulting in a tremendous 1-2-3 finish. The visually stunning R18 Ultra Chair was revealed earlier this month at the prestigious Design Miami/ show to a global audience. Masterminded by designers Clemens Weisshaar and Reed Kram, and developed using the most efficient and sustainable processes, the R18 Ultra Chair is made from a mix of carbon fibre, carbon and high-strength sheet aluminium. This combination guarantees maximum stability and comfort with minimum consumption of materials, and also ensures that the chair is almost feather-light to lift. The striking chair appeared first in prototype form at the Milan Furniture Fair in April this year, where it was fitted with an array of sensors capable of collecting data on the forces at play whenever the chair was used. Some 1,500 testers took the opportunity to try it out, and in the process informed the evolution of its design. In conjunction with engineers at the Audi Lightweight Construction Centre, the designers used the data to optimise their prototype, resulting in a finished product which embodies the principles of Audi ultra light-

weight construction - through the intelligent deployment of advanced materials, high strength and exceptionally low weight have been achieved - in this case a total weight of just 2.2 kilograms. Dr. Karl Durst, an engineer in fibre-reinforced composites at the Audi Lightweight Construction Centre, explains the finished product: “We combine the strengths of the materials in such a way that their weaknesses are no longer important. This efﬁciency is the focus of our ultra lightweight construction principle.” The R18 Ultra Chair is the design duo’s second project for Audi after the widely acclaimed, award-winning installation OUTR ACE on London’s Trafalgar Square in 2010. Described as ‘the vanguard of the next generation of digital designers’, permanent collections display the work of Weisshaar and Kram at the Museum of Modern Art, New York and the Centre Pompidou, Paris. Audi has been the exclusive automotive partner of Design Miami/, the most inﬂuential international design forum, since 2006 and has a sense of obligation to design and technology in equal measure. In recent years, the brand with the four rings has commissioned installations by international designers and architects such as Tom Dixon, Moritz Waldemeyer, Mirko Borsche and Bjarke Ingels, and is committed to promoting design culture and research.

Auto Monitor

24 DECEMBER 2012

NEWS

Auto Expo Gets New Dates, Venue Greater Noida will host the Auto Expo from February 6-12 in 2014

ociet y of Ind ia n Automobile Manufacturers (SIAM), the organizers of Auto Expo, has announced a change of venue for the country’s premium and most eagerly awaited automobile expo. SIAM has announced that the 2014 Auto Expo will be organized at Greater Noida from February 6-12 instead of the regular venue Pragati Maidan. According to SIAM, the expo dates have been rescheduled from January to February in order to avoid clashing with the Detroit Auto Show. Since the usual venue was not available in February for the required dates, SIAM had no option but to choose a new venue. Pragati Maidan has always been home of the Auto Expo since its inception with the expo always kicking off in the ﬁrst week of the New Year. Speaking to the press after the announcement, Vishnu Mathur, Director General, SIAM said, “In the next Auto Expo, which will

be held from 6-12 February, we will be showing only vehicles and accessories at the India Expo Centre and Mart in Greater Noida. Lot of global CEOs who wanted to be here have said to us that they could not because of their engagement with the Detroit Auto Show. So we decided to shift our Auto Expo to February.” “In February 2014, Pragati Maidan is not available and hence we had to move to Greater Noida. Moving the Auto Expo to a place further away from the main city will not be an issue as we are hoping that now only the serious visitors will come. For the component manufacturers, the exhibition will be held in a separate venue and is still being worked out,” he added. Elaborating about the likely beneﬁts of a shift in venue, Sugato Sen, Deputy Director General SIAM, said, “The 2014 Auto Expo will be much bigger in terms of exhibition space. We will now have 50,000 square metres of occupied space by exhibitors

Change is for the better, even offering relief.

as compared to less than 40,000 sq. m that we had at this year’s Auto Expo. In order to have a trial run ahead of the 2014 expo, Siam will be organizing a bus and utility vehicles show from 15-18 February 2013.” The shift in venue is likely to be seen as a welcome breather by the well wishers of the Indian auto-

mobile industry. A lot of industry insiders have spoken out in the past about the lack of adequate facilities at Pragati Maidan which did not match up to the standards of global automobile shows. There have also been reports of mismanagement and lack of adequate crowd control measures owing to infrastructure related

issues which resulted in visitor entry being restricted during the 2012 Auto Expo. Here’s hoping the new location brings an end to the venue related problems that attracted a lot of ﬂak for the 2012 Auto Expo from auto enthusiasts and head honchos of the automobile industry.

Tata Motors To Launch Indica Vista D90

he phrase ‘Better late than never’ always seems to resonate at Tata Motors. The Manza Club Class Sedan was a late entrant to the hotly contested sedan segment. So was their new Safari Storme which took a long time to evolve despite new age competitors having entered the market segment. Now, Tata Motors has decided to compete in the hot hatch segment! Nope its not a new car but the typical ‘old wine in a new bottle’.

Cushy Comfort Enough of the phrases. The news is that Tata Motors is launching a new diesel variant of the Indica Vista with a higher power output of 90PS. This engine basically does duty in the diesel variants of the Manza Club Class sedan. The engine of the Indica Vista D90 is the same Multijet diesel engine sourced from Fiat but with a higher power output as it employs a Variable Geometry Turbocharger. The oil burner develops a peak power of 90PS@4000rpm and 200Nm of torque available from 1750rpm till 3000rpm. The changes to the interior include a driver aligned console with the instrument cluster being positioned on the driver side away from the traditional center position, steering mounted audio controls and dual tone interiors. It also features a driver information system (again!) borrowed from the Manza Club Class Sedan which shall display the instant mileage, distance to empty and average fuel efﬁciency. On the exterior the hot hatch now gets alloy wheels and a color contrast blacked out roof to add a sporty livery.

Price Matters The Indica Vista D90 will be offered to buyers in two variants namely VX and ZX with an exshowroom Mumbai price of approximately Rs 6.3 lakhs and Rs 6.7 lakhs respectively. It won’t be fair to say that the Indica Vista has been a popular choice among the family hatchback buyers. It for sure wasn’t on the list of automobile enthusiast looking for a diesel powered hot hatch. Nonetheless it has been popular among ﬂeet operators as it is a very economical runabout. Its main drawback from an enthusiast’s perspective was that there was nothing substantial on offer. Let’s hope that with the Indica Vista D90 Tata Motors manages to make a lasting impression. Not in terms of the borrowed Manza Club Class engine and interiors but in terms of improved progression with every …. of accelerator pedal modulation!

