Automotive 2018

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EDITORIAL

Dear readers Along its 15 years of operations, The Diplomat – Bucharest has brought you a fair and balanced coverage of the political and business scenes in Romania.

Our reporting team has shaped the editorial voice of the publication into an accurate barometer of the current state of the environment we all activate in, with the editorial policy remaining free of any political influence or shadowy interest.

We have always listened to your opinions and strived to bring you the best products and services that can best suit your needs.

At the beginning of the year, we launched automotive-today.ro, the online platform aimed at delivering the latest news stories, analyses and interviews from the Romanian automotive industry.

Today we bring you the Automotive Today annual guide, whose main goal is to best summarise the developments and trends that have marked the automotive industry throughout the year, as well as trying to take a closer look at the outlook the ever challenging industry has for the future. Published in a once-per-year issue, Automotive Today speaks with, and to leaders of manufacturing companies, automotive suppliers and retailers, as well as professional services managers looking to enhance their businesses.

And we will not stop here.

The Romanian Automotive Forum event series creates an opportunity to examine key case studies around workforce management and is a platform for the exchange of ideas around the impact of market dynamics and new technologies for current and future manufacturers, operations and supply chain leaders.

We aim at offering you access to exceptional panels of business leaders sharing their inside knowledge and personal views on how new technologies, architecture and consolidation will shape the future of the automotive industry.

We will also give credit where it’s due, with the Romanian Automotive Industry Awards Gala - an event meant to celebrate achievement, creativity, knowledge and partnership. Individuals and companies across ten categories are to be honored at this prestigious award ceremony, which rewards enthusiasm for development and innovation across the whole industry. Encouraging and developing individuals through creativity of ideas, through adaptation and flexibility, through planning and pioneering new ways, through new thoughts and new ideas is what moves the entire industry forward.

To this end, we invite you to enjoy this first edition of the Automotive Today annual guide and to not hesitate to get in contact with us to discuss ideas that can help foster an even closer collaboration.

Looking forward to receiving your feedback, Mirela Gavra, Publisher The Diplomat – Bucharest & Automotive Today

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CONTENTS

contents 6. INVEST ROMANIA

44. ANALYSIS

Romania to position itself as a regional growth pole for the future of the automotive industry

Romania’s aging cars - why own a vehicle when you can rent it

9. ROMANIA’S LANDSCAPE

52. HELLA CRAIOVA

The fourth biggest automotive manufacturer in the CEE region

Designing and developing software applications for the automotive industry

22. FORD ROMANIA

54. PORSCHE ENGINEERING

Ford to invest up to 200 million Euro to manufacture a second vehicle at its Craiova Assembly Plant

Romania to have an active contribution to the development of new technologies for cars of tomorrow

27. AUTOMOTIVE TRENDS

60. WORKFORCE

The car of the future is electric, autonomous, shared and connected

Romanian companies are having a difficult time finding skilled employees with communication and teamwork abilities

39. SCHAEFFLER New development phase this year, which includes a new production hall and an additional logistics facility

Publisher

64. PREH IASI Plans to increase and develop the team in Romania as major automotive innovator and trendsetter

Address: 20 Brailita Street, 1st Floor, Sector 3, Bucharest, Romania

Mirela Gavra Marketing Manager Nicolae Popoviciu Business Development Manager Cristina Millio Editor Petre Barac

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EDITORIAL

IS ROMANIA LISTENING TO ITS AUTOMOTIVE INDUSTRY?

T

he Romanian automotive market has been growing every year since 2009 and is forecasted to exceed 20 billion Euro by 2020. It is the fourth biggest automotive manufacturer in the CEE region, and a sector of national importance, with a high share in the country’s exports, number of employees and turnover, localized in all areas of the country and with great potential for development.

In the last decade, more than 600 OEMs for automotive supplies opened plants in Romania following the investments of two big automotive manufacturers at Craiova and Mioveni, namely Ford and Renault.

The national car production is expected to follow an upward trend, mainly due to competitive salaries and the country’s strategic positioning between Asian and European markets.

Romania’s automotive industry development can have several directions either by attracting new investors or by expanding already created ecosystems in the production facilities in Craiova and Mioveni. But is Romania really listening to its automotive industry players?

Probably not, considering the development of the transport infrastructure, the main cause why Romania is continuously losing numerous investors in the automotive industry.

Romania has 14 international airports, about 11,000 km of railways, but only 747 km of highways, although it has access to EU funds. As a result, the progress in modernizing the transport infrastructure is very slow and the underdeveloped regions of Romania remain isolated, being unattractive to investors.

The development of the automotive industry - by bringing new models into production to the two local producers – needs above all to deliver the promised infrastructure projects. Time will tell if Romania will continue to be an attractive country for the foreign investors, as the future of the local auto industry is very closely related to how the infrastructure will develop and will be able to sustain a high production flow. 

Petre Barac, Editor The Diplomat – Bucharest Automotive Today

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INTERVIEW

ROMANIA TO BECOME REGIONAL GROWTH POLE FOR THE AUTOMOTIVE INDUSTRY

R

omania will position itself as a regional growth pole for the future of the automotive industry, said Paula Pirvanescu, State Secretary InvestRomania within the Ministry for the Business Environment, Commerce and Entrepreneurship.

“The country is expected to increase its competitiveness on international markets through foreign investments in various sectors of the industry,” she said in an interview for Automotive Today. “The world is changing. Global trends indicate a transition to hybrid and electric cars, dropping conventional engines, such as diesels. We believe that Artificial Intelligence and virtual reality will be maintained, transposed into the construction of autonomous vehicles such as those built by Google or by Tesla, which have already begun to implement certain new technologies into conventional cars.”

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Paula Pirvanescu claimed that 3D printing has evolved rapidly in recent years, stimulating the implementation of the recycling concept in the automotive industry, making it easy and inexpensive to refurbish one’s car or change its appearance whenever one wants, thus increasing its lifetime.

Furthermore, she said the Cloud Driving concept will allow personalization of driving experiences based on the driver; by logging in with their personal data, the software will provide custom settings and preferences, depending on the driver’s options and behaviour.

INTERVIEW

“More and more car manufacturers have begun to incorporate this type of multiple-featured functions, such as voice-controlled apps, parking systems based on Artificial Intelligence or Bluetooth connectivity,” she added. “The development of the IT sector in recent years has made it a facilitator for the automotive sector. By creating new partnerships or strengthening existing ones between universities and the business environment, Romania is part of the Industry 4.0 Revolution.”

State Secretary Pirvanescu mentioned Brexit as a big opportunity for Romania to attract new foreign investors.

“Brexit may bring the relocation of some automotive companies, considering the new taxes and other lost benefits (derived from EU membership) will have a negative impact on the UK auto industry, as components cross the borders several times during the manufacturing process,” she explained.

“The costs of building a car in the UK could increase by around 3,000 Euro per unit if a ten per cent tax would be imposed, so some manufacturers are expected to head to locations like Romania, for their competitiveness in terms of costs and profit margins.”

PAULA PIRVANESCU STATE SECRETARY INVESTROMANIA “The development of the IT sector in recent years has made it a facilitator for the automotive sector.”

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INTERVIEW

The Romanian automotive industry has seen an upward trend in recent years, according to the State Secretary, and today is in a transition period to high added-value investment projects.

In this respect, the Paula Pirvanescu mentioned Bosch Research and Development Centre (Cluj-Napoca), Porsche R & D Centre for Autonomous Vehicle Technology (ClujNapoca), the two research and development centres of Continental in Iasi and Brasov; and last but not least, Renault’s R&D centre in Titu (Dambovita County), the largest outside France.

According to Paula Pirvanescu, Romania has a number of competitive advantages in the automotive industry, among which she mentioned: “Well-qualified labour force at competitive prices, with a good capacity to overcome the cultural and linguistic threshold, our country ranking third when it comes to the lowest wages in the European Union (90 per cent of graduates are English speakers, and a large number of them are also speakers of German, French, Spanish or Italian), low taxes, low utility costs, a network of 14 technical universities; tax incentives for research and development including in the automotive sector, a network of public and private industrial parks with access to utilities and facilities, depending on the specifics of the activity.”

The automotive sector is a key sector with a long tradition in Romania, enjoying the presence of two of the world’s largest automobile manufacturers: Renault and Ford and more than 600 suppliers, thus offering one of the highest quality levels in the productions of automotive components in Eastern Europe.

State Secretary Pirvanescu said that the lack of qualified workforce is an issue which has been addressed in the past few years with the introduction of dual education and the creation of partnerships between automotive companies and major universities in Romania.

Paula Pirvanescu represents InvestRomania’s team, described as the foreign investors’ problem-solving hub and one-stop-shop for foreign investors. InvestRomania offers expertise and advisory services to foreign investors to fast track their projects.

The Ministry for the Business Environment, Commerce and Entrepreneurship recently launched a new tool designed to support foreign investors and domestic entrepreneurs in identifying potential partners for new businesses or expending the already existing ones. The platform is www. businessromania.gov.ro and was created as an instrument that will support foreign investors and local companies in identifying potential partners to create new businesses or develop existing ones.

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The platform will include information on funding options for Romanian companies, fiscal and legal framework for commercial companies and details of the promotion of Greenfield and Brownfield projects - projects that can be developed in a public-private partnership with the local public authorities.

Coming back to InvestRomania’s mission, Paula Pirvanescu represented Romania at the OECD (Organization for Economic Cooperation and Development) Ministerial Conference on “Strengthening SMEs and Entrepreneurship for Productivity and Inclusive Growth”, held in Ciudad de Mexico on 22-23 February.

The Romanian official presented the Government’s Programmes for encouraging and enhancing SMEs establishment and development in the country, financed from the state budget, implemented as “de minimis” schemes for debutant entrepreneurs, experienced SMEs, women entrepreneurs and handicrafts entrepreneurs by the Ministry for Business Environment, Commerce and Entrepreneurship.

Among the national programmes implemented by the Ministry of Business Environment, Commerce and Entrepreneurship, some have been particularly highlighted: the “Start-up Nation Romania” Programme, that involves financial support for startups and debutant entrepreneurs, the “Multiannual Programme for Micro industrialization” and “Programme for upgrading the commercialization of market products and services” that facilitates access to finance for experienced SMEs. Romania’s accession to the OECD is a strategic objective for the country, and is being included in the Governance Program. Romania officially submitted its application for accession to the OECD on the previous enlargement exercises in April 2004 and November 2012 and renewed it in 2016 and 2017.

Concluding her speech, the Secretary of State reiterated Romania’s commitment in obtaining OECD membership status: “I would like to invite you to consider Romania’s regional role and expertise as a solid ground in bringing a most useful contribution to the enhancement of OECD policies and projects within the region. Taking into consideration Romania’s involvement in OECD’s structures and committees and its fulfilment of the OECD membership criteria, we are confident that this ministerial meeting will increase Romania’s chances to be part of the next wave of enlargement of the Organization.” 

TRENDS

ROMANIA TO RISE AS REGIONAL AUTOMOTIVE HUB 9

TRENDS

ROMANIA’S AUTOMOTIVE MARKET HAS BEEN GROWING BY AN 18 PER CENT YEAR-ON-YEAR AVERAGE SINCE 2009 AND IS FORECAST TO EXCEED 20 BILLION EURO BY 2020. IT IS THE FOURTH LARGEST AUTOMOTIVE MANUFACTURER IN THE CEE REGION, ACCORDING TO THE ASSOCIATION OF AUTOMOBILE CONSTRUCTORS IN ROMANIA (ACAROM).

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n the last decade, more than 600 OEMs for automotive supplies opened plants in Romania following the investments of two big automotive manufacturers at Craiova and Mioveni, namely Ford and Renault.

The automotive industry is a sector of national importance, with a high share in the country’s exports, number of employees and turnover, located in all areas of the country and with great potential for development.

In 2017, Romania’s automotive industry had a 13 per cent share of the GDP. Last year, Romania’s exports accounted for approximately 62.6 billion Euro, of which almost half were related to the automotive industry. The local automotive market has risen from a turnover of eight billion Euro in 2009 to more than 23 billion Euro in 2017, according to an estimation by ACAROM.

600 OEMs opened plants in Romania following the investments of Ford and Renault

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Analysts estimate that Romania’s car production will follow an upward trend, mainly due to competitive salaries and Romania’s strategic positioning between Asian and European markets.

Specifically, they estimate an increase in vehicle production of two per cent, reaching 377,464 units in 2018 and an average of 4.6 per cent for the 2018-2022 period, which is, however, well below Poland and Slovakia, with a projected production of 775,889 and 1,137,177 units respectively in 2018. Thus, Romania is producing about half of what Poland produces and a third of what Slovakia produces.

In terms of total vehicle sales, Business Monitor International (BMI) estimates it will increase by 10.8 per cent in 2018, by 6.2 per cent in 2019 and by an annual average of 5.7 per cent by 2022, due to strong growth of segments of light commercial vehicles and passenger vehicles.

“These segments benefit from a strong consumer base, as Romania’s economy grew strongly in 2017 and will continue to do so for the rest of the forecast period,” says Daniel Anghel, tax and legal services leader at PwC Romania. “Decreasing unemployment and rising average wages suggest that household incomes will increase in the coming years. This will allow consumers to spend more on durable goods such as new cars and at the same time increase the retail segment in Romania, which will benefit the sales of light commercial vehicles. However, private consumption may slow down slightly in the coming years as inflation starts to rise, stimulating the increase in the interest rate, which will make financing more expensive,” he tells Automotive Today.

TRENDS

ROMANIA’S NEED FOR PREDICTABILITY AND BETTER INFRASTRUCTURE Romania’s automotive industry’s development can head in several directions, either by attracting new investors or by expanding already created ecosystems in the production facilities in Craiova and Mioveni.

“In terms of attracting new investors, and not just about the automotive field, the predictability of the economic environment is particularly important,” says Anghel. He claims that Romania needs to be able to offer companies a stable framework in which they can plan their businesses in the medium term without the rules being changed during the game.

Equally important is the development of the transport infrastructure, probably the main cause why Romania is continuously losing numerous investors in the automotive industry.

An opportunity for the development of the automotive industry would be the improvement and expansion of transport routes for commercial vehicles. Romania has 14 international airports, about 11,000 km of railways, but only 747 km of motorways, although it has access to EU funds. As a result, the progress in modernizing the transport infrastructure is very slow and the underdeveloped regions of Romania remain isolated andunattractive to investors.

“The development of the automotive industry - by bringing new models into production to the two local producers – needs above all to deliver the promised infrastructure projects,” says Anghel, who believes the future of the local auto industry is very closely related to how the infrastructure will develop and will be able to sustain a high production flow.

The predominance of automotive companies in the western region of Romania is based on the connection with the European motorway network and clearly shows that infrastructure investments are urgent in other regions, such as Moldova, according to Ciprian Gavriliu, tax partner at Deloitte Romania.

“Romania’s priorities should be the construction of the Bucharest ring road in order to connect with the A1 and A2 motorways, the Pitesti-Sibiu motorway and the construction of a direct link between Moldavia and Transylvania,” he tells Automotive Today. “At the same time, the improvement of railway infrastructure is vital, as the average speed has been lowered to a historical minimum. Without these projects, Romania is losing competitiveness and risks losing investors.”

As far as the car market is concerned, Romania has seen three years of consecutive sales growth, with clients showing a great interest in both new and old cars.

Brent Valmar, general manager of Porsche Romania, says that the company’s sales are almost double compared with five years ago, with a total of 1.5 billion RON in 2013 and 2.9 billion RON in 2017.

CIPRIAN GAVRILIU DELOITTE ROMANIA “Romania’s priorities should be the construction of the Bucharest ring road in order to connect with the A1 and A2 motorways, the Pitesti-Sibiu motorway and the construction of a direct link between Moldavia and Transylvania.”

“The current challenges, however, are different and are related to the new technologies, connected cars or the development of online sales channels,” he tells Automotive Today. “Equally, over the past year, we have seen a great deal of interest in old cars, many of which have a high degree of pollution and a lower safety level than new models. As a trend, we see an increasing appetite for larger cars such as SUVs.” Valmar goes on to say that Romania is at a stage of economic growth and demand in the auto sector is high.

He believes it is important for authorities to get involved by taking measures to renew the national car park.

Porsche Romania estimates the car market will continue to grow, and the company goal is to exceed the threshold of 50,000 units sold annually, by 2025.

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TRENDS

As far as the Romanian clients are concerned, Valmar sees a great diversification of propulsion methods in the automotive field, with hybrid cars growing in popularity in recent years.

“We also have a very good presence in the segment of compressed gas cars. I also believe that in the near future more hydrogen models will appear on the market. The entire automotive industry is looking to identify models with minimal environmental impact,” he explains.

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share of the GDP was the slice of Romania’s automotive industry in 2017

OPERATIONAL LEASING – A GROWING MARKET The automotive industry has seen a strong development in recent years gradually becoming one of the main pillars of the Romanian economy. Closely related, operational leasing is one of the areas that have gained a growing market share in recent years. As a result, 2017 has seen an 11 per cent increase in vehicle registration over the previous year, with 66,000 new entries, according to Philip Aarsman, general manager of Business Lease.

He claims that the investments the biggest players in the industry have done in recent years, both for strengthening local investments and for positioning Romania on the map of R&D hubs, are a signal that the development potential of the auto industry is promising for Romania.

But in order to remain competitive, Aarsman says the automotive industry first requires investments in transport infrastructure, legislative stability, stimulating the education system and adapting it to market requirements.

“At the same time, Romania must keep up with the changes taking place internationally, where we see a clear effort to combat pollution in major cities and an opening to the purchase of eco-friendly cars at the expense of diesel or gasoline engines,” he tells Automotive Today.

“New ways to develop mobility, such as car-sharing, ride sharing, bicycle, train, subway, rented autonomous vehicles, are emerging from this environment protection trend. The adoption of these new concepts in Romania is still in its early days, but the emergence of alternative transport services is a clear sign this is the direction to which we are going to turn.”

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But the big problem for the local market remains the import of old and used cars, which filled the gap created by the slow new car deliveries, as described by Dan Boiangiu, general manager of Arval Romania.

However, he believes that the Romanian automotive industry will continue to align with the Western European practices and standards not only in terms of product policy for vehicles, but also in terms of quality of service related to them.

“I think it is very important to mention that players in the financial services market represent a positive growth driver for the automotive industry, both in terms of quality and quantity,” he tells Automotive Today.

