Automotive World Megatrends Magazine – Q2 2013

megatrends Q2 2013

M A G A Z I N E

iComposingi iconnectivit yi

Symphony Teleca orchestrates infotainment in a discordant market

iBosch iNDIAi

...and the emerging market’s hunger for technology

iMIST marketsi The new BRICS?

iconcept genevai The mobility ideas which lit up this year’s motor show

iFORMULA Ei

Putting EVs streets ahead with insights from Frost & Sullivan, eos intelligence and roland berger

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Editor's welcome Welcome to Megatrends Q2 2013 As the industry slows down for summer, we are looking back on what has happened over the past quarter - and how it will impact the industry long-term.

February saw delegates gather for Automotive World’s annual Commercial Vehicle Megatrends conference in India; one month later, industry leaders met in Detroit for Automotive Megatrends USA, and the first Marketing Summit.

Held at a crucial time for the market - as the CV industry eagerly awaited the 2013/14 budget - CV Megatrends India proved to be the perfect forum for speculation on the industry’s prospects, both long and short term. Read up on what happened at all three conferences from page 12.

As the automotive market in India continues to cause concern, many OEMs and suppliers are looking for new emerging economies into which to expand. On page 21, Manmeet Malhi of EOS Intelligence analyses the opportunities and challenges for OEMs in the new MIST markets.

Back in Europe, the 83rd Geneva Motor Show saw OEMs release the first wave of concept vehicles on the continent. Although not all are planned for production, the technological innovations and inspirations mark a step change in tactics going forward for several manufacturers. Take a look at our review of the biggest and brightest on page 17.

As well as taking a look back, we look forward at longer-term industry developments. This year’s Formula 1 may be disappointingly controversial, but eager anticipation is growing for its new electric vehicle sister series. On page 25, Martin Kahl

speaks to Lord Paul Drayson, founder and Chief Executive of Team Drayson, and Qualcomm Dr Anthony Thomson about how Formula E is going to bring the spark back to the EV market.

While Formula E is looking to help change inner city mobility, inner city logistics strategies will need to change too. On page 33, Frost & Sullivan’s Archana Vidyasekar explores the new logistics models that will change the way we order and deliver things in increasingly populated urban areas.

The connected car is a term we’re all very familiar with and, while advancements are ever ongoing based on current trends, true success lies in a far-reaching future focus. On page 55, Harman’s Vice President and CoPresident of the Infotainment and Lifestyle division, Michael Mauser, speaks to Megatrends about the “unique” environment of the car and why connecting with consumers is so important.

Delving deeper into the realms of infotainment on page 46, Martin Kahl investigates the pros and cons of using HTML5 for in-car connectivity, while, on page 37, Dean Miles, Senior Vice President at Symphony Teleca discusses the connected vehicle experience from a service provider’s perspective.

We hope you enjoy this issue of Megatrends magazine and, as always, we welcome your thoughts and suggestions; email us at megatrends@automotiveworld.com.

Ruth Dawson

Ruth Dawson Publications Editor,Automotive World

Automotive World Megatrends magazine

Publisher: Automotive World Ltd 1-3 Washington Buildings Stanwell Road, Penarth CF64 2AD, UK www.automotiveworld.com T: +44 (0) 2920 709 302 info@automotiveworld.com

Registered number: 04242884 VAT number: GB 815 2201 Chief Executive: Gareth Davies Editor: Martin Kahl

Publications Editor: Ruth Dawson

Subscriptions and Advertising: Gavin Dobson gavin.dobson@automotiveworld.com Copyright Automotive World Ltd 2013

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Contents Q2 2013 9 The fastest EV in the West

>On the cover

24 OEM consolidation helps

growth amid slowing Indian demand

30 Building products around predictions

25 | Formula E Lord Drayson and Dr Anthony Thomson discuss charging the EV market with a new motorsport series 17 | Concept Geneva Ruth Dawson analyses the concept vehicles that lit up the 2013 Geneva Motor Show 60 | Bosch, RBEI and India’s immense hunger for technology The in-house supplier with a global reach discusses modular approaches and the Indian market

33

Urban logistics 2020 Frost & Sullivan’s Archana Vidyasekar looks at the future of logisitics in an increasingly urbanised world

37 | Composing connectivity Symphony Teleca talks orchestrating infotainment in an industry where everyone plays a different tune 21 | MIST: the new BRICS? As growth in the BRICS markets falters, new players are beginning to emerge 5 | Megatrends

41

Customising aftersales The rules of the automotive game are changing and aftersales should be more important to OEMs than ever before www.automotiveworld.com

43 Public transport gets

46

personalised

HTML5: the most significant HMI development for 15 years?

A fusion of HTML, CSS and JavaScript fit for across the board use - or something to be viewed with caution? Martin Kahl investigates HTML5 in the auto industry

AMT: the future of Indian truck transmissions?

54

55

Clouding the future Driven by cloud computing, future proofing and new safety concerns, Harman knows just what consumers want from its connectivity features

63 Big Data, big brother?

>Also in this issue

12 | A stormy start for India As India eagerly awaited the 2013/14 budget, CV experts discussed where the market was headed 13 | Conformation or flexibility?

Strategy by sector was the core theme at Automotive Megatrends USA 2013 14 | Marketing Summit USA 2013 Clicks, bricks and likes get social at Automotive World’s first marketing event

67 Connecting with

integration

31 | Industry viewpoint: battery electric vehicles Have BEV sales been disappointing, or have they reached a realistic level for a new technology?

51 | Industry viewpoint: light vehicle safety As the industry races to reduce fatalities in an increasingly mobile world, active and passive safety technology continues to advance www.automotiveworld.com

69 IPI tax reductions: the

optimum opportunity for Brazilian investment

Megatrends | 6

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THE BIG PICTURE

The fastest EV in the West It’s been a busy quarter for Detroit Electric: first the Michigan-based electric vehicle startup announced the world’s fastest pure-electric production car; then, at the end of April, came the news that it would be partnering with Geely to bring EVs to China.

The SP:01 (pictured) is a limited edition twoseater sports car which boasts new standards for performance and handling in EVs. With a top speed of 155mph (249kph), the car can go 0-62mph (0-100kph) in 3.7 seconds.

Each SP:01 features a mid-mounted 201 bhp electric motor, delivering 166lb ft of torque. The battery has an energy storage capacity of 36kwh, which gives a range of almost 190 miles (305km), tested to the New European Driving Cycle (NEDC) standard.

9 | Megatrends

Using a Detroit Electric home charging unit, the battery can be fully charged in just 4.3 hours. The body consists of a lightweight aluminium platform with a carbon fibre bodywork, similar to those used in Formula 1 vehicle chassis.

“The SP:01 will be exclusive, luxurious and technologically advanced,” says Albert Lam, Detroit Electric’s Chairman and Chief Executive. “It is a milestone in the history of the Detroit Electric brand, but also a significant development for the international EV

sector. The car will allow us to demonstrate to the world our ability to build an exciting and innovative product, one that displays outstanding performance coupled with strong green credentials, and which delivers an exhilarating driving experience.”

www.automotiveworld.com

THE BIG PICTURE

And it seems Lam did not have to wait long for the worldwide impact of the SP:01 that he was hoping for. Announced at the Shanghai Motor Show, Detroit Electric’s strategic partnership with Geely will bring a new direction to the Chinese EV market.

The two OEMs plan to co-develop both pure EVs and related electric drive systems under Geely’s Emgrand brand. The first model, the EC7-EV, is expected to go on sale in the first quarter of 2014 with medium-range (165km per charge) and long-range (258km per charge) options. Although the EV will only initially be sold to business users and public sector organisations, the partnership is forecasting sales of 3,000 units in the first 12 months, and 30,000 in three years’ time.

www.automotiveworld.com

Megatrends | 10

is coming to Europe...

1 Stream / 4 Workshops / 16 Expert Speakers

Co-Sponsors

November 12th 2013,

Radisson Blu Royal Hotel, Brussels, Belgium

®

Tickets from €Free!* Commercial Vehicle Megatrends Europe 2013 will bring together key stakeholders to discuss the business models, technologies and trends that look set to shape Europe's commercial vehicle idustry over the next ten years and beyond.

Expert speakers, fantastic networking opportunities and cutting edge topics focusing on fuel efficiency and market outlook, will make this an unmissable event.

Speakers confirmed so far include:

Norbert Dressler, Roland Berger

Sebastian Gundermann, Roland Berger

Denis Naberezhnykh, TRL

Sandeep Kar, Frost & Sullivan

Dr Ajit Jindal, Tata Motors India

Artur Koba, Eaton

Click here for more details or call +44 (0) 2920 709 302 James Hookham, FTA

Mark Sealy, Norgren

*Automotive World Single-User (max 1 ticket) and Company-Wide (max 3 tickets) Site License customers are eligible for free passes to this event. Employees of vehicle manufacturers are eligible for free passes to this event (max 5 per company).Full ticket prices can be found at http://cvmeurope2013.automotiveworld.com/registration Terms & conditions apply.

Knowledge Partners

®

A stormy start for India As the industry eagerly awaited the 2013/14 Union Budget, Automotive World’s Commercial Vehicle Megatrends India 2013 took place, allowing a unique insight into the hopes and fears of the commercial vehicle industry for the year ahead. The slowdown across the automotive and CV sectors saw India’s automotive trade body SIAM petition the government earlier this year to initiate modernisation and emission control programmes, and to reduce excise duty in the budget.

Speaking at the conference, Marc Llistosella, Chief Executive Officer and Managing Director of Daimler India Commercial Vehicles (DICV), commented on CV sales, calling the offering of aggressive discounts a “venomous game”.

According to Llistosella, “uncontrolled discounts” seen in the Indian CV market of late, have caused the residual value of used trucks to deteriorate, translating into an asset loss for fleet owners.

Looking further down the supply chain, Erich Nesselhauf,Vice President of Procurement and SCM at Daimler, said that market conditions have put together a storm for the Indian truck industry. A transition in the entire automotive supply chain is in order, he said, thanks to changing market and customer needs.

Supplier trends

One key trend that will affect CV component suppliers in the future is the increasing complexity of products - which will demand more research and development - and modern technology, Nesselhauf said.

Consolidation will also affect supplier selection and relationship management: lack of technology knowledge, and R&D capability will see some suppliers who are Tier 1 at present, falling to Tier 2 or 3.

Meanwhile, monitoring and maintaining cost of quality will require greater transparency and exchange of knowledge: “You have to monitor your supplier, control your costs and help each other,” Nesselhauf observed.

In order to become globally competitive, Indian component manufacturers need to invest more in modern equipment and automation. Suppliers will also have to enhance R&D competence and reputation, and modernise logistics fleet management systems.

Rajiv Bajaj, Principal at Roland Berger Strategy Consultants, too acknowledged that the supplier segment’s margins are constantly under pressure, as component manufacturers are sandwiched between OEMs on one side and raw material

CONFERENCE REVIEW

suppliers on the other. In recent years, rising costs and slowing growth have hit the performance of Indian suppliers and past advantages they once held have been eroded.

Safety worries

Away from financial distress, both OEMs and suppliers alike are turning their attentions to the safety concerns currently plaguing the Indian automotive and CV industries. Despite having just 1% of the global vehicle population, India accounts for 8% of recorded fatalities worldwide. Over the last few years, the market has topped the list with regards to road fatalities, at 142,000 as of 2011. An estimated 3% of the Indian GDP is lost due to road accidents.

Wabco, a manufacturer of braking products and systems, believes that anti-lock braking systems (ABS) are the way forward for the CV segment to address safety concerns in the country, as this technology is more mature, accessible and economical in the long run.

In India, as in other economies, CVs are key contributors to the economic growth of the country. Accidents, however, cause a significant loss. There is, according to Dr Chitra Rajan, Safety and Reliability Expert at Mahindra Satyam, a need for safety compliance in the country. Doing so will reduce vehicle call backs, insurance claims and product returns before warranty, she said.

At present there is no specific functional safety standard for CVs in India. However, there is growing demand from the sector to extend ISO 26262 to CVs. “This is a well structured process,” said Dr Rajan. “As of now we don’t have a specific functional safety standard...ISO 26262 states that your design is safe enough...it increases market potential.”

David Isaiah

CONFERENCE REVIEW

Conformation or flexibility?

Every industry decision is dominated by one big question: how can an OEM give consumers what they want? At Automotive Megatrends USA 2013, two experts from different sectors presented their views on conforming to standards already set and being flexible to suit the market and profit margins.

Follow the leader

In the realms of connectivity, consumers expect in-car features to match what they are used to on their consumer electronic devices.

However, these expectations are not based on what other OEMs offer, but on what has already been seen on tablet computers and smartphones, said Matt Jones,Vice President of the GENIVI Alliance. Looking to the future, consumers are unsure of what features they will want in-car, but they do know that their expectations will be based on what is already available in the app store.

This striking statement seems somewhat at odds with the tech industry ethos of driving innovation to new frontiers. However, to meet consumer desires, Jones said, automotive OEMs should develop hardware that is easily customisable and can be updated to be in line with what is available in the consumer electronics industry.

13 | Megatrends

The most important requirements coming from OEMs are almost opposite to this conformity: OEMs still must maintain differentiation, have a strong USP and reduce the time from development to market launch, as well as the total cost of ownership - all while maximising profits. The traditional route of getting locked into proprietary hardware is therefore not compatible with flexibility.

The GENIVI Alliance’s work attempts to satisfy both business and customer demands: its aim is to build relationships between industry bodies that have traditionally been closed and noncollaborative. Citing the Alliance’s diagnostic data, Jones pointed out that, in reality, there is no need for - and certainly no consumer interest in - numerous proprietary technologies delivering the same thing.The automotive industry needs to take inspiration from personal computing where, in most cases, software and hardware operate independently of each other.

Adapt to survive

Under the hood, powertrain players are taking a much more open approach to development.

Consumer desires tend to drive the industry mostly through actual internal market movement, rather than customer preferences from outside trades.

“We believe that there are markets and customers for all different types of fuels, and those fuels and those customers exist in different regions…So we have to be flexible, which is the key,” said Mike Tinskey, Director, Vehicle Electrification and Infrastructure, Ford.

Citing electric powertrains as an example, Tinskey commented that, although media hype has turned to focus on electrification’s false start, the market has “doubled essentially in the past year”. When hybrid vehicles were first launched, it took around eight years for these cars to gain around 2% of the total US market.