Auto Monitor

24 DECEMBER 2012

NEWS

Estilo, Spark Rank High In JD Power Study Our Bureau Mumbai

ew vehicle satisfaction is increasingly being driven by the vehicle interior, according to the recent JD Power Asia Pacific 2012 India Automotive Performance, Execution and Layout (APEAL) Study. The 2012 India APEAL Study is based on responses from more than 8,000 owners who purchased a new vehicle between November 2011 and July 2012. The study was fielded between May and September 2012 in 25 cities across India. The study finds that during the past four years, the impact of the vehicle interior on overall satisfaction has increased consistently, particularly in the two fastest-growing vehicle segments in India—compact car (which includes entry compact, compact and premium compact cars) and utility (which includes MUV/ MPVs, SUVs and vans). However, visibility and driving safety, followed by fuel economy, continue to be the leading drivers

of satisfaction among new-vehicle owners in India. The interior factor has experienced a 28-point improvement compared with 2009, and an eight point improvement over 2011. The India APEAL Study is an owner-reported measure of what gratifies vehicle owners in India with the design, features, layout and performance of their new vehicle during the first two months of ownership. The study measures satisfaction across ten performance categories: vehicle exterior; vehicle interior; storage and space; audio/ entertainment/ navigation; seats; heating, ventilation and air conditioning (HVAC); driving dynamics; engine/ transmission; visibility and driving safety; and fuel economy. Overall APEAL performance is reported as an index score based on a 1,000-point scale, with a higher score indicating higher satisfaction. “To improve the quality and aesthetics of their models, automakers have made significant efforts and investments to enhance the overall design and quality of the vehicle interior,

even in the small car segment,” said Mohit Arora, Executive Director, JD Power Asia Paciﬁc. “This is evident in the newly launched models, as well as the refreshed models launched in 2012. Both newly launched and refreshed models perform 17 points higher in the interior factor compared with other models.” The overall APEAL score in 2012 averages 836, which is a seven-point increase from 2011. The industry improves across all 10 categories, similar to 2011, with the largest improvements in fuel economy and vehicle interior. Satisfaction is higher among owners of diesel-powered vehicles than among owners of petrolpowered vehicles. Moreover, the gap in satisfaction scores between owners of diesel and petrol vehicles has changed signiﬁcantly during the past four years. In 2012, the APEAL score for diesel vehicles is 22 points higher than for petrol vehicles, while in 2009 the score for petrol vehicles was three points higher than that for diesel vehicles. Further, diesel vehicles achieve an average APEAL score of 839

for fuel economy in 2012, which is 24 index points higher than for petrol vehicles. The Chevrolet Spark and Maruti Suzuki Estilo rank highest in a tie in the compact car segment with a score of 837 each. The Chevrolet Spark performs particularly well in the audio/ entertainment/navigation and driving dynamics categories, while the Maruti Suzuki Estilo performs particularly well in seats. The Maruti Suzuki Swift DZire ranks highest in the entry midsize car segment for a ﬁfth consecutive year, with a score of 841. The Maruti Suzuki SX4 and

the Nissan Sunny rank highest in a tie in the midsize car segment with 853 points each. Both models perform particularly well in the storage and space and HVAC categories. The Honda Jazz ranks highest in the premium compact car segment with a score of 866 index points and performs well across all 10 categories. Toyota leads the utility vehicle segments, as the Innova ranks highest in the MUV/ MPV segment for a sixth consecutive year, with a score of 872, while the Fortuner ranks highest in the SUV segment with a score of 877, which is the highest APEAL score in the study.

VW’s Adding More Indian Guns

W India seems to be taking its current dip in sales rather seriously. After having brought Arvind Saxena from Hyundai to its ranks as MD, the company is eyeing more top guns from the Indian auto industry to infuse some life into its business. According to a repo rt published in a national newspaper, the company is planning to rope in Avik Chattopadhyay, a former MSIL top guy, who handled the reins at Peugeot before the European carmaker’s Indian plans were shelved. The word goes that Avik is soon to Join VW as its GM, Marketing. Avik will be replacing German Lutz Kothe for the job. Other names in the news are Hardeep Brar, former MSIL dealer development head and Ashish Anand, one of Hyundai’s regional managers is also joining in. VW had also hired Pankaj Sharma from Maruti as its sales head in 2012. VW, which entered the Indian market with much fanfare and posted good numbers initially, hasn’t quite been able to shine in recent times. The company doesn’t have new products paunches lined up, which will make the task to increase sales even more difﬁcult for the top brass. And that’s one of the reasons why the company wants the best talent to see off these tough times. Apart from introducing special variants for its top selling polo and Vento, the company has also slashed the prices on its products. In our honest opinion, reducing the rather high service and spares prices would go a long way in luring the customer back in. The MSIL brigade which is thronging the VW ofﬁces would drive the point home soon enough we guess.

Auto Monitor

24 DECEMBER 2012

AUTOPOINT

How The Giants Move Revati Kasture Head, Industry Research, CARE Research Vishal Srivastav Manager, CARE Research

luggish economic scenario posed strain on the CV demand in FY13 Slowing down economic growth and escalating inflationary pressure since the second half of the last fiscal has shrinked the average consumer spending significantly. The M&HCV goods

carrier (GC) segment especially multi-axle vehicles and tractor trailer subsegments has bore a signiﬁcant brunt as the demand for this segment dropped by a considerable 18 percent during H1 FY13 period. Regulatory bottlenecks hovering around mining industry across key

states have also considerably affected the demand for tippers.

...LCV GC continues to remain the mainstay The LCV GC segment which is dominated by SCV and pickup trucks segment continued to witness healthy growth scenario

even in the challenging environment. During H1FY13 period, this segment has managed to post a growth of around 20 per cent that has been mainly driven by strong demand from SCV sub-segment. Healthy redistribution demand coupled with growth in non-discretionary expenditure (especially FMCG, pharmaceuticals, etc) has aided demand for this segment. The increase in the product offerings in SCV segment due to frequent model launches (For example M&M ‘Maxximo mini truck’, Tata Motors ‘Super Ace’ and Ashok Leyland ‘Dost’ are recent entrants) has led many small transport operators to replace their three wheelers with more efﬁcient SCV. Further, CV manufacturers have also started focusing on expanding their reach in semi urban and rural areas to market their SCVs that has not only helped in enhancing the sales but also provided cushion from the uncertainties of softening in demand from urban markets.

CV finance – Still remains an alluring prospect Inspite of tough market condition surrounding the CV industry, CV finance market still remains an attractive proposition for the financers. CARE Research believes, even though the new CV finance market has impacted owing to the sharp slide observed in M&HCV segment in the current fiscal, strong demand from LCVs has provided some respite to the financers. Further, healthy demand scenario that was observed in CV market during last one decade has resulted in a considerable pile up of CV stock. As per CARE Research estimates around 38 percent of the overall CV stock lies between the age bracket of 5-12 years which is considered to be a target market for used CV finance. Off-late financers have started tapping small transport operators from tier II and tier III cities and semi-urban areas, which has consolidated the growth prospect of the used CV finance industry significantly. CARE Research estimates used CV finance would manage to post a healthy rise of around 10-11 per cent in FY13.

Domestic market to witness 5-6 per cent growth in FY13 CARE Research estimates the domestic CV industry to grow by 5-6 per cent in FY13. CARE Research believes, economic scenario will continue to remain gloomy atleast for the next 8-10 months & M&HCV GC subsegment will bear a signiﬁcant brunt. Nevertheless, healthy rise in demand from LCV GC would help in negating the slowdown by some extent as it expected to exhibit strong growth in FY13. On the other hand increased demand from STUs and corporate buying combined with government initiatives to improve public transport infrastructure will fuel the PC demand.

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NEWS

Iconic MINI Arrives In Hyderabad

INI India has op e n e d KUN Exclusive, its exclusive dealership in Hyderabad. The new MINI KUN will display the MINI Hatch, MINI Convertible and MINI Countryman. Philipp von Sahr, President, BMW Group India said, “There is no other more exciting car brand in the world as MINI. With the launch of KUN Exclusive in Hyderabad, we hope to accelerate MINI’s momentum in India.” The new MINI dealership interior at KUN Exclusive has been uniquely designed to replicate the modern city feel in an indulging, inviting and interactive format representing the iconic MINI Lifestyle. KUN Exclusive Hyderabad is an exclusive MINI dealership with a 4 MINI display set-up. The multi functional architecture also has a MINI Lounge, MINI Lifestyle Collection and

24 DECEMBER 2012

MINI Accessories on display. Gaut ha m Gudigopura m, Director, KUN Exclusive said, “KUN Exclusive has been working with BMW Group India since 2007. We are thrilled to bring the MINI to Hyderabad and become part of its India journey.” With MINI Financial Services,

the customers will be able to avail attractive finance and insurance options. In addition, MINI Financial Services will also offer a comprehensive insurance package: MINI Smile (similar to BMW Secure) which is a value-add for MINI customers over and above their basic motor insurance.