THE RACE FOR ELECTRIFICATION A PwC study shows that nearly 55 per cent of new cars globally could be electrified by 2030. That means either full electric or hybrid - which represents a big transformation of the industry paradigm and the way this product is “consumed”.

Large car manufacturers have already announced their willingness to invest significantly in new technologies in the coming years.

Last year, for example, 140 per cent more electrified cars were sold in Europe than in 2016, after an increase of about 40 per cent over 2015.

“In Romania, we can talk about an increasing popularity of electric and hybrid cars, especially during the last two years,” says Anghel. “A decisive role could also be played by government subsidies through ‘Rabla Plus’. But overall, the whole market needs more than that, especially if we look at things in terms of the purchase price for such cars.”

TRENDS

According to statistics from the Association of Car Manufacturers and Importers (APIA), in the first four months of this year, over 1,000 electrified cars (hybrid or fully electric) were sold, which means an increase of 83 per cent compared to the same period in 2017. There has been an increase of over 417 per cent in the sales of full electric cars and over 52 per cent of hybrid cars.

“Organizations’ interest in contracting operational leasing eco-friendly vehicles is steadily increasing in countries such as The Netherlands, the Czech Republic, Hungary, Slovakia and Poland. This approach shows us a sustained orientation of the organizational system towards environmentally friendly alternatives,” he adds.

For the whole car market, the share of alternative propulsion vehicles was 2.3 per cent for the first four months of 2018, compared to 1.7 per cent in the same period of 2017.

WHAT ABOUT THE CONSUMERS’ INTEREST IN THESE CLEAN VEHICLES?

Romania has a lot of catching up to do when it comes to the infrastructure for these electrified vehicles, namely the charging points, while other countries are early adopters of this new technology.

Electric mobility is a paradigm shift that will not happen overnight, but the Romanians are open to new and they can understand the advantages of these cars, according to Brent Valmar.

“In Romania the increase in the number of electric and hybrid vehicles from year to year is very high, percentage wise, being encouraged mainly by the financial incentives offered by the authorities, but the prices for these vehicles are still high and the infrastructure necessary for their use is still incipient,” says Gavriliu.

He estimates that more and more clients will use the state incentives to purchase a new electric or hybrid vehicle.

He expects the Romanian market to follow the European trend, especially in the context of the growing pressure of European authorities to promote clean vehicles.

At an international level, there is a constant concern for protecting the environment and reducing greenhouse gas emissions. More and more countries are taking measures to protect the environment, while electric and hybrid cars are gaining ground against vehicles equipped with traditional engines.

“In Romania, although volumes are still low compared to countries such as The Netherlands or Norway, we expect the growth rate to increase as the infrastructure of the loading stations develops,” says Aarsman.

“We are waiting for companies to renew their fleet to take a step towards adopting electric / hybrid models,” says Valmar. “They meet the internationally accepted values of many of the active companies in Romania. We have had customers on the fleet segment so far, who said they intend to own a car fleet only with electric models.”

In the first half of this year Porsche Romania delivered 141 electric and hybrid vehicles with the latest technologies and a higher degree of autonomy and inter-connectivity.

DANIEL ANGHEL PWC ROMANIA “Private consumption may slow down slightly in the coming years as inflation starts to rise, stimulating the increase in the interest rate, which will make financing more expensive.”

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TRENDS

MOBILITY SERVICES Technological development has raised customer demands, regardless of industry. Today’s client is better informed, makes more rational choices, and has a wide range of products to choose from. Coming back to the automotive industry, there are many instances when technical, engineering or car development elements are no longer taken into consideration in the purchasing decision.

Digital interaction with the car has reached a new level, it is the reason why we see more and more technologies that make driving easier, more fun and also ensure a high degree of traffic safety. Some car manufacturers have developed several technologies that allow communication between cars, thus alerting drivers of potential traffic hazards.

Europe’s car fleet could fall from 280 million to 200 million units by 2030, according to a PwC study.

The study speaks of a particularly important change in how the car will be used in the future and predicts that by 2030 more than one in three kilometres will have gone through some form of sharing.

Some analysts say that Elon Musk changed the course of the industry with his bet on electric cars, namely the launch of Tesla Model S six years ago.

Traditional manufacturers have quickly adapted to the new trend and have made significant investments for developing electric and hybrid cars.

“We can say that the car market has started a double race, for the autonomy of the electric power train, on one hand, and on the other hand, that of the alternative to the internal combustion engines,” says Anghel.

In his opinion, clients want a competitive market that offers them viable alternatives whether they want an electric car or an internal combustion engine.

“Automotive industry competition is beneficial for technological development, but especially for refining customer tastes,” he explains. “It supports market development by educating the market. And here I think the most prominent example is the Dieselgate, which has led to a drop in diesel sales - the latest statistics show that, at the level of the European Union between 2015 and 2017, the share of sales of diesel-fuelled engines has fallen from 52 per cent to 45 per cent. By 2030, they could reach five per cent.”

This shift towards ride-sharing is closely linked to two megatrends in the automotive market: the popularization of electric vehicles and the very strong advance of the development of autonomous cars.

The way it is adopted by the public depends on several factors, one of which is economic development. “Investing in such platforms, allowing short-term rental of specially modified and adapted cars for this type of driving, requires very robust analysis, both in terms of efficiency and public appetite for access to such services,” the study shows.

Overall, mobility services will change the way the car is perceived and the way we each exploit it. The same study talks about modifying the business model of sub-assemblers in the context that the wear and tear of everincreasing fleets of cars used in different sharing concepts will be quite different compared to traditional use. Moreover, the development of the automotive industry in the electrified alternative propulsion area will bring new business models where technology and telecommunications will intersect with the automotive industry. 

BRENT VALMAR PORSCHE ROMANIA “ I believe that in the near future more hydrogen models will appear on the market. The entire automotive industry is looking to identify models with minimal environmental impact.”

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execution stages, as with any project of this type. It is the first time since Groupe Renault came to Romania, when the company brings together all activities located in Bucharest (design, engineering, business services, trade and other support functions) in a single space. (text and photo: www.gruprenault.ro)

Future unique Headquarters Renault Bucharest Connected will be located at Preciziei Street no. 3G, close to the means of transport (subway, bus), but also to the other entities of the Renault Group: Titu Technical Center and the Mioveni plants, which will facilitate the movement of employees to and from the workplace. The RBC building, P + 7, will be built on an area of 47,000m2 (40,000m2 of the first building and 7,000m2 of the second building) and is classified in Class A, respecting the top quality standards for this type of construction. RBC will have a showroom for Groupe Renault vehicles, 1,000 parking spaces, an amphitheater with a capacity of 350 seats for internal and external events, restaurant, medical cabinet, IT infrastructure.

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The deadline for the project is 2019, taking into account the standard

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Meet industry requirements to ensure quality and availability of equipment Throughout the production chain, Bureau Veritas can assist your organization in meeting specific automotive industry requirements in regard to production: n Quality n Reliability n Compliance n Availability of equipment n Factory safety.

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INSIGHT

TRENDS IN THE AUTOMOTIVE INDUSTRY T

here is a lot of talk lately about the revolution in the Automotive industry and changes that it is about to bring upon our lives. But why it draws so much attention?

Since the days of horse and cart, people have proudly owned and lovingly cared for their analogue transport machine. This culminated with the auto industry more than 100 years ago, generating an industry that has become the recognized symbol of lifestyle and freedom of movement. This is probably the single major element in the lifestyle of humanity that hasn’t changed much in the past 100 years: it’s still an internal combustion engine on four wheels, and the way of driving it is essentially the same: a driver from 100 years ago won’t have much trouble driving a modern automobile. This is how much it’s entrenched in our daily lives!

However, over the past half century, their very success has generated pollution and congestion, while straining the supply of global resources. The rapid surge of emerging markets, particularly China, has heightened these dynamics. Today, Americans spend an average of one hour per day in the car – that is a combined of 3.4 million years in 2014 in the US. It’s even worse in congested cities: in Bucharest a single driver wastes an additional travel time of 218 hours per year due to congestion.

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Globally, transportation causes more than 200,000 premature deaths from air pollution and 1.25 million road deaths a year. That’s the equivalent of around 10,000 commercial airplanes crashes!

But all these are about to change. The smartphone, Internet, wireless and cellular communications are giving us an unending supply of conveniences and services. Driving this change is the rise of digitally enabled consumers who increasingly demand that their vehicles provide the same level of digital utility and capability they have grown accustomed to in their electronic devices. People, especially the growing ranks of digital natives, start seeing the vehicle not as a product to buy and own; rather, transportation is a mobility experience that might take them somewhere in a single vehicle or via multiple forms of transport.

Meeting these demands is a particular challenge for an industry that throughout its existence has been focused on creating hardware products rather than delivering software solutions. Today, 90 per cent of Auto Innovation comes from Electronics and Software. The modern car runs over 100 million lines of code, much more than what it is in a Boeing 787! As a result, cars, in many ways, need to be thought of as a software platform and their design approached in a similar manner.

INSIGHT

This is changing the landscape, both for existing players, as well as new entrants. This digital transformation of the automotive ecosystem has allowed a number of non-traditional, technologybased companies to enter at various points along the automotive value chain: from companies offering Engineering-as-a-Service solutions, to companies offering digital technologies in the car; from tech giants entering the game (names like Google, Apple), to new specialty OEMs (well-known names like Tesla, or new start-ups like Iconiq Motors); from aftermarket providers, with E-commerce substituting traditional channels (Amazon, eBay), to Transportation-as-a-Service providers (like Uber, Lyft, BlaBlaCar). The focus on software has attracted record funding of four billion USD in 2017 alone for tech start-ups developing technology for autonomous vehicles.

All these have lowered the barrier of entering the automotive world, due to the open-source software democratizing effect, leading to an avalanche of innovation.

The widespread commercial realization of AVs in the immediate future is hindered by technical constraints, legislative wariness, infrastructure barriers, unpredictable consumer acceptance and cost of development. Consequently, the production of AVs will require a full transformation of the automotive operation and its support ecosystem. The route to critical mass adoption of AVs isn’t clear. Acceptance may occur after years of incremental introductions of discrete autonomous functions, or more quickly, through the direct development of the radical new technology of autonomous driving. The major players in the market are pursuing one or both approaches.

So, what lies ahead? Assisted driving is already here, with cars having features unheard of not many years ago: they park themselves, cruise hands-free on highways and with the pending arrival of full autonomy, we are approaching a time when there may no longer be “drivers”. Autonomous driverless vehicle is the end goal. It is operated by millimetrewave radars, cameras, ultrasonic sensors, lidar scanners, GPS technology, vehicleto-vehicle and vehicle-to-infrastructure connectivity, and proprietary algorithms working seamlessly together to perform the entire dynamic driving task in all situations and conditions throughout an entire journey.

However, there are growing concerns about how the players in the industry can respond to fundamental consumer expectations around security and The potential impact? Nothing short of CATALIN STRATULAT data privacy. The ability to manage revolutionary. Wide-scale adoption will WIPRO and secure consumer data is a lead to unprecedented economic, social, challenge faced by most industries “The modern car runs over hundred geopolitical and environmental change. in this increasingly digital world, million lines of code, much more For the public, the independence and but for the Auto industry is not than what is in a Boeing 787!” freedom of personal travel will be available only about securing the customer’s to almost everyone – youth, seniors and data, but also the physical vehicle the physically, mentally and visually impaired. Driverless cars and the transport experience, lending a magnified could stop around 90 per cent of accidents, save around 300,000 importance to these concerns. Moving from producing lives per year, and cut 871 billion USD in costs from road traffic and selling a mostly mechanical vehicle to providing accidents. Costs of ride-sharing could be five to ten times lower smart mobility services is forcing the industry to work than owning a car. The geopolitical importance of oil will vastly well outside its comfort zone, and the routes to success diminish. The expected reduction of road congestion would remain contested and unclear. We have already seen bring wide-ranging work and personal benefits.  friendly hackers (researchers and graduate students) take over connected vehicles; malicious players are certain to be lurking in the shadows to exploit the many Catalin Stratulat, interconnected links to penetrate and control vehicle Delivery Head Europe, systems. To ensure public trust and avoid high litigation Industrial & Engineering costs, managing cyber security risks will be imperative.

Services at Wipro

Sources: World Economic Forum - Digital Transformation of Industries: Automotive Industry; TomTom – Traffic Index; Urban Development | World Bank Institute; Think tank RethinkX report; Cooney and Conway report on National Highway Traffic Safety Administration; McKinsey: A road map to the future for the auto industry

17

MILESTONES

DACIA CELEBRATES GOLDEN JUBILEE It’s 50 years this year since the finishing touches on a brand new car plant in Colibasi, a village near Mioveni, Arges county. Half a century down the road, Dacia is a brand name and the owner of the manufacturing facility, Renault, is a power house in the worldwide carmakers’ industry.

T

he history of the plant starts in 1943, near Colibasi, 12 km north of Pitesti. The first buildings were supposed to host, back then, the production of engines and equipment for planes manufactured at the IAR factory in Brasov. Some of the buildings, made out of brick, with a facade specific to the industrial architecture of the first half of the 20th century, are still to be found on the current premises of the Mioveni plant.

After the war, up to 1949, the buildings would be used to store ammunitions. They were then reconverted as repair shops for locomotives. In 1952, the plant got specialized in the manufacturing of parts for trucks and tractors and, 11 years later, the company, known in its beginnings under the name of “Uzinele Vasile Tudose” became “Uzina de Piese Auto Colibasi (UPAC)”.

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In 1965, the Romanian authorities decided to develop a national automotive industry. The preferred solution was to manufacture cars under license, given the lack of Romanian expertise in the field. Several western companies were contacted, among which Renault, that won the bid organized by the Romanian Government with a model at that time in project phase - Renault 12.

The framework contract between the Romanian state and the National Authority of the Renault Plants (RNUR) was signed on September 6, 1966, with a validity of ten years.

Just ten days later, a decision is taken that the new car plant be built in Colibasi, in the proximity of the already existing plant – UPAC. The construction works for the Car Plant in Pitesti started in the first months of 1967 and were completed in May 1968.The first pre-production vehicles got off the assembly line on August 3, 1968.

MILESTONES

DACIA 1100

THE END OF THE AGREEMENT WITH RENAULT

The plant inauguration takes place on August 20, 1968.

Dacia 1100 will be manufactured up to the beginning of 1972 in slightly more than 37,000 units. Since Renault 12 was still slated for manufacturing back in France at the end of 1969 (the car was to be launched at the Paris Motorshow in October 1969), the contract between the Romanian state and Renault stipulated the temporary assembly of another car from the French constructor’s range.

After the contract signed in September 1966 came to its end, Romanian authorities started again the negotiations with Renault, and in June 1978 a framework agreement was reached to manufacture the Renault 18 in Romania. Unfortunately, this agreement will not be signed, despite very favourable provisions for the Romanian side. The plant in Pitesti will continue to manufacture models derived from Renault 12 in the following years, in the context of a Romanian economy undergoing a deeper and deeper crisis.

If, at first, the R16 seemed to be preferred by the Romanian side, the final decision was taken in favour of the R8 (Major version), a car that had a more accessible price for the Romanian customers.

The launch, in October, of the Dacia 1300 model will prove to be a real commercial success, both in Romania, and in other Eastern countries, where the model was exported starting 1971.

Another important moment in 1969 is the merge of the two companies existing at that time in Colibasi – UPAC and UAP, under the umbrella and name of UAP. The Dacia 1300 Station Wagon is launched in 1973. It is the first in an ample series of versions of the basic model that would be developed in the next 35 years.

In 1975, a first commercial vehicle derived from Dacia 1300, called Dacia 1302 is launched. In the same year, Dacia starts the production, at reduced levels, of the Estafette van. The plant was also manufacturing gearboxes and front and rear axles for Renault Estafette at the same time.

At the beginning of the 80s, the plant that meanwhile had its name changed to “The Pitesti Car Company” (“Intreprinderea de Autoturisme Pitesti IAP”) was manufacturing over 300 cars per day and had over 20,000 employees. The range evolved with the launch of a redesigned version of Dacia 1300, now called Dacia 1310. Along the years, this car will know several evolutions, both in terms of design and at mechanical level. Unfortunately, the manufacturing quality will decrease considerably after 1980.

In the 80s, Dacia develops two models derived from the 1310 range. The sport version, launched in 1981 will benefit from a certain success in Romania, despite its selling price that was substantially higher than that of a standard Dacia 1310. In 1987 the 5-door Dacia 1320 is launched, but it will have a very short career, with only 2,500 units sold over a threeyear period.

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MILESTONES

1968

1971

Dacia 1100

DACIA’S MILESTONES DACIA NOVA

2000 – SUPERNOVA

In 1995, a completely new model shows up in the Dacia offer: Nova 523. It’s a hatchback, with a tailgate, designed entirely by Dacia. The car is equipped with the same engine that was to be found on the Dacia range for 25 years. The model Nova 524 version will correct the youth problems of the Nova with a straight rear windshield.

In October 2000, Dacia SupeRNova is launched, equipped with a modern power train from the Renault range. The first model manufactured by Dacia after being taken over by the French group establishes itself as a real success on the Romanian market. In total, over 60,000 units will be manufactured until the end of 2003.

1999 - DACIA BECOMES A BRAND OF GROUPE RENAULT At the end of the 90s, after long and difficult negotiations, French giant Renault takes over a majority stake in the Romanian flagship carmaker.

The contract is signed in Bucharest on 2 July, 1999 and it stipulates the manufacturing, under the Dacia brand, at the horizon of 2004, of a single model, priced at 5,000 Euro, to be sold on emerging markets. Groupe Renault pays 50 million USD for 51 per cent of the Dacia stocks and commits to investments of 219 million USD by 2003.

The objective to manufacture the 5,000 Euro car will involve a profound restructuring of the Mioveni site.

Several programmes will be run in parallel for the modernization of the industrial installation, the introduction of Renault Production Way and the training of employees. The modernization of the plant will significantly improve the manufacturing quality.

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Dacia 1300

At the end of 2002, the range of Dacia commercial vehicles will be developed from the R12 license, equipped with a diesel engine of 1.9 litres. This evolution, expected by the Romanian customers, will give a significant boost to the sales of Dacia commercial vehicles in the following years.