Between October 2011 and October 2012, hybrids, plug-in hybrids and electric vehicles accounted for 4% of car sales.

Although not a dramatic change, it is exactly what Ford expected:“It’s minor growth, it’s becoming more of a mainstream product, and that product is essentially allowing others to start understanding and accepting plug-in hybrids.”

According to Ford data, interest in hybrid vehicles has gone up 23%. Plug-in hybrids have fared very well too, with one person in four willing to consider purchasing, thanks to high efficiency and low operation costs.

Ruth Dawson

www.automotiveworld.com

CONFERENCE REVIEW

MARKETING SUMMIT USA 2013 Connecting clicks, bricks and likes

How will OEMs market their products in the future? Who will their customers be, what will they be expecting, and how will OEMs know what customers really ‘like’? What will be more important - a valuable product or brand value? Clicks, bricks, likes and connectivity will all play fundamental roles in the future of automotive retail, and those four terms summed up the core themes of Automotive World’s Marketing Summit USA 2013.

A key issue is not how the dealership of the future will look, but whether there will even be a place in the future for brick-based dealerships. Analyst Glenn Mercer, quoting NADA research on the operations of US car dealerships, claimed that, to date, not a single car sale had been conducted exclusively online in the US, including the complete transaction and all accompanying paperwork, without the need for a traditional dealership visit.Vishwas Shankar - referencing Frost and Sullivan’s Bricks and Clicks study on the future of car retailing - provided a confident forecast, however, of four million cars being sold online globally by 2020, equivalent to 4% of new car sales.

Clicks: online sales and marketing

The need for a brand to be online is undisputed - but how do you measure the financial return of an online advertising campaign, or make money from a Facebook ‘like’? What is a click worth? And how do you turn it into real money?

Being online and ‘social’ is about more than just direct sales, emphasised Mary Henige, GM’s Director of Social and Digital Communications. It’s about getting the right message out there, developing the brand, and “having a conversation with consumers”.

John Waraniak,Vice President of Vehicle Technology at SEMA agreed: people do not buy things, they buy into things. Frankfurt, Detroit and Tokyo are motor shows for people who like cars; SEMA is for people who love cars, and attendance has never been so high, attracting 60,000 visitors in 2012. SEMA is for car owners looking to personalise their vehicle after purchase. For those OEMs savvy enough to get in on the game, it is about more than a separate aftermarket business - it is an extension of the brand. That’s why, Waraniak said, brands should market with their customers, and not to their customers.

Quoting from Graham Brown’s book All is Social, Waraniak explained that the 10-29 year olds of ‘Gen O’ “will be the generation that shows the industry the way forward in how new technologies, apps and products will be used to optimise the customer experience”.

The role of the car

Many see the role of the car changing from an object of desire into an aspect of the ‘internet of things’ - one more tool in the www.automotiveworld.com

box that includes everything from public transport to domestic appliances. The car in the ‘internet of things’ knows when you are leaving the office, prepares your personal settings, selects an appropriate route based on traffic and your habits, and even sets the temperature in your house before you arrive, said David Miller, Chief Security Officer at Covisint, the event’s lead sponsor.

But will people even buy cars in the future? In the internet of things, private vehicle ownership could be superseded by car sharing, which might take one of two forms: car pools owned and operated by fleets, where registered members use vehicles on demand, perhaps paying by the hour; and private users renting out their cars when not in use. IBM’s Joe Speed believes that, were the infrastructure in place, cars that would otherwise sit in the company car park for eight hours could prove a lucrative source of income for office workers.

And if car sharing, not car buying, is to be the source of income for the automotive industry, then the financial value lies more than ever in the value of the brand, not the product. It is time to get marketing.

Martin Kahl

Megatrends | 14

is coming to Europe...

3 Streams / 48 Expert Speakers / 1 Day

Co-Sponsors

November 13th 2013,

Radisson Blu Royal Hotel, Brussels, Belgium

Tickets from â‚Ź Free!*

Automotive Megatrends Europe 2013 will bring together key stakeholders to discuss the business models, technologies and trends that look set to shape Europe's automotive industry over the next ten years and beyond.

Expert speakers, fantastic networking opportunities and cutting edge topics, including safety, connectivity and powertrain, will make this an unmissable event.

FLUID TECHNOLOGY

Speakers confirmed so far include:

Floris Van De Klashorst, Nokia

Gert-Jan Vogelaar, Punch Powertrain

Wolfgang Bernhart, Roland Berger

Michiel Van Ratingen, Euro NCAP

Al Bedwell, LMC Automotive

Yoram Berholtz, Red Bend

John Leech, KPMG

Mathieu Meyer, KPMG

Alexander Asner, Elektrobit

Scott Sedlik, Inrix

Dr Ajit Jindal, Tata Motors India

Rudolf Hemmert, Delphi

Richard Robinson, Strategy Analytics

Robert Acker, Harman

Nick Ford, Frost & Sullivan

Nicolas Burger, Tomtom

Klaus Kompass, BMW Group

Thomas Broberg, Volvo Cars

Click here for more details or call +44 (0) 2920 709 302

*Automotive World Single-User (max 1 ticket) and Company-Wide (max 3 tickets) Site License customers are eligible for free passes to this event. Employees of vehicle manufacturers are eligible for free passes to this event (max 5 per company).Full ticket prices can be found at http://ameurope2013.automotiveworld.com/registration Terms & conditions apply.

Knowledge Partners

ON THE FLOOR

Concept Geneva Kicking o the 2013 run of European motor shows, the 83rd Salon International de l’Auto in Switzerland was home to new ideas that ranged from the impossibly expensive to the practically innovative. Ruth Dawson analyses the concept vehicles that lit up the Geneva Motor Show

17 | Megatrends

www.automotiveworld.com

ON THE FLOOR

Pininfarina Sergio

Probably the most highly anticipated design concept at the show was the Pininfarina Sergio. Sitting on a fairly understated stand, the not-so-understated Sergio is the type of car that turns heads - of course, you would expect as much from this Italian design house.

According to Pininfarina Design Director Fabio Fillipini, the car’s design was motivated by the company’s best sports cars: Ferraris of the 1960s and 1970s designed under Sergio

Pininfarina himself - in particular the Dino Berlinetta special 1965, Ferrari 250 LM, P5, Modulo and Mythos.

Classic design cues are mixed with subtle modernity for the new Sergio, making this the perfect tribute to the car’s namesake. The most obvious feature is the lack of windscreen: like rival Lamborghini’s Aventador J concept unveiled at Geneva 2012, the sculpted bonnet deflects airflow

and channels it over the passenger’s helmeted heads.

The Sergio is powered by a 4.5-litre V8 engine generating 570 hp; it reaches 0-62mph (0100kph) in just under 3.4 seconds and has a top speed of 199mph (320kph). The car is set to go into production, but with a price tag of around €3m (US$3.9m), it is hardly surprising that Pininfarina expects to build only five or six Sergios.

Toyota i-Road Sitting between a motorcycle and a microcar, the Toyota i-Road was certainly the most surprising electric commuter concept at the show. The three-wheeled, two-seater city car features active lean technology which tilts the vehicle when turning, using an actuator and gearing mounted above the front suspension.

An ECU calculates the depth of the lean using the steering angle, gyro sensor, and vehicle speed information to make sure the ride remains smooth with no risk of falling over. www.automotiveworld.com

By comparison with what would be its biggest competitor, the Renault Twizy, the iRoad is narrower - despite being able to accommodate a driver and passenger side by side - shorter in length, and is fully enclosed.

The i-Road has a 30 mile (48km) range and takes three hours to recharge fully from a household socket; the Twizy has a 50-62 mile (80-99km) range and takes only 30 minutes longer to charge. However, the i-Road does come with a range of connectivity options,

such as a stereo, heating and Bluetooth.

What use they would really be to drivers on a complete 30 mile trip, though, remains to be seen: all are powered by the car’s own battery.

Although production has not been confirmed

by Toyota, the potential success of the i-Road against the Twizy could depend largely on consumer perception of the two OEMs’ brands in the European market.

Megatrends | 18

ON THE FLOOR

Mitsubishi GR-HEV The first of Mitsubishi’s concept vehicles at the show, it was the design of this pick-up truck that really got people talking. Prescribed with a “strong dose of aerodynamic chunkiness”, this conceptual successor to the OEM’s pick-up line moves away from the traditional squared design of the segment into a new, more

muscular ideal; the sharp lines of the exterior are softened by subtle sweeping curves and a rounded end which appears to lift slightly.

The GR-HEV also sees Mitsubishi taking its first steps into the realm of hybrid pick-up trucks. The vehicle features a 2.5-litre diesel

hybrid powertrain which can run as a pure EV on demand, meaning CO2 emissions sit below 149g/km despite the truck’s size (5.4m/17ft long). The e-motor helps the diesel engine give a low end response with high end torque, offering quieter acceleration and high speed cruising.

Mitsubishi CA-MiEV

Mitsubishi’s other offering at Geneva came in the form of the CA-MiEV. A suburban EV with enough range to last the average European driver one week, the CA-MiEV could be an excellent rival to Tesla’s Model S. Substantially bigger and more powerful than Mitsubishi’s existing e-car, the i-MiEV, this concept, along with the aforementioned GRHEV, marks a step-change in Mitsubishi’s alternative powertrain outlook. Although the ‘compact advanced’ MiEV is not planned for production, the vehicle does make use of 19 | Megatrends

several technologies which, Mitsubishi has confirmed, will be brought in across various ranges in the mid to long-term.

The car has a range of 186 miles (300km) with a battery capacity of 28kWh and an 80kW motor offering 107 hp. Like the Model S, the CA-MiEV’s flat battery pack also leaves room for a range extender to be fitted, and the car is further complimented by WiTricity wireless charging functionality.

The CA-MiEV is a clever competitor in an EV

market which marvels at innovation in design standards. Although it still features the egg-like shape of the i-MiEV, the newer concept is sleek, modern and much more fashionable.

Under the hood, the range of this vehicle is carefully placed to sit at a distance untouched

by Tesla: the CA-MiEV can outlast a base model Model S by 26 miles on a smaller battery of 28kWh compared to Tesla’s 40kWh. Although the upper level Model S boasts a 300 mile range, this mid-market offering could capture a crucial segment of consumers if priced accordingly. www.automotiveworld.com

ON THE FLOOR

Kia Provo The Provo is a “new DNA interpretation” for Kia and - should the car be put into production - a move into what could be a lucrative area of the market for Kia: the hybrid B segment.

Presenting itself as a Mini rival, at least in looks if not in powertrain, this concept has a 1960s/70s feel to it. Appealing to a young, urban demographic, the Provo stands out from the crowd as subtly as possible, making

the car quite an enigma to those who try to understand it. While the exterior is fresh, with a green and orange paint job on a muscular design, the interior is a few steps upmarket, with a quilted leather, wave seat bench in the front which swivels to let passengers into the rear. The retro versus modern clash is certainly very trendy in other markets at the moment, but no other OEM has attempted such a bold design mix - making this a very brave choice indeed for the Korean company.

The Provo’s 1.6-litre turbo engine features Kia’s first seven speed transmission, along with regenerative braking power capture and ‘creep mode’ - electric only operation at low speeds - both ideal for the inner city traffic of today.

If this concept does appear on the roads, it is likely to be in Europe only. But, given the trendy, muscular design and hybrid powertrain, the Provo could well prove to be an excellent competitor for Toyota’s Yaris hybrid.

Innovative Mobility Colibri Micro EVs are nothing new - just look at the aforementioned i-Road or the GN-EV - but this new concept from German manufacturer Innovative Mobility is probably the most habitfocused of all. Although at first glance it is not as impressive as its two-seater counterparts, the potential for this little car is huge.

Like the i-Road, the Colibri is a thoroughly modern vehicle, looking to solve the commuter problems of today. Unlike the iRoad, however, this one seater boasts a 110km www.automotiveworld.com

(68 miles) range on a 6.5kWh battery, and will charge fully in just two hours at home, or up to 80% in 20 minutes on a public socket; the battery lasts 2,000 charges, eight years or 220,000km (137,000 miles).

The car is just 2.75m (9ft) long and 1.8m (5.9ft) wide with gull wing doors and an impressive 180 litres of trunk space. Two of these cost efficient city cars can fit into one parking space, potentially solving another city mobility problem.

Orders for the micro EV will start in 2014, with delivery expected in 2015. Innovative Mobility aims to build 17,000 vehicles a year and believes there is a market potential of 500,000 customers for cars like this. Although it costs just €10,000 (US$13,000), the prospect of battery rental fees may be offputting for some consumers. But, with an integrated touchscreen and smartphone connection, the concept could well see a bright future as part of a car sharing fleet.

Megatrends | 20

EMERGING MARKETS

M I ST

the new BRICS?

As both economic and consumption growth in the BRICS nations lose momentum, global investors are looking to a new set of emerging countries: Mexico, Indonesia, South Korea and Turkey.

The MIST economies present widely varied economic and demographic platforms for growth and, while the automotive markets across these countries seem to provide several opportunities for expansion to OEMs, they also present a number of challenges Manmeet Malhi, EOS Intelligence

OPPORTUNITIES

Turkey is a safe long-term bet, both for OEMs looking to cater to the domestic market - the country has a relatively low vehicle penetration rate of 100 vehicles per 1,000 people coupled with an expanding middle class - and export to Europe, the Middle East and Africa, thanks to its proximity to these regions.

OPPORTUNITIES

Mexico has free trade agreements (FTAs) with more than 44 countries across the Americas and the European Union. The country avoids a 10% tariff levied on USbuilt vehicles sold in Europe, thereby providing OEMs with an incentive to shift production from the USA to Mexico.

Since 2009, the Turkish government has been offering incentives to OEMs to manufacture vehicles in the country. In early 2013, the country doubled tax breaks (now up to 60% for new investments) in the sector and also began to offer other rebates to further incentivise vehicle manufacturing in the country.

Located between North and South America, the country has emerged as a preferred sourcing destination for materials and parts, for companies looking to cater to both the US automotive market, and to South American countries such as Brazil and Argentina.

CHALLENGES

Occasional bans are issued in Brazil and Argentina on Mexican vehicle imports, as was the case in 2011, when domestic automotive manufacturers in these countries suffered heavily from strong imports from Mexico. Unless Mexico improves lobbying for its automotive industry, it will be difficult for the country to properly position itself as a regional manufacturing hub.