Philipp von Sahr, President, BMW Group (left) India with Gautham Gudigopuram, Director, KUN Exclusive at the launch of MINI in Hyderabad

GM India has Rajesh Singh as VP Marketing, Sales & After-Sales

M India announced the appointment of Rajesh Singh as the new Vice President Sales, Marketing & Aftersales, with effect from Jan 1, 2013. Rajesh Singh will be responsible for the complete Vehicle Sales, Servicing & Marketing (VSSM) function of GM India. He will be based at the Corporate Office in Gurgaon and will report to the President & MD of GM India. Lowell Paddock, President and Managing Director said, “We are confident that Rajesh, with his wealth of experience in the field of vehicle sales, service and marketing, will accelerate GM’s emergence as a significant volume player.” Rajesh began his career with Maruti in 1992 and has held various sales, marketing and network development positions at regional and national levels for Maruti. Earlier this year, he joined Havells India Ltd as

Rajesh Singh

Senior VP (Sales & Marketing). Rajesh Singh holds a PGDM from IIM, Calcutta and B.Tech. from IIT, Delhi. Following a transition period, Rajesh Singh will replace Ashwani Muppasani, who had assumed the VSSM leadership role on an interim basis in August this year. Muppasani will be moving on to a new role in GM, which will be announced separately.

Nissan Organises Nissan Fest

issan has launched an entertaining and unique promotional campaign ‘Nissan Fest’ in association with the Radio City Connect team. Visitors to Nissan’s showrooms will be able to enjoy a funﬁlled weekend of live shows and antakshari, to tatoos, gaming consoles, darts, rafﬂes, and much more in the run up to the New Year. This initiative will also include RJs from Radio City – conducting their shows LIVE from the dealership. This activity will be held every Saturday and Sunday at a Nissan dealership and will move to different location in a different city the following weekend thus covering the country. To add to the festive cheer, Nissan is offering its world class cars at a special price. The premium hatchback Micra is available at `3.99 lacs and its popular sedan ‘Sunny’ at `5.79 lacs. In addition, there are host of other attractive offers and services by Nissan for its esteemed customers.

This initiative will also include RJs from Radio City – conducting their shows LIVE from the dealership. This activity will be held every Saturday and Sunday at a Nissan dealership. As part of the initiative, a live studio will be set up at the respective dealerships. Visiting customers of all age groups will be encouraged to participate by airing their talents live on FM. In addition, there will be various activities to keep visitors engaged across all the target groups.

A taste of things to come.

Auto Monitor

24 DECEMBER 2012

EMERGING M A R K E T S

Building Blocs C

hina is the world’s largest auto market, and the global auto industr y is increasingly about China. Within three years, China’s auto market may grow to be larger than that of the U.S., Japan and Germany combined. For investors who are interested in investing in the auto industry anywhere, the growth potential for companies in China’s auto industry exceeds the potential in any other country. China’s auto sales in November grew to 1.79 million vehicles, an increase of more than 11.5 percent from the October sales numbers, and 8.16 percent greater than the sales total for November of last year. There are numerous ways for investors to participate in China’s auto industry. These include investments in automakers, auto parts manufacturers and companies in the auto supply chain. I will focus on three global automakers with Chinese operations, General Motors (GM), Ford (F) and Volkswagen. While

none of these companies are 100 percent China auto opportunities, all three have signiﬁcant operations in China, and have made major commitments to the growth of their companies in the country. I’m also discussing China Automotive Systems (CA AS). China Automotive Systems is a leading supplier of power steering components and systems. Asia Carbon Industries is a China based manufacturer of carbon back, a material that is used in the manufacturing of tires.

The Future For China’s Auto Industry McKinsey & Co, the global management consulting ﬁrm, has indicated that China’s auto market will grow annually by 8 percent to 22 million annual vehicle sales by 2020. The McKinsey report also stated that the growth in China’s auto industry will be led by demand for SUVs, and by ﬁrst-time purchasers in China’s smaller cities. There are differences of estima-

tions as to how large China’s auto market will be by the end of this decade. General Motor’s Chief Executive, Dan Akerson has stated that China’s auto market will reach 30 million annual sales by 2020. In either case, the growth prospects for China’s auto industry are impressive. The smaller Chinese cities referenced by McKinsey are typically referred to as China’s third-tier and fourth-tier cities. McKinsey’s report indicates that the growth of auto sales in these smaller cities will be due to increases in income and wealth, and millions of first-time purchasers buying their first cars. McKinsey has stated that these third-tier and fourth-tier cities will account for almost 60 percent of new car sales by 2020, up from around 40 percent during the first decade of this century. Even with their projections for the growth in auto sales in China, the authors of the McKinsey report, Arthur Wang, Wenkan Liao and Arnt-Philipp Hein, indicated that China’s car ownership

will only be at half of that of the U.S. by 2020. Among all types of autos, McKinsey’s report stated that SUV sales will triple for the 10 year period ending in 2020. McKinsey indicated that the increase in SUV sales will be propelled by higher wealth and income, resulting in many Chinese wanting larger cars. As a conﬁrmation of the commitment to their growth potential in China, over the past two years China’s top ten automakers have announced more than $38 billion in capital investments.

General Motors General Motors has a total of twelve joint ventures in China. The company sold more than 2.5 million vehicles in China last year, a total that exceeds that of its global rivals, Toyota Motor Corp. and Volkswagen. GM’s joint venture with China’s SAIC Motor Corp. sold a total of 136,444 vehicles last month, up 21 pc from the number sold in November last year.

Ford Motor Company Sales of Ford’s Focus model in China during the month of November broke records. A total of 38,362 Focus autos were sold in November. The total Focus sales for the ﬁrst eleven months of this year was 259,492 vehicles. Two models, the Edge and the Mondeo models also showed huge growth. For the ﬁrst eleven months of this year, sales of Edge model were up 111 percent, while sales of Mondeo models were up 8 percent.

Volkswagen China is Volkswagen’s largest market. Volkswagen’s China sales for the third quarter of this year increased by 21 percent to 704,991 vehicles. Volkswagen’s growth rate for the quarter almost tripled the growth rate of its rival General Motors. Volkswagen’s sales for the quarter were also sufficient to surpass GM’s sales for the quarter of 664,765 vehicles. Through the third quarter of this year, GM was still in the lead for Chinese year-to-date sales by a slim margin of approximately 77,000 vehicles. But, it must be recognized that China and Volkswagen calculate their China sales differently. General Motors includes truck sales, but excludes sales in Hong Kong and Macau. Volkswagen doesn’t include truck sales, but does include Hong Kong and Macau sales. For the first nine months of this year, Volkswagen had five of the ten best-selling autos in China, while General Motors had three.