In March 2003, the Solenza model is launched. At first, it takes over SupeRNova’s power train. Starting with September 2003, the model will also have a diesel version, equipped with the F8Q engine – that has already been running on the commercial vehicles of the brand.

2004 - LOGAN, THE WINNING BET The model that will launch the Dacia brand is shown to the international media on 2 June, 2004.

The first deliveries will take place in Romania starting 9 September. Sales objectives are overachieved even in the first year, following a strong customer demand, which leads Renault to deciding to sell the Dacia brand in western Europe as well. The first model derived from Logan sedan is shown in March 2006 at the Geneva Motor show.

Available in two configurations – with 5 and 7 seats, Logan MCV amazes the international media and establishes itself as a sales success especially in western Europe.

MILESTONES

1980

1995

Dacia 1310

2000 Dacia SupeRNova

Dacia Nova 523

After the vans based on the Renault 12 platform stopped being manufactured, Dacia approaches again the commercial vehicles, this time with a van derived from the Logan MCV model.

2004

Sandero joins the Dacia range in 2008. The model will be highly appreciated especially by western customers and will shortly become the most exported car made in Mioveni. With its launch, Dacia inaugurates its new logo.

2010 – DUSTER With the launch of the Duster model, Dacia proposes to its customers a car that perfectly meets the new tendencies of the European market and it doesn’t take that long for it to prove successful. The Dacia SUV will be the first model of the brand manufactured in over one million units.

In the same year, Renault-Dacia opens the Titu Technical Centre and Oarja Exchange Centre. One year later, Renault Commercial Roumanie is born. In 2012, Dacia launches a new generation of Logan, Sandero and Sandero Stepway.

Four years after that, the whole Dacia range benefits from a new design.

Phase Two of the models Logan, Logan MCV and Sandero are also equipped, as a premiere, with a robotized gearbox.

The most recent model in the Dacia line-up is the new Duster, launched at the end of 2017. The new SUV incorporates numerous items of equipment, for the first time on a Dacia model and shows a level of perceived quality that has significantly improved. The model obtained the title “Car of the Year 2018” in Romania.

Dacia Logan

2010 Dacia Duster

Dacia continues its growth in 2018 and the brand has recently passed the milestone of five million vehicles sold since 2004, in all markets. The car maker has achieved the best first half-year sales in terms of volumes in its history. The brand confirmed its third place in the retail market in France, where, for the first half of the year, Dacia sales went up 20.8 per cent.

In Europe, the brand achieved record sales for the first half of 2018 with 281,206 vehicles registered (+14.6 per cent) and a market share of 2.9 per cent. 

21

INTERVIEW

22

INTERVIEW

Ian Pearson, Ford Romania

WE WILL MAKE MORE CARS THIS YEAR THAN WE HAVE EVER MADE

F

ord confirmed it is investing up to 200 million Euro and adding an additional 1,500 jobs this year to manufacture a second vehicle at its Craiova Assembly Plant, in southwestern Romania.

The new vehicle is an addition to the EcoSport small SUV currently built in Craiova, plus Ford’s 1.0 litre EcoBoost engine. The model and start date for production of the second vehicle will be confirmed closer to launch.

Ford’s overall investment in its Romanian manufacturing operations – including the 200 million Euro investment announcement – is nearly 1.5 billion Euro since acquiring the Craiova facility in 2008. Significant upgrades have recently been made to Craiova’s vehicle operations, with more than 550 robots installed at the facility to further improve efficiency and quality in the paint, trim and chassis, and body shops.

In this context, Automotive Today talked to Ian Pearson, plant site director and president of Ford of Romania board of directors. Ian Pearson returned to Craiova where he had previously been responsible for running Craiova powertrain operations from 2011 to 2014.

The Romanian automotive industry is in a growth period, with significant increase in terms of new vehicle sales. Ford is currently number three on the market with a market share of around eight per cent. This means the company has sold just under 10,000 cars from the beginning of this year to August.

“Clearly, we would want to be number two and then number one on the market,” says Pearson. “We see this year as a solid growth as far as Romania is concerned. We’d like to sell more vehicles, we’d like to be number one and that’s what we’re aspiring to become,” he tells Automotive Today.

Pearson claims that the EcoSport, made in Craiova, has been received very well by the customers in all of the markets and Romania is no exception.

“From our very local perspective, what we see in Europe and Romania as well, is growth with SUVs and the fact that EcoSport is made in Craiova is great for us,” he adds.

BREXIT – THE UPCOMING CHALLENGE FOR THE AUTOMOTIVE INDUSTRY In his opinion, one of the biggest challenges for the automotive industry is the outcome of Brexit. The perfect scenario for all manufacturers would be a “no tariffs” scenario and the same arrangements in terms of customs.

“We would like to see one legislative framework in Europe,” says Pearson. “From a vehicle point of view, we don’t want to see different rules or regulations in the UK vs. the rest of Europe so it’s very important the legislative framework is in place. Essentially what we don’t want to do is to add unnecessary costs to our products,” he explains.

A hard Brexit is the worst scenario and that would be unpleasant for most of the manufacturers. Ford Europe estimates that the cost of a hard Brexit will be around one billion USD a year.

“It’s a significant impact for all of us,” says Pearson. “Two of our engine plants are in the UK. The diesel engines that we put in our vehicles come from the UK and a lot of other parts come from Europe. We’d have parts from Europe going to the UK, subject to customs and tariffs. The products manufactured in the UK will then be shipped to us in Europe, subject again to customs and tariffs. So, it would be a significant impact,” he says.

Pearson feels that Ford needs to keep its options open in terms of the outcome of Brexit, and to wait for an outcome before considering any financial or economic decisions.

23

INTERVIEW

Another delicate subject for the automotive industry is the current slump in diesel engine sales across Europe, a rather emotional decision for most of the customers.

“It has been a move with personal buyers to switch from diesel to petrol,” says Pearson.

“What we haven’t seen so much at this moment is a move for commercial vehicle buyers. Still, if we take the commercial vehicles we sell, 95 per cent of those customers want diesel engines because they recognize their clean diesel,” he says.

Pearson goes on to say that there will be a move into hybrid vehicles first, and then into pure electric.

“As we go forward we will see is that the number of pure internal combustion engines will go down. So, we see that there will be a shift as we go forward in terms of electrification.” he adds.

Ford Europe is responsible for producing, selling and servicing Ford brand vehicles in 50 individual markets and employs about 54,000 employees at its wholly owned facilities and some 69,000 people when joint ventures and unconsolidated businesses are included. In addition to Ford Motor Credit Company, Ford Europe operations include Ford Customer Service Division and 24 manufacturing facilities (16 wholly owned or consolidated joint venture facilities and eight unconsolidated joint venture facilities). The first Ford cars were shipped to Europe in 1903 – the same year Ford Motor Company was founded. European production started in 1911.

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The issue around electric vehicles refers to mass production because it does not make “a good business equation”. It is not affordable from a mass production point of view and almost every manufacturer who produces an electric vehicle loses money on that electric vehicle because the technology is not that advanced at this moment, because the costs of the batteries and the electric motors are still very high.

Charging time is also an issue, but the biggest single problem is the infrastructure, according to Pearson.

“With some exceptions, such as The Netherlands, you have an advanced structure in terms of charging points but if you take the likes of Germany, the UK and France we’ve gone into a joint consolidation with a number of companies to increase the number of charging points,” he says. “Until that infrastructure is in place I think it’s going to be very difficult in terms of practical everyday use.”

What is his opinion with regards to the ban on diesel engines in the major cities of Europe?

“We can’t legislate for how individual cities or their countries decide to approach the diesel problem. From a company point of view, whatever their approach is, we have to make sure that we got the right ofference to be able to support that.“

INFRASTRUCTURE – THE SAME OLD PROBLEM FOR ROMANIA Ford Romania had a recent meeting with the Transport Minister, where the main topic was the need to improve Romania’s road and railway infrastructure, according to Pearson.

“The conversation wasn’t specifically around the need to improve infrastructure, but that was a large part of it,” he says. “It was really just to explain the reasons why infrastructure is a competitive disadvantage to Romania. A lot of companies come to Romania because of a competitive advantage and part of that advantage is the labour condition in the country.”

Pearson explains that most of their parts come from Western Europe to Craiova by road or train: “If they come by train almost 1.500 kilometres from the middle of Germany to the Romanian border, that train can travel at an average of 50 km/h. As soon as it hits Romania, it gets stuck but eventually when it gets going you can only go 30 km/h for 500 kilometres.

So, it has taken just as much time to get from the Romanian border to Craiova as it takes to get from northern Germany to Romania and that doesn’t make sense. If you take the same journey on the road, the average speed for a truck is 75 km/h until it hits the Romanian border. Once it hits the Romanian border, it drops to around 40 km/h. This not only represents an issue in terms of costs because it takes more time, but it’s also an issue in terms of stability.”

The issue here for Ford is that the company has to make sure that the parts arrive when they’re supposed to arrive.

“We have generally a one-hour time delivery window,” says Pearson. “If the parts aren’t there, we have to hold more infantry, more stock of parts and that puts another cost for the company as well. The conversation with the Minister was that we would like better roads.

We discussed about the express road from Craiova to Pitesti. We talked about the southern ring road and that would be ideal for us. We also need the modernization of rails.”

As far as infrastructure is concerned, Ford Romania wants more predictability in order to improve its activities on the Craiova plant site.

INTERVIEW

IAN PEARSON FORD ROMANIA “We can’t legislate for how individual cities or their countries decide to approach diesel problem. From a company point of view, whatever their approach is, we have to make sure that we got the right ofference to be able to support that.“

DUAL EDUCATION AND STEM SUBJECTS Pearson supports the idea of improving Romania’s education system to make sure that when children, students or young adults leave school or universities they have the qualifications and the skills necessary to enter any business or industry.

“We’ve been working hard with the Ministry for Education to talk about the curricula in schools, how to create more technical schools through dual education,” says Pearson. “We’ve been talking to the local university about the types of courses that they want and the content of those courses because we have a lot of people who leave university with the right name on the degree but not necessarily with the right skillset that goes with that. All together we need to ensure that we put the right package in place so that children when they leave school, adults when they leave school, have all the right skillset that they need, and we need,” he explains.

“We had a roundtable last month in Craiova with central Government, local Government, local business.

It’s clear after the discussion that everyone has the same needs and hopefully next September we can start with the first pilot dual education program in Craiova. There are things we’ve done sort of independently.

Through the Ford Fund we invested 100.000 USD into a local high school, to set up a mechatronics laboratory.”

Pearson goes on to say that Ford is encouraging STEM subjects, which stands for science, technology, engineering and maths. We make sure we talk to children at a much earlier age so that when the children and the parents make decisions about subjects that they want to do in the future they see these subjects as a future career path.

500 robots installed at Ford Craiova’s facility

25

INTERVIEW

Ford confirmed this year it is investing up to 200 million Euro and adding an additional 1,500 jobs to manufacture a second vehicle at its Craiova Assembly Plant, in southwestern Romania.

ROMANIAN MARKET – FROM SECONDHAND CARS TO ELECTRIFICATION Romania is currently dealing with a large number of second-hand cars and the authorities are trying to use the “Rabla” scrappage scheme as a solution. Considering the electrification trend, we should get rid of the old cars and promote new clean ones, such as hybrids or electric cars.

Pearson believes the scrappage scheme provides a good incentive and Romania should encourage incentives for new cars.

“It is helpful and is one of the reasons why the number of new car registrations has increased this year,” he says. “I think Romania should also disincentivize the purchasing of old polluting cars whether through taxations or other ways. We also need to educate people on the harm that those vehicles do to the environment. There are a number of things we need to do in terms of educating people to purchase clean vehicles, but we need to make sure those vehicles are affordable at the same time.”

Talking about the evolution of electric vehicles in Romania, Pearson indicates the lack of charging points as the biggest single barrier to the development of this market.

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“You want to be able to not be concerned about where you have to be, in what time or kilometres in order to charge the car,” he explains. “I think that in any country, and specifically in Romania, with the lowest density of charging points in Europe, the infrastructure needs to be improved. Once you get the infrastructure in place, then the number of electric cars will increase. That’s why we think that on the shorter term the move will be more to hybrid, so you allay some of those concerns.

We see hybrid as the opportunity in the short to medium term to improve fuel consumption, to reduce emissions, and alleviate some of the fears and the anxiety of customers in terms of infrastructure. Eventually and probably driven more by legislation and consumer demand, we’ll see more and more electric vehicles.”

In his opinion, going hybrid is the only practical way for Romania to go forward and the most effective one given the current market conditions.

FORD TO CONTINUE ITS LOCAL MARKET GROWTH The main objective for Ford Romania is to grow from a sales perspective but also from a manufacturing perspective, according to Pearson.

“We will make more cars this year than we have ever made,” he says. We’ve announced that we will bring the second product so one of my challenges will be to make sure that is launched successfully. So, we’re going to bring a second product while continuing the production of the current product.”

“From the manufacturing point of view, the reasons we are here is because we are competitive. We have to win business, not only to get in the business. The competitive advantage that we have, for me it’s the people.

They are brilliant to work with”, Ford Romania’s president concludes. 

TRENDS

TRENDS THAT WILL TRANSFORM THE AUTO INDUSTRY 27

TRENDS

GLOBAL ECONOMIES ARE CONSTANTLY CHANGING, TRIGGERED BY DEVELOPMENT IN EMERGING MARKETS, THE ACCELERATED RISE OF NEW TECHNOLOGIES AND CHANGING CONSUMER PREFERENCES AROUND OWNERSHIP. NEW TRENDS SUCH AS DIGITALIZATION, INCREASING AUTOMATION AND NEW BUSINESS MODELS HAVE REVOLUTIONIZED OTHER INDUSTRIES AND AUTOMOTIVE WILL BE NO EXCEPTION. THESE FACTORS ARE GIVING RISE TO FOUR DISRUPTIVE TECHNOLOGY-DRIVEN TRENDS IN THE AUTOMOTIVE SECTOR.

S

ome experts say the car of the future is electric, autonomous, shared and connected. Their predictions can be summed up as follows: 1) it will emit less exhaust fumes and noise into its environment because it is electric; 2) it will take up less personal time and space because it moves autonomously; 3) it will be more accessible because users will not need a driving licence to use it; 4) it will be more affordable because it will no longer have to be bought outright but can instead be paid for in small amounts per use.

Most industry players agree that the four trends will reinforce and accelerate one another and that the automotive industry is ripe for disruption. Given the widespread understanding that game-changing disruption is already on the horizon, there is still no integrated perspective on how the industry will look in ten to 15 years as a result of these trends.

To that end, a PricewaterhouseCoopers (PwC) study shows that the mobility of the future will be much easier, more flexible and more individual for users. Furthermore, the vehicle of the future will be used on demand, with shared ownership.

From the customer’s point of view, the four dimensions are bringing along numerous benefits. All predictions suggest that driving will become easier, safer, cheaper and more comfortable, according to PwC: “At the same time, the revolution in individual mobility will force the automotive sector to reinvent itself to a certain extent.

A team of automotive industry specialists, dedicated to ongoing analysis and prognosis of sector trends, has devised a mathematical model to determine the effects of restructuring of the key performance indicators of this sector.

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“The main focus here is on the existing car inventory and new car sales. Ultimately, these two variables determine the value chain of automotive production – and are therefore critical for the future business models of manufacturers and suppliers in equal measure.”

PwC analysts claim our mobility behaviour will change radically: “As soon as the legal questions have been clarified and the main technological hurdles have been overcome, the percentage of shared and autonomous mobility in terms of overall road traffic will rise significantly. By 2030, more than one in three kilometres driven could already involve sharing concepts. At the same time, user behaviour will move more and more towards autonomous mobility. Based on mileage, PwC calculates that by 2030 this may even rise to as much as 40 per cent.”

MORE PEOPLE WILL TRAVEL MORE KILOMETRES Due to rising population figures and higher mobility demands, mileage will continue to increase, according to PwC. At the same time, given that driving will be easier, safer and cheaper, general mobility trends will move even more strongly in the direction of individual mobility. In addition, individual transport could become an option for groups of people who have not had access to transport at all in the past, such as people with physical disabilities. Another factor here is the rise in mileage due to empty journeys made by autonomous vehicles. PwC assumes that personal mileage in Europe could rise by 23 per cent by 2030 to 5.88 trillion kilometres. Forecasts predict an increase of 24 per cent in the US and 183 per cent in China.

TRENDS

AUTONOMOUS DRIVING AND ELECTRIFICATION

1

the car of the future will emit less exhaust fumes and noise into its environment because it is electric

“Autonomous, and in particular, shared-autonomous vehicles will, in the future, be far better utilised in terms of capacity than is the case with traditional vehicle use today,” PwC experts say. “The annual mileage will therefore rise dramatically. As a result, the cars will have to be replaced much sooner – even though their active lifetime mileage will increase. The assumption that the lifetime mileage of future cars will be higher has much to do with autonomous and connected driving resulting in fewer accidents. Maintenance and repair costs will drop, and lower accident rates will mean that cars will be able to travel many more miles.”

In light of the increased utilisation of the fleet, fewer vehicles will be required in the future. Some experts estimate that the inventory in Europe of currently just over 280 million vehicles could drop by 2030 to around 200 million. This would be a decrease of over 25 per cent.

Despite the falling inventory, vehicle sales will visibly increase. PwC estimates vehicles that are used in the traditional way will remain in the inventory for a comparatively long time: “By contrast, autonomous - and in particular - shared autonomous vehicles will be changed far more frequently, resulting in rising sales figures. Across Europe, new car sales could rise by 34 per cent during the transformation process from around 18 million to just over 24 million units.”

The automation of driving or the so-called autonomous driving is expected to initially increase primarily in narrowly defined and geographically restricted areas – most likely mainly in inner cities and on highways. This is also due to the fact that, according to the quoted study, the dimensions autonomous and electrified are mutually supportive: “For example, autonomous vehicles create a clear case for electrical drive since the ‘inner city’ use case is aimed at just this scenario. One example of this is an automatic charging process that uses inductive charging. The reciprocal effect of these two dimensions results in a positive overall effect.

It therefore seems possible that by 2030 there will only be a small, single-digit percentage of pure combustion engines among new car sales in the EU. In this scenario, more than 55 per cent of new cars will already be fully electrified. Around 40 per cent of new vehicles would still include hybrid drive technologies in combination with combustion engines.”

PwC calculated that the automotive industry will start to invest less in product range, with investment in this field falling by 19 per cent as early as 2020.