21 | Megatrends

CHALLENGES OEMs in Mexico face another hurdle in the form of stricter emission controls, which they fear will increase the cost of production.

The Mexican government is trying to implement fuel efficiency rules to curb carbon emissions, aligning them with US norms. However, OEMs are blocking the initiative, claiming that the proposed rules are even stricter than those in the US. Both sides have been at loggerheads for over six months, sending out mixed signals to potential investors.

Labour unions in the EU are against the transfer of automotive production to Turkey. Likewise, some vehicle manufacturers prefer to move to other emerging economies such as China and India which have experienced rapid growth in productivity.

Turkey needs to look at overhauling its tax system for the automotive industry.

Currently, special consumption tax and VAT raise the domestic purchase price of vehicles for Turkish consumers by 60100% of the pre-tax price. www.automotiveworld.com

EMERGING MARKETS OPPORTUNITIES

South Korea has aggressively pursued FTAs, especially with the US and the EU, on parts and components tariffs, thus reducing restrictions on both sides for OEMs. With these agreements now taking effect, the South Korean automotive market is finally opening up to foreign manufacturers through automotive imports, which grew to 10% in 2012 from 2% a decade ago.

European OEMs have benefitted the most, as tariffs on large vehicles have fallen from 8% to 5.6%, thus making EU vehicles more competitive in South Korea’s large automotive marketplace.

CHALLENGES

Hyundai, Kia and GM Korea suffered record losses in 2012 due to strikes by their respective labour unions, which were demanding higher wages, the abolition of the graveyard shift, and permanent positions for a higher proportion of contract workers. Although a deal was signed to bring an end to the strikes, OEMs need to ensure such a dispute does not happen again: a repeat performance is likely to

severely impact South Korea’s attractiveness as a global production hub.

The Won has been strengthening against both the US dollar and the Yen since mid2012, significantly eroding the competitiveness of South Korean OEMs. OEMs will have to review their positioning in the international market if the South Korean government does not take any measures to correct the exchange rates.

OPPORTUNITIES

With current vehicle ownership in Indonesia at just 32 cars per 1,000 people, and the country witnessing record car sales year-on-year, the underlying opportunity is clear. In order to reach the penetration level of developed countries (average 450 cars per 1,000 people), it is estimated that Indonesia needs an additional 108 million cars.

The Indonesian government is keen to develop the country as a hub for manufacturing green cars and has initiated the Low Carbon Emission (LEC) programme, offering OEMs tax incentives and other support to encourage green development and manufacturing. In return, a number of leading OEMs are ready to invest a combined US$4.5bn in the emissions plans.

CHALLENGES

The Indonesian government has plans to increase fuel prices in order to generate funds for infrastructure. However, this rise will undoubtedly increase the total cost of vehicle ownership and maintenance, which may stifle the currently buoyant demand.

To prevent the risk of a car loan bubble, the government has reduced the loan-tovalue ratio to 70% when borrowing from banks - essentially forcing buyers to pay a larger deposit. As loans account for nearly three quarters of all new car purchases in Indonesia, this lower loan-to-value ratio will have a definite impact on sales.

SUMMARY

Mexico and Indonesia stand out in the current scenario as the most attractive economies within the MIST group. While Mexico is destined to play an important role in global automotive manufacturing, Indonesia promises to be one of the hottest domestic markets in the years to come. www.automotiveworld.com

Market performance in 2013-2015 will be indicative of which MIST country has the best opportunities for the automotive sector looking forward, as the world continues to recover from the global crisis.

Manmeet Malhi is a Senior Analyst at EOS Intelligence (www.eos-intelligence.com).

Megatrends | 22

It’s easier to cross borders when you’re not carrying any baggage.

To make the most of your company’s growth into new markets, it’s sometimes important to let go of old habits.

Find out how we can help you seize opportunities to grow at ey.com/automotive

© 2013 EYGM Limited. All Rights Reserved.

See More | Growth

INSIDE THE INDUSTRY

OEM consolidation helps growth amid slowing Indian demand Riddhima Saxena and Savitha Kraman, Mergermarket India

Growth of the passenger car segment in India is witnessing a gradual decline, triggered by rising inflation, high cost of debt, and poor monsoons, which in turn have impacted consumer spending.

The drop is in excess of 26% - the highest in more than a decade, according to the Executive Director of the Society of Indian Automobile Manufacturers (SIAM), Sugato Sen. OEMs are consequently revisiting their strategies in an attempt to remain competitive, with a focus on product design, pricing and distribution. Moreover, companies are further looking at consolidation as a means to gain economies of scale.

Of the 17 players present in the market, only four - Tata Motors, Hyundai, Mahindra & Mahindra, and Maruti Suzuki - have achieved economies of scale.

The trend for consolidation has already begun with OEMs sharing manufacturing facilities, sourcing technology and jointly launching new models: Maruti Suzuki has been sourcing diesel engine technology from Fiat India; the Renault-Nissan Alliance shares production; while the joint venture between General Motors and Shanghai Automotive Industry Corporation (SAIC) is set to launch a number of models from the latter’s portfolio.

With increasing competitive pressures and a reduction in customer ownership, OEMs need to regularly launch new models and upgrade existing ones to remain competitive. In response, alliances are likely to gain

momentum as companies look to rationalise their investments and maximise reach through technology, manufacturing and distribution.

However, consolidation in the form of company acquisitions is unlikely as the mid- to long-term prospects for the market remain bright. Automotive penetration in India is still low compared with other developing economies such as China, Malaysia and Brazil: Malaysia has 300 cars per 1,000 people; China has 40 cars for every 1,000 and there are 750 cars per 1,000 in Europe. India, on the other hand, has just 12 cars per 1,000.

It is hard for any foreign players to tar India as a market without potential growth - and one that will continue to be so at least in the medium term.

India is still growing and this slump in demand is a mere temporary glitch.

Several foreign players are yet to enter India but are looking for the right time and the right partners to do so. OEMs are looking at new ways of bringing consumers on board primarily through focus on small cars and launch of diesel variants, the latter of which has seen a rise in popularity as the cost of diesel is cheaper compared to gasoline. Diesel-run cars now account for 45% of the total passenger car segment - a figure that was 2225% two years ago. Indeed, the majority of new launches for 2015 have diesel engines. The Ford EcoSport, Honda Amaze, Honda Brio Diesel, Honda City Diesel, Chevrolet Enjoy, the new Skoda Octavia, Tata’s Mini Aria and the Volkswagen up! are all set to hit the market.

This article first appeared in the Comment section of AutomotiveWorld.com. For more expert insights and analyses of the global automotive and commercial vehicle industries, visit automotiveworld.com/comment.

The Comment column is open to all automotive industry decision makers and influencers. If you would like to contribute an article, please contact editorial@automotiveworld.com. www.automotiveworld.com

Megatrends | 24

MOTORSPORTS

Formula E

Mar tin Kahl talks to Lord Drayson, founder and Chief Executive of Team Drayson, and Qualcomm Dr Anthony Thomson about how new racing series Formula E is expected to charge the EV market

25 | Megatrends

www.automotiveworld.com

MOTORSPORTS

!Formula E race data!

When: First race expected in late summer 2014

Where: The nine cities in the preliminary calendar are London, Rome, Los Angeles, Miami, Beijing, Putrajaya, Buenos Aires, Rio de Janeiro and Bangkok; tenth city to be announced Partners: Michelin (tyres), TAG Heuer (official timekeeper, official watch and chronograph and founding partner of Formula E) and Renault (technical partner in joint agreement with Spark Racing Technologies) Participants: Ten teams and 20 drivers in 2014 Race format: One-day (Saturday) events; 2.5-3km (1.5-1.8 miles) course; one hour duration; cars equipped with ‘push-to-pass’ technology to encourage overtaking

According to Team Drayson’s founder, Chief Executive and Team Principal Lord Paul Drayson, “Formula E is a recognition by the FIA that global pressures and concerns around climate change, in particular air pollution caused by vehicles in cities, are increasing pressure on the automotive industry. Motor racing lacks a championship which provides a platform for manufacturers to showcase what they are doing in this area, to compete and to accelerate the development of relevant technology. With the growing importance of EVs, Formula E creates a new championship to enable them to compete.”

The aim of Formula E is to make the championship as relevant as possible, in terms of the race locations, the type of racing and the specifications of the cars. By racing on public roads in city centres,” says Drayson, “we’re taking the race to where the people are, where the challenges around air pollution are most keenly felt and where mainstream EVs would be driven.”

One of the specific goals is to show EVs in a new light. “There’s a need for the car industry to enthuse the millennial generation. This championship will be targeted at people in the teenage to low 30s age-group, which is so important for early adoption of EVs. EVs have become perceived as being quite dull, so here is an opportunity to redefine the electric vehicle. The old saying is, ‘race on Sunday, sell on Monday’. We haven’t had the opportunity to do that with EVs. Formula E is going to provide that opportunity.”

Motorsport has launched many significant powertrain innovations that have later found their way into mainstream cars. In May 2013, an Aston Martin Rapide S became the first hydrogen-powered car to make an official grid start in an international motorsport event, when it made its debut at the Nürburgring 24 Hours race. In recent years, hybrid technology has been used by Le Mans race winners, and Formula 1 has introduced KERS and is pushing engine downsizing.

“Hybrids are increasingly a central part of motorsport competition but there is nothing for pure EVs. It is strategically important to use Formula E as a mechanism to speed the rate of innovation around electric drivetrains and all that’s associated with electric cars.”

Open wheel, single-seater

Open wheel single-seat racing has been chosen due to its similarity to Formula 1 car design: “Because this is an FIA championship and is designed to be the top of the pyramid of what we hope will be a developing electric vehicle racing universe, it needs to be the ultimate level of racing technology,” Drayson explains enthusiastically. “And that means open wheel, single-seater.” www.automotiveworld.com

Megatrends | 26

MOTORSPORTS In the first year, all vehicles will be common.

Designed by Italian company Dallara, which will also produce the chassis, the cars will be built by Spark Racing Technology (SRT). To ensure the availability of cars for the initial season, Formula E Holdings (FEH) has ordered 42 cars from SRT for the 2014 championship: 40 will go to the teams, one will be a show car and one car is for crash testing. Renault is SRT’s official technical partner, and engineers from Renault Sport F1 and Renault Sport Technologies will work with SRT to optimise the electric and electronic layout and performance of the powertrain. “It involves a huge undertaking to set up a new world championship with completely new technology in new cities on new tracks,” explains Drayson. “To ensure that the championship starts on time next summer, and to make sure that there is a level playing field for the teams to start with, the promoter took the decision to source a single chassis and drivetrain for the first year.”

McLaren Electronics will provide the cars’ electric powertrain, including the electric motor, the motor control units and battery management. With the 120kW electric motor and related electronics, “We have the most efficient electric motor in the automotive industry,” says Dr Peter van Manen, Managing Director of McLaren Electronics. “By racing the vehicles in the middle of cities, there will be a lot of very sharp acceleration and braking, rather than high speed endurance, which suits the characteristics of an electric motor. An electric motor provides you with almost instant torque, so you get great acceleration and regenerative braking.”

From year two onwards, the regulations will allow technology competition, and Drayson Racing has stated that it plans to become a constructor in its own right. From 2015, it will enter a car based on a new drivetrain

27 | Megatrends

developed from the advanced DRT 4X2-640 electric system featured in the Lola-Drayson B12/69EV car that set a new electric record at the 2012 Goodwood Festival of Speed. “You can expect to see a number of drivetrain suppliers, like in Formula 1,” says Drayson.

“The focus will be on the drivetrain rather than the chassis and aerodynamics; it will be a competition between drivetrains.”

Links to mainstream motor sport

Open-wheel, single-seat vehicles are not the only link to mainstream motor sport. Wellknown drivers and racing teams are expressing an interest in Formula E, and former F1 driver Lucas di Grassi is the official Formula E test and development driver. “A group of drivers, including several Formula 1 and Le Mans drivers, see this type of racing as a fantastic opportunity not just to develop their careers but also to do something to the direction the world’s going in,” says Drayson.

“Those who have driven an electric car are really excited about the driver challenge involved in the differences to internal combustion engine cars. In Formula E, you’re going to see the highest level of professional racing drivers from all over the world.”

Teams showing interest in Formula E include those with a background in electric technology; teams that have a background in traditional, mostly single-seater racing; and new teams formed by sponsors and businesses that traditionally support other sporting events, who see this sustainable championship as providing a very unique and strong marketing platform. As for established vehicle manufacturers, Drayson says around four major OEMs are “seriously looking at participating in the championship”.

One of Team Drayson’s partners is Qualcomm, which will provide wireless charging technology. This will be used in the first instance to charge static vehicles in the Drayson pits during the race. “Wireless

www.automotiveworld.com

MOTORSPORTS

charging has the ability to free the electric car from the cable,” says Drayson, “so introducing wireless charging in electric racing, the highest level of electric vehicle technology, is a great way to accelerate its adoption, get experience and speed up development.”

The two companies are also exploring dynamic charging. “Initially, we’re looking at stationary charging or static charging. We have a system already fitted to Drayson’s LMP-style EV racer to really prove that technology out,” explains Dr. Anthony Thomson,Vice President of Business Development and Marketing at Qualcomm. “Over time, the big vision is to move to higher power in stationary mode and then move into dynamic charging, where cars can pick up charge, initially when they’re coming into pit lanes, but ultimately on the track itself. That is a real game changer. That’s where we can push the race out from limited time to normal race times of 90 minutes. It would be a fantastic achievement to complete a 90 minute race by charging dynamically.”

Opportunity knocks

Qualcomm sees Formula E as “an opportunity to develop high performance systems in a known aggressive and high-pressure environment,” says Thomson. “We see it as a test bed for advancing the technology. And working with someone like Drayson Racing where we can form a close relationship and get feedback from the race team itself and assist them with the development of new approaches - is really key for us.”

www.automotiveworld.com

Seven second pit stops are the reserve of Formula 1 and, as battery charging currently takes significantly longer than seven seconds, Formula E permits teams to change vehicles.

“Initially there will be two vehicles per driver,” explains Thomson. “The driver will head out and when his car is out of power, he will come in and swap cars. There will be a Le Mans-style run between cars as one starts charging whilst the driver jumps out and does the next part of the race in the other car.”

Qualcomm is also developing wireless charging for mainstream use. Its solutions for Formula E will, of course, differ from mainstream solutions, mainly in power levels.