China Automotive Systems For the September 30th quarter, the company’s sales increased to $73.2 million, an increase of 3.2 percent compared to the third quarter of last year. For the quarter, the company’s gross profit was $12.5 million, compared to $12.6 million in the third quarter of 2011. The company’s net income was $4.4 million for the quarter, compared to $11.1 million for the corresponding quarter of 2011. The company’s earnings per share for the quarter were $0.12, compared to $0.09 in the third quarter of 2011. While the company’s net income for both the quarter and the first nine months of this year are disappointing, China Automotive Systems is well positioned to increase its profitability.

Conclusion The growth of China’s auto industry is compelling for investors. While there are many opportunities to participate in the growth of China’s auto industry, General Motors, Ford, Volkswagen, China Automotive Systems and Asia Carbon Industries are all well positioned to continue to grow their China operations as the country’s auto industry grows. The article was penned by Jeffrey Friedland for Seekingalpha.

Auto Monitor

24 DECEMBER 2012

INTERVIEW

The New Light Heavyweight the real difference is in terms of strength to weight ratio.

Phil Simmonds, Studio Design Director, Range Rover, is the man behind designing the fourth generation Range Rover. It is also the first all aluminum body light-weight SUV. Simmonds tells Nabeel Khan how the company has made a more efficient vehicle.

The New Range rover is a completely aluminum monocoque vehicle. How did you work at the robustness considering Indian conditions? Aluminum is a material which the Jaguar Land Rover (JLR) has expertise in. So it is not just the Range Rover but also the Jaguar XJF that has a whole aluminum monocoque. We have a body shop which is the larg-

est aluminum body shop in the industry. For instance, by using panels like monoside, we have ensured that this vehicle has the largest automotive aluminum panel. What benefits will the aluminum monocoque offer customers? There has been enormous beneﬁt of this in all spheres. It

offers less emission of CO2, high performance, better acceleration, and much better agility. At just under 5m long, the new Range Rover has a similar footprint to the outgoing model, but with a smoother and more streamlined profile. It is the most aerodynamic Range Rover ever, with a drag coefficient starting from 0.34 – the roofline sits 20mm lower in access mode.

But only aluminum may not give the required strength. What kind alloy or other metal have you mixed for that? We have used other materials such as magnesium casting and high strength steel. However, the vast majority of the panels are aluminum. In terms of price there is a small difference between steel and aluminum. It’s not such a major difference,

What kind of weight reduction has happened in the new Range Rover as compared to earlier ones? We have reduced the weight by around 420 kgs. This kind of reduction has not come about only by using aluminum, but the entire body structure is extremely light. The weight will also depend on the specifications and choices made by the customers. If the customer opts for V8 diesel engine, it’s an improvement by 250 kg versus the outgoing model of Range Rover. The vehicle efficiency does not really come only by having reduced the weight. For example, what we have in this car is a small regeneration charging which helps in reducing the load on the engine thus making it more efficient. The other example is the application of electric power steering where earlier we used hydraulic which again helps in improving the vehicle’s efficiency. The vehicle can be steered automatically with the help of Electric Power Assisted Steering. Could you elaborate on the use of laminated glasses? We have used laminated glass which brings in plenty of benefits. It doesn’t only make it stronger but also improves the overall Noise Vibration and Harshness (NVH) of the vehicle. The sound insulation of the vehicle has also improved. In terms of strength, the glass can easily sustain the double weight of the vehicle.

24 DECEMBER 2012

G L O B A L WAT C H

UK Car Industry Deﬁes European Slump Increase in sales and strong exports show it’s not all doom and gloom, despite the UK’s double-dip recession.

he automotive sector flew the flag for the UK in 2012, becoming Europe’s second largest new car market and producing almost 10 percent more vehicles than it did last year. According to figures from the Society of Motor Manufacturers and Traders (SMMT), the UK automotive sector has an annual turnover of around £55bn with more than 40 global companies basing their operations in Britain and employing more than 700,000 people. In 2012, the UK new car market has grown in every month since March. The SMMT indicates that further growth is likely to be market specific, boosted by attractive offers and new, innovative models offering significant fuel efficiency and cost savings. A noticeable trend across every vehicle category has been the rise of fuel-efficient models – so regardless of the size or type of vehicle motorists are buying, it’s those that boast the greatest efficiency that typically perform the best. Sales to date in 2012 show 1,921,052 registrations in the UK, of which 975,332 had diesel engines 919,527 petrol and 26,193 powered by alternative fuels. The average emissions of new cars have fallen to 133.2g/km, down more than 3.5 percent in just a year. The mini and super-

mini segments have shown the greatest growth (increasing market share by 6.6 percent in the last ﬁve years), with SUVs and crossovers selling particularly strongly and increasing market share by 2.4 percent since 2007. Paul Everitt, the SMMT’s chief executive, said: “The UK has outperformed our European partners during 2012 with vehicle manufacturing and new car registrations rising strongly through the year. “While most EU markets have been impacted by eurozone instability, the UK has beneﬁted from £6 billion of new investment from global vehicle manufactur-

ers during the past two years, with car production set to break all-time records in the years ahead. At the same time new car buyers have responded positively to the exciting and fuel-efﬁcient new models now on the market helping to boost registrations and make the UK the second largest market in Europe.” More than 80 percent of vehicles and 60 percent of engines manufactured in the UK are exported. The SMMT’s projections for 2013 include 2.015 million registrations, up 0.1percent on the 2012 forecast.

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VW Beetle Fender Rocks Into Town

usic fans have a lw ay s l i ke d the Beatles, and now they’ve got another great reason to get into Beetles, with the introduction of the Volkswagen Beetle Fender limited edition, created in conjunction with the eponymous guitar manufacturer. The limited-edition Beetle Fender comes with an efﬁcient yet powerful 2.0-litre TDI 140 PS engine connected to either a six-speed manual or DSG gearbox. Like the cover of Spinal Tap’s infamous album Smell The Glove, it is available in just one colour - black (in this case a lustrous Deep Pearl Black) - with a rear spoiler, stylish 18-inch ‘Discus’ alloy wheels, and a Fender badge on each front wing. Step into the Beetle Fender’s welcoming interior, and the guitar connection becomes clear: each model comes with a dash panel in vibrant ‘Sunburst’ wood, just like a classic Fender guitar. If that’s not enough to rock your world, each car is ﬁtted with the incredible 400-Watt Fender sound system, complete with boot-mounted subwoofer, illuminated front speaker mountings, and a volume dial that goes to 11 (okay, we made that last bit up). Each Beetle Fender also comes with the RCD 510 audio unit with full-colour touchscreen and MDI multi-device interface, 2Zone climate control, front and rear parking sensors, bi-xenon headlights and bespoke ‘Cheyenne’ cloth seats with leather-look side bolsters.

The Beetle Fender costs £23,015 (RRP OTR) for the manual model, and £24,610 for the DSG. Orders open on 2 January but hurry, production is limited. The eye-catching new Scirocco GTS packs a unique speciﬁcation that includes the aforementioned pair of broad stripes running the length of the vehicle from bonnet to tailgate, red- or white-coloured door mirror caps (depending on body colour), bespoke 18-inch ‘Thunder’ alloy wheels and a panoramic sunroof. The Scirocco GTS is available in Candy White (with black stripes and red door mirrors), Salsa Red (black stripes, white mirrors), Deep Black Pearl and Indium Grey. Adding to the already comprehensive speciﬁcation of the R-Line model, the Scirocco GTS comes with black ‘Vienna’ leather upholstery with red stitching and an embroidered GTS logo, a golf ball-style gearknob, bespoke multifunction steering wheel with GTS logo, GTS sill plates, and Piano Black door handles. As on the Scirocco R-Line, equipment includes an RNS 315 satellite navigation, Adaptive Chassis Control, and Bluetooth telephone connection. The GTS is available with either a new 2.0-litre TDI 177 PS or 2.0-litre TSI 210 PS engine, and a six-speed manual or DSG gearbox. Prices are £27,945 for the TSI manual, £29,345 for the TSI DSG, £27,980 for the TDI manual and £29,395 for the TDI DSG.