However, this is not necessarily a bad sign, according to the company. The study came to the conclusion that those companies who invest their R&D budget in software solutions instead of product range are already showing stronger growth than their competitors.

“This picture also suggests the direction that manufacturers and suppliers need to take,” PwC experts say. “Apart from Tesla, not a single automotive company is ranked in the top ten of the most innovative companies in the world (although five are ranked between 11 and 20) – even though the company with the highest R&D expenditure is a German automaker. In total, the R&D spent in the automobile industry decreased by four per cent between 2015 and 2016 – and that in an era characterised by digital innovation and transformation.”

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TRENDS

USING INSTEAD OF OWNING

2

the car of the future will take up less personal time and space because it moves autonomously

DECISION TO BE MADE BETWEEN 2020 AND 2025 Between 2020 and 2025 in particular, manufacturers and suppliers will be battling sinking margins while at the same time having to invest heavily in customeroriented innovations, according to analysts’ predictions.

“The traditional automakers will have to consider how much they are prepared to invest in mobility services to ward off a potential decline in their core business,” the study shows. “At the same time, the rising sales volume of new vehicles demands additional investment in production capacity for the necessary ‘hardware,’ and those companies that implement flexible and scalable concepts now will be in a position to play an active role in shaping the future from 2025 on. Future business models cover the sale and operation of vehicles.”

In the future, it will no longer be enough to focus purely on the production and sale of vehicles, according to PwC: “The automotive value chain will no longer finish at the factory door, but will extend across all types of use over the entire lifetime of the vehicle through its eventual recycling. The customers and target groups of the automotive industry will no longer be just direct buyers of vehicles, but all users of the products – in private and shared usage models. Software-based, direct interaction with every user – supported by the brand experience which is already such a key feature – will lead to higher revenues over the lifecycle of the customer relationship.”

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Changes in behaviour will characterise the mobility of the future, with many mobility options on the market. This is already being demonstrated by the rising number of suppliers in this segment. Start-ups are fighting for market share with established automotive, transport and logistics companies. There are two kinds of shared mobility: car-sharing and ride-hailing.

The basic difference lies in the availability of the vehicles. While station-based car sharing means that the vehicles can only be collected from predefined stations, the area of availability for free-floating car-sharing reflects the business area of the supplier. Ride-hailing, by contrast, is about sharing a journey. According to PwC, this concept is growing in popularity and can no longer be seen as a fringe phenomenon. Analysts explain that if we combine “autonomous” and “shared” we get four forms of mobility, namely 1) unshared and not autonomous, 2) already shared but not yet autonomous, 3) still unshared but already autonomous, 4) already shared and already autonomous.

“The most popular form of transport today is still the self-driven private car (therefore ‘unshared and not autonomous’). However, the self-driven shared car (in other words, ‘already shared but not yet autonomous’) is growing in popularity. The self-driven private car (‘still unshared, but already autonomous’) is not yet available on the market, but that could well change within a few years,” according to PwC consultants. “That would also prepare the way for the self-driving sharing car (‘already shared and already autonomous’) and the absolute correlation of the two dimensions autonomous and shared.”

The study also shows that autonomous and shared forms of mobility will become much more prevalent by 2030.

Less than one per cent of all journeys in Europe are currently made using sharing services, PwC estimates: “With a compound annual growth rate (2017–2030) of over 20 per cent by 2030, this percentage will increase sharply and could reach more than ten per cent of mileage travelled by the second half of the 2020s.

TRENDS

The first of these fully automated cars may be aimed primarily at sharing concepts, since that is their preferred area of application. This will give a huge boost to sharing services, as the ‘human cost factor’ will no longer apply. Between 2022 and 2030, the market share of autonomous shared concepts could increase on average by over 70 per cent per year – and thus make up more than 25 per cent of mobility forms by 2030.

Autonomous forms of mobility could in the meantime account for more than 40 per cent of all vehicle mileage.”

NEW TECHNOLOGIES DRIVE NEW BUSINESS MODELS The automotive revenue pool will significantly increase and diversify toward on-demand mobility services and data-driven services. This could create up to 1.5 trillion USD or 30 per cent more in additional revenue potential in 2030, compared with about 5.2 trillion USD from traditional car sales and aftermarket products/ services, up by 50 per cent from about 3.5 trillion USD in 2015, according to McKinsey data.

“Connectivity, and later autonomous technology, will increasingly allow the car to become a platform for drivers and passengers to use their time in transit to consume new forms of media and services or dedicate the freed-up time to other personal activities,” consultancy firm McKinsey estimates.

“The increasing speed of innovation, especially in software-based systems, will require cars to be upgradable. As shared mobility solutions with shorter life cycles will become more common, consumers will be constantly aware of technological advances, which will further increase demand for upgradability in privately used cars as well.”

NEW ON-DEMAND MOBILITY SOLUTIONS

McKinsey experts estimate that the traditional business model of car sales will be complemented by a range of diverse, on-demand mobility solutions, especially in dense urban environments that proactively discourage private-car use.

“Consumers today use their cars as all-purpose vehicles, whether they are commuting alone to work or taking the whole family to the beach,” analysts say. “In the future, consumers may want the flexibility to choose the best solution for a specific purpose, on demand and via their smart phones. The importance of privatecar ownership is declining: in the United States, for example, the share of young people (16 to 24 years) who hold a driver’s license dropped from 76 per cent in 2000 to 71 per cent in 2013, while there has been over 30 per cent annual growth in car-sharing members in North America and Germany over the last five years.”

Consumers’ new habit of using tailored solutions for each purpose will lead to new segments of specialized vehicles designed for very specific needs. For example, the market for a car specifically built for e-hailing services—that is, a car designed for high utilization, robustness, additional mileage, and passenger comfort—would already be millions of units today, and this is just the beginning.

As a result of this shift to diverse mobility solutions, up to one out of ten new cars sold in 2030 may likely be a shared vehicle, which could reduce sales of private-use vehicles, according to McKinsey predictions: “This would mean that more than 30 per cent of miles driven in new cars sold could be from shared mobility. On this trajectory, one out of three new cars sold could potentially be a shared vehicle as soon as 2050.”

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the car of the future will be more accessible because users will not need a driving licence to use it

Changing consumer preferences, tightening regulation, and technological breakthroughs add up to a fundamental shift in individual mobility behaviour. Individuals increasingly use multiple modes of transportation to complete their journey; goods and services are delivered to, rather than fetched by consumers.

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TRENDS

4

the car of the future will be more affordable because it will no longer have to be bought outright but can instead be paid for in small amounts per use

ELECTRIC VEHICLES ARE BECOMING VIABLE AND COMPETITIVE

UP TO 15 PER CENT OF NEW CARS SOLD IN 2030 COULD BE FULLY AUTONOMOUS Fully autonomous vehicles are unlikely to be commercially available before 2020. Meanwhile, advanced driver-assistance systems (ADAS) will play a crucial role in preparing regulators, consumers, and corporations for the medium-term reality of cars taking over control from drivers.

The market introduction of ADAS has shown that the primary challenges impeding faster market penetration are pricing, consumer understanding, and safety/security issues. Regarding technological readiness, tech players and start-ups will likely also play an important role in the development of autonomous vehicles. Regulation and consumer acceptance may represent additional hurdles for autonomous vehicles. However, once these challenges are addressed, autonomous vehicles will offer tremendous value for consumers (for example, the ability to work while commuting, or the convenience of using social media or watching movies while travelling).

A progressive scenario would see fully autonomous cars accounting for up to 15 per cent of passenger vehicles sold worldwide in 2030, according to McKinsey data.

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Stricter emission regulations, lower battery costs, more widely available charging infrastructure, and increasing consumer acceptance will create new and strong momentum for penetration of electrified vehicles (hybrid, plug-in, battery electric, and fuel cell) in the coming years.

The speed of adoption will be determined by the interaction of consumer pull (partially driven by total cost of ownership) and regulatory push, which will vary strongly at the regional and local level.

In 2030, the share of electric vehicles could range from ten per cent to 50 per cent of new-vehicle sales, McKinsey analysts say: “Adoption rates will be highest in developed dense cities with strict emission regulations and consumer incentives (tax breaks, special parking and driving privileges, discounted electricity pricing, and so on). Sales penetration will be slower in small towns and rural areas with lower levels of charging infrastructure and higher dependency on driving range.�

Through continuous improvements in battery technology and cost, those local differences will become less pronounced, and electrified vehicles are expected to gain more and more market share from conventional vehicles. With battery costs potentially decreasing over the next decade, electrified vehicles will achieve cost competitiveness with conventional vehicles, creating the most significant catalyst for market penetration. At the same time, it is important to note that electrified vehicles include a large portion of hybrid electrics, which means that even beyond 2030, the internal-combustion engine will remain very relevant. 

OPINION

WE’RE ON THE ROAD TO SOMEWHERE? As I look at the blossoming rise of the automotive Industry in Romania, I immediately and nostalgically reflect on the UK industry and how it developed itself through the 50’s 60’s and 70’s.

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his magical era created such iconic brands as Jaguar, Mini, Rover and many more that have now sadly disappeared as a proud UK owned brand through ownership being transferred to foreign organisations throughout the 80’s and 90’s with only a pocket full of unique British brands such as Morgan that are still alive and being manufactured in the UK But, despite my rather sentimental despairing, Britain still has a very strong manufacturing base and those iconic brands despite the change of ownership, are still in volume production alongside foreign investment and production facilities from giants such as Nissan, BMW and The PSA Group dominating the manufacturing landscape.

So, here we are today in Romania amidst a buoyant economic moment for the industry as pioneering successes from Dacia and Ford are creating an economical magnet for other manufacturers and automotive suppliers to seriously consider Romania as a viable and sustainable regional base and hub for car production.

As Chairman of the British Romanian Chamber of Commerce, I am continually working hard to soften the obvious concerns on Brexit and its impact on the industry and general business relationships between the UK and Romania and I can confidently predict that the existing trade and the It’s crucial role in the supply chain operations to company’s like Ford will continue, grow and play a major role in Romania success in the industry over the next few years

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The automotive industry, like many other emerging markets here in Romania requires crucial support from various areas in which to establish, grow and compete in an ever-changing market that is now moving rather swiftly into the exciting and, I feel, the ‘no turning back’ new era of electric vehicles.

This needed support comes, of course, from local and national government as well as having the labour workforce availability and, finally, the land on which to develop manufacturing plants and support offices and, you can see, I am already waving a red flag just in the mention of these three crucial areas for this industry to truly succeed and develop Romania as a default region for car manufacture in Europe in the same way that the Outsourcing, BPO and Call-Centre market has flourished in recent years.

These industries indeed are facing similar challenges but not on the scale and consequential impact as the automotive industry and the fierce and somewhat frustrating lobbying is in full swing as the demands of improved infrastructure (Rail and Road) are being laid bare on the governments table so we all wait with baited breath, for the response and actions desperately required for this industry to survive and grow over the coming few years.

From a Real Estate perspective, the challenge is less irritating but still a concern although the needs will come in also accommodating the rapidly rising ‘supply industry’ that can create more jobs than the manufacturers themselves in many cases.

OPINION

My experience with Avison Young Real Estate over the last year has taught me a great deal about the challenges of expansion and restructuring for large manufacturing plants in Romania and our expertise and collaboration with major developers will, I hope, become a valuable contributor to keeping the proverbial wheels turning although those wheels will find it difficult to turn effectively on broken roads, slow rail lines and bureaucratic obstacles constantly in their path.

My final note is on human resource as we keep hearing about the dramatic and almost catastrophic talent drain to other countries creating a domestic industrial ‘poaching’ culture as young talent is lured away with the flash a few euros more from competitors or similar market players.

The aforementioned Ford and Dacia are establishing a great base for encouraging this needed talent back into Romania but we should also look at the rising trend in foreign workers seeing this country as a good option to have a decent standard of living and, of course, experience the wonders of living in this beautiful country.

I finish with another flash back to the 1950’s in the UK where the movement of predominantly, blue color workers from the sub-continent to fill the manufacturing vacancies so desperately vacant following the end of World War Two as, without them, my nostalgic stories would not exist and maybe this is just one example of the flexibility and creativity that Romanian Car Industry needs to adopt over the coming months because, as we have witnessed in the UK, the medium future is, I think its correct to say, a wonderful opportunity, the long term future is still the unknown.  Colin C Lovering Vice-President, British Romanian Chamber of Commerce Senior Vice-President, Avison young Real Estate, Romania

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INSIGHT

SHAPING A CROSS-DOMAIN INDUSTRY W

e now live in a time when a young employee might know more about emergent and future technologies than an upper management professional, or even a CEO character. Collaborative work, AI, smart connections and connectivity, autonomous vehicles, disruptive pervasive digitization are transforming almost all industries and businesses. A real HR asset today, has almost nothing to do with “I’ve developed this experience over XZ years, trust me, this is how it goes, no doubt.” Alvin Toffler said “the illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.”

The automotive industry, as one of the largest economic sectors in the world by revenue, is at a constant fast pace. The waves of innovative products integrated in automobiles are amplifying the costs and the complexity of the final product, but for a few decades now, it was related to electronics, a variety of digital services and driver assistance. More and more, the industry is heading towards connectivity systems.

All these developments raised the price tag as much as 20 per cent higher than the cost of previous generation of automobiles (PwC strategy - 2017 automotive industry trends).

1.3 billion vehicles on the streets

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The 1860s brought horseless carriages. Hundreds of manufactures pioneered the predecessor of today’s automotive industry. It all has begun with the moving from A to B more efficiently and effortlessly. Maybe also with a more efficient way to transport goods.

A lot has changed since. Cars begun to be more present in day-to-day life, and from the 1930s at more than 32,000,000 existing units, in 2010 there were estimates that over one billion passenger cars were on the roads. According to the International Organization of Motor Vehicle Manufacturers (OICA), this year only, over 62,000.000 units have been produced, by the end of October 2018. According to the European Automobile Manufacturers Association, Europe has over 252 million automobiles on the road, over six million trucks (end of 2017). Most of these vehicles are diesel powered. But we are at a time in history when a new disruption must and will change the future. With all the environmental challenges created by the industry, the future will certainly be related to electric/clean energy means of transportation.

If we talk about added value to today’s vehicle, we can certainly talk about interior surfaces, ambitious enhancements, entertainment systems or safety and control enhancements. We talk about augmented reality heads-up displays, haptic feedback sensors, all sorts of warning sensors integrated in the vehicle, visible or not, meant to provide driver assistance and warnings, or in some cases, even take control of the vehicle. We have now ample multimedia navigation and entertainment displays, web based info connectivity and much more to come, with the autonomous car. A mix of software and hardware will transform vehicle experiences further, reorienting the way we need to interact in the vehicle and outside it. The real challenge though, is on the software part, where engineers will need to add ample, more dynamic and also safety features.

INSIGHT

ANDREI CRACIUN WEST UNIVERSITY OF TIMISOARA “We are at a time in history when a new disruption must and will change the future.

With all the environmental challenges created by the industry, the future will certainly be related to electric/clean energy means of transportation. �

Industry 4.0 elements and innovations are rapidly challenging and changing the automotive industry, in some cases merging the boundaries between Tier 1/2 suppliers but also OEM integrators. If in 1986 we had an estimate of almost 500 million vehicles on the streets, we now have more than 1.3 billion vehicles, the number increasing at a fast pace. The global automotive industry is facing more challenges than many people think nowadays.

At a first level, performance of many manufacturers is strong. But the pressure of costs is making a mark. The pressure of reducing pollution is making another. With all this in mind, collaboration and joint ventures of relevant actors might be a path to go.

Romania is a good place to foster innovation, build performance and excellence in the automotive field.

Being an emergent market, but with relevant long time expertise in the automotive industry (first automobile built here was in 1909 in Arad; and also keeping in mind that in the communist period, it was one of the largest vehicle producers in Central and Eastern Europe), Romania now also hosts both local and global automotive giants, with production facilities and also numerous R&D business units of these international players. Tier 1 and 2 suppliers, but also one of the most prominent cost-value OEM in the region (Dacia), are present in Romania, developing innovation and fostering excellence in the industry.

Romania is hosting a diversity of value chain relevant players in the automotive industry, that mainly sell on the global market, but I feel that for now, they have not yet explored their full potential here. The industry already started to be reshaped. On the global market, young Tesla built in eight years electric vehicles that are expected to outsell soon on certain markets players that have been active for more than 135 years.

In 2017 a pool of entrepreneurial ecosystem professionals started to identify potential smart specialization niches across all regions of Romania under SIPOCA27 project. It built a series of ecosystem reports, concerning certain innovative ecosystems. In four out of eight regions in Romania they have found active big companies that provide Tier 1/2 components for the automotive industry across the world - global actors such as Continental Automotive Romania, Hella, Autoliv/ Veoneer, TRW, Honeywell and many others.

From a simple means of transportation, the automobile is nowadays a complete ecosystem that not only carries us from A to Z, but also offers comfort, assistance in communication and navigation, even relaxation on a certain level. Disruptive digitalization, the interconnectivity, monitoring active and passive sensors, all these concepts that one saw as fiction, are a reality. For the future, we clearly have to deal with overcrowded streets, so shared mobility will probably transform the city traffic. The pollution, cost-benefit ratio, urban transportation efficiency and many other such concerns need to be tackled.

Clearly, there are companies that might be able to build from scratch such functional solutions, but there is a smarter way the matter can be approached. According to SIPOCA27 Innovation Ecosystem Reports, there is a concern that the local automotive industry has developed some barriers for start-ups (lack of resources, access to capital, specialised knowledge and skills, tough competition from multinational companies). If we talk about 2017, in the central region of Romania there have been identified 273 companies active in automotive sector, but only 15 having R&D activities. However, the regional market is still attractive in Romania and new players are joining and/or scaling their business. For example: - Ningbo HuaXiang Electronic Co. Ltd. is currently building a 30 million USD factory in Brasov,

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INSIGHT

206

thousand employees had the automotive industry in 2017

- PMG is investing ten million USD in the same area for gearbox factoring, - Continental Automotive has invested over 175 million Euro in Romania in 2017, also employing more than 1,500 professionals, - Autoliv created a spinoff – Veoneer that will handle its ADAS and AD projects, as well as other products, with more than 800 employees in Timisoara and Iasi, and growing.