“The system that we developed with Drayson is a 20kW system,” says Thomson. “Most of the systems that have been developed for private vehicles, taxis and car-share are either 3kW or 6kW. So that’s a significant jump in power. There are other elements to the technology in terms of adding lightness, and really hardening for motorsport. But the key differentiator for now is the power level.”

Race EVs on Sunday, sell EVs on Monday?

In addition to the obvious sustainability matters surrounding electric vehicles, there are broader messages that Formula E aims to deliver. These range from making tyres last for two or three races to developing legacy charging networks. Qualcomm has a particular legacy intention, Thomson explains: “As the race moves on to the next city, the charging infrastructure would remain behind and be

available to residents. A move to dynamic charging would result in strips of road around a familiar area in a city where people can pick up power as they drive. We’re looking to not go in and bust up roads and then strip out and go away, but to build. We want to help the early deployment of electric vehicles not only by encouraging and exciting the local millennial, but by also providing something real for people to use afterwards.”

“At its heart, [Formula E] shows the motorsport industry recognising that it could do more to support the automotive industry in meeting the challenge from climate change and airborne pollution,” summarises Drayson.

“In doing so, it's creating something really transformational, which will be hugely important not just for the industry but for motor sport and for the cities that bring it on board. This championship will make a difference to electric vehicle adoption, and it will make a difference to the rate of technology development and acceptability.

Next year, the first year of the championship, will be a new dawn. It’s going to be the first time we’ve had such a global championship and it’s going to make a real difference.”

“From our perspective, this is an opportunity to bring life to electric vehicles and wireless charging,” concludes Thomson. “Put it in front of people who are possibly sceptical or don’t quite understand the potential, and I think we’ll see people being quite amazed at what electric vehicles can do. My aim is to show people what’s possible, and encourage them to buy electric vehicles.”

Megatrends | 28

How the GENIVI Alliance Works The GENIVI Alliance is an automotive and consumer electronics industry association that drives collaboration among vehicle manufacturers and suppliers, to build open source infrastructure for in-vehicle infotainment (IVI) systems. IVI is a rapidly changing and expanding field within the automotive industry. It covers many types of vehicle infotainment applications including music, news and multimedia, navigation and location services, telephony, internet services and more. The alliance aims to align requirements, deliver reference implementations, offer compliance programs, and foster a vibrant open-source IVI community.

The majority of GENIVI’s work is conducted through the technical and marketing teams and groups. There are currently six topical “expert groups” – Automotive, CE Connectivity, Location-based Services, Media and Graphics, Networking, and System Infrastructure. The EGs establish and prioritize the technical requirements, identify and enhance components that implement those requirements, and together develop the GENIVI Compliance Statement.

In Asia, regional expert groups also develop specific requirements unique to their locations. All of these requirements are collected, reviewed and integrated by the System Architecture Team, resulting in a comprehensive compliance specification.

The Program Management Office develops and monitors the technical working plan resulting in a regular, six-month release cadence. The Baseline Integration Team provides a continuous build environment where EGs and members can test their developed software against a number of GENIVI compliant Linux distributions.

The GENIVI compliance program is a key deliverable of the alliance, providing the set of specifications for GENIVI member companies to measure their products and services. Those that meet the specifications may be registered as GENIVI compliant and listed on the GENIVI website. Compliant platforms consist of Linux-based core services, middleware, and open application layer interfaces. These are the essential but non-differentiating core elements of the overall IVI solution set.

Automobile manufacturers and their suppliers use these compliant platforms as their common underlying framework and add to it their differentiated products and services (the consumer-facing applications and interfaces).

GENIVI is identifying these common automotive infotainment industry requirements to establish an open and robust baseline from which to develop products for the common good of the ecosystem.

The GENIVI Alliance is open for membership to all organizations engaged in the automotive, consumer electronics, communications, software, application development and related industries that are invested in the success of IVI systems and related products and services.

OEMs

First Tiers

OSV, Middleware, Hardware, and Services Suppliers

Silicon

www.genivi.org

Building products around predictions

MAKING MEGATRENDS

In this exclusive interview, Benoit Schlumberger, Opel’s Director of Global and Market Industry Analysis, Europe, tells Ruth Dawson how future trends shape today’s products Opel/Vauxhall’s new A-segment car, the Adam, marks the OEM’s first steps into a previously unexplored area: developing a product around fashion and lifestyle trends, with a heavy focus on personalisation and connectivity.

How does Opel structure product development around fashion trends?

It's really not one thing that we look at, but a little bit of everything.We look at everyday life, what's happening in other industries and what other companies are doing. We leverage our own people: we have engineers working on new technologies; we have designers tracking their field; we look at suppliers; we look at what the competition is doing and their concept cars; we identify what our customers want through market research. It's about trying to be engaged in as many different things as you can. Put simply, we identify the trends and then see what we can do about them. For example, in the early 1990s, we made catalytic converters standard in all our vehicles, because we knew that it was important for the environment, and that society would focus more and more on this as time went on.

But it's not only the execution of the idea, it's working with other members of the GM family, partners and suppliers. How we do it comes down to the specifics of the product development: adding a technological feature is different to how you make an entire vehicle.

With technology, you might be working more in co-operation with a supplier, but if you do an entire vehicle you would typically do much of it yourself.

The pace of change in the consumer electronics sector is much faster than the pace at which the automotive industry operates. How do you factor this into product development?

We have recently announced that Wi-Fi will be in all GM vehicles, starting in North America, but it will go worldwide. We don't have to worry about our system being outdated when the next big smartphone comes out, our vehicles will be able to interact with any electronic device available on the market at any point in time. That brings peace of mind to customers who then don't have to worry about cable connections - with Wi-Fi, everything will always be connectable.

In North America, we’ve hired people from the consumer electronics industry and the IT world, to bring new perspectives from those industries to ours. We do not see ourselves being able to control everything, but we want to be able to offer a connection to whatever is on the market. It is important to have embedded technology so that the customer has a quality screen and sound system in the vehicle that's much better than their portable devices.

How is the changing role of passenger cars from something of personal pride to a thing of pure mobility - affecting Opel’s vehicle development?

There are people for whom cars are becoming less important, but there are also many people for whom cars are

equally, if not more, important. The growth of premium brands proves people are willing to spend more money on cars. Customisation is developing significantly and you can see that in the Mini, the Fiat 500, and Opel’s Adam. There is a very significant share of customers who want to spend more money to have a vehicle that is more suited to their needs. There is also a huge aftermarket for wheels and accessories, so you still have a very large proportion of people for whom their car is important and they are willing to spend a lot of money on it.

What impact has the current economic crisis had on product development?

The economic downturn means people have less money - which probably explains Dacia’s success, which is more an A to B method of transport. And there are people for whom ownership is not necessarily important. The cost of owning a car in big cities is extremely high - people would go to public transportation in the past, but many companies are now working around car sharing, which is very interesting. It's not clear whether car-sharing will negatively impact ownership or whether it's going to be used as a substitute for public transportation or taxis.

In the long term, which business model do you think will prevail? Ownership or car-sharing?

There are many different business models and we are debating which is best. There is no doubt that congested cities need to find solutions. We would love to sell more cars but the utility for a customer is getting close to zero and that's not good for them. It's not good for us as an industry. The market is fragmenting and, at the end of the day, we don't sell cars, we provide services. If customers' needs are better met by owning one car instead of two and being able to use car sharing and other schemes, it's the right thing to do for the customer and that's where we will end up. You don't succeed as a company if you don't put your customers first.

The Opel Adam Rocks concept is a “symbol for fashion-led, active drivers wanting to stand out from the crowd,” says Malcolm Ward, Lead Design Director at Opel/Vauxhall. “Adam Rocks is just one possible answer to the question of how new development paths for the absolutely unique car can be forged.”

www.automotiveworld.com

Megatrends | 30

Technology Roa dmap: Battery electr ic vehicles

FACTS & FIGURES

Industry viewpoint:

battery electric vehicles With two years of sales of the first pure BEVs of the modern era now behind us, the automotive industry is taking a serious look at the technology’s potential and weighing it up against other alternative powertrain technologies. Have BEV sales been disappointing, or have they reached a realistic level for a new technology? Will BEVs have a place in the automotive industry of the future, or will developments in other powertrain technologies make them redundant? Can

Marketplace

of survey respondents expect more than 5% of new light vehicle sales globally to involve some form of powertrain electrification by 2020... ...but BEVs are expected to account for less than 5% of the electrified light vehicle market by 2020

“

OEMs, suppliers and other stakeholders turn BEVs into a successful business activity? And what are the biggest opportunities and barriers to a viable BEV market over the next decade?

The following statistics were first published in Automotive World’s Technology Roadmap: Battery Electric Vehicles. Download the report from automotiveworld.com/research for more original research, and exclusive insights from OEMs, service providers, suppliers and analysts.

31 | Megatrends

Over the last two years there’s nothing that demonstrates to us that the EV market is going to take off... we believe BEVs will continue to be a niche market and that we’re quite a way off for this to be a meaningful part of the portfolio.

”

Alex Molinaroli, Vice Chairman, Johnson Controls

Range

said that OEMs should develop cars which accept combustion engines as well as a range of electrified powertrains, including HEVs, BEVs and FCEVs

named battery energy density and/or range limitations as the most significant market barrier

thought that 300km (185 miles) is the minimum range per recharge that BEVs should be capable of

In 2020, we expect to see, out of a global total of 115 million cars, 2.5 million pure EVs, 3 million plug-in hybrids and 6.5 million conventional hybrids.

”

Robert Bosch (statement)

Sales

“

“

During the next ten years, I think most of us are looking at it as being a breakeven type project. We all agree that we need to be in hybrids and pure EVs, but there’s not a very strong business case at the moment.

”

Rob Rickell, Engineering Director, GKN Driveline

Powertrain

believe that cost is the single factor that could most increase BEV sales

thought that BEV industry stakeholders will make a profit from battery EVs within 5-10 years

said that the maximum charging time (excluding quick charging) that would encourage consumers to purchase a BEV is no more than one hour

named recharging infrastructure as the most significant factor that could increase BEV sales

believe that a sufficient BEV sales volume is necessary before investment in recharging infrastructure can be justified

believe that OEMs should collaborate on platforms and use open-sourced design to create economies of scale www.automotiveworld.com

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LOGISTICS

Urban logistics 2020 Studies show that the cost of congestion now is through the roof: almost 200% more than what it was in the 1980s. And traffic is only a part of the urban delivery problem: restricted access in city centres, lack of parking, and warehousing costs are all contributing to the expense of urban logistics Archana Vidyasekar, Frost & Sullivan

Urban logistics is now more relevant and important than ever before. There is already a paradigm shift in how products are being manufactured - through innovations such as 3D printing - and retailed, as consumers buy more and more online. The supply chain, as the common denominator at all stages of a product’s lifecycle, must adapt to these changes as quickly and efficiently as possible.

For the most part, urban logistics is concerned with the final leg of the product lifecycle: last mile deliveries. The urban supply chain mainly delivers what are essentially finished goods to cities. Finished goods, however, could vary from being a raw material to a construction company, or a finished product taken to a retailer. Depending on the nature of the goods, the urban supply chain differs greatly when it comes to the mode of transport, warehousing and other services.

This variability and complexity in the urban supply chain has compelled logistics service providers (LSPs) and other stakeholders to

innovate and better monitor urban freight flows as well as define an all-encompassing strategy to manage urban logistics. Urban consolidation centres, on-the-fly connectivity, smart IT solutions, and automation, in this context, have emerged as critical differentiators when urban deliveries have to be made.

Urban consolidation centres: the hub and spoke model The number of city dwellers is growing and, by 2025, Frost & Sullivan expects three out of five people to live in cities globally. Currently, an average city dweller from a developed city generates about 0.1 deliveries per day, assuming the same ratio for 2025 that is a minimum of 500 million deliveries per day.

To meet that kind of volume, logistics companies must consolidate their deliveries and polarise their fleet. Frost & Sullivan foresees a future when companies will adopt a hub and spoke logistics model, where deliveries are consolidated and dispatched.

Ocado’s hub and spoke model In the UK, online grocery retailer Ocado follows a hub and spoke approach where all orders are fulfilled from a 1.2 million square foot, fully automated warehousing facility in Hatfield. Deliveries are bundled and forwarded to spokes, from where small Ocado delivery vans pick them up to be taken to homes. Ocado has achieved over 90% accuracy in picking and delivering products on time.

The company heavily leverages technology to ensure its hubs, spokes and fleet are seamlessly connected. The company uses telematics, smart sensors in trucks and warehouse management systems to track, trace and optimally deliver its products.

33 | Megatrends

The large hubs - or urban consolidation centres (UCCs) - will be found away from the city, and smaller spokes of distribution will be situated nearer to the city. Large trailers will travel to big warehouses where products are automatically bundled and sorted, and smallto-medium sized vehicles will travel from the regional city drop-off points, undertaking all last mile deliveries.

The UCCs will essentially function as tactical warehouses where all the goods destined for the same route/same type of customers in a city are first consolidated and then shipped.

This enables better truck utilisation and warehouse space, thereby reducing the number of trucks on the road. These models are in fact already being trialled and tested by companies in many places, including Ocado and DHL. On-the-fly connectivity and informationdriven logistics By 2025, every person will have more than five connected devices. This essentially means that people will have omni-channel touch points to suppliers and can, and will, order goods from anywhere at any time, demanding it to be delivered quickly. Logistics must therefore become agile and scale up to offer spontaneous ‘on-the-move’ deliveries.

Technology, in that sense, will subsequently become more proactive than reactive.

Connectivity will have to seep into every stage of the supply chain process. Before deliveries, the main task is that of order picking and processing which, in the future, www.automotiveworld.com

LOGISTICS DHL’s Heathrow consolidation centre

Kiva’s orange robots

The centre sub-contracted to DHL at Heathrow Airport is a perfect example of how a consolidation hub works. Heathrow Airport has nearly 323 retail and catering outlets, pubs and restaurants on its premises. Delivering goods to these commercial entities was becoming increasingly difficult, adding congestion to the already crowded airport. Through this consolidation centre, DHL has managed to convert 700 inbound deliveries a week into 300 outbound deliveries through consolidation. They have increased accuracy to 99% on all deliveries through this model and have since replicated this success in the Bristol consolidation centre, which serves the nearby Broadmead shopping centre. On average, DHL has generated a load factor of 90% and made a 70% reduction in total trips made through such facilities.