Auto Monitor

24 DECEMBER 2012

G L O B A L WAT C H

Continental Goes Auto Mode in Nevada

he international automotive supplier Continental has received Nevada’s ‘Autonomous Vehicle Testing License’ – a state approval from the Nevada Department of Motor Vehicles (DMV) to test automated driving on the state’s public roads. Continental’s testing license is for the company’s highly automated vehicle, and represents the first license granted by the Nevada DMV to an automotive supplier. “At Continental, we continue to invest in research and development for next generation technologies – such as our highly automated vehicle – that will drive us toward a safer, more efficient and more comfortable future,” said Dr. Elmar Degenhart, chairman of the executive board of Continental. “As a company, Continental’s strategy is clearly focused on making this type of future technology a reality. It’s clear to us that automated driving will be a key element in the mobility of the future. We will be able to develop the first applications for highly and ultimately fully automated driving, even at higher speeds and in more complex driving situations, ready for production by 2020 or 2025.” After completing driving demonstrations on December 18 in Carson City, Nevada, USA, the DMV’s Autonomous Review Committee approved Continental’s safety plans, employee training, system functions and accident reporting mechanisms. Following approvals, Continental will receive its testing license and red license plate featuring an infinity sign to represent the car of the future.

Continental’s short term goal is to relieve the driver of tedious activities, such as driving on highways.

The plate is designed to be easily recognized by law enforcement and the public at large. It will only be used for licensed test vehicles for automated driving. Continental’s current highly automated vehicle is designed to always have a driver monitoring the vehicle behind the wheel, unlike a completely driverless vehicle. The automated vehicle can accommodate multiple driving scenarios. Utilizing four short-range radar sensors (two at the front, two at the rear), one long-range radar and a stereo camera, the vehicle is capable of

cruising down an open freeway as well as negotiating heavy rushhour trafﬁc. Taking advantage of Continental’s sensor fusion technology as part of the ContiGuard safety concept, the vehicle is able to track all objects as they enter into the sensors’ ﬁeld of view. The object information is then processed and passed on to the control unit (Continental Motion Domain Controller) to control the vehicle’s longitudinal and lateral motion via signals to the engine, the brakes and the steering system. T he e qu ipment in

Continental’s highly automated vehicle differs from the customized sensors and tailor-made actuators in other automated vehicles. The vehicle, which has logged more than 15,000 miles (24,000 kilometers), is built primarily with equipment that is already available in series production. Continental’s short term goal is to relieve the driver of tedious and monotonous activities, such as driving on highways with minimal trafﬁc or in low-speed situations like trafﬁc jams. Although the concept of complete fully automated driving

is valid, it is not yet fully viable. Continental’s highly automated vehicle, however, is an intermediate step toward fully automated driving. Continental’s vehicle brings Continental closer to achieving the company’s Vision Zero – the goal of reaching zero accidents and zero fatalities on the roadways. Continental will continue real world evaluations with this vehicle. From 2016, partially automated systems may therefore be assisting drivers in “stop & go” situations on the freeway at low speeds of up to 30 km/h.

24 DECEMBER 2012

Auto Monitor

INTERVIEW

The New BMW Z4 B

MW has revealed a new version of the popular Z4 roadster which will go on sale in March, 2013. The new BMW Z4 sDrive18i engine heralds a new entry point into BMW Z4 ownership. Priced from £27,610 OTR this new derivative uses a de-tuned version of an existing 2.0-litre four-cylinder twin-scroll turbocharged engine. Producing 156hp at 5,000rpm from its 1,997cc powerplant the car is capable of zero to 62mph time of 7.9 seconds before going on to a top speed of 137mph. It manages to do this while still recording 41.5mpg and emissions of just 159g/km. Some of the existing engines have also received enhancements to improve t heir overall performance. The BMW Z4 sDrive20i comes with a 184hp engine that achieves 41.5mpg and 159g/km CO2. The model is the most popular derivative of Z4 currently accounting for 80 per cent of sales.

Further up the range and the four-cylinder twin-scroll turbocharged sDrive28i, and the six-cylinder twin-turbocharged sDrive35i and the sDrive35is offer customers greater performance courtesy of their respective 245hp, 306hp and 340hp power outputs. All cars are rated at an electronicallylimited 155mph top speed. Transmitting the power to the road is a six-speed manual gearbox as standard. Customers can also specify an eight-speed automatic with gear shift paddles located on the steering wheel, while buyers of the BMW Z4 sDrive35is have a seven-speed Double Clutch Transmission, again with gear shift paddles, as standard. All of the latest BMW Z4s come as standard with facets of BMW’s award-winning EfﬁcientDynamics programme. Technologies that improve engine performance while enhancing economy and cut-

ting emissions include Brake Energy Regeneration, Electric Power Steering with Servotronic, Reduced Rolling Resistance Tyres, on-demand control of the engine’s ancillaries and Optimum Shift Indicator on manual transmission cars. The BMW Z4 also adheres to a philosophy of lightweight construction with the front suspension and subframe being largely made from aluminium. Design wise the winning formula of the BMW Z4 styling has only had minor enhancements mid-life. The headlights now include white LED corona rings and a white ‘eyebrow’ with additional chrome detailing, while in proﬁle the side gill features chrome detailing and LED side repeater lights. Building on the striking looks of the BMW Z4 is the introduction of the Pure Traction Design package. Available exclusively in Valencia Orange with an optional black contrast roof

the model also comes with Sport seats in Alcantara and leather with contrast stitching, Anthracite headlining and a unique metal weave interior trim. Should a customer wish to have another exterior colour this can be offered though. The Pure Traction Design package costs from £550 up to £2,240 depending on the model within the Z4 range it is order on. SE and M Sport derivatives will continue to be offered. Standard equipment across all models now includes DAB radio, Xenon head lig hts, Bluetooth, USB connectivity and Sport multi-function steering wheel. All models apart from the new entry-level sDrive18i SE come with Kansas leather upholstery as standard. Three new colours of Mineral Grey, Glacier Silver and Valencia Orange are offered while two new styles of alloy wheel, 17-inch and an 18-inch V-spoke styling wheel are available.

50+ Unveilings Prepared For Detroit

lobal automakers have saved their best for the 2013 North American International Auto Show (NAIAS), and with less than one month to go before the curtain rises, the industry remains focused on one of the top automotive events in the world.

Top Priorities “This show is a reﬂection of the positive changes that are occurring in our industry,” said Jim Seavitt, chairman, 2013 NAIAS. “Automakers from around the world continue to place NAIAS at the top of their global auto show strategies, and have committed to more than 50 vehicle debuts with the majority being worldwide unveilings.”