The importance of the automotive sector in the Romanian economy is not only confirmed by the turnover generated by this sector - which has seen a significant increase over the last years - but also by the number of employees in the field. The constant evolution has led not only to the diversification of the multinational companies’ activities, but also to the vertical chain value development.

Vertical integration of the automotive industry implicitly increased the complexity of the sectors’ operations in Romania. New technological processes and development processes have been integrated both technical and managerial skills at the level of companies, so they can develop coherent growth and vertical development strategies.

According to the Association of Automobile Manufacturers in Romania, the automotive industry had in 2017 more than 206,000 employees, in over 600 companies, producing components, systems and intelligent modules in all important spectra of the industry and a turnover of 22 billion Euro. 13 of the first 20 global suppliers in the industry have operations in Romania.

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The Internet of Things is already a major disruptive force, at a planetary level. IoT elements are widely used across industries and of course, are part of the automotive industry of the future. With relevant global players in IT technologies, automation robotics, communications and growing ecosystems alongside these players, the opportunity for cross-industry partnerships has never been more appealing here. The Romanian entrepreneurial ecosystem is already heading towards its second unicorn and is still not yet at emerging potential. We cannot speak now about the digital industry and the automotive industry by isolating completely the domains. We cannot talk about environment challenges without talking about the chemical industry, about clean energy and let’s say, battery research. We cannot talk about research, development and innovation, leaving the educational system, the universities, and professional – dual schools on the side. Romania has all of these actors, some of them at a well-established maturity and experience, other just emerging. The potential is enormous, with the proper partnerships that should tie education to industry, public and private sector with vision and a bit of trust leap. The automotive industry in this region can take advantage of numerous opportunities related to frontier research in collaboration with universities and research centres, such as testing their solutions with minimum effort and investment in high performance computing clusters, for example the Interreg Danube INNOHPC, and much more.

SIPOCA27 and other studies underline that the Romanian market is an industry with well-connected professionals to global trends, in regard to connectivity, autonomous/ automated algorithms and technologies, but also with shared mobility and many other important elements of the 4.0 Industry Revolution. Employees’ productivity is constantly growing, the time for prioritizing and solving challenges is optimum. The value chain created by the industry is constantly growing. There are some issues, mostly related to infrastructure, the lack of high-speed roads available, but in terms of connectivity to current and future technologies, skilled workforce and potential for growth, Romania is definitely one of Europe’s rising gems.  Andrei M. Craciun Head of office for Innovation, Technological Transfer and Intellectual Property West University of Timisoara

INTERVIEW

WE STARTED A NEW DEVELOPMENT PHASE THIS YEAR Interview with Sorin Poteras, Schaeffler Romania

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chaeffler Romania has had a solid, constant growth and development since the Group founded the Romanian site in 2002, says Sorin Poteras, director of the company.

“The initial project for the plant, inaugurated in 2004, consisted of three production halls and a developed area of 55,000 sqm,” he tells Automotive Today. “Those expectations were exceeded by far and the plant today has six production halls covering a built area of about 100,000 square meters.

This construction phase was finished in 2008, with expansions through the Training Centre and Engineering Centre in 2011, respectively 2012. The last years can be described as a huge step forward in terms of development of technological and systems know-how. This happened alongside an enlargement of the product portfolio and production lines. In the last three years, we hired 1,000 more people and are now operating with more than 4,800 employees in Brasov.”

Schaeffler Romania produces components for the engines and transmissions of millions of cars worldwide. For example, the RSTO tappets are going into 20 million engines every year and the company’s variable camshaft timers are used in the Ford Eco Boost 1L engine and also in engines of Ferrari, VW, Audi, BMW, Hyunday, Volvo and GM. Also, the tripod rollers from Schaeffler Romania are equipping cars that include Bugatti and the 918 Porsche Spyder.

The company is also working on R&D solutions in order to make a contribution to all forms of future mobility. “We concentrate on four areas: environmental-friendly drives, urban mobility, interurban mobility, and the energy chain,” says Poteras. “Further thinking, lateral thinking and rethinking allow us to identify key trends at an early stage. We develop innovative products and systems, define new technology standards, and make them ready for volume production. In this regard we also focus on digitalization. We believe that within the next few years, all vehicles and machines will be connected with each other via the Internet of Things.

“We are quite proud of our R&D engineers in Romania; they have registered more than 150 patent applications in the last ten years. We are very eager to see all these ideas in the new products launched in serial production.”

The R&D department started in 2004 with a team of ten engineers, while the location in the plant was under construction.

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INTERVIEW

SORIN POTERAS SCHAEFFLER ROMANIA “I believe it is essential for the administrative, political and business environment to invest in people and their development in order to support a strong and motivated workforce: from the education system to specific training and retraining programmes.”

“The department has experienced a steady development, reaching a team of 90 engineers in 2012, which has led to the strengthening of R&D activities under the umbrella of the Engineering Centre and the inauguration of the centre built for this purpose,” Poteras explains. “This has been an important step in the company’s development strategy, through value added to production processes and, last but not least, has meant strengthening the R&D shared service in the Schaeffler Group worldwide. The Engineer Centre currently operates with over 200 engineers and has competences in areas such as Product Design, Technical Calculation, Technical Analysis, CAD Methods, CAE Software Programming, Design and Development of New Concepts.”

The next step in development for Schaeffler Romania was the foundation stone for the new Testing and Validation Centre, which adds a new activity (product validation) to the company’s R&D portfolio.

“We would like to continue building and consolidating our know-how, teams and activities,” says Poteras. “The new Testing Centre is planned to have an office floor designed after the ‘New Work’ concept, the first pilot project for the Schaeffler Group outside Germany.

Therefore, we will have a very strong and modern R&D centre in Brasov.”

Poteras goes on to say that Schaeffler Romania is working on a wide range of technologies for the various drive concepts, markets, and regions.

“In the automotive division, we have four growth drivers: electrification, autonomous driving, connectivity and added value of automotive suppliers,” he says.

“While doing our part to shape and align to the future trends and solutions, we maintain our primary target of keeping our status as favourite supplier for our customers. Our strategy is not focused on local markets, but on a global scale. However, although we operate as a global supplier, with the products we manufacture in Romania delivered to customers worldwide, we also have customers close-by, in the local market, like Dacia Pitesti and Ford Craiova.”

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Schaeffler Romania started a new development phase this year, which includes a new production hall, the mentioned Testing Centre and an additional logistics facility. The company expects to exceed 5,000 employees in 2019, but it faces the problem of workforce shortage.

“There are quite a few companies that wanted or want to expand, but due to lack of workforce they must postpone their development or look for other areas for their investment,” says Poteras. “I believe it is essential for the administrative, political and business environment to invest in people and their development in order to support a strong and motivated workforce: from the education system to specific training and retraining programmes.”

In his opinion, Romania needs strategies to motivate skilled and productive people through the entire structure and system, to keep them in the Romanian work environment.

“The training, attraction and retention of the workforce must be treated with the utmost seriousness and resources,” says Poteras. “An example of good practice in this case is the German Kronstadt Professional School project where, in partnership with local authorities, the Ministry of Education and the economic environment, the foundation of a successful national project was laid. This project does not only meet the economic requirements of the moment, but also contributes to a better future for the social and economic environment in which we operate.”

INTERVIEW

Schaeffler Romania is looking for R&D specialists in areas that range from mechanical and electrical design to technical computation, testing, software programmers, technical analysis and many more.

“As we have a strong production in Brasov, our R&D role is also important for product optimization, assuring the right product knowledge and the needed documentation,” says Poteras.

He goes on to say that the entry level for engineers can start from a fresh graduate, as the company has different training programmes, and end as a specialist in different areas.

“Our educational programme portfolio is quite complex and offers guidance, support and knowledge to all those who are interested to find out what fits them best and then train and start a career,” Poteras explains. “Next to our Trainee programme - that offers university graduates the chance to train for a year, as employees, within the company, before starting their work on the position that fits them best - we also have internships, degree collaborations, scholarships, workshops and three Masters Programmes, developed with our direct involvement with the Transylvania University: ‘Virtual Engineering in Automotive Design’, ‘Engineering of Advanced Manufacturing Processes’ and ‘Practical Integrated Methods for Propulsion Systems Engineering’.”

More than 400 students take park in Schaeffler’s educational programmes in Romania every year.

The Schaeffler Group is an automotive and industrial supplier. The technology company generated sales of almost 14 billion Euro in 2017.

With more than 92,000 employees, Schaeffler owns manufacturing locations, research and development facilities, and sales companies in 50 countries.

Since 2002, Schaeffler Romania has been manufacturing in Brasov components for the automotive industry and bearings for industrial applications. 

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OPINION

ROMANIA

EUROPE’S EMERGING AUTOMOTIVE HUB

by Codrin T. Scutaru and Lavinia Bughiu, McGuireWoods Romania

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omania together with other Eastern European countries such as Slovakia and the Czech Republic manufactured over 2.7 million vehicles in 2017, representing over 15% of the European Union’s total car production that reached 17 million in 2017, according to the European Automobile Manufacturers Association. Romania, Czech Republic and Slovakia’s results’ were determined by both robust foreign direct investment and external demand, accompanied by an abundance of skilled and cheap labor force, compared with their Western neighbors.

Furthermore, overall productivity in the area has increased over the past 10 years. For instance, Romania doubled its labor productivity between 2005 and 2016, 9 years after the EU accession, based on an assessment made by to the Eastern Europe Competitive Edge Report.

The beginnings of Romania’s automotive industry date since 1966 when the country set up the national company Dacia, which later became a worldwide renowned brand, one of the two regional brands that survived in the competitive global market (the other one is Skoda), and an ambassador of the country around the world. Later, in 1976, the Romanian Government formed a joined venture with Citroen and founded Oltcit, in Craiova, the predecessor of Automobile Craiova.

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Both companies went through privatization phases after the fall of the communist regime. The privatization of Dacia went smooth with Renault Group purchasing the company in 1998.

However, the sale of Automobile Craiova was more sinuous with several international players acquiring ownership over the company, including the Korean company Daewoo Heavy Industries, and General Motors, concluding with Ford Motor Company taking over Automobile Craiova in 2008.

These two global car manufacturers are the main drivers for the industry’s production growth. The total number of cars produced in Romania almost doubled in the last decade, reaching 364,000 units in 2017 and expected to mark a firstever result of over 450,000 units by the end of 2018.

Based on public data, ever since Renault and Ford Motor Company entered the Romanian market, they invested over EUR 2.5 billion and EUR 1.2 billion, respectively. At the same time, Automobile Dacia and Ford Romania are the backbone of the local industry also in terms of employment, hiring over 18,000 employees.

The presence of these global manufacturers attracted numerous other investors contributing to the development of a broad network of parts producers and suppliers, which at the moment counts over 600 companies, with 13 of them ranked in Top 20 worldwide automotive suppliers.

OPINION

Due to this extensive OEMs network, Romania offers a complete range of components, systems and systems modules such as tires, cables and conductors, interior parts, plastic parts, aluminum and metals, gearboxes, bearings and transmission components, electronic and mechatronic components, lighting fixtures, and batteries/ accumulators etc.

PROSPECTS FOR THE LOCAL AUTOMOTIVE INDUSTRY According to an analysis conducted by the Association of Automotive Manufacturers of Romania (ACAROM) the future expansion of the country’s automotive market depends to a large extent on the further production development at Automobile Dacia and Ford Romania, focusing on the introduction of new production concepts and manufacturing technologies, and research and development activities.

CODRIN T. SCUTARU MCGUIREWOODS ROMANIA

In addition, in the light of the increased interest of car manufacturers towards adding electric cars to their portfolio, Romania could use this trend in its advantage and seek to develop new manufacturing capacities for electric cars and battery packs.

The latest figures show that electric cars exceed 1 million units in Europe as sales rise by more than 40% in the first half of 2018. Norway is leading in electric car sales with 36,500 units followed by Germany with almost 20,000 units, but predictions show that Germany will overtake Norway by the end of the year.

Recently this year, Volvo announced its plans to launch five electric cars in 2019, Jaguar Land Rover stated that all new models from 2020 will be fully electric or hybrid, and BMW aims to have 12 different electric cars models by 2025. At the same time, looking at the manufacturers present in Romania Ford is exploring the opportunity of joining forces with Volkswagen, collaborate on R&D projects, while Renault plans to bring hybrid Clio and plug-in hybrid Captur and Mégane variants in Europe by 2020, and announced a new economy electric compact model, K-ZE for the Chinese market.

LAVINIA BUGHIU, MCGUIREWOODS ROMANIA

For the past years, Romania’s Government has been seeking to attract a third car manufacturer. In the light of the ongoing developments on the electric cars front, this is an opportunity to seek ways of incentivizing and welcoming such investments and position Romania among the pioneers in electric cars manufacturing taking the local automotive industry to the next level. 

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ANALYSIS

ROMANIA’S AGING CARS why own a vehicle when you can rent it

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he renewal of the national car fleet needs some fiscal measures to hinder imports of second-hand cars, as more than half a million vehicles have been imported in the past year and have contributed heavily to raising the average age of the national car park.

Specialists urge the introduction of an environmental contribution that does not violate the rules of the European legislation, but which will support the rejuvenation of the car fleet and the reduction of polluting emissions.

“This contribution should be correlated with the annual vehicle tax system that also takes into account the level of CO2 emissions and pollution rules,” says Daniel Anghel, tax and legal services leader at PwC Romania. “At the same time, the renewal of the annual tax on environmental principles to support the reduction of CO2 emissions and the average age of the fleet is another instrument that can be even more easily adjusted and implemented, and which can deliver results in the medium and long-term.”

He goes on to say that the money generated through this system should return to the automotive industry by stimulating the purchase of new cars and having a low level of polluting emissions.

“This would solve two problems of the national car park, on one hand it would decrease its age, and on the other hand, Romania would continue the descending trend of the average value of CO2/km,” says Anghel.

The Romanian car park is, without a doubt, one of the oldest in Europe, which can be seen in official statistics. According to the European Automobile Manufacturers Association (ACEA), the average age of the Romanian car fleet is 15.3 years, while the average age of the car fleet in the EU is 11 years.

DANIEL ANGHEL PWC ROMANIA “The renewal of the annual tax on environmental principles to support the reduction of CO2 emissions can deliver results in the medium and long-term.”

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ANALYSIS

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ANALYSIS

The aging of the car fleet has negative effects on the environment caused by the high level of CO2 emissions and other harmful substances, but especially road safety, which is seriously endangered by the cars which do not meet the highest technical standards on traffic safety. As such, Romania is one of Europe’s leaders in the number of road accidents and it needs to find the proper measures to discourage the use of old, polluting and unsafe cars on Romanian roads.

PHILIP AARSMAN BUSINESS LEASE “The Romanian corporate consumer has reconfigured its options, opting for preventive actions and alternatives to diesel engines.”

“Identifying the best measures will not be easy, but by taking on the recommendations of the European institutions (which require Member States to significantly improve air quality to bring them closer to the recommended levels of global emissions) and why not, by analysing the measures imposed by other states which have had the expected effect in these countries, we will be able to find optimal solutions for the fleet problem,” says Anghel.

He explains that the discouragement of purchasing old and polluting cars was achieved by imposing some fiscal measures: “As for the environmental stamp, it should be noted that the formula was correct, before its abrogation in February 2017, the exceptions it provided were the reason for the infringement proceedings against Romania.”

In his opinion, Romania should come up with some form of penalties for the old, polluting vehicles, combining the effects of an environmental stamp with the annual tax.

“It is clear that whatever the authorities will do, it should be done in such a way to comply with the principles of Community law in order not to risk starting another infringement procedure,” he explains. “This should also be coupled with a new form of annual tax currently applied to automobiles, but also calculated on the basis of the environmental component, depending on the level of CO2 emissions and the pollution standard.”

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The decision to remove the environmental stamp at the beginning of 2017 was translated into a 110 per cent increase in the number of second-hand cars registered in the first eight months of that year. Basically, the number of cars older than ten years has doubled, compared to 2016.

“An effective solution for car fleet renewal should take into account the purchasing capability of the Romanian consumer and harmonize the first registration tax with the car tax, which takes into account both the level of CO2 emissions and the pollution regulations,” says Philip Aarsman, general manager of Business Lease.

He believes the import restriction for second-hand cars should include a mix of actions covering a change in the annual tax on the relevant parameters to the pollution standard, CO2 emissions, the first registration tax and even traffic restrictions in certain areas of cities for cars with a high level of pollution.

OPERATIONAL LEASING – A POSSIBLE WAY TO RENEW THE NATIONAL CAR PARK The renewal of the national car fleet is a complex problem to be handled from different perspectives.

The Romanian state has an important role because it can encourage potential buyers through various incentives for cleaner vehicles.

Leasing companies can also play a big role in this matter, especially those offering operational leasing services, by switching from the ownership mentality to a sharing one.

“The major advantage for the national car fleet is that the operational leasing requires the constant renewal of the fleets with the latest models, and also has a positive impact on CO2 emissions, which are constantly improved by car manufacturers,” says Dan Boiangiu, general manager of Arval Romania. “Our main challenge is to change the perspective on the car use within a company and I am confident that slowly but surely we will change this perception among Romanian companies,” he tells Automotive Today.

ANALYSIS

15.3 years is the average age of the Romanian car fleet

Boiangiu claims that the import of second-hand vehicles will continue to be a massive phenomenon, as long as fiscal-administrative policies allow this type of sourcing to be very competitive for local dealers.

“In Western Europe, energy transition started significantly earlier than in the East, which obviously creates import opportunities for vehicles that are no longer searchable in those markets,” he explains.

“Considering the current legal framework, the only obstacle in the face of used cars import is only the transport costs, which often discourages the dealers of cheap vehicles.”

DIESEL ENGINES BAN TOO SOON TO BECOME REALITY? There is huge frustration right now at automakers’ level, that their costly upgrades to ensure new diesel cars comply with tougher European emissions regulations are doing nothing to alter consumer belief that diesel is dirty and will soon be legislated out of existence.

The latest blow to the fuel’s reputation was the February 28 ruling by Germany’s highest federal administrative court, that cities could ban diesel cars to help reduce pollution.

Some analysts say the range of outcomes from city bans is wide, but in almost all scenarios automakers and customers will be hurt.

There were proposals in the past for Bucharest to introduce some interdiction for vehicles with nonEuro to Euro 2 diesel engines, with the possibility of extending the ban for Euro 4 cars, but the initiative was hard to implement. Before any restriction, the city needs a good public transport system, numerous park & ride facilities and unique lanes for public buses.