Kiva warehouses in the US utilise small orange robots that can pick and move products four times faster than a human, resulting in much more efficient and optimised order processing.

They move around in the warehouse using directional bar-code stickers on the floor, which send them to a product or order station. Major brands such as Gap and Staples are using Kiva warehouses and Amazon, in March 2012, acquired Kiva to integrate its robotic software into its order fulfilment centres.

Siemens City Logistics Platform

will be highly automated. Although partially automated now, via conveyor belts, RFID tags and scanners, it will become robotic with small automatons moving ten times faster than employees, picking and processing orders along automated conveyor belts.

During delivery, route planning and scheduling will become imperative. Using traffic prediction tools and predictive analysis, companies can optimise their trips.

Through geo-fencing and location-based tracking they can ensure that the trip goes as planned and, in cases of unexpected disruptions or changed plans, on-board vehicle telematics could be used to reorganise the delivery. Being able to leverage technology and make proactive deliveries will become a key decisive factor for delivering into cities, especially with the increasing pressures being placed by the growing market of online retail on the urban supply chain.

More distribution points than distribution centres By 2025, nearly 20% of retail transactions will be made through online channels and, in leading markets like the US and UK, with www.automotiveworld.com

high per capita online spending, this will increase to nearly 25%. The transition to online will transform the retailing model itself with most retailers adopting a hybrid bricks and clicks model in the future. Brick and mortar stores are already evolving into more connected and interactive structures, introducing hybrid bricks and clicks models such as virtual stores.

This growth in online sales has increased the demand for e-fulfilment centres and placed a greater emphasis on last mile delivery. Both these operational tasks present lucrative opportunities for postal and express parcel companies. Parcels will become lighter as products become smaller, and also become more frequent with an increase in the average orders per week.

Customers’ demands for inventory visibility, multiple delivery options and more cold supply chain services has resulted in retailers and parcel companies alike introducing innovative supply chain services such as click and collect; same-day deliveries; locker boxes/collection points; and, specifically to cater to the growing demand for cold supply chain services, refrigerated locker boxes.

Siemens City Logistics Platform utilises RFID labelling and satellite navigation to analyse and manage the flow of information between different stakeholders, including manufacturers, logistics service providers and retailers. By better managing information, Siemens IT platforms shorten travel times, reduce congestion, and offer environmental benefits.

Access to multimodality and seamless urban deliveries There are some interesting examples of how cargo trams in Germany and gondolas in Venice have been put to use for delivering non-time sensitive goods. To make next day or same day deliveries, however, a fast option is required which uses less fuel than air freight: high speed rail. By 2025, over US$800bn globally will be spent on high speed rail projects, some of which are aiming to connect continents, not just countries. There are two ways in which high speed rail could influence logistics: it could free up more space on the road and rail tracks for freight, as more people shift to high speed rail, or it could potentially offer exclusive high speed freight services.

The most interesting project in high speed rail is the Eurocarex, a train that will run from Lyon, France to St. Pancras international station in London carrying only freight. Projects like this will cause a modal shift from trucks and Megatrends | 34

LOGISTICS Kiala automated locker boxes

Shutl same day deliver y

Kiala, a Brussels-based company, offers a fast delivery service where parcels are delivered to a convenient collection point, typically a store, from which the customer can collect their item. Through the Kiala platform, customers can also track their parcels online and receive updates and notifications via SMS, email, or phone. The company operates nearly 7,000 Kiala Points and manages up to 145,000 parcels per day.

Over 300 companies are currently using the service, including H&M, Esprit, and BrandAlley. Global carrier UPS recently acquired Kiala in a bid to expand its presence in the B2C market.

Shutl UK is a London-based start up launched in 2009 which offers quick home delivery services to internet shoppers in the US and UK. Although the company does not operate a physical fleet network or warehouse infrastructure, it offers delivery services by aggregating the capacity of various logistics providers through a unique technology platform, serving as a fulfilment service that connects retailers with local couriers. The service allows retailers to offer their in-store merchandise online by letting the retailer’s customers reserve their choice of product at a store closest to them. Shutl will then assign a courier in their network to pick up the order from the store and make the final delivery to the customer. By leveraging a retailer’s own network of stores, Shutl has redefined the same day delivery market, offering deliveries in less than 90 minutes.

John Lewis Click and Collec t

short/mid-range aircraft to high-speed trains wherever appropriate, with services tailored to meet the demands of the urban supply chain, and priority given to express freight.

Though it may seem far-fetched to connect continents by train, the possibility of shipping goods within a day through these intercontinental high speed rail projects cannot be entirely overruled. Considering the increasing fuel costs in the air-road mix and restrictions being imposed on night-time flights, high speed rail appears to be a highly reliable and viable model.

Opportunities in the urban logistics market By 2020, Frost & Sullivan expects global urban logistics spending to increase almost threefold from US$2.5trn now to nearly US$6trn, driven by a sheer increase in consumer trade volume, B2C e-commerce growth, investment in sophisticated technology for better optimisation, and higher transportation costs.

Transportation and distribution activities will account for the majority of spending - 55% in 35 | Megatrends

2020 - owing to increases in fuel costs and city congestion costs.

The percentage of outsourced urban logistics will vary by city type and area. But, on average, it could be anywhere between 30% and 35% globally. This will grow to over 50% of spending in 2020 as logistics providers find methods to organise the supply chain, and logistics evolves into more of a 4PL concept.

The future is indicative of a shift towards smarter models of urban logistics. However, there is no homogenous strategy for urban logistics as each city has a different spatial pattern, infrastructure and urban setting.

Nevertheless, as emphasised earlier, each urban area will have unique and customised options at its disposal. Cities will be more proactively involved with private logistics providers at mitigating the risks associated with urban freight distribution. Delivering to cities tomorrow will require customised solutions and unique propositions for each individual urban area.

Lobbying, partnership and collaboration with stakeholders will almost become imperative and necessary in the urban context.

In 2009, John Lewis launched a convenient delivery option to its customers in the form of Click and Collect, allowing consumers to pick up products available in-store after ordering them online. This fulfilment service has since become one of the company’s fastest growing online channels. Click and Collect accounted for 22% of all orders in FY2011 (compared to 16% for Jan-Dec 2010). In FY2012, Click and Collect accounted for nearly 30% of online sales and over 5% of the company’s total sales, having grown at an impressive rate of 40% from the previous year.

Archana Vidyasekar is Senior Research Analyst and team leader in the visionary innovation group at Frost & Sullivan.

The visionary innovation team at Frost & Sullivan has published a study on urban logistics, entitled “Global Mega Trends and Their Implications on Urban Logistics by 2020” detailing the trends discussed in this article. For more information on the report, please contact Katja Feick, Corporate Communications, at katja.feick@frost.com. www.automotiveworld.com

CONNECTED CAR

Composing connectivity Mar tin Kahl talks to service provider Symphony Teleca about orchestrating in-car infotainment in an industry where everyone seems to be playing a different tune As the technical capability to deliver in-car infotainment increases, so too does concern over the potential for driver distraction. With legislation slow to keep pace with technological developments, the automotive industry is starting to take steps towards selfregulation through various methods including ‘white labelling’ and the development of automotive versions of apps and services designed to limit the potential for distraction.

This process will of course involve OEM and supplier approval, but there will also be considerable upstream work needed from service providers too.

In April 2013, Symphony Teleca was elected to the GENIVI Alliance Board of Directors. The company, headquartered in Mountain View, California, bills itself as a global innovation and development services company, and specialises in Ethernet Audio Video Bridging (AVB) and Firmware Update Over the Air. Automotive is a growing industry for Symphony Teleca, which, including its history as Teleca, has around 20 years’ experience in the embedded device and automotive sectors.

It has supplied software to various European OEMs, including Volvo, and enjoyed close business ties with Nokia and Ericsson.

“With many of the technologies from the handset industry becoming of increasing interest to the automotive industry, Teleca, with its history of being in the handset market, was in a very good position to capture some of that newer technology and newer business in the automotive industry,” explains Dean Miles, Senior Vice President of Automotive at Symphony Teleca.

“Around two and a half years ago, we created a specific industry vertical for automotive, and obviously we already had some internal customers, which were automotive focused, and they all moved in.

37 | Megatrends

But then we started looking for business in that area. In the last eight months, we started increasing our standing in the industry generally, including things like our membership of GENIVI.”

Symphony Teleca has two automotive products: Echo Cancellation/Noise Reduction (ECNR), and Ethernet AVB. “Ethernet AVB has an organisation that looks after it called the AVnu Alliance, and we are on the board. We’re also on the steering committee of Automotive Grade Linux, which started last year.” Both ECNR and Ethernet AVB are sold through a licence model; the rest of the automotive business is service-based, rather than IP-based.

Automotive accounts for around 7% of Symphony Teleca’s revenue and headcount, says Miles. The largest part of its business is the supply of software to other software companies. “We do a lot of work with companies like Oracle and Google, which provide software as a service, and we have different engagement models with them. But probably a quarter of the business is handsets, consumer electronics and embedded devices, which we [automotive] then spin out of.”

Symphony Teleca’s automotive business has doubled in size in the last year, “and we see significantly above-average growth in this area,” says Miles. “For us, the automotive industry is going to drive more lines of code above the growth of the automotive industry average. The amount of software code being generated by car companies is only going to grow, so there's obviously growth there for us, and I would expect to grow faster than the average supplier in the market because we have a unique selling proposition, thanks to our history in open source, handsets, delivery services over the air and server-based capabilities, which many of our competitors can't bring together as a package.”

The connected vehicle experience

A typical example of Symphony Teleca’s work, says Miles, would be the creation of a customer head unit. Here, Symphony Teleca acts as the software integrator, bringing together the broad support package, the operating system, building or sourcing the middleware, and bringing in and managing third party software, such as navigation, Bluetooth and voice. “We finish that off, put the HMI on top of it, test it and give it back to the customer. And that customer could either be the OEM, or more traditionally a Tier 1.”

Asked whether the connected vehicle experience should be delivered through an embedded or a brought-in device, Miles chuckles, “There are many answers to that question! There is the basic telematics question about whether it's a brought-in phone or a built-in phone modem which provides connectivity to the outside world. Different car companies will choose a different method for it. eCall will potentially change that, when it gets type-approval from the European Community; you would probably need to have a built-in solution, so you might as well piggyback off that.

There's a slight change in the market because the hardware is so cheap, and telephone service providers are changing their pricing models to enable multiple SIM cards to report to the same account, which then might encourage car owners to have a built in system in their car attached to their existing account, rather than have two accounts.”

Another aspect of the brought-/built-in debate relates to whether users want their media services on their phone or in their car. “I think the segmentation here might come down to car size and value. For lower-end vehicles, you might have a Mirrorlink-type solution which replicates a brought-in app on the head unit.

On higher-end systems, you'll have a built-in system with built-in apps. But those higher-end

www.automotiveworld.com

CONNECTED CAR car companies probably still need to provide a Mirrorlink-type solution because some people still want to see their media on their car and expect that a higher-end vehicle can do that.

The future for a replicated system is pretty good, because both the low-end and the highend still need to offer that.”

Familiarity and safety

An embedded device replicating the screen of a brought-in device could help reduce distraction potential by presenting the driver with a familiar screen. The issues here are two-fold, says Miles. In addition to the obvious safety factor there is the image factor. “Does a high-end company which prides itself on safety, or on a certain very distinct brand image, want the pure implementation of an app which looks and acts exactly like it does on a home computer? I'm not sure what the answer would be, but I suspect it's probably ‘no’. There's going to be some work there, both for companies like us and for the OEMs, to modify that app experience. And you can modify it a little to make it safer but still appear exactly the same, or modify it significantly, so you get similar services, but the way

customisable interface would be of very good interest to customers.”

HMI control

Voice and gesture control is being developed, but both are still far from ready to become the main means of controlling the HMI. How quickly will voice and gesture become mainstream methods of controlling in-car connected technology? “The voice suppliers would argue they already are,” says Miles.

“Voice will really change once you have the ubiquitous link to a server, like Siri. That increases available processing power and its ability to understand spwwch. For voice, the real change will come once higher bandwidth is available to use off-board voice recognition.”

“Head-up displays can help here, and they're definitely becoming more affordable and available across the OEMs.”

Miles also mentions eye tracking: “Once you can track the eye location, if it’s linked to a head-up display, you could have two options: you just look at the one that you want and then press an ‘okay’ button, and you've never actually taken your eye off the road directly.

Peripheral technologies are out there, which will be coming to the market. It's up to the ingenuity of the OEMs, Tier 1s and service providers, like us, to capture that and create the user experience of the future.”

As for gesture control, “this is a big subject and slightly more

that you interact with it on the car is completely different.”

As mentioned earlier, Miles believes the issues of driver distraction, legislation and liability will lead to white labelling, and the development of automotive versions of apps.“Car companies probably will not allow direct access to apps like Facebook - they would have to white label and approve any apps that could go onto the vehicle. This is why you'll always have an automotive version of a particular app. Companies like TuneIn and Spotify are already working with car companies to create automotive versions of their apps. Going forward, there will be automotive versions of these services, and the car companies - rather than companies like ours - are the ones that will regulate the safety and distraction potential of the content.

Being very simplistic and cutting access off at a certain speed is not the way ahead - that's a short term fix.You really need to get into the user experience and change the interface.

Services like Facebook and Spotify, for example, have so much functionality that a www.automotiveworld.com

difficult because you could argue, depending on how you implement it, that it's also distracting in itself, and potentially more difficult to use than a hard button.”

Interestingly, Miles adds, “There will always be a role for some kind of physical button.You can press buttons without looking at them. And they’re very fast.”

Other technologies could play a role in reducing driver distraction too, says Miles.

Megatrends | 38

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AFTERMARKET

Customising aftersales

delivering the service that customers really want

Philipp Grosse Kleimann and Swen Beyer, Roland Berger Strategy Consultants The aftersales business is finally gaining importance in various markets. However, in contrast to new vehicle sales, aftersales have been neglected for quite some time and now need development and professionalisation.

The global aftersales market is a safe haven with strong margins for suppliers, independent repair shop chains and OEMs. Manufacturers on average generate 80% of their profits from aftersales products and services - although they account for no more than 20% of sales and this profit share is rising.

But why is aftersales becoming so important now? The rules of the automotive game are changing: current trends will continue to shake up the industry until 2025, with four substantial market developments set to influence the customer interface.