Skills Are Key For Nissan Boost

utomotive suppliers are happy by Nissan’s latest a n nou ncement but lament that industry skills gaps need to be plugged. The Japanese car maker will inject more than s250m into building the luxury Inﬁniti model at its Sunderland plant, a move which is expected to create 1,000 jobs in the North-east. David Land, right, engineering and operations director at

Tallent Automotive, welcomed the announcement which he says will encourage suppliers to step up their game and recruit more skilled engineers. It employs 1,400 and supplies all major Tier 1 OEMs for the car industry. While welcoming the news Land said a looming hole in the skills provision for the Northeast sector was becoming more apparent. One of the things we’ve got to do in this region is get peo-

ple skilled up to do the work and we will have a big push next year getting young people into engineering. He added: The Infiniti is a brand new model that’s been predominantly built in Japan, this is the first time it’s come to the UK. For the UK to get a prestigious, high-market car such as the Infiniti is great news for both Nissan and its supply base. The Infiniti cars produced at

the plant will be shipped across Britain and Europe from 2015. It is the ﬁrst time in 23 years

that a new car brand has been produced on such a scale in this country.

Auto Monitor

24 DECEMBER 2012

COLUMN

Better Than It Sounds The changing business. Automobile companies are constantly vying to offer customers a better driving experience through cushy comforts interiors. Aditya Ambardar

he world has entered into an era where consumers are aware and are making intelligent choices when it comes to spending money. Before making a buy, people gather information predominantly by word of mouth or the Internet and compare various available products. This change in consumer behavior has affected the intelligence behind the way products are designed and marketed. The automotive industry is not shying away from this reality. Web portals like carwale.com and gaddi.com make the consumers aware of the various speciﬁcations of a particular automobile. This increase in information sharing has created a need for the automobile companies to differentiate their products to make them more attractive to end con-

sumers. The differentiation is, of course, based on the whole user experience in the automobile which includes factors like ride, controls, handling and the interior and exterior aesthetics of the vehicle. T he consu mer d r iven approach has given rise to increased investments on technology from the OEMs which has definitely enhanced the overall user experience. To quote an example, in India the four-wheeler segment includes standard cars to high-end variants and models with different functional features in the car. There is a car for anyone and everyone on the road now. Even the budget cars have variants to satisfy the pockets of users. In case of the high end feature variants, they offer that extra experience and satisfaction to the user. High-ﬁdelity audio system to automated HVAC systems, to built-in audio controls

on steering wheel and even the bluetooth connectivity with the audio console for hands-free operation are just some examples which give a differentiated ride experience to the user. In two wheelers, there is the addition of night glowing switches on the handle bar, a mobile charging module, innovative style and cluster display on the bike, and push-button ignition are all examples of differentiation happening due to advancements and investments in technology. Given the extra visible features and ride experiences, one can not shy away from the next big question, fuel efficiency of the vehicle. The technical innovation and investments that go behind the aspect of fuel efficiency of the vehicle are huge, and manufacturers are investing money on R&D to have best in class specification. The look of the vehicle, depending on which segment it

is targeted to, is the first thing which grabs the attention of the consumer. Cool looks, vibrant cures, aerodynamic cuts from front mesh to LED tail lights, all create the ever capturing effect on the consumer. The exterior of the vehicle is designed with care as they make the first impression. A significant amount of research and investment goes in the design, to make sure that your vehicle looks good with perfect aerodynamics to have minimum air drag when the vehicle is moving. Achieving this perfection is not a simple task, as design and redesign activity consumes a good amount of time and money to deliver the best to the consumer.

Enhanced Customer Experience The moment you get into your car, or rather how you gain entry to your car is also an aspect of differentiation. Key less entry

is a feature which is now seen in all the mid-range cars. Users just press a button on the key and the signal is captured in the electronic heart of the car, which then unlocks the vehicle. This category is widely known as car access system and this particular application is called remote keyless entry. Evident from the name, the user has to press the button and gains access to his/her car without using mechanical door key to unlock. This special key contains a small UHF (ultra high frequency) transmitter or transceiver module which activates the unlock routine in a car which unlocks the doors. Today most of the cars in the Indian market have the immobilizer function built in. This function allows the ignition module to start the car only when the right key identity is transmitted. A key with wrong identiﬁcation number, even with the right grooves will

not activate the engine. Advancement in the low power consumption CC11xx, TMS37xx, has enabled users to just pocket the key, walk to the car, open the door and push a button on the console to start the engine. Investment in this technology has given an enhancement to security of vehicle and also added a differentiated value to the cars on the road today. Entertainment has also become an integral part in the passenger compartment of automobiles. A while ago, not all cars came with this feature and consumers used to buy the radio transceiver from the aftermarket to enjoy music. Now radio decks and USB music consoles are integrated in the midrange cars, as a default feature or an add-on optional package. Users are very keen on buying these added features as it enhances the entire user experience while driving. The evolution of this technology is also a good example of how the investments in recent automotive industry have led to differentiation of cars available now. It began with just the FM/AM receiver and then addition of cassette players. As the technology evolved, CD players came into market and now there are total experience packages available with USB dongle music players, and popular music player accessibility like ipods and mobile phones. Infotainment systems which were available in high end cars have been brought down to entry level and midrange cars too. The terminology has also changed, now cars need infotainment systems which inform as well entertain us on roads. The entertainment console is not only playing your favorite music but, it is also seen as a information portal which can help you navigate, display the rear vision while backing up and provide a panoramic vision to avoid accidents due to obstacles in vehicle’s blind spot. We are working with customers to bring this integration into the car console. One can even have diagnostic features of a car mapped on infotainment consoles with integration of early warning systems. These systems also have radio connectivity (GSM/GPRS) for the immediate assistance, in case of emergencies or download internet content and enjoy online video portals like Youtube, etc. There are ample possibilities with such kind of systems; one can even download trafﬁc updates to avoid being stuck in a jam. According to statistics released by Ministry of Road and Transport and Highways, points out to 4.9 lakh road accidents in 2011. This number of road accidents average to one every minute. These facts are not overlooked by the Indian car manufacturers. With this in mind, the number of cars in midrange and high-end segment with airbags and ABS (Antilock Braking System) have increased in number. Airbags are deployed when a knock is sensed in the car informing the control unit that a crash has happened, which in turn deploys the airbags, restricting the driver or the passengers to jolt and have any interior (anterior-referring to front of body) or head

Contd. on Pg 30

Auto Monitor

24 DECEMBER 2012

COLUMN

Better Than It............. Contd. from Pg 28 Car side

Key fob side

Current Measurement Load Drivers

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optional for Battery Charge LF &KDUJLQJ $PSOL¿HU Base Station TMS3705-Q1

UHF Transmitter or UHF Transceiver CC11x1-Q1 Up to 13 ft (4 m) Cable Length SPI

Push Buttons

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LF Immobilizer Antenna

LED

Embedded Processor

SPI Passive Entry Device

GIO

PEPS LF Driver

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System Supply

Power Supply

injury. This additional feature is usually incorporated for child safety, where weight sensors

sense whether an adult or child is occupying the seat, resulting in variable or no deployment of air-

bags. Why? Because a fast moving airbag can lead to injury to a child rather than acting as a safeguard.

ABS technology allows a car to have better control at high speed breaking, as it does not allow the

wheels to lock and skid in the direction of motion. Consumers are becoming aware of the use of safety features in the car. Another differentiator that has been developed is the electronic power steering (EPS) which is now a standard feature on most car variants available in the market these days. Texas Instruments identiﬁed this need and developed a state of art motor driver solutions to drive the bulky motors used in the EPS systems, the newest and feature rich member in the family is DRV3201. More recent ly, Tex a s Instruments (TI) has also launched SafeTI solutions web portal, also targeted for automotive industry. It features microcontrollers from Hercules safety ARM controllers family. With the adoption of semiconductor technology and software technology, car manufacturers can achieve a competitive advantage and differentiate themselves in the market to costeffectively introduce highly sophisticated features into the automobile we know today. The author is Business Development Manager – HVAL (Automotive), Texas Instruments (India) Pvt. Ltd.