This year, the European Commission has decided to send before the Court of Justice of the European Union countries such as France, Germany, Hungary, Romania and the United Kingdom, for failing to comply with the air quality standards imposed, mainly for exceeding the limits of emissions and ultra-fine particles.

Germany, France or UK have already outlined a timetable for a complete ban on diesel. Actions to reduce urban pollution are also needed in Romania.

In recent years, the pollution tax - a contribution that should be paid for both new and second-hand cars has been constantly on the negotiating table.

“This pollution tax has to be carefully assessed,” says Aarsman. “If it is too expensive and consumers will not be able to pay it to replace their cars, we risk an increase of the average age of the car fleet leading to an increase in the level of pollution,” he explains. “To some extent, the Romanian corporate consumer has reconfigured its options, opting for preventive actions and alternatives to DAN BOIANGIU diesel engines. In the first ARVAL ROMANIA six months of this year, we noticed a nearly 20 per cent “Our main challenge is to change drop in orders for diesel the perspective on the car use vehicles, as compared to within a company and I am the same period in 2017. confident that slowly but surely For the time being, we we will change this perception can only interpret these among Romanian companies.” results through a sense of insecurity regarding the future of this vehicle segment.”

Some market analysts estimate classic combustion engines will not disappear soon and these cars will continue to exist until at least 2035. They also say that, for small cars, we may see a slip from diesel to petrol, because it is costly to make clean diesel technology.

In the future, customers may choose car sharing services, instead of owning the car. 

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INTERVIEW

DELPHI TECHNOLOGIES IASI

FORESEES FUTURE DEVELOPMENT OPPORTUNITIES T

he market evolution shows that the Romanian automotive industry adapts to the European trends and is focusing on more green, environmentally friendly, products and solutions, says Jaume Roquet, site director at Delphi Technologies Iasi.

“Nevertheless, most companies are facing real challenges due to fiscal instability, frequent changes of legislation and more and more delays in developing and adequate road and railway infrastructure,” he tells Automotive Today.

Delphi Technologies PLC launched as a standalone powertrain and aftermarket company in December 2017. Currently, all global operations are focused on three main business segments: Gasoline Direct Injection Pumps (GDi), Power Electronics and injection systems for Commercial Vehicles.

In Romania, Delphi Technologies operates a single production site in Iasi, following a total investment of 300 million Euro. Here it manufactures high pressure pumps (petrol/diesel) and injectors for the automotive industry. Products made in Iasi are installed on more than ten million vehicles worldwide.

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“Our site from Iasi is the biggest one of Delphi Technologies, gathering over 3.000 employees,” says Roquet. “All investments made in Iasi have developed this location into an integrated production site, being able to comply with the highest customers’ expectations in terms of quality and short delivery terms. At local level, Delphi Technologies Iasi is the biggest company, largest employer and biggest exporter of Iasi County.”

Edward Mandic, vice president and chief information officer at Delphi Technologies, adds that the global IT shared service centre in Bucharest is a key element for the “digital journey at Delphi Technologies”.

“Besides operating the company’s ERP, financial backbone systems and global application landscape, we are continuously increasing our cyber security capabilities to protect enterprise assets and proactively drive operational excellence,” he tells Automotive Today.

“We are extending our capabilities leveraging emerging technologies such as IoT, Robotics, Agile Software Development and AI, where our highly educated IT professionals are driving projects which directly contribute to the top line of the company, at both, revenue as well as margin expansion.”

INTERVIEW

JAUME ROQUET DELPHI TECHNOLOGIES IASI

Jaume Roquet describes Delphi Technologies’ site in Iasi as a success story. “We started to invest here over ten years ago, being one of the first companies from the automotive industry that has seen the potential of the region,” he explains.

“The 300 million Euro invested until now has contributed to the development of the manufacturing opportunities for this location. Today, we look at Delphi Technologies Iasi as the biggest company site worldwide and one of the most important ones with a strategic role in providing the highest and best quality solutions and products for our customers. If we consider the ten million products made in Iasi, we can say that in the last ten years, our colleagues have offered their expertise and commitment to provide the best technical fuel & injection systems for more than several thousand vehicles per day.”

Roquet foresees future development opportunities for Delphi Technologies Iasi according to the market trends but also to the evolution of the Romanian economy and infrastructure.

“For the moment there aren’t any plans in opening new manufacturing sites in Romania,” he adds.

“Delphi Technologies Iasi is performing well and has the capacity to attract new developments. Any decision regarding new production lines will be announced at the right moment. We are investing in developing the existing and future workforce through several intensive training and graduates’ programs. We have dedicated teams of technical trainers who are offering know-how and expertise to the existing employees but also to students from technical faculties which are coming to meet us during internships or fresh graduates’ programs.

Nevertheless, there is a lack of workforce especially in entry level positions and the frequent changes of work legislation, is an extra challenge we have to counteract. Without a medium-term predictability, a company cannot start to implement its plans, while the rules are changed during the game.”

Delphi Technologies currently employs more than 100 IT professionals into the office in Bucharest across various IT disciplines and functional towers today.

“We are looking for architects, solution designers, data analysts, service- and program Managers (and more) who can become part of our digital journey and are excited about collaborating with our business partners and suppliers to transform information technology and move the organization to the next level,” Mandic concludes.

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INTERVIEW

DELPHI TECHNOLOGIES LAUNCHES GLOBAL IT CENTRE IN BUCHAREST Delphi Technologies, a provider of propulsion solutions to automotive manufacturers has opened its first multidisciplinary global IT centre in Bucharest.

This new site aims at providing information technology services to the company’s technical centres, manufacturing sites and business support functions on a global basis. Bucharest was selected due to its talent pool and is an expansion of the company’s existing Romanian footprint.

“Our new Bucharest global IT centre is a continued commitment to our existing investments in Romania. We are creating a global IT team that will provide a platform to support our company in delivering real value. The Bucharest team will create innovative, technical solutions and services to support more than 20,000 employees across the globe.” said Edward Mandic, vice president and chief information officer at Delphi Technologies.

The office will host up to 150 people who will cover core functions that include IT security and compliance, enterprise architecture, IT operations, enterprise resource planning and global solution delivery.

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EDWARD MANDIC DELPHI TECHNOLOGIES “ We are continuously increasing our cyber security capabilities to protect enterprise assets and proactively drive operational excellence.”

Delphi Technologies is making material investments in the development of the new facility, which will be phased in by 2022. In Romania, Delphi Technologies operates a single production site in Iasi, following a total investment of 300 million Euro. Here it manufactures high pressure pumps (petrol/diesel) and injectors for the automotive industry. Products made in Iasi are installed on more than ten million vehicles worldwide.

Delphi Technologies is a technology company focused on providing electric vehicle and internal combustion engine propulsion solutions, in addition to solving emissions and fuel economy challenges for the automotive OEMs. 

INTERVIEW

VOLATILE PUBLIC POLICIES AND THE LACK OF ADEQUATE PUBLIC INFRASTRUCTURE ARE A HINDRANCE TO THE AUTOMOTIVE INDUSTRY

T

he automotive industry is one of the engines of Romania’s economy, with the segment of vehicle and trailer production generating around 2.7 per cent of Romania’s Gross Domestic Product.

In the last decade, the means of transportation sector has almost doubled its proportion in the total foreign direct investment, from four per cent to 7.4 per cent (or 5.6 billion Euro), “perhaps the strongest dynamics since 2008,” says Silviu Pop, head of research at Colliers International Romania.

“For the last ten years, Romania has achieved one of the best the performances in labour productivity in the EU, while wage costs remain considerably lower than in the rest of the Union (including in the East),” he tells Automotive Today. “However, volatile public policies and the lack of adequate public infrastructure are a hindrance to an even stronger development of the automotive industry.”

Colliers estimates a potential number of employable people in Romania to about two million people, with 15 per cent of them only in two counties: Iasi and Suceava.

“Therefore, beyond favourable social effects, a motorway linking northeastern Romania to the west would have an extremely powerful engagement effect for the local economy,” says Pop.

“If we see real progress in the field of structural reforms, the automotive industry in Romania would see improvements both quantitative (more plants, more employees) and qualitative (products of higher complexity/added value).”

As far as Brexit is concerned, he argues that the impact is hard to predict until we see the final outcome.

“Clearly, a hard Brexit would change the current situation and is at the same time a very foggy scenario,” he explains. “A simplistic and slightly optimistic approach might suggest that at least some of the UK automotive industry might relocate to continental Europe and possibly also to Romania. We do not believe in this scenario (at least not in the medium term, for a few years) and we believe that the effects would be significant and negative for local producers. The UK absorbs around four – five per cent of Romania’s exports of vehicles and components.”

Colliers International Group is an international real estate services and investment management company operating in 69 countries with a workforce of more than 12,000 employees. 

SILVIU POP COLLIERS INTERNATIONAL ROMANIA “If we see real progress in the field of structural reforms, the automotive industry in Romania would see improvements both quantitative (more plants, more employees) and qualitative.”

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INTERVIEW

“WE NEED GOOD PROGRAMMERS AND CYBER SECURITY SPECIALISTS” Nicolae Neagu, Hella Craiova

G

erman group Hella is one of the most important automotive suppliers in the world, with more than 40,000 employees and around 125 locations in 35 countries.

The company started its Romanian business back in 2005 with the opening of its first electronics site in Timisoara. About two years later, Hella opened two development centres in Timisoara (2006) and Craiova (2007). The company now has around 3.700 employees and three production facilities in Romania.

Hella’s evolution in Romania is also linked to the group’s global development. Hella Romania has had a good evolution over the years and now it’s facing a major shift in the automotive industry, says Nicolae Neagu, general manager of Hella Technical Centre Craiova.

“The automotive industry is facing major challenges, and the cars as we know them might radically change in the medium to long-term,” he tells Automotive Today. “These changes will have an impact on the environment and cities infrastructure. We are talking about electrification, electric cars, autonomous vehicles, connectivity, car-to-car communication and so on.”

He goes on to say that electrification will improve the infrastructure by creating more charging points for electric vehicles, while autonomous cars will improve traffic safety.

“Vehicles of the future will have a large amount of software and artificial intelligence, which will make them very flexible,” says Neagu. “The hardware will remain roughly the same, but the difference will be made by these innovative software applications. We will see autonomous cars sooner or later and that will change the whole automotive industry and the way we see the world.”

Hella Craiova is in charge with designing and developing such software applications for the automotive industry, but the company can’t keep up with the high demand due to its lack of specialized workforce.

2005 the year the company started its Romanian business

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“Over 97 per cent of our employees are graduates of the University of Craiova, but we are having a difficult time finding good specialists,” says Neagu. “We need to improve the education system, and we also need a different attitude towards? About? Pick your poison... the work we do. We need good programmers, because new graduates are not good enough to come work with us right after they get their diploma. We have to great efforts for training them to reach an optimal skillset.”

INTERVIEW

Hella Craiova is looking for young students with potential for fast learning and development: “We want 30 per cent skills and 70 per cent attitude. If the students have the right attitude, a good potential and a strong desire for learning, we can help them build a successful career in the automotive industry.”

In Craiova, approximately 300 employees will move to a high-tech building with state-of-the-art facilities in the next year.

Neagu says he needs at least 100 more employees before he takes more projects for Hella Craiova.

The vast majority of Hella products that are designed in Craiova are also manufactured in the company’s local production facilities. “We have a current contract with General Motors, but our main clients are Daimler, Volkswagen and BMW,” says Neagu.

“Our strategy is to constantly grow in the following five years. We have started 11 years ago with 20 colleagues and now we have a team of around 340 people. The goal is to reach 400 employees by 2023,” he adds.

One of the biggest challenges for Hella’s site in Craiova is to find cyber security specialists, much needed for developing safe software applications that integrate into the car system.

A significant percentage of the Hella products in Romania are designed by the employees of the Timisoara and Craiova technical centres, which produce for the energy management segment (battery sensors, DC converters, fuel control modules, LiIon battery management systems in electric cars) as well as systems specific to the autonomous driving area (Compact Radar 77GHz ) and safety of driving and traffic participants.

“We need quality people and we want to become an important player for the automotive industry in Craiova,” says Neagu. “We can achieve our goals by changing our mentality and the way we interact with our young employees.”

Hella’s representative concludes that Romania needs to restructure its educational system in order to have a more skilled workforce for the future. 

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INTERVIEW

Marius Mihailovici, Porsche Engineering Romania

WE EXPECT TO EMPLOY AT LEAST 250 HIGHLY SKILLED PROFESSIONALS IN THE NEXT TWO YEARS

I

n the last couple of years, the automotive industry has evolved significantly, and now sees a time of advanced technical innovation, through the introduction of new variables into the field: digitalization, autonomous driving, active safety, hybrid and fully electric vehicles. “These trends are also visible in the automotive companies in Romania, that are able to adapt to the global changes and integrate these new areas of expertise into their scope of work, thanks to the great technical skills of Romanian employees,� says Marius Mihailovici, general manager of Porsche Engineering Romania.

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INTERVIEW

Porsche Engineering Romania, headquartered in Cluj-Napoca, became operational in 2016. It is a wholly owned subsidiary of Porsche Engineering Group and therefore integrated in the global network of Porsche Engineering, with locations in Weissach, Bietigheim-Bissingen, Wolfsburg, Leipzig (all Germany), Prague, Ostrava (both in Czech Republic), Shanghai (China), Cluj-Napoca (Romania) and Nardo (Italy). Porsche Engineering Group is a 100 per cent subsidiary company of the sports car manufacturer Porsche AG.

He goes on to say that customers are looking for safety in the first place, for multiple gadgets at their fingertips, for fast and responsive technologies – in short, for a fully connected vehicle. In his opinion, cars of the future will focus more and more on delivering an enhanced, immersive user and driving experience.

“Romania is considered a pole of attraction for foreign investors, especially due to the highly-specialized workforce in the field,” he tells Automotive Today. “Therefore, I think Romania will have an active contribution to the development of the car of tomorrow’s new technologies.

Today’s customers have refined their requests and expectations concerning cars – they no longer just want to travel from point A to point B, they expect a complex environment and an exciting driving experience every time they get behind the steering wheel.”

“Nowadays, we spend far more time in our cars that we used to ten years ago and we need a multifunctional environment that will help us spend this time more pleasantly and even be entertained,” he explains. “My point is that the automotive industry is not all about sales, but it is also based, to a large extent, on the technical developments inside the car, where new technologies have a leading role.”

Porsche Engineering Romania is currently working on projects with focus on developing performance power trains, both hybrid and fully electric, high voltage charging, solutions meant to improve the driving experience, active assistance and autonomous driving.

“We have a sustainable growth strategy, that implies steady and long-term investments,” says Mihailovici.

“Our step by step approach is based on an organic growth – we expect to employ at least 250 highly skilled professionals in the next two years.”

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INTERVIEW

PORSCHE ENGINEERING ROMANIA LAUNCHES NEW OPPORTUNITIES FOR MASTER STUDENTS The “Advanced Techniques in Automotive Engineering” (ATAE) Master program, established by Porsche Engineering at the Technical University of Cluj-Napoca, in 2017, is about to welcome a new generation of future software engineers for the automotive industry.

Porsche Engineering recently announced further learning opportunities for students, among which the introduction of the new ”Autonomous Driving Vehicles” course and English as the main teaching language.

The ATAE Master program was established within the Department of Automotive Engineering and Transports of the Technical University of Cluj-Napoca. Currently, the Master program offers 25 places yearly for students who want to pursue a career in research and development in the field of software engineering for the automotive industry.

Porsche Engineering wants to support the 12 top students of each class with monthly scholarships. The company will organize various working visits to the local offices in Cluj and sponsored student trips to the Porsche factory in Germany.

The ATAE students can also get involved in internship programmes and work on research projects, under the supervision of experienced engineers. Throughout the first year of the Master program, students spent over 300 internship hours within Porsche Engineering Romania and over 50 hours of practical courses, working on a large research project meant to develop a battery prototype for electric vehicles.

Porsche Engineering started two years ago as a small start-up, but now the team is expanding towards the 120 employees target by end of the year.

Talking about electric and hybrid vehicles in Romania, Mihailovici claims this is firstly a matter of infrastructure, which is still in an early phase of development in Romania.

“We are beginning to see a small growth of hybrid and electric vehicles on the local market – a good sign and a proof that Romania is aligning, in its own pace, to this strong global trend,” he explains. “I am sure that in the near future, hybrid and electric vehicles will be ever more present on the streets of Romania. At the same time, in the context of the high pollution in big cities, the need to focus on more efficient transportation solutions is a real necessity and will drive us to search for alternative ways of propulsion for our daily commuting.”

Mihailovici also talks about the workforce crisis in Romania. He believes that one major solution is to bring the academic education closer to the automotive industry and its real working environment, in order for the universities curriculum, specialties and courses to be constantly updated and adapted, in line with current technologies in the field.

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“This type of partnerships – between companies and universities – also grants students early access to experts in the field and provides a practical perspective over their chosen field of study,” he says.

“Such collaborations also create a competitive environment among companies and lead them to keep their experts engaged and motivated. In the automotive industry, we face the same problems like all the other engineering companies focusing on Research & Development – we have to train our employees and involve them in projects at an early stage, in order for them to fully understand the product itself. Since the development of software and digital solutions for the automotive industry is a quite new field, the most difficult for us is to find IT professionals with automotive knowledge and a mindset focused on learning and innovation.”

Mihailovici underlines that the dual education system is a successful method in Western Europe and can definitely bring valuable work experience on the local market as well, meeting the needs of each company’s working model. “This also leads to a faster integration of employees on the labour market,” he concludes. 

INTERVIEW

Gheorghe Badea, GIC WE WORK WITH DACIA AND FORD TO INCREASE THE LOCAL MANUFACTURING VOLUMES

W

ith over 30 years of experience, Grupul Industrial Componente (GIC) is a Romanian group of companies dedicated entirely to the automotive industry. The medium-sized organisation is active in the fields of plastic, metal, system and assemblies.

GIC produces automotive seating systems and accessories (electrical cars, army vehicles, ambulances), retractable luggage rails and safety nets for brands such as Land Rover, Volvo, Renault, Peugeot, and also wire harnesses assemblies (doors modules, front modules as well as smaller modules like mirrors and airbags).