Trend one: increasing consolidation

The aftersales business has been characterised by repair shop insolvencies, mergers and acquisitions for years. New cars need fewer repairs; less mileage and longer-lasting parts have pushed down the amount of service required. By 2025, the amount of workshop labour hours is expected to drop by 20-25%.

This will shift more power to specific players, forcing others to struggle for survival.

41 | Megatrends

Trend two: downstream business

Players from other industries and intermediaries are using innovative business models and offering new services to gain a foothold in the aftersales market, and occupy the interface with customers. Insurance companies are using alliances to channel customers into selected repair shops; OEMs are selling spare parts over the counter, and white label products are gaining importance.

Trend three: new mobility concepts

Established and emerging players are using new technologies to tap into innovative revenue sources. Specialised online repair shops, for instance, are achieving breakthroughs with web portals. Among the new mobility concepts to come out of this, fleet management and car sharing have emerged as the most important. In 2012, about 700,000 Europeans were sharing some 21,000 cars. These figures are expected to hit 15 million people and 240,000 cars by 2020.

Trend four: retail experience

So far, no big OEM has customised its aftersales approach. A surprising fact given that selling new cars is becoming ever more sophisticated to reach specific target groups.

Customers tend to project this positive experience onto aftersales. Providers that want to establish long-term relationships must work hard to gain loyalty and meet customer requirements throughout the entire car lifecycle.

To survive, aftersales players must carefully listen to customers, and provide the goods and services they really want. Micromarketing with offerings tailored to each individual would be ideal. The extreme complexity in today's repair shops, however, rules that out.

The task now is to identify target groups and put together suitable - and profitable services. The first step for every player, therefore, is a detailed product, service and customer segmentation.

More and more providers are competing in aftersales, making authorised repair shops, in particular, struggle to remain competitive in the maintenance and repair market. Repair shop chains have developed over the past few years, gaining prominence through aggressive branch network expansion and large-scale advertising campaigns, positioning them as players offering better value for the money.

Customer touch-points offer particularly valuable opportunities to spot and meet individual needs, boosting both customer satisfaction and profits. www.automotiveworld.com

AFTERMARKET The jury is still out on who will win the next round, but what is clear is that the winner will be the company which best meets the needs of individual segments with a differentiated range of products and services. In the future, standing out from the competition won't just be advisable, it will be crucial.

Segmentation

Clearly dividing segments into various customer groups offers similar advantages to micro-marketing. Players can assemble service packages tailored to each segment so that the customer experiences the optimum amount of individual attention.

To do this, aftersales players first need a much better understanding of who their customers are and what they need. Using the RB Profiler tool, Roland Berger Strategy

Consultants have recently tested this segmenting process on the German, US and Chinese markets. Using 18 value statements, socio-demographic criteria and usage behaviours, light has been shed on customer and market values, and those target groups which promise companies the greatest strategic and commercial success.

In conjunction with market researcher GfK, 4,500 aftersales customers in Germany, China and the US were surveyed. Based on their responses, customers were segmented into meaningful brand- and value-specific groups at the national level. Key differences emerged, not just in service preferences, but also in demographics, values and service behaviour in general.

Naturally, segmenting by brand or repair shop chain would result in even more precise

groupings. But even this analysis reveals differences: for example, three of the six segments in Germany show a strong preference for authorised repair shops and original parts.

To learn more about customers' specific desires and requirements, the six segments were examined under the following categories: general preferences regarding cars; criteria for selecting a repair shop; satisfaction with the repair shop; readiness to switch repair shops and reasons why; and preferred service packages and contracts.

Sustainable strategies

To ensure their aftersales business is set up in a sustainable way, all players must stay on top of format- and company-specific issues.

Looking to OEM authorised repair shops, it is clear that their special structure is one of their best strengths: they have standardised processes developed by OEMs, where they can implement brands throughout the entire repair shop network. However, it must be ensured that repair shops do not perceive this as a further administrative burden.

Independent shops and chains meanwhile have two major advantages: transparent, fixed-price offers and the option of offering standard services to key accounts with multi-brand fleets. The customer segmentation approach is ideal for such providers because it is not restricted to a specific vehicle brand, but is instead based on customers or values. It unleashes its full potential only after each market player has analysed its own specific customer base.

There are many different types of repair shop offers at the customer interface: premium or budget propositions; key droppers or active receipt; fast-lane or airport service; pick-up and collection or receiving stations in city centres; all-inclusive service contracts or remanufactured parts. Going forward, market players must better cover all of these options and have a clear service USP.

Competition is fierce when it comes to winning customers in the lucrative aftersales business. Consolidation pressure, new players and mobility concepts combined with rising customer expectations are making life tough.

Nevertheless, there are strategies for success: businesses just need to go back to the shop floor and look at what the individual customer really wants. An essential part of this is an individual customer analysis to develop a differentiated range of products in line with ideal micromarketing. Aftersales needs to refocus on the most important person in the whole process: the consumer.

Philipp Grosse Kleimann is Partner, Roland Berger Strategy Consultants, Munich.

Swen Beyer is Senior Consultant, Roland Berger Strategy Consultants, Munich. www.automotiveworld.com

Megatrends | 42

THE BIG PICTURE

Public transport gets personalised While most media buzz of late has been around advances in driverless cars for the individual, a handful of industry players are looking into making public transport more accessible than ever before.

Similar to Harman’s micro mobility concept, created in partnership with Rinspeed (see page 55), the Taxicol project is a new species of adaptable transport. Designed by Mondex Design, the tram-like Taxicol cars are autonomous vehicles that can selfnavigate along predetermined routes, following lines painted onto the road surface. The new concept was funded entirely by the General Council of Yvelines after being commended in the French locality’s intelligent vehicles scheme.

The electric ‘cars’ are powered by a 60kW engine with a top speed of 55kph (34.2mph) and an operational range of 210km (130 miles); each module also features a bio-ethanol range extender. The whole system above the powertrain, including doors, heating, air conditioning and infotainment features,

43 | Megatrends

are powered by solar cells installed on the roof.

Inside the carriage, climate conditions are controlled automatically and passengers receive route and schedule updates in real time.

Operated bi-modally, the cars can be controlled by an on-board driver or remotely by a control centre worker. Each Taxicol carriage can transport up to 22 passengers each, and five of the vehicles can be linked together electromagnetically to form a convoy for the whole or part of a route. V2V and traffic systems constantly monitor the position of the whole fleet, allowing vehicles to join onto convoys or leave as needed. Unlike a tram or train, the only new infrastructure required to run this public transport system is the aforementioned painted lines, reducing the implementation costs dramatically by comparison. If the vehicle meets an obstacle along its route, a system of navigation software, digital cameras and radar, map a new path for the car to take until it can return to the original line.

www.automotiveworld.com

THE BIG PICTURE

www.automotiveworld.com

Megatrends | 44

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HTML5: the most significant HMI development for 15 years?

Mar tin Kahl

Described as a fusion of HTML, CSS and JavaScript, by Dr Rainer Holve,Vice President, North America at Elektrobit, the new HTML5 standard underpins much of today’s humanmachine interface (HMI) development. HTML5 was initially designed for mobile web applications, but its standardised specification makes it ideal for in-vehicle application frameworks. However, the industry is still divided on just how important HTML5 is in the developing world of infotainment.

According to Intel Automotive Strategist Joel Hoffmann, HTML5’s cross-platform functionality is one of its greatest attractions: “While previous generations of HTML could run on various systems, they generally were too sluggish, and you couldn’t get the responsiveness that you expect from a native application. HTML5 changes all that. HTML5 is very attractive to the auto industry because now software developers can build one application and run it on a variety of platforms, in a variety of models of cars, and that is a huge step forward. It still requires cooperation, though, from car manufacturers.

They have to open up additional details about their car functions in order for them to be exposed to the application.”

This is where groups like the World Wide Web Consortium (W3C) can help. W3C’s intial focus has been on defining a vehicle data API which will create new opportunities for automotive services via the web. Intel is set to chair the business group which will eventually lead to a working group and a new industry standard. “Participants are coming from automakers and technology specialists, including GENIVI, which will bring forward, www.automotiveworld.com

HTML5 was initially developed for the mobile web but its standardised specification makes it ideal for in-vehicle application

with its membership of the W3C, three car OEMs and a Tier 1 supplier to drive the implementation of that spec,” Hoffman said.

Brought or built?

Another attraction of HTML5 is the role it will play in solving the built-in or brought-in device conundrum, by bringing commonality to HMI development. “Carmakers are

currently very busy trying to get mobile applications into the vehicle. The way they are doing it at the moment is mostly by leaving the app on the phone and just connecting it to the car. The application remains on the phone and runs on the phone,” explained Holve. ”If you want the application to run on the car system itself, then you need a new application framework in the vehicle. There are not many solutions out there, and that is actually a good Megatrends | 46

<!DOCTYPE html>

Separating the interface from the underlying technology and using HTML5 means that all the hard work is done - at least from an engineering perspective, said John Traynor, Senior Vice President of Products and Technology at Bsquare

47 | Megatrends

www.automotiveworld.com

<!DOCTYPE html> Think of the mobile space: the majority of devices being put out in the market will be HTML5-enabled, or at least have the capability to render HTML5 content. What’s really important is to understand that there is a place for HTML5 but there is also a place for a hybrid approach to creating an HMI. HTML5 would be the open standard for application development, but there is also a place for native graphics and things of that nature, and the ability to seamlessly stitch those designs together to create one cohesive experience.”

Garmin, too, is looking cautiously at the role of HTML5 in its product development. “We showed a fully integrated glass cockpit solution at CES using HTML5,” said Matt Munn, Managing Director of Garmin’s automotive division. “It has some strengths, there are also some weaknesses. We will have both HTML5 and other alternatives for HMI development for various customer needs.”

thing, because we can pick a common application framework that all app developers can use. HTML5 is a good candidate for that.”

Bsquare’s Senior Vice President of Products and Technology, John Traynor is, however, more bullish on the importance of HTML5 for automotive IVI: “When it comes to the human-machine interface and the user interface inside the vehicle, I don’t think in the last ten or 15 years there has been a more significant technology that has come along. It has really allowed automotive manufacturers and Tier 1s to display the types of things inside the cabin that users really want to see in their automobiles.

“A lot of older technology had people focused on the technology itself, rather than the user experience inside the cabin,” Traynor stated. “Separating the interface from the underlying technology, and having HTML5 which is much easier to use, more common, and deployed on more vehicles - means that, from an engineering perspective, the hard work is done. Everyone can now focus on the user experience at the top of the stack.”

OEMs embrace HTML5

At the 2013 Consumer Electronics Show (CES) in January, Ford and GM opened their APIs to the open source community, and, in February, Ford contributed AppLink to the GENIVI Alliance. “The decision by Ford to open AppLink as a BSD open-source licence project under the GENIVI projects banner is huge for the entire automotive industry,” said Matt Jones,Vice President of the GENIVI Alliance. “And it is huge for all those app developers that previously had no real way to www.automotiveworld.com

enable their application to work in a sensible manner in a vehicle.”

Ford-branded mobile applications and website developments are HTML5-enabled, said Doug VanDagens, Global Director of Connected Services at Ford Motor Company. “We leveraged HTML5 when we developed our most recent apps and website for our PHEV vehicles. We've adopted it in all of our products going forward on the cloud side. We understand what that offers, the efficiencies it enables and why that's a popular technology.”

GM is also using HTML5: its new software development kit (SDK) is designed to enable developers to work with GM to design, test and deliver relevant, customisable and seamlessly integrated automotive apps, and uses the HTML5 JavaScript framework.

According to Phil Abram, GM’s Chief Infotainment Officer, the OEM has designed the SDK “so that developers only have to write the software code once to address the entire population of vehicles and end users.

Developers can repurpose existing tools and code as long as they’re consistent with applicable licenses.”

Other standards are available

Industry fractions are apparent, however, with not everyone taking up HTML5 so readily.

Justin Moon, a member of the automotive business development team at QNX, believes that whilst it is essential to embrace HTML5, there are other ways of developing the automotive HMI. “HTML5 is absolutely enormous in this space. We’re talking about an open standard, something that’s being leveraged in so many other environments.

Dean Miles, Senior Vice President of Automotive, at recently-elected GENIVI board member Symphony Teleca, believes HTML5 will make a difference, but that considerable development is yet to be done.

“There are websites out there already which are HTML5-based, so the next generation of cars, and even the current generation, need to be able to access that information.

“But how far do you take that HTML5 browser and technology into the vehicle’s IVI system? Do you make a fully HTML5-based HMI, with all the benefits of instantly available single platform apps that it empowers? That is difficult, because there are still changes to HTML5 coming down the pipe from the consortia, which are yet to be defined. There are also some specific limitations to what you can do with HTML5 today. So, can the current implementation of HTML5 deliver a full highend OEM experience? Today, I think the answer is probably no. But that certainly will change. It's just a question of when.”

Taking a more cautious view of HTML5, Peter Balogh, Co-founder and Chief Executive of NNG said, “Lots of companies in the industry are currently using HTML5 the wrong way for the wrong reason. The challenge is to figure out how to make something more structured and reusable in HTML5, and not create messy spaghetti code in the process.”

Elektrobit’s Holve summarised HTML5’s prospects enthusiastically, but cautiously: “HTML5 represents a promising technology to get the mobile app from the phone into the car, which enables new use cases, and reduces the dependency on the phone and the ecosystem that comes with its brand.”

Whether full industry uptake will happen remains to be seen but, as with previous code languages, the question of implementation may well be superseded by a new HTML6 or other coding development.