Mercedes Benz Has Investors Worried

he number one luxury car maker in the world – BMW – has more good news coming its way. It seems that the arch rival Mercedes is in a tone of trouble after recent evaluations. According to Bloomberg, the investors value Mercedes-Benz at half what BMW is worth. According to recent valuations, BMW’s market cap has surged to 45 billion euros whereas Mercedes is valued at 25 billion euros. This new valuation is quite alarming because throughout the history Mercedes and BMW were pretty much neck-to-neck with each other. In fact, just two years ago, Mercedes had a market capitalization of 15.5 billion euros higher than BMW. The key reasons for the declining market cap are many. Slow growth in China, lack of a right mix of products, slow expansion in high-volume segments and an aging brand identity to name a few. The outcome was almost inevitable – BMW sold 1.39 million vehicles versus 1.19 million for Mercedes, widening its lead to 193,400 cars for the period from 115,700 a year earlier. Even more alarming is the fact that BMW makes more money by just selling cars than Mercedes makes by selling cars and commercial vehicles. But Mercedes is ready to straighten things up. The automaker has initiated a drive to cut costs by 2 billion euros by 2014 under a program dubbed ‘Fit for Leadership’. Next year, we will see two game-changing products – The all-new S Class and the Mercedes CLA – hit the stands. The Mercedes A Class is already a grand success signaling the start of a comeback. To capitalize in China, Mercedes appointed Hubertus Troska to oversee operations in the world’s largest car market. Back home, we also saw the change in guard with Mr. Eberhard Kern replacing Peter Honegg for the leadership role. Kern has spent three decades with the company and has successfully executed assignments across Asia and other global markets.

24 DECEMBER 2012

G L O B A L WAT C H

Auto Monitor

Why Quick Innovation Is Critical

“decentralized” and “rapid approach” to innovation will be the critical drivers of success for the automotive industry in the near future, according to a new report – demanding that more research and development (R&D) dollars be spent on ways to boost fuel economy and “communized” global platforms, while helping find new ways to attract younger buyers. “Right now, the automotive industry is in a phase of both rapid and broad technological innovation that spans several scientific disciplines—chemistry (batteries), materials science (lightweight materials), and consumer electronics (infotainment), to name a few,” noted Scott Corwin and Brian Collie, partners with global management consulting firm Booz & Co. and authors of its 2013 Automotive Industry Perspective report. Given the span of innovation, it’s becoming exceedingly difficult and too costly for OEMs to ‘go deep’ across all technologies. Additionally, some nonautomotive players have superior specialized

technical capabilities and R&D scale in speciﬁc disciplines. These factors are fundamentally shifting the industry’s long-standing model of innovation[from one] centered around large OEMs and major suppliers toward a more decentralized approach in which OEMs serve as integrators, with large and small suppliers playing an expanded role. Corwin and Collie argue that the automotive industry will need to innovate rapidly in order to remain competitive in an everchanging market, where the goals include hitting more stringent fuel economy standards, boosting the electronics in cars, developing common platforms around the globe, and attracting younger buyers. Doing this requires signiﬁcant R&D dollars, both within OEMs and increasingly across a broader innovation landscape. More than ever, advances are taking place in systems that have highly intricate linkages throughout the entire vehicle and rely on a wider variety of diverse disciplines. Take the growing array of fuel and powertrain technologies:

Why Fewer Passenger Cars In Apr-Nov 2012

Few seem to rise to the occasion. The reasons are many.

he government has announced that production of passenger cars marginally declined by one percent year-on-year to 15.9 lakh in April-November 2012 due to factors including slow economic growth and high interest rates. “Due to the increase in fuel price, low GDP growth rate, exorbitant material cost, high interest rates and slow economic growth, the production growth (of passenger cars) has reduced to a marginal one percent during April-November 2012-13 against its corresponding period in the last fiscal,” said Praful Patel, Minister of Heavy Industries and Public Enterprises. Out of the 16 car manufacturers, nine companies have reported decreased production, three more companies have reported only marginal growth (less than 4 percent) and only four companies “have been doing well”, he said in a written reply to Lok Sabha. Among the companies which registered a production decline in the first eight months of the current fiscal, Fiat India Automobiles witnessed a 47 percent drop in output, followed by Mercedes Benz India 26.8 percent, General Motors India 23.7 percent and Volkswagen India 23.2 percent, Patel said referring to data from Society of Indian Automobile Manufacturers (SIAM). However, he said, companies which performed well in terms of cars production during the period under review include Renault India which registered a year-on-year growth of 616 percent, Honda Cars India 83 percent and Toyota Kirloskar Motor 19.8 percent and Nissan Motor India 13 percent. According to the SIAM, he said, passenger car production in India was growing at a rate of over 17 percent during the last 10 years. Further, the minister said, to boost the production of cars, various steps have been taken in pursuance of Automotive Mission Plan (2006-16) and the new Foreign Trade Policy provides additional incentives.

With numerous options and no clear winner, OEMs and suppliers are placing bets on a wide range of technologies, Corwin and Collie wrote. “Some of these require step changes in development, such as designing and manufacturing automotive-scale advanced lithium-ion batteries for electrical vehicles,” they noted. “[But] the addition of such a large onboard energy storage device in turn creates new requirements—like advanced thermal management techniques to maintain narrow temperature operating zones—as well as opportunities to leverage that electrical energy in new ways and improve overall vehicle performance.” At the same time, the greater penetration of smart phones and tablets is leading consumers to expect more advanced electronic content in their automobiles – and with much faster refresh cycles than have been typical in the industry, Corwin and Collie explained. “In addition to basic infotainment systems that provide vehicle information and enter-

tainment options, more active driver-assistance technologies such as collision avoidance and autonomous parking are becoming the norm,” they pointed out. Government policy also affects the development of new automotive technologies, Corwin and Collie added – especially in the U.S. market. “New fuel efﬁciency standards, which take effect in 2017, will require automakers to reduce vehicle weight and drag by incorporating new lightweight materials for auto body parts and internal components, for example,” they said. “While lightweight materials such as high-strength steel and aluminum are likely to have a greater presence in the automobile, ultra-lightweight materials such as carbon ﬁber will also gain acceptance, as increased industry adoption drives scale that reduces the cost of such components to more competitive levels,” Corwin and Collie emphasized. Developing these materials requires partnerships between materials suppliers, OEMs, and component manufacturers.

Government regulation will also be a key factor in alternative powertrains. For example, the means of calculating CAFE [corporate average fuel economy] compliance for electric, plug-in hybrid, and ﬂexible fuel vehicles, combined with the level and structure of subsidies for emerging powertrains and electric recharging infrastructure, w ill affect customer perceptions and economics substantially—and drive adoption of new technologies. While those are all complex issues, there is no turning back, Corwin and Collie pointed out. In an era of rapid and accelerating technological advances, companies must build the superior innovation capabilities essential to success. OEMs and suppliers alike will need to adapt their operating principles to allow for a more thoughtful and strategic approach. They must decide which technologies to focus on in a proprietary manner and how to develop them in a way that will increasingly, and with greater certainty, generate high returns on a growing investment in innovation.