This year was a good one for the group, but with a lot of challenges generated by the lack of workforce and the legislative incoherence, according to Gheorghe Badea, president of GIC. “We are working with our most important customers, Dacia-Renault and Ford, to help them increase the manufacturing volumes in Mioveni, Craiova and also for export,” he tells Automotive Today. “These developments are positive for the Romanian economy and especially for the automotive suppliers’ ecosystem, but this requires substantial investments and organizational efforts.”

Badea claims that the strengthening of existing activities in the current context of labour shortages has been a big achievement for GIC this year, as well as securing the order books for the next years.

Training new company specialists to take the lead from older generations about to retire, stabilising the workforce and absorbing the cost increase are the main challenges for GIC in 2018.

“In the context in which the technicalprofessional education system has been destroyed and now only a revival is being attempted, we are forced to train the staff internally, thus replacing our professional schools,” says Badea.

He goes on to say that allocating financial resources for in-house training of staff at all levels and adapting manufacturing processes to current realities through automation and robotics are the main priorities for GIC. “The salary gap between Romania and the other central European countries is no longer that big, which leads to a fierce competition that can only be won by efficiency and technology,” he says.

GIC currently employs more than 3,500 employees and the group aims for a stabilisation of the headcount in the near future. 

3,500 GIC has 3,500 employees

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LEGISLATION

Big blow for Romania due to WLTP emissions rules R

omania’s Government recently extended the incentive scheme for the renewal of the national car park, popularly known as the Rabla programme.

As a result, the Government offers an incentive of 6,500 RON for the acquisition of a new vehicle with CO2 emissions lower than 130g/km in exchange for a vehicle older than eight years. The programme has become more generous, with system users also benefiting from an extra 1,000 RON bonus if they purchase a new car with CO2 emissions of 98g/ km and a 1,700 RON bonus for cars with a hybrid propulsion system, but no external power supply.

Therefore, a Romanian client can receive up to 9,200 RON (around 2,000 Euro) to replace their old car with a new one with a hybrid propulsion system.

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This is one of the most generous incentives in Europe, considering that Romanians can also get a 10,000 Euro bonus for buying a new 100 per cent electric vehicle, through the Rabla Plus programme.

With a budget of around 24 million Euro, authorities estimate that a number of 19.000 new vehicles will get on the public roads in 2018.

“The two programmes are meant to encourage the purchase of electric cars and we will see a further increase in sales in this sector, at least in the medium term. We will see if these incentives will be offered after 2020,” says Daniel Anghel, tax and legal services leader at PwC Romania. “The 2017 total allocation for the Rabla programmes was around 44 million Euro, including an additional five million Euro during the year.”

LEGISLATION

As of this date, cars certified according to the previous standard, NEDC (with pollution standard Euro 6b) will no longer be registered. The decision accelerated the sale and delivery of new cars on stock, forcing companies to offer higher discounts, which negatively affected the sale price of second-hand cars.

“Globally, we expect the transition from NEDC to WLTP to result in production stops and delays in delivery times for certain models and engines as these cannot be adapted in time to the new WLTP standard,” says Philip Aarsman, general manager of Business Lease.

“Furthermore, almost all diesel engines will be equipped with DPF and AdBlue filters, and in the case of petrol ones, DPF equipment will be generalized, which will generate higher production costs, implicitly translated into the car sales price starting with September 1, 2018,” he explains.

“From the perspective of vehicle configurations, we expect manufacturers to reduce the list of options given that WLTP measurements take into account each option added to the vehicle, indicating fuel consumption and emissions per car.

And, in this case, users will pay more for an option than in the previous period, being forced to pay for a full package of options and not just for the one they want.”

As a consequence of WLTP, from 1 September 2018,delivery times will increase, as manufacturers will have to close factories for upgrading works.

WLTP – THE BIGGEST IMPACT ON THE AUTOMOTIVE INDUSTRY Probably the most important legislative change that has had the biggest impact on the automotive industry, including Romania’s market, is the introduction of WLTP. WLTP represents the introduction by the European Union of a new standardized testing procedure worldwide, designed to measure fuel consumption and gas emissions much closer to reality. The WLTP (Worldwide Harmonized Light Vehicle Test Procedure), which replaces the European NEDC (New European Driving Cycle) since September 2017, also applies in Romania starting 1 September, 2018.

In September 2018, registrations of new passenger cars in the European Union fell by 23.5 per cent, according to ACEA data. However, this should not come as a surprise, as the introduction of the new WLTP test at the beginning of last month caused an exceptional surge in registrations in August (+31.2 per cent). As a result, most EU countries suffered doubledigit losses in September, including the five major markets.

Over the first nine months of 2018, EU demand for passenger cars remained positive (+2.5 per cent), in line with growth expectations for this year. Looking at the five biggest markets, demand went up in Spain (+11.7 per cent), France (+6.5 per cent) and Germany (+2.4 per cent), while car sales contracted in Italy (-2.8 per cent) and in the United Kingdom (-7.5 per cent).

The highest decrease caused by WLTP was recorded in Romania (-73.4 per cent), after the country achieved the best performance at European level last month (+138 per cent). In September, only 2,771 new vehicles were registered on the local market. 

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EMPLOYMENT

WORKFORCE CRISIS

challenges to overcome for the Romanian automotive industry

M

igration is one of the biggest problems Romania is facing at this time, along with the lack of infrastructure. A study by the United Nations shows that 3.4 million Romanians left the country between 2007 and 2017, accounting for 17 per cent of the country’s population.

Romanian companies are having a difficult time finding skilled employees, with communication and teamwork abilities. After competing for good employees with high salaries and the best facilities, companies have developed a new strategy – growing their own future employees.

Some say Romania is going through the most severe workforce crisis in its recent history.

According to a KeysFin analysis, recruitment in Romania has become a real challenge. The growing interest of employers has made the HR market grow significantly in recent years, from 2.06 billion RON in 2012, to 3.6 billion RON in 2017. The number of recruitment companies has steadily grown, by almost 20 per cent between 2012 and 2016, and their net profits have almost doubled in the same period. The increased interest in this economic segment has also led to a 40 per cent increase in the number of employees in recruitment companies.

Among European states, Romania had the largest percentage growth of the minimum wage in the last ten years, of 195 per cent.

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Some analysts believe that while salaries are growing significantly at the moment, they are reflecting economic realities and the growth comes mainly from consumption, meaning that it is not solid or sustainable in the long term.

Productivity is still low in Romania, and companies avoid investing a lot in their employees. By growing salaries in the public sector, the state is trying to boost the market, but due to the unstable economic framework, few investors followed the trend. In the absence of proper investment conditions, such as infrastructure or a good fiscal system, Romania is still attractive for investors especially due to the low costs of labour.

Beyond the reality of 2018, the future of the labour market looks quite bleak. Lower birth rates and the retirement of a whole generation in the following years, as well as the exodus of workforce towards the west will make Romania deal with an even deeper crisis in the near future.

A set of solutions with different impact horizons must be considered, says Daniel Anghel, tax and legal services leader at PwC Romania. “Solutions have to be analysed at least from the combined impacts and ease of implementation perspective,” he tells Automotive Today. “Actions with a relatively fast impact have the role of solving the effects of a crisis, but do not work on causes, which makes them less sustainable. Such measures in the present case would be in the area of deficit coverage by labour mobility, whether we are talking about mobility within the country, or about migration.”

EMPLOYMENT

He adds that internal mobility, in a geographically reasonable perimeter that allows commuting, is already used by many companies. “The recent legislative package to encourage employees working in other locations or even change their place of residence with jobs should support employers’ efforts,” he explains.

“For the time being, the impact is relatively low, because the law needs to be complemented by adequate communication efforts towards the target groups, not only for information, but also for a change of mentality, as Romania is one of the countries with the lowest level of internal mobility in the EU.”

The automotive industry needs relatively skilled workforce, but Romania is perceived as a solution rather by unskilled workers, says Anghel. He also claims that most people perceive Romania as a transit country to other EU countries, and this can only be solved with the increase in living standards.

“Raising wages or benefit packages can be a solution with immediate impact,” says Anghel. “Wage dynamics are already high. Annual growth rates tend to be close to pre-crisis levels, especially in the worker-operator category, in addition to the minimum wage increases. Unfortunately, however, these increases emphasize labour mobility between growing companies to keep/attract the necessary people. Or, solutions must consider the inactive population.

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EMPLOYMENT

“And here the actions must be supported by the authorities. Romania has one of the largest inactive populations (population aged 15-64 who does not work and is not registered as unemployed) in Europe, of over 40 per cent, compared to 30 per cent of the EU average.

Most initiatives by authorities target the unemployed population, which is relatively low and where there is access, because it is registered with ANOFM (National Agency for Employment). Moreover, initiatives are rather in the policy area (subsidies to encourage employment, newer conditioning of unemployment benefits), not management, namely communication, consultation, proposal of practical solutions for both employers and potential employees.”

The labour market crisis raises many problems, not only for the automotive industry but for all employers. The recruitment base and the available workforce quality are no longer enough to support the pace of development of many sectors.

The causes are demographic, first of all: the massive migration of the last decade, the aging of the population, but also the quality of the education system. To attract employees, companies have increased wages, a positive and natural evolution, especially in an economy that has to compete with those in Europe, where wages are higher.

However, too rapid labour costs correlated with falling demand put pressure on companies’ budgets, with implications for profitability, says Ciprian Gavriliu, tax partner at Deloitte Romania. He claims this raises the risk of de-motivating investments that may prefer other countries with lower costs. In his opinion, Romania needs to find medium to long-term solutions, where political consent is critical.

Some market analysts say Romania needs to invest in more training, both in dual education and vocational/ reconversion programmes. Romania has made progress in this area by the regulation of dual education, which has brought some projects with potential, but the main issues are related to the fact that the significant investments of the companies have no guarantee. The risk of unemployment or fast departure of qualified personnel is fully taken up by companies.

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The labour market crisis is a problem that many European countries face. Carefully mapping the competences required for future organizations, an educational plan correlated with their real needs, a strategy at national level to support the involvement of suitable people, including retired seniors, as well as employee retention, are issues that need to be warily evaluated.

In the long run, the adaptation of the education system to the current market demands is essential, says Philip Aarsman, general manager of Business Lease. “Education programs are needed to support the development of practical skills, digital skills, support critical thinking, and, last but not least, soft skills,” he tells Automotive Today. “And all these can only be implemented and achieved on the basis of a close partnership between the corporate and the education environment.”

Analysts say the Romanian automotive industry need two categories of specialists: those required for production - whether for car manufacturers or suppliers - and those needed for research and development activities in the area of robotics, electric cars and more.

The deficit does not appear only on specialisations, but especially on geographic areas. There are massive concentrations of production activities in the west and the centre of the country. Companies have chosen to invest in the same areas either to be close to large manufacturers, or to have the proper infrastructure for transporting the products, or to have access to the necessary skills. Labour shortages are no longer a human resource problem, they are an operational problem and a major risk that has become one of the hottest points of discussion on the management agenda.

40

per cent of Romania’s population is inactive

EMPLOYMENT

The situation is even more complicated in the second area of interest, namely research and development, according to Anghel.

“We are talking about rare, emerging competencies, which global education systems are making efforts to generate, given that technological innovation has an extremely rapid pace,” he explains.

“Adapting the curriculum to the needs of the organizational environment can be the mediumterm key to addressing the deficit of specialists. Then we need an effective retention strategy of these specialists in the country.”

A PwC study conducted for the OECD (Organization for Economic AXEL GIRARDETTI, ALTEN Cooperation and Development) shows that by 2030 approximately “In Romania in particular, digital “Romania should be looking 30 per cent of jobs could be competences are deficient, and for innovative minds, creative automated in OECD countries. the orientation of young people engineers who want to be a part People with STEM profiles will be towards STEM (Science, Technology, of the future innovation wave.” less affected - the unemployment Engineering & Maths) is relatively rate among STEMs was two per small in relation to the current and cent compared to 11 per cent in 2013, according to the future economy needs (about one third of students, for study. example, chose such areas in the school year 2016/2017).

The R&D field is growing and has a great potential, which One of the major problems that Romanian automotive must be capitalised on to transform Romania’s economy companies are facing is the lack of craftsmen, such as from a low-cost into an ‘added-value’ economy”. tinners, turners, car mechanics, welders, electricians, and also unskilled workers and engineers.

DUAL EDUCATION – SOLUTION TO SKILLS “In adjacent sectors, and especially in those where DEVELOPMENT? customer service component is essential, as is the case Anghel claims the education is changing its orientation in the financial services sector, the sales and specialist to STEM subjects, in terms of opportunities, quality, and support positions are increasingly difficult to cover, also promotes and increases the attractiveness of these especially when the mix of skills includes specialized areas. Some western Europe countries are conducting big know-how and soft skills,” says Aarsman. investments in STEM education.

Axel Girardetti, CEE director at Alten, believes that In the long run, dual education can be one of Romania should be looking for innovative minds, creative the solutions to address the staff shortage faced by engineers who want to be a part of the future innovation employers in the automotive industry, according to wave, and also managers who are willing to take Aarsman. “In order to achieve the level of efficiency responsibilities for projects such as autonomous cars and of Germany or other central and western European connected vehicles.  countries, it is necessary for employers in the automotive industry to remain willing to invest in laboratories, teacher training, in support of practical training, as well as planning and drafting curricular content. All these take time, long-term investments, and sustained social responsibility,” he explains.

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INTERVIEW

“WE PLAN TO INCREASE AND DEVELOP OUR ROMANIAN TEAM” Interview with Andreas Martin, Preh Iasi

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reh, together with Preh Car Connect and Preh IMA Automation (PIA), makes up the automotive electronics & automation division of the Joyson Group, one of the world’s largest automotive suppliers.

The automotive supplier recently expanded its activities in Romania. The German company also develops innovative electronics for control systems in the vehicle interior in Iasi since 2017.

Starting as an equipment and component manufacturer in the broadcasting industry, the company has developed over the years into an automotive supplier and automation specialist.

Nowadays it concentrates on the development and manufacture of HMI (Human Machine Interfaces) systems, ECUs (Engine Control Unit) for e-mobility applications, navigation systems, and infotainment and connectivity solutions, as well as assembly and automation systems. With around 7,000 employees in Germany, China, Poland, Portugal, Romania, the USA and Mexico, Preh‘s sales exceed one billion Euro. Preh officially opened its production location in Brasov, Romania on September 3, 2009. The automotive supplier manufactures various units at this plant, in particular multifunction steering wheel switches and climate control systems.

“After Preh´s start in March 2017 we accomplished a steep ramp up phase,” says Andreas Martin, site manager at Preh Iasi. “The initial target of the Board of Directors was to establish a software development focused location in Iasi,” he tells Automotive Today.

“In the meantime, we managed to cover all technical disciplines including validation, hard-, software development and mechanical design. With this holistic setup we are able to create synergies within the project teams.”

Production in Brasov began in March 2009 and has been gradually expanded since then. Production expertise includes injection moulding, laser etching and final assembly. Paintwork was also added to this range.

In Brasov, Preh is manufacturing with more than 1,000 employees. This is the largest plant of the Preh Group outside Germany. Here the “Touch Control Button” switch systems for the steering wheel of the Mercedes-Benz E-Class and other products are being built. In addition, the company has made a name for itself with the iDrive Controller as a supplier for BMW and supplies battery management control units for the E-vehicles BMW i3 and i8. The customers of Preh include other internationally automotive manufacturers, including VW, Audi and Porsche.

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Complexity in products, processes and technologies are constantly growing, says Martin, so the target for the team in Iasi is to keep up with this enhancement but to also set trends and actively participate in the decisionmaking process. Preh plans to increase and develop the team in Romania as “major automotive innovator and trendsetter”, as expansion plans are in line with Preh Group’s growth.

“More important than the size of the team is the integration phase into our organization, projects and company culture, as well as a continuous learning process,” says Martin.

“We are proud to employ young, motivated engineers, with very good technical background which are a great value for our team,” he adds. “Due to increasing functional, safety and security requirements, software engineers are the largest share in the product development. Also, specialists in hardware and mechanical engineers will be required because of a seamless integration of our products in the vehicle.” 

INTERVIEW

PREH AT THE IAA COMMERCIAL VEHICLES 2018 Preh Group’s presence at the IAA Commercial Vehicles 2018 in Hannover showcased the latest developments in HMI and connectivity. Many features familiar from the passenger car sector have been adapted to the specific requirements of commercial vehicles.

A new development by Preh, in cooperation with Daimler, enables a large number of the infotainment functions to be controlled from the steering wheel. In the future, drivers of the latest generation of MercedesBenz Actros trucks will be able to call up vehicle information and operate the navigation or audio and telephone functions while keeping both hands on the wheel. This development has been made possible by the integration of two so-called touch control buttons.

The new feature is based on a touch technology that responds to horizontal and vertical swiping movements made by the thumb.

In future, the driver will be able to control the functions of the head unit display, such as audio and telephone, via the button integrated into the right-hand multi-function switch. The left-hand button can be used to call up all vehicle information on the instrument cluster, as well as the navigation function.

ANDREAS MARTIN PREH IASI “We are proud to employ young, motivated engineers, with very good technical background which are a great value for our team.”

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DAIMLER’S ROMANIAN SUBSIDIARIES TO CONTINUE THE REGIONAL GROWTH

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aimler, one of the world’s biggest producers of premium cars, published its financial results for the third quarter of 2018. The German group said its financial development was strongly influenced by external factors, with a net profit of 1.7 billion Euro that was significantly below the prior-year figure of 2.2 billion Euro.

In Romania, Daimler owns two subsidiaries, namely Star Transmission and Star Assembly.

Star Assembly, the company that operates Daimler’s gearbox factory in Sebes, central Romania, recorded a turnover of 1.6 billion Euro last year, up almost fivefold compared to 2016. The company’s net profit followed suit, reaching 54 million Euro, according to data from the Finance Ministry.

Daimler currently employs over 1,800 people at the two sites operated by its Romanian subsidiaries.

Star Transmission was established locally in 2001.

Since then, gearwheels, shafts as well as machine components for engines, transmissions and steering systems are being produced at the Cugir location.

Moreover, the technology centre, which produces prototypes, as well as a training centre is located there.

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Its sister company, Star Assembly was set up in 2013 in Sebes, with production of the five-speed automatic transmission launching in the same year. The first sevenspeed automatic transmission left the assembly line in 2014.