Megatrends | 48

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Distracted drivers

Approximately 1.4 million crashes each year are caused by drivers using mobile phones, and at least 200,000 more are caused by drivers texting while driving - US National Safety Council

Distraction was a contributing factor in nearly 10% of traffic fatalities and 18% of injuries in the US in 2010 - NHTSA More than 3,000 people were killed in distracted driving crashes in 2010 - NHTSA

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of respondents said that intervehicle connectivity as the platform for advanced active safety systems has the potential to increase occupant and pedestrian safety long term

Price and incentives thought that incentives, from government or through insurance companies, should be offered to encourage the purchase of safer cars

named collision mitigation and avoidance systems (CMAS) as the technology with the most potential to road safety

said that regulators should recognise the burden of cost on OEMs when enforcing safety technology; 30% thought there should be safety at any cost

said that lane keeping assistance systems are the most likely to advance road safety

thought that consumers will be reluctant to pay extra for safety technology but nevertheless expected it to be provided

saw active safety systems as the most likely to improve safety in developed regions over the next ten years

59% of respondents believe that there is still considerable potential for advances in passive safety while the remainder believe that further advances will require active systems

Active v passive 6

seconds

Someone is killed or maimed on the worldâ&#x20AC;&#x2122;s roads every six seconds - FIA Foundation

Legislation

NCAP

of countries have comprehensive laws relating to five key risks: speeding; drink driving; and the non-use of helmets, seat-belts and child restraints - Decade of Action for Road Safety 2011-2020

said that NCAP ratings should not be legally enforced

51 | Megatrends

In developing countries, 37% said that driver education would cause the greatest increase in road safety; legislation came a close second with 31%

believe that OEMs should not be prevented from selling low NCAP-rated vehicles.This position was reinforced by 69% saying that OEMs should be allowed to sell cars of differing standards in different regions of respondents were willing to state a specific NCAP rating as the lowest rating that should be allow, the most popular answer was three stars, chosen by 33%

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AMT: the future of Indian truck transmissions?

Automated manual transmissions are expected to account for 30% of the Class 8 market in the US by 2014, and are now mostly standard across the HD trucks on offer in Europe. By contrast in India, scepticism is still rife when it comes to this non-traditional technology. But with new government plans to raise truck highway speeds, AMT looks set to become the new driving force in truck transmissions David Isaiah In India, the most important driver of powertrain development is legislation, so it is almost no surprise that the move towards a new transmission has come just as the government announced plans to raise highway speeds. In the mid-term, however, the rush to develop powertrains better suited to higher engine ratings can be helped by fittings such as automated manual transmissions (AMTs).

In emerging markets, “fuel consumption will be an ever important factor in the buying decisions of customers,” says Alistair Peel, Business Development Manager at Ricardo.

“But how do we select the technology that gives the user the best benefit for the least cost on their vehicle? This must be achieved while controlling risk, durability and warranty to protect the brand and sales.”

According to Peel, AMTs are expected to bring a 5-7% fuel consumption benefit to fleets over the next two decades. And, as emissions limits move from noxious gases to CO2, any moves to a Euro VII standard will likely include a new CO2 limit which OEMs and engine suppliers will have to adhere to.

The opportunity to reduce fleet mpg has already been quickly taken on in those markets which have adopted this technology: AMT-equipped trucks such as the Freightliner Cascadia, available in the US market, and Iveco’s Stralis in Europe, have proven savings of 9.31 mpg and 4% respectively.

The residual value of an AMT-equipped truck is likely to absorb much of the up-front cost incurred by fleet managers adopting the technology. Iveco was the first European OEM to fit AMT as standard, in 2000. By 2007, the value of an AMT-equipped three-year-old vehicle in the UK was over US$2,300 greater than one without. Notably, in that year, AMTequipped trucks accounted for the majority of European HD sales.

Beyond the residual value benefit, however, lies the AMT’s greatest advantage, namely that it www.automotiveworld.com

simplifies the driving process.

AMTs may not turn bad drivers into good ones, but they can certainly affect the output of less-skilled drivers, thus improving average fuel consumption across the fleet.

Commenting on AMT adoption in the US market, Nandu Srinivasan, Director of Engineering at Eaton says, “There is so much emphasis going into driver habits, and their ability to affect efficiency.

AMTs are one way of minimising a driver’s influence on that cycle in terms of acceleration and deceleration. We only see this going up.”

Considering the Indian driving test is regularly labelled the “easiest in the world”, not only will repair costs, caused by less-skilled driving, be reduced by AMTs, but the pool of potential drivers will also be widened to those with little or no truck experience - with no worry of serious engine damage. As Peel points out, AMTs “increase the durability of transmissions and clutches, and also manage shift patterns to optimise engine speeds.”

At present AMTs dominate the low speed, high weight truck sector in India, i.e. on cyclical vehicle duty trucks such as buses and refuse collection. While many see this as an ideal solution for driving in slow Indian traffic, others believe AMTs should be regarded as

more of an intermediate answer, not as the last word in this sector.

“Instead of going the way of the fully automated transmission, and upgrading the existing manual transmission, AMT is a good option in between,” says Neelkanth Marathe, Senior Deputy Director of Powertrain Engineering at the Automotive Research Association of India (ARAI).

Offering a more generous estimate of 10% fuel economy benefit, Marathe continues, “AMT is going to be a very useful transmission option in the Indian scenario…it can be retrofitted very well.”

Until the onset of AMT, however, Peel believes that India will continue to be dominated by manual transmissions.

The automated manual transmission (AMT) slots between the manual and automated transmissions. Gear changes are accomplished without using a foot clutch pedal; instead, when a gear is selected, the AMT automatically disengages the clutch, changes gear and engages the clutch again while modulating the throttle.

The system is comprised of a dry clutch, gearbox and an embedded, dedicated control system, which uses electronic sensors, processors and actuators to effect gear shifts. The heart of the gear control system is the transmission control unit (TCU). AMTs require no engine or gear modifications, meaning less physical effort for the driver, and are more comfortable to use than a manual transmission.

Megatrends | 54

HARMAN

Clouding the future Safety, connectivity, accessibility and future-proofing are intertwined, says Harman, which has more than a keen eye on the consumer electronics industry Ruth Dawson

For infotainment supplier Harman, futureproofing is not just key to business, it is the company’s guiding principle. What started as a small partnership in the 1950s developing hi-fi systems, has branched and grown into one of the automotive industry’s leading suppliers of infotainment and connectivity features.

Today, Harman has a firm grasp of the market and a knack for knowing just what consumers want. At a time when connectivity development was just beginning to turn to more affordable, and thus more accessible, systems, Harman announced its Connected Radio entry-level connectivity platform at the 2013 CES, which links a smartphone to a budget radio to give access to full infotainment services.

“The younger generation, for example, do not start out with a premium car but have a requirement for connectivity,” says Michael Mauser, Harman’s Vice President and Copresident of the Infotainment and Lifestyle Division. “Infotainment is a major buying attribute for sales of cars.”

More recently, Harman has been pushing into the area of safety in the connected car. Having previously incorporated algorithms designed by safety app developer iOnRoad into system architectures, Harman acquired the company back in April. The buyout means that iOnRoad’s advanced driver assistance system 55 | Megatrends

(ADAS) features will be built into Harman’s scalable and premium heads-up displays.

“We have to provide automotive grade applications into the car. It’s not just about copying and pasting something which is already available on a smartphone”

“In the future, infotainment systems will have to focus far more on safety,” says Mauser.

“Our target is to make it affordable, bringing safety into all car platforms, not just the high-end. We owe it to consumers to so.”

Taking a very holistic view of things, Mauser believes that connected services are secondary in the driving environment and must be designed specifically for it, with no possible cause for distraction. “The more connectivity functions we bring into the car, the more important safety is becoming,” Mauser says. “You can bring connectivity just through a smartphone and MirrorLink into the car - but that is not good enough to create the same user experience and to prevent or reduce driver distraction.”

Creating a user experience which is up to

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HARMAN

date with consumer expectations, while dealing with the “unique” environment that is the connected car, is no easy task. While many OEMs and suppliers continue to focus on consumer electronics and connecting them into the car, Harman is taking a different tact, driving down development cycles to keep pace with the consumer electronics industry and customer expectations.

“Time to market was further reduced with the introduction of our scalable head units,” Mauser explains. “If you look at customisable systems from the past, there was a development time or time to market of about

three years. Now our scalable units have a time to market of maximum 18 months. That was the first step but of course it doesn’t close the gap [between the pace of change in the automotive and consumer electronics industries]. But with the introduction of our Android systems and Aha [Harman’s interactive radio product], we were able to introduce personalisation into our head units and make them future proof, which our customers are very interested in.”

It is this attention to future-proofing that is taking Harman up to the next level. Although Mauser admits that they are not “100% there yet, the android system is a step in the right direction. It allows you to basically upgrade the system through the cloud.You don’t have to go back to your PC and update as you would have in the old days”.

All this is well and good, but connectivity needs to pay too. When asked which business model will prevail when it comes to delivering connected products, Mauser says it is up to the OEMs to decide on one - and stick to it.

“In Germany, BMW, Audi and others have completely different views on how to structure things. Of course, OEMs want to keep their piece in that area, at least for now, and that, from my point of view, is limiting opportunities. The overall opportunities are already far bigger when it comes to service and downloading of applications, but OEMs are still restricting that quite intensively.

“There is not one answer to the question of what model will prevail. Take our Aha solution - that is completely free of charge. There is no licence or something like that, we just provide the service to the OEM but each one is handling it a little differently. Porsche is charging the end customer some incremental expenses to get the optional product, but other OEMs are using it as a standard functionality. I think it will actually be a mix of models that work.”

Its current products may be future-proof as far as the predicted market looks now, but the supplier’s keen survival instinct means that it is still keeping watch of how the connectivity industry could develop. At present, Mauser predicts APE and 4G to be the main drivers of development in the connected car.

“Supporting a good bandwidth of data connectivity into a car and reliability of that connection will be very important,” Mauser says. “What you are used to having when you’re connected at home, you’re going to expect from your car as well, especially for mobile office functions. When you want to keep your car up to date, you have to have a very good connection with a high bandwidth.”

While it certainly seems that clear skies are ahead for this supplier, it is the firm grasp of consumer desires that will keep it flying high. www.automotiveworld.com

Megatrends | 56

!Micro mobility!

HARMAN

!maximised!

Promoted as blurring the lines between public and private transportation, the Harman Rinspeed microMAX, unveliled at the 2013 Geneva Motor Show, is a futuristic solution to today’s mobility problems.

At just 3.73m long, the microMAX is shorter in length than a Mini Clubman but stands much taller at 2.12m. The car runs off a 28kW motor and has a range of 100km (62 miles).

Large windows and upright seating make this vehicle seem just as light and breezy as its eco-friendly, ultra modern ethos.

“It’s very much like Facebook,” a Rinspeed spokesperson commented. “This is a new community type of mobility.”

But how can a personal vehicle be compatible with a community concept? Harman’s solution is urbanSWARM: a cloud-based system which melds several Harman products already available, in a new, connected way. urbanSWARM is what really ties the microMAX together: the system links with other vehicles in the area and accesses navigation data in real time across the whole 57 | Megatrends

fleet. Not only does this allow passengers to fill spare seats at will, it also helps drivers navigate traffic using data which has been crowd-sourced from other microMAX cars on the road. This is the ultimate application of cloud and V2V technology, designed to maximise urban movement. The system also calculates potential ride opportunities in real time and can determine transfer options if necessary. Once a seat has been requested onboard, a driver can choose to accept or reject the passenger. Inside the car, passengers can access their own infotainment options, synced via the cloud: music, books and videos can all be viewed, keeping user preferences the same from vehicle to vehicle.

Although Rinspeed typically focuses on concept vehicles, Michael Mauser, Harman’s Vice President and Co-president of the Infotainment and Lifestyle Division, is sure that the microMAX has real world application right now: “It’s not just a concept. If you go back a few years you will see that a lot of Harman solutions found in Rinspeed concept cars are in production.”

“This megacity solution makes urban travel

much more efficient,” the Rinspeed spokesperson continued. “In most cities now we have the problem of infrastructure not growing fast enough; there are too many cars on the road. This is an efficient system for transporting people on a smaller footprint.

The techniques necessary to do something like this all exist now - all we need is for someone to decide to do it and it would be possible to build up a network very fast.

“Unlimited funds will not suddenly become available for infrastructure improvements, as even the most powerful economies are struggling to solve traffic problems.”

With more start-ups, smaller OEMs and suppliers looking to make private transport more open to public use, traditional forms of mobility are set to diverge even further than has been foreseen up to now. Although there is a mobility segment for vehicles like the microMAX to satisfy, the success of the vehicle could depend on community mood.

But with car sharing gaining ever more popularity, urbanSWARM could very well be the next step in cloud infotainment and traffic management for such vehicles. www.automotiveworld.com

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POWERTRAIN ELECTRONICS

Bosch, RBEI and India’s immense hunger for technology Mar tin Kahl

Robert Bosch Engineering and Business Solutions (RBEI), headquartered in India, is Bosch’s centre for powertrain electronics for emerging markets. Its main activity is to provide services and solutions internally for Bosch, supporting the automotive arm of Bosch worldwide. Its focus in the automotive sphere is on software development and support, as well as hardware support, specifically electronic control units, explains Hadi Syed Abdul, Head of Hardware Development at RBEI. “The teams here work with the operations in Germany, particularly in the CV and diesel systems areas, and we support them with their electronic control units, hardware, and software. We also have teams in the mechanical area which support various other CV components, including final element analysis, validation, liability and so on.”

As well as working as an internal supplier to Bosch, RBEI also serves external customers.

“When we go to the OEMs, we go as Bosch,” explains Hadi.

Robert Bosch Engineering and Business Solutions Limited (RBEI) is a wholly-owned subsidiary of Bosch with the majority of its approximately 12,000-strong workforce located in India. In addition to its operations in Bangalore and in Coimbatore, in the Indian state of Tamil Nadu, RBEI has sales and marketing offices in other parts of the world, primarily one in Germany. It also has a sales office in Farmington Hills, Detroit, offices in Japan, the UK and a large development centre in Vietnam.

The development of vehicle powertrain electronics, and in particular, the market for CV powertrain electronics, in India is in its infancy, says Hadi. “The CV industry in India is now relatively new to electronics in powertrain. When I say the Indian industry, I mean the Indian OEMs. The category of trucks normally used in India is not really in the high

ECU made by RBEI for commercial vehicles

www.automotiveworld.com

payload segment. Now those truck OEMs also want electronics and this is where we come in. We’re able to adapt and give them 24V solutions - they are more powerful than for passenger cars but they are not very heavy duty ECUs.” Strength in cost innovation

Bosch in India has exported its cost innovation strategy to other parts of the Bosch group, and Hadi says this is one of the strengths of the Indian operation. “Being in India, we understand the local conditions and we can leverage the technology which is used in Europe and America, and bring the cost down for local requirements.” Not only does this ensure the cost is right for local needs, but RBEI also ensures that whatever cost innovation has been tried out in India is also available for markets like Brazil, Russia and China.