Auto Monitor

24 DECEMBER 2012

G L O B A L WAT C H

A Mixed Bag – Brazil’s Auto Industry In 2012

s the year draws to a close, there’s time for a little ref lection on the performance of the automotive market in Brazil, a market which has delivered a mixed bag of results. In January, analysts were forecasting a 4 percent GDP growth for the full year. However, as we moved into the second quarter, estimates dropped to 1.2 percent. The first five months saw a yearto-date drop of 4.8 percent on vehicle sales, which in turn triggered government incentives such as a reduction in the industrial tax (IPI) of, on average, 5-7 percent, depending on engine size. This has been an important year for new model launches from OEMs established in Brazil, and in particular Brazil-specific vehicles either developed locally or in global headquarters for the Brazilian market Imports were also hurt by the 30 percent increase in IPI tax introduced back in December 2011. In the year to November, total sales of imports, from countries subject to a 35 percent import tax, were down 33.5 percent year-on-year. However,

imports from countries that have a trade agreement and are not subject to the import tax – like Argentina and Mexico – improved by 1.9 percent. Heavy commercial sales were also affected due to a slowdown in industrial activity and lower than anticipated ‘pre-buy’ of Euro 3 emissions vehicles in 2011 ahead of the price increases that were to come with the implementation of Euro 5 in January 2012. The heavy commercial segment faced a 19 percent drop in sales overall this year, but a recovery has been seen in the last two months thanks to lower ﬁnancing rates and industry recovery. Local automotive production has seen a drop of 2 percent compared to last year, which was attributed to a 20 percent drop in exports. Overcapacity in many global markets makes it more difﬁcult to export, but it must be noted that export markets account for only 13 percent of local production, unlike many other countries that rely mainly on exports. Driven by incentives, the market recovered after a slow start, and the year is set to end with a 5.2 percent growth in overall vehicle sales.

More coming your way.

On a more positive note, this has been an important year for new model launches from OEMs established in Brazil, and in particular Brazil-speciﬁc vehicles either developed locally or in global headquarters for the

Brazilian market. Highlights included the Chevrolet Onix, Fiat Grand Siena, Ford new EcoSport, and Hyundai HB20. Hyundai opened its ﬁrst wholly-owned plant to build the new HB20 compact car. Toyota also

inaugurated its second plant to produce the Etios compact car, ﬁrst launched in India. And other OEMs, including BMW, Chery, Fiat, JAC Motors and Nissan, are building new car plants that will open in the next two years.

The inside picture.

Driven by incentives, the market recovered after a slow start, and the year is set to end with a 5.2 percent growth in overall vehicle sales. The outlook for Brazil in 2013 is for GDP growth of 4 percent, and the same rate of growth is expected for both vehicle production and sales. Julian Semple is a Senior Consultant/Manager at CARCON Automotive in Brazil.

Fiscal Cliff Could Hit Auto Industry Hard

mericans could lose dozens of tax breaks and perhaps a good chunk of their disposable income if Congress fails to act in time to address the nation’s deficit. National industry research firm IBISWorld has authored new analysis indicating that the auto industry will feel the effects of consumers’ shrinking bank accounts if the country falls off of that fiscal cliff. IBISWorld analyst writes, “Cars are highly discretionary and expensive purchases that require significant maintenance, so a reduction in disposable income would force consumers to delay new purchases over the next couple of years.” Automakers like Toyota, which operates a truck manufacturing plant in San Antonio, could take a hit. So could auto dealers. It’s an unsettling scenario for an auto industry that has gained some momentum of late after dealing with the fallout from a deep recession. “The automotive sector’s high sensitivity to consumers’ purchasing power ultimately resulted in high revenue volatility during the past five years,” Panteva explains in his analysis. “Based on the sector’s recent performance, IBISWorld expects it to be one of the U.S. economy’s worsthit victims if the fiscal cliff is not resolved by the end of 2012.” Panteva says the effects of a fiscal cliff, coupled with high gas prices, could take a toll on the auto industry over the next five years.

Auto Monitor

24 DECEMBER 2012

BLOG

Image Problems Bob Ferrari

n July, Supply Chain Matters called attention to A Changing Collection of Supply Chain Related Business Challenges Facing Ford Motor Company. Of particular note was a product recall involving 11,500 brand new 2013 Ford Escape vehicles equipped with the 1.6 liter engine because of a serious potential for a fuel leak. Ford took the unusual measure of instructing owners to stop driving their vehicles altogether and make arrangements to have their recalled vehicles transported to local dealers for repair. In its press release announcing the July recall, Ford indicated the need to replace an engine compartment fuel line

Ford is not the only OEM to experience product glitches in new platforms. In October, Supply Chain Matters called attention to an increase in product recalls involving newly released models of highly anticipated automobiles including Nissan Altima and Hyundai Sonata, and the re-designed Honda Civic.

that could potentially result in a fire. It further noted that dealers were instructed to stop demonstrating or delivering the new Escape model to customers until the problem was corrected. Ford had issued an additional recall concerning 8,266 redesigned 2013 Escape SUVs in the U.S. to fix carpet padding that could hinder proper braking. Ford indicated that wrongly positioned carpet padding could reduce space around the pedals and cause drivers to hit the side of the brake pedal when switching from the accelerator. The 2013 Ford Escape was totally redesigned for 2013 to leverage Ford’s global single platform strategy, and represented one of the two critical product launches planned for 2012. Now comes word that last week, Ford had to issue a series of two other recalls within a week regarding its newly launched Ford Fusion sedan. Ford recalled about 19,000 2013 Fusion sedans to replace headlights because of a defect that could cause them to become blurry. Ford indicated that the coating on the polycarbonate lamp may not have been cured properly in manufacturing. The recall was described by the U.S. National Highway Traffic Safety Administration (NHTSA) as a violation of Federal guidelines related to visibility. Ford also

The ‘return rates’ of some vehicles are higher because of the flaws.

recalled 19,000 Fusion SE and SEL models, and 73,230 separate Escape models equipped with the 1.6 liter engine because of guess what- the threat of engine fires. According to today’s update printed in The Wall Street Journal, Ford has disclosed that the problem is linked to 13 separate reported engine ﬁres in certain 2013 Fusion and Escape models. Ford is not the only automotive OEM to experience notable product glitches in new model platforms. In October, Supply Chain Matters called attention to a recent increase in product recalls involving newly released models of highly anticipated automobiles including the 2013 Nissan Altima and the 2012/2013 Hyundai Sonata, and the recently

re-designed Honda Civic. As noted in October, any new product has an initial period where certain undiscovered ﬂaws can initially appear. Product teams anticipate these circumstances and compensate with added inspections and checks. With so much written about the maturity and deeper collaboration of new product introduction processes, we can all wonder why the frequency of product recall incidents involving re-designed products continues. There are considerations for common component parts utilized across all product platforms, newer and older. There are considerations related to the global platform strategy itself, magnifying the impact of a quality or product design

flaw. The increasing use of more sophisticated on-board electronics certainly adds a new dimension, coupled with the burden of component product innovation transferred to supplier responsibility. For Ford, it may be a more acute problem that can effect perceptions of brand and model image. Previous product defect incidents involving fires have led to considerable image problems, not to mention Toyota’s two year challenges with unintended vehicle acceleration with suspicions of sticking accelerators and misaligned floor mats. Open questions remain on the integrity of quality monitoring processes for both new global platforms as well as existing vehicles.

24 DECEMBER 2012

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