With support from the Romanian government, Star Transmission offers a dual education system modelled after the German state of Baden-Wuerttemberg. The goal of the dual education system is to offer young people in the Alba region a good career outlook while at the same time ensuring the development of young talents for the company. Since September 2013 the plant has been training young people in technical professions, such as electrical mechanics, for example.

Last year, Daimler inaugurated a new production unit at its Start Transmission plant in the town of Cugir. The 36 million Euro investment has led to the creation of 200 new jobs and an increased production capacity Star Transmission produces engine and transmission parts, as well as for the assembling automatic transmissions.

At the end of Q3 2018, the Daimler Group had 300,367 employees worldwide. Of that total, 176,287 were employed in Germany and 26,079 in the United States.

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INVESTMENT IN THE FUTURE The Daimler Group invested 2.1 billion Euro in property, plant and equipment in the third quarter of 2018, out of which 1.6 billion Euro, was invested in the Mercedes-Benz Cars division. The Group’s research and development expenditure in the third quarter amounted to 2.4 billion Euro. About three quarters, namely 1.8 billion Euro, of the research and development spending was at the Mercedes-Benz Cars division.

This year, Mercedes-Benz Cars aims at matching last year’s sales figures, based on, to a certain extent, the lifecycle effects of certain model series. Additional factors are increased import duties for US vehicles in the Chinese market and the suspension of deliveries of individual diesel models. Vehicle certification is in some cases taking longer than usual and is also impacting availability. The car division continues to expect sales growth from the SUVs. Based on the generally positive development of unit sales, Daimler assumes that Group revenue will increase slightly in 2018. Significant revenue growth is anticipated for the Daimler Trucks and Daimler Financial Services divisions, while only a slight increase is now expected at Mercedes-Benz Vans. At MercedesBenz Cars, the expected exchange-rate developments and lifecycle effects of some models will dampen the development of revenue, so the division is expected to post full-year revenue at the high level of 2017.

In late March 2018, Daimler and the BMW Group announced their intention, subject to review and approval by the relevant competition authorities, to combine and strategically expand their existing services for on-demand mobility in the areas of car sharing, ride hailing, parking, charging and multimodality. To those ends, the two companies signed an agreement on the merger of their business units for mobility services. Each company will hold 50 per cent of the shares in the planned joint ventures for the mobility services of both companies. Subject to the approval of the competition authorities, the establishment of the joint ventures would lead to significant positive changes to net assets and earnings at Daimler Financial Services.

2014 the year the first seven-speed automatic transmission left the assembly line

Due to several factors, some temporary restrictions occurred in the availability of Mercedes-Benz Cars vehicles in the third quarter and will also partially affect the fourth quarter. These factors include, among others, the previously announced suspension of delivery for some diesel models.

Inventories have increased temporarily. Based on demand for Mercedes-Benz vehicles, Daimler continues to expect, however, that the situation will return to normal in the fourth quarter and that inventories can be reduced again by the end of this year.

On October 19, 2018, as a result of current developments, Daimler reassessed its earnings outlook for the year 2018 for the Mercedes-Benz Cars and Daimler Buses divisions and for the Daimler Group. The main factor is an increase in expected expenses in connection with ongoing governmental proceedings and measures taken in various regions with regard to Mercedes-Benz diesel vehicles.

By 2022, the entire Mercedes-Benz Cars product range is set to be electrified. This means that different electrified alternatives will be available in every segment – from smart to large SUV. There are plans for more than 130 electrified vehicle variants, from 48-volt versions to a range of plug-in hybrids to all-electric vehicles. The electric initiative is subsumed under the new technology and product brand EQ, which stands for “Electric Intelligence”.

Daimler and Mercedes-Benz Cars are also planning extensively upstream. Electric vehicles under the product and technology brand EQ will be integrated into the series production processes at the existing plants within Mercedes-Benz Cars. 

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CONTINENTAL TO EXCEED 20,000 EMPLOYEES IN ROMANIA THIS YEAR

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erman car component and tyre maker Continental has reached 19,700 employees in its seven production units in Romania and four research and development centres.

Last year, the company hired 1,500 new staff, and wants to add 1,000 more people to its payroll this year.

It will have job openings in software and IT&C, electric engineering and mechanics, process engineering, production operators.

The company already works with over 5,700 engineers and IT specialists for research and development.

Continental invested 175 million Euro in Romania last year. The group plans to invest a similar amount this year.

Continental is present with production units and R&D centres in Timisoara, Sibiu, Carei, Nadab, Brasov and Iasi, it runs a joint venture in Slatina and has a tyre distribution centre in Bucharest.

Continental will hire 250 engineers and IT specialists at its research and development centre in Iasi this year.

The group currently has some 1,800 employees in the north-eastern city.

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The company is looking for experienced engineers, software and hardware specialists, mechanical engineers and young graduates from technical universities for the 250 career opportunities open within the organization. The company is also looking to expand its offices in the city.

As far as the national expansion is concerned, Continental’s tyre division has recently purchased 32 hectares of land in Timisoara, from the UMT and Prompt groups.

The land represents most of the former UMT industrial platform in Timisoara. The group will use the land to expand its warehouses and optimize its general logistics costs, Continental.

The company operates a tyre factory in Timisoara, in which it has invested over 460 Euro million in 18 years, creating more than 2,500 jobs. The factory has produced and delivered some 200 million tires. The German group has invested over 1.4 billion Euro in Romania through all of its divisions.

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ROMANIAN ENGINEERS WORK ON CONTINENTAL’S VIRTUAL DRIVING SCHOOL TECHNOLOGY Engineers from Continental Romania are working in international teams to develop Continental’s new virtual driving school technology, through which the company targets the use of Artificial Intelligence (AI) to give vehicle systems human understanding.

The German autoparts producer presented a computer vision platform that uses Artificial Intelligence (AI) at the CES Asia event, alongside neural networks and machine learning to improve advanced sensor technologies. The company’s fifth generation of its multi-function camera, which will begin series production in 2020, will use neural networks alongside traditional computer vision processes.

Depending on the available hardware, these can be scaled and refined, and using intelligent algorithms they improve the scene understanding involving the classification of the intentions and gestures of pedestrians, according to the company.

Artificial Intelligence opens up new possibilities for the computer vision platform. For example, AI can detect people and interpret their intentions and gestures.

Continental said it relies on AI in its product development departments to perform complex tasks such as pedestrian detection to learn the concrete parameterization of this design from huge quantities of data. This requires the creation of a system that combines the data input such as the millions of pixels in a camera image used for pedestrian detection. The second step involves enabling this system to search every combination of the parameters that solves the problem.

CONTINENTAL’S AUTOMOTIVE BUSINESS EXCEEDS 20 BILLION EURO AFTER FIRST SIX MONTHS Continental released its 2018 half-year results and it showed a 5.4 per cent increase in organic sales growth, with all five divisions contributing. In the same period, the Automotive business was up 6.6 per cent in organic terms. For the current year, the company still expects the global production of passenger cars and light commercial vehicles to rise by more than one percent.

In the first half of the year, Continental upped its sales to 22.4 billion Euro and posted an adjusted operating result of 2.2 billion Euro.

In the same timeframe, the company received more than one billion Euro in orders for products and systems for hybrid and electric cars. At over 20 billion Euro, order intake is at a record level in the automotive sector after six months, company officials say.

After the first six months, net income attributable to the shareholders of the parent rose by 4.3 per cent to around 1.6 billion Euro, after 1.5 billion Euro in the same period of the previous year.

Free cash flow in the first half of 2018 amounted to 122 million Euro, after 292 million Euro in the first half of last year.

The Automotive Group increased its sales by 2.8 per cent in the past half-year. Organic growth was 6.6 per cent, whereas sales amounted to 13.8 billion Euro in this period. In the first six months, the Rubber Group achieved sales of 8.6 billion Euro, down slightly year on year, with the company saying there was organic growth of 3.6 per cent in the first half of 2018.

In the first half of the year, Continental invested 1.2 billion Euro in property, plant and equipment, and software. This corresponds to a capital expenditure ratio of 5.2 per cent (previous year: 5.3 per cent). The technology company’s net expenditure for research and development stood at 1.7 billion Euro, which equates to 7.7 per cent of consolidated sales. In the same period of the previous year, the ratio was 7.2 per cent.

At the end of the first half of 2018, Continental had more than 243,000 employees, which equals about 8,000 additional employees compared to the end of the year. Nearly two-thirds of the growth was due to staff increases in the global R&D team and higher production volumes in the Automotive Group. About one-third of the additional staff was hired in the Rubber Group. These employees are required primarily for the expanded production operations and the growing distribution network. 

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GERMAN GROUP BOSCH TO EXPAND ITS PRODUCTION ACTIVITIES IN ROMANIA

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erman group Bosch, an international player in the equipment and services sector, has started the construction of its new engineering centre in ClujNapoca.

Bosch already operates an engineering centre in the city since 2013 where it currently employs around 400 people, spread across the city in several locations. The new building will bring all these employees together under the same roof.

Bosch plans to invest around 25 million Euro in this endeavour. The company will be located in Cluj-Napoca’s centre, within the DaVinci software development campus. It will have six levels and a total surface of 16,000 sqm and should be finalized by end-2019.

The engineering centre in Cluj-Napoca has a strong cooperation with the group’s factory in Jucu, near the city, as well as other Bosch centres worldwide.

100

million Euro Bosch invested in 2017 in Romania

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The German group also said it is in talks with local authorities to get the permit for testing autonomous cars on the streets of Cluj-Napoca. The road tests would be done with two people in the car, namely one who will focus on driving and will intervene if needed, and another one who will track the collected data.

For a few years now, the German group has been testing in the central Transylvanian city the software that will be used on self-driving cars in the future. The cars are always under the control of the driver while the algorithms are tested in different situations to see which elements they are able to recognise in traffic and how they can be improved.

The Bosch Group has been present on the Romanian market for about 25 years and has over 6,500 employees.

In 2017, Bosch recorded a consolidated sales volume of 416 million Euro in Romania. With two factories, a research and development centre and sales offices, all four sectors of the group are represented in Romania: mobility solutions, consumer goods, construction and energy technologies and industrial technology.

In Romania, the Bosch Group is present with five entities in different locations across the country. The headquarters of the company are located in Bucharest, where Bosch also has a sales office. Also, in the capital is a subsidiary of BSH Hausgerate GmbH, active in the home appliance market. In Cluj-Napoca, Bosch operates a research and development centre and a production facility for automotive technology. A production line of linear and automotive technology is in Blaj. The company also has a business process outsourcing centre (BPO) in Timisoara.

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The Bosch Group opened its first Romanian plant in Blaj and it operates in two sectors: industrial technology - through the Bosch Rexroth division, which has been producing linear technology components, and the mobility solutions sector since 2007 through Chassis Control Systems (2013) and Propulsion Systems (since 2015). Both produce sensors and electronic components used in the automotive industry.

The second Romanian plant in Jucu produces electronic components for the automotive industry since 2014, in areas such as driving assistance or safety and comfort management. Over 43 million electronic components such as electronic control units for the eBike propulsion system, parking assistance, as well as control units for the engine and the airbag were produced so far. Inside the factory, Bosch inaugurated in 2017 a training centre equipped with training rooms for students in the dual education system and for the development of its own employees.

The firm also has a research and development centre in Cluj-Napoca since 2013. The centre’s activity focuses on areas such as autonomous driving, electrical mobility and connectivity. Engineers at the Bosch Engineering Centre in the city are developing software solutions and image processing algorithms for real-time detection of objects in different traffic situations, software solutions to ensure high connectivity of electric vehicles as well as smart sensors.

Bosch ended the fiscal year 2017 with consolidated sales of 1.9 billion RON (416 million Euro) in Romania, which represents an increase of 26 per cent over the previous year.

The number of Bosch employees in Romania reached around 6,500 on 31 December 2017, which stood at an annual increase of 36 per cent. It is expected that this number will increase in 2018, especially in Cluj-Napoca, Blaj and Timisoara.

Bosch invested about 100 million Euro in Romania in 2017, especially in the development of production units for mobility solutions in Cluj-Napoca and Blaj. The automotive electronic components factory in Cluj-Napoca has increased its production capacity and product portfolio to meet customer demand.

In this production facility, Bosch has been manufacturing, since 2014, electronic airbag control units, multiple camera systems and driving assistance, as well as electronic safety systems that increase road safety and driver comfort. In October 2017, Bosch inaugurated a Training Centre at the factory, dedicated to the training of students in the dual education system, but also to the continuous professional development of its employees. The investment in the new 4,400 square metre building and modern training rooms amounts to approximately six million Euro.

Moreover, Blaj’s production unit registered a significant increase in production during 2017, especially in the mobility solutions sector. Due to the high demand, the company has increased its production capacity for car components such as oxygen sensors and transmission control components and is preparing to add new products to its portfolio in 2018 such as Oxygen Emission Sensors azote. Since 2007, the plant also produces components for the Industrial Technology sector and will continue to strengthen its position by getting new projects in this area. Bosch has begun building a new office building this year and will be inaugurated in 2019. 

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ELBA EXPANDS ELECTRONICS CAPABILITIES THROUGH JOINT VENTURE AGREEMENT

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omanian electronics company Elba announced the signing of a joint venture agreement with Varroc Lighting, a privately-held automobile and twowheeler lighting solutions company in the US. The joint venture will focus on electronics manufacturing, and – given the constantly increasing electronic content of lighting products - will significantly support Elba’s growth in Romania.

“The global lighting market is facing major changes, where electronics integration is key to address the actual and future needs of the final customer,” said Bogdan Cocian, CEO of Elba. He underlined this joint venture will optimize Elba’s supply of electronic components.

Varroc Lighting Systems is an American supplier of innovative automobile and two-wheeler lighting solutions, with 7,200 employees in Africa, Asia, Europe, North America, and South America.

Elba Timisoara is a manufacturer with 100 years of experience on the mainstream market for automotive and technical lighting.

The Romanian manufacturer had a net profit of 17.7 million RON (3.9 million Euro) in 2017, 55 per cent higher compared to the previous year, according to data from the Ministry of Finance.

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The company reported a turnover of 250.2 million RON (54.8 million Euro), plus 11 per cent, reaching an average of 1,086 employees. One year before, in 2016, Elba Timisoara reached a turnover of 225.2 million RON (50.2 million Euro), a net profit of 11.4 million RON (2.5 million Euro), with an average of 1,020 million employees.

In 1952, Elba launched the production of the first headlights and lamps for tractors and trucks. Subsequently, between 1956 and 1970, Elba started producing the first vehicle headlights and lamps designed for Dacia.

Starting 1976, Elba has been the lighting producer for the whole range of models subsequently developed in partnership with Automobile Dacia, as well as for other types of vehicles. In 2003 and 2004, an ample investment programme was carried out with the purpose of aligning the production technology of the lighting devices (headlights and lamps) to the requirements of the vehicle producer Dacia Group Renault.

In November 2004, the Automotive Factory has completed the certification of the quality management system in accordance with a specific standard for the production processes from the automotive industry.

Elba’s automotive production site is almost 19.000 sqm-wide and is specialised in the production of vehicle headlights and rear lamps. The company’s R&D department covers the design and concept development activities. 

SUPPLIERS

FRENCH AUTOMOTIVE GROUP FAURECIA REACHES FIVE PLANTS IN ROMANIA

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rench car parts producer Faurecia recently opened its fifth factory in Romania, located in the village of Cateasca, Arges county, following an eight million Euro investment.

The company raised its 2018 outlook after reporting that first six months profit this year at the supplier rose by 10.2 percent.

The plant produces components for car interiors that will be delivered to international customers such as Jaguar, Land Rover, Fiat, Chrysler Automobiles, Volvo, Ford, PSA, Peugeot, Citroen and Renault.

Faurecia, which is 46-per cent owned by the PSA Group, said its first-half net profit rose to 342 million Euro, while sales climbed 5.2 per cent to 8.99 billion Euro from a year ago.

The plant currently has 370 employees and, by 2020, their number will increase to 900, according to JeanMichel Renaudie, Faurecia vice-president responsible with interior systems. The unit spans over 14,000 sqm and is one of the most modern in the group.

The company changed its outlook, saying it would target earnings per share (EPS) of more than five Euro, compared with a previous EPS target of five Euro.

The group currently owns five factories in Romania.

It produces car seats in Talmaciu and Ramnicu Valcea, emissions control systems in Craiova, and interior systems in Mioveni and Cateasca.

Faurecia entered the local market in 2003 and has reached over 3,300 employees in Romania.

“We delivered a very robust performance in the first half of the year again, ahead of our roadmap,” Faurecia CEO Patrick Koller said. “Taking into account this strong performance, we upgrade our guidance for the year and fully confirm our 2020 financial targets as presented at our recent capital markets day.”

Faurecia is targeting sales growth of more than seven per cent per year to reach 20 billion Euro by 2020, compared with its 2017 turnover of 16.96 billion Euro. 

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CELESTICA DOUBLED ITS PROFIT AT THE ROMANIAN PLANT IN BORS

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elestica, the local subsidiary of the Canadian group with over six billion USD in global revenues, posted last year a net profit of more than 2.6 million Euro, more than double compared to the previous year, according to data from the Ministry of Finance.

In 2017, Celestica reported a turnover of approximately 251.4 million Euro, slightly higher than in the previous year.

The company had an average of 1,240 employees in 2017.

Celestica Group, a supplier of components for electronic equipment for Alcatel, HP, Honeywell or NEC, recently expanded the production capacity and office area of the Bors plant in Romania with 9,000 square meters and transferred ten million USD to increase the company’s capital on the local market.

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The Bors plant has been expanded as a result of the company’s growing customer base in Romania and the new opportunities created by the advanced and intelligent technologies markets in energy, industry and health. The Romanian factory was inaugurated in 2004.

The Canadian Group also invested four million USD in the same plant last year to increase the capital to around 100 million Euro. The shareholders of the Romanian company are Celestica Netherlands BV Netherlands - over 99.99 per cent and Celestica International (Ontario, Canada).

Globally, the Canadian group has 40 factories in 20 countries, and around 43,000 employees producing equipment for Alcatel Lucent, HP, Honeywell and NEC. In Romania, with more than 1,000 employees, Celestica is one of the largest companies in Bihor County, but in recent years it reported big losses, with some exceptions.

After a profit of 12.5 million RON in 2011, the company announced losses of 11.6 million RON in