The Indian operations lie at the heart of Bosch’s global activities. “We work as one with Bosch in Germany,” says Hadi. “There is a very close cooperation and a strategy that we spell

Megatrends | 60

ELECTRONICS

Bosch Bangalore

out together. If you talk about software, it's the same repository. So you may have a module which is then used for, say, a high-end CV, and that module can be broken down in an architecture which can be used in whole or in part for an emerging market. If you find one component which is doing well in the emerging market, this could easily be applied in another market. This kind of model architecture helps us to move solutions from different parts of the world to areas where there's a new interest.”

Bosch h

as been

presen

t in Ind

ia since

1922

Contradicting demands

Whilst cost is key, cost innovation is not about reduced quality or durability. “The demands of the emerging market are very contradictory,” says Hadi. “We started off some years back saying that it costs less so it'll be less rugged, or maybe of lesser quality. But now we see that the demands made on electronics or on product robustness are much higher. We want cost effective designs, but they have to be robust to withstand misuse and the elements.

We build these aspects into our modules, which then also makes Bosch products for the rest of the world very rugged and robust.”

RBEI uses a modular structure approach, explains Hadi. “If an Indian OEM, or an OEM like Renault based here in India, wants the features which are used in a Renault car in France, we can very quickly deliver that.

Because it's a common repository, we follow the same procedures, policies, quality guidelines, structures, architecture. It's very easy for us to provide a product sample. We can quickly provide the same thing that is being used in a Renault car in France, or a feature that Renault uses in Brazil. Being in all global regions is a major strength of Bosch.

Germany is one of our main entities, but so is India. We are partners. We have competence centres in key markets, but we are all in touch 61 | Megatrends

Bosch plant at Nashik, India

with each other. And it's relatively easy for us to first know what is happening in the rest of the Bosch world and be able to offer that to our OEM customers here.”

Vehicle electronics in India

How will the Indian market for electronics in light vehicles and CVs develop over the next ten years? Is it possible to envisage parity in the near or medium term between the demands for electronics in India and Europe, for example? “Yes and no,” says Hadi. “I think the demand for more electronics will probably first come into cars and motorcycles. When you compare India to Europe, the literacy levels are very different. But the hunger for technology in India is immense. The motorcycle and car sectors definitely demand more electronics, because the users demand the electronics. My personal feeling is that the CV world will lag behind the passenger car world and it will be primarily driven by demands like consumption or emission limits.”

Hadi says he expects strong growth in the Indian LCV and ultra-low segments. By ultralow, he is referring to vehicles in the one tonne range, in the segment effectively created by the Tata Ace. “With the Ace, Tata has really brought out that new segment, and the segment came in because there was a move from the government not to allow heavy vehicles into cities. These vehicles were ideal for bringing deliveries into the city. But this has also found favour with the rural market.

Every OEM worth its salt is now trying to get into this market. I'm curious as to when OEMs from outside India will try to enter this market, and what solutions they will offer.”

The passenger car market also offers considerable opportunities for development in in-vehicle electronics. “The population is very large, and if you look at the number of cars owned, there is a very attractive opportunity. Here, the user experience will mean that technology and electronics will play a major role.” www.automotiveworld.com

THE BIG PICTURE

!Big Data,!

!big brother?!

The industry’s new found love of the benefits of Big Data has taken a slight downturn, as consumers look to privacy matters and how their user data can be kept anonymous. It is a well known fact that we as humans are all predictable so, no matter how anonymised a large data set may purport to be, analysts claim it is still very easy to pick out an individual based on their habits.

This fact seems wholly adverse to the notion that Big Data is the next innovation expected to revolutionise the way we use technology both in and out of the car. After all, “The connected vehicle is all about Big Data,” says Dr Wolfgang Bernhart, Partner at Roland Berger Strategy Consultants. Furthermore, “the financial value of the connected vehicle lies in Big Data.”

But beneath the worries, there is one matter which is often overlooked when the privacy issue arises: Big Data is already providing drivers with real benefits taken for granted in the modern age - without any noticeable detriment to privacy. General

63 | Megatrends

Motors, for example, captures data from its OnStar system to lower insurance premiums; Ford’s Energi plug-in hybrid generates around 25 gigabytes of data per hour which is then processed and given back to the driver via a mobile app, in the form of battery life, performance stats and information on the nearest charging stations; and navigation companies like TomTom are using vehicle data to monitor traffic flow and pinpoint congested areas.

So how can the industry overcome privacy problems to provide the services that are fast becoming expected as standard in new cars? Discussing the connected car in general, Nicole Yelland, Director of Marketing and Communications at Livio says simply, “The car is already the next phone docking station. Just like Wi-Fi, we'll figure out smarter solutions for security”.

www.automotiveworld.com

THE BIG PICTURE

P er s o na l d a t a is t h e n ew o il o f t h e Internet and the new currency of the digital world

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Meglena Kuneva, European Consumer Commissioner

www.automotiveworld.com

Megatrends | 64

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SYSTEMS INTEGRATION

Connecting with integration As the cost of processing power falls, it seems obvious that intelligent control systems across the whole vehicle system would become more commonplace. Yet with such increasing sophistication, OEMs and suppliers are still struggling to connect with each other. So is now the time to re-evaulate control communications standards? Olivier Raynauld, Global Manager of Suspension Technologies at BWI Group, a supplier of vehicle dynamics technology, certainly thinks so Aaron K. Warner

As the man in charge of a product which calls for very delicate incorporation into a vehicle, Raynauld has amassed a great deal of experience when it comes to systems integration. However, he believes that the way systems are integrated now is just not good enough: the industry needs a standard protocol to work from when it comes to communications between in-vehicle systems.

“Creating new standards will not only simplify the design process,” says Raynauld, “but it will also decrease integration and testing times, generating profitable production volumes and cost savings which can ultimately be passed on to new car owners.”

This lack of clarification and focus on minor specifics is just one illustration of the lack of unity in this corner of the connectivity world

The level of personalisation, connectivity and safety expected by today’s car buyers is pushing to new heights all the time. As smartphones get smarter and more focus is put on active safety systems, OEMs and suppliers are under increasing pressure to bring out bigger and better innovations.

The status quo

“Historically, protocols haven often been developed as a pragmatic response to a 67 | Megatrends

“

The ultimate objective should be to bring high level integration to all vehicles to allow for not just consumer comfort and enjoyment, but to provide the next level of vehicle safety

”

Olivier Raynauld, Global manager, Suspension Technologies, BWI Group specific need, without the requirement for a large amount of data sharing outside of a single system,” says Raynauld.

As ever, the best way to set the ease at which electronic systems can be integrated is to define the parameters within which this can be done. At present, several regulations - including ISO26262 on safety and reliability procedures, and AUTOSAR (Automotive Open System Architecture) - set the industry standard.

“When OEMs agreed on the rules set out in AUTOSAR and ISO26262, that was a huge step in the right direction, but both still have shortcomings,” Raynauld explains. “AUTOSAR, for example, was intended to establish open standards for electronics architecture to help develop new software and interfaces that could work with other systems. But during negotiations, several points were added to meet the very specific needs of some OEMs and Tier 1s, which bloated the standard at the expense of clarity. This has meant that several companies have developed their own versions of AUTOSAR to work from.”

ISO26262, for example, does not define software protocol structure, but rather focuses on the safety aspects that come into

New standards for systems integration will mean that components like BWI Group’s MagneRide suspension (pictured) can connect more easily with the rest of the vehicle

www.automotiveworld.com

SYSTEMS INTEGRATION play should an electrical or electronic system malfunction. Neither standard, therefore, provides the clarity or unity needed for standardisation in the latest systems.

As the move from passive safety to collision avoidance becomes more important, so too will systems like AEB and the subsequent requirement for better integration standards.

Raynauld hopes future legislation will push the requirement for collision detection, warning and avoidance systems. After all, he says, “We already do this for high end vehicles, but with greater harmonisation we can achieve the timescales and budgets which will make it more realistic for a mass market vehicle.”

This lack of clarification and focus on minor specifics is, of course, just one illustration of the lack of unity in this corner of the connectivity world. Another lies in the method by which OEMs implement communications protocols: this matter has so far been left to individual manufacturers to decide, resulting in dozens of interpretations. The burden then falls to suppliers, who are expected to make their components work in an uneven environment.

A universal approach

Much as the USB port standardised the memory stick/PC interface, a standard interface for OEMs and suppliers would allow any system to be integrated with any platform without the aforementioned need for work after initial product development.

Even though, essentially, a supplier’s product - a brake sensor, for example - may remain visually unchanged, it must undergo extensive testing to ensure there are no system conflicts.

“Providing a universal architecture that is suitable for all existing functionalities and useable by all OEMs would massively save on costs and time, both in the short- and longterm,” Raynauld argues. “That would allow Tier 1s to focus on inventing new functionalities, instead of making existing tech fit in with any number of OEM systems.” www.automotiveworld.com

At present, the primary obstacle to electronic system integration being streamlined is largely political.There has been very little incentive for OEMs to collaborate on a standard in the past “The ultimate objective should be to bring high level integration to all vehicles to allow for not just consumer comfort and enjoyment, but to provide the next level of vehicle safety,” Raynauld says. “Within two years, achieving a five star Euro NCAP rating will require vehicles to be fitted with an autonomous emergency braking system (AEB) - which works through a system of sensors, a control unit, suspension, brakes and potentially air bags, all working together and communicating.”

At present, the primary obstacle to electronic system integration being streamlined is largely political. There has been very little incentive for OEMs to collaborate on a standard in the past. However, although previous attempts at creating a set of parameters have had mixed results, they have at the very least created a basis for cooperation.

“The electronics and general vehicle technology landscape has changed so significantly since the introduction of AUTOSAR and ISO26262 that a simple update won’t suffice,” warns Raynauld. “The economic climate is now putting pressure on all manufacturers to streamline design and production, so the list of benefits that regulation would bring grows.

“There are solutions which meet immediate and short-term needs, such as Flexray, which is a faster but more expensive protocol, and Ethernet. But no solution which is currently available offers the flexibility and scalability required for a long term strategy to deal with ever increasing connectivity demands.”

As mentioned earlier, similarly to how computer manufacturers created a replacement to the Basic Input/Output System (BIOS), to cope with the growing variety of components and peripherals on modern desktops, now is the best time for manufacturers and suppliers to look at a new cross-industry protocol.

“Once we achieve this, a more holistic approach can be taken to data sharing and the benefits it can bring to developing vehicle connectivity will grow exponentially.”

Megatrends | 68

INSIDE THE INDUSTRY

IPI tax reductions: the optimum opportunity for Brazilian investment Julian Semple, CARCON Automotive In October 2012, Anfavea, Brazilâ&#x20AC;&#x2122;s national association for vehicle manufacturers, forecast that the industry will invest between US$25bn and US$35bn by 2015 to meet market demand. The main driver behind this investment is the future potential growth of the automotive market - which expanded by 4.6% in 2012 to 3.8 million vehicles, and is set to match this again in 2013 - making Brazil the fourth largest automotive market after China, the US and Japan.

With this growth has come new legislation: Inovar-Auto is a Brazilian government programme that sets out several important factors which the domestic automotive industry is to achieve by 2017. This includes fostering new investment, promoting and applying technological innovations and improving supply chain competitiveness.

This new automotive programme, approved in 2012, comprises cars, light commercial vehicles, heavy commercial vehicles, chassis with engines, and components. Companies which can apply are those OEMs already established in the country with production plants, and those which are investing in new plants and/or new vehicle models. OEMs that want to enter the Brazilian market for the first time and plan to invest in new factories, as well as importers, can also apply to join the programme; preliminary enrollment started last year and final enrolment and approval is due by the end of July this year.

Those brands which do not come under the remit of this legislation are subject to a hefty 30% increase in industrial products tax (IPI).

But this tax rise can be avoided relatively easily, by any manufacturer which can prove that it intends to play out a long term business plan.

The most important, and seemingly most obvious, factor is localisation, but this is not restricted solely to the Brazilian borders: those vehicles manufactured in the Mercosur region (Argentina, Brazil and Uruguay) or Mexico will fall under the programme and escape the IPI increase. The latter is, however, limited to the 69 | Megatrends

annual quota set between Brazil and Mexico, and both the Mercosur region and Mexico are not subject to a 35% import tax.

Local producers must also increase the number of local manufacturing processes for light vehicles from the eight of 12 available now to ten of 12; the 12 processes are Fiat Betim plant, Brazil stamping, welding, painting, plastic moulding, engine A further 2% IPI tax reduction can be assembly, transmission assembly, steering and achieved by investing in R&D, engineering suspension assembly, electric system assembly, and supplier development, with the proviso brakes and axle assembly, monocab or chassis that R&D expenses must increase from assembly, final assembly and R&D/testing.

0.15% of the net revenue in 2013 to 0.5% Heavy commercial vehicle manufacturers must by 2016. also increase their process steps from nine of 14 now to 11 of 14 in 2016.

However, the boost in localisation is not the only thing that the Inovar-Auto scheme is Another incentive for localistion is the ceiling geared towards: efficiency of the average OEM set on IPI tax reduction for importers, product range must also improve by 12% by restricting annual imports to 4,800 vehicles.

2017. This is equal to a fuel economy This has caused a huge rush to apply for local improvement of 13.6%. If an OEM achieves a plants by around 14 OEMs, including Chrysler, fuel economy improvement of 18.6%, it will be BMW,Volvo and Chery. entitled to another 1% IPI tax break from 2017; if the manufacturer achieves 23.6%, then Acting almost conversely to this, for OEMs a further 1% will be granted. investing in new plants, IPI reduction is limited to just 50% of the annual plant capacity. But One condition that sits within this is the rather than deterring manufacturers, it has requirement that all vehicles must be proven to be something of a balancing act: submitted to a fuel efficiency labelling BMW, for example, agreed with the local programme; at present, only 36% of products government in April to invest US$300m in its are submitted. Non-compliance with the first Brazilian plant, with an estimated output programme will make brands subject to a fine. of 32,000 cars per year. Other brands setting up new plants include JAC Motors, Nissan For a country that is oft-criticised for being a and DAF Trucks, and feasibility studies are protective market, this latest round of IPI tax being carried out by a number of OEMs reduction begs to differ. OEMs have quickly including Audi and Jaguar Land Rover. realised the potential that lies within the Brazilian market: now is the time to invest in Investment in new products is also being this South American country. considered: the CAOA Group has announced investment of US$150m to produce the Julian Semple is a Senior Consultant and Manager Hyundai ix35 SUV under license, while at CARCON Automotive in Sao Paulo, Brazil.

Mitsubishi is planning to build both the Lancer and ASX locally. www.automotiveworld.com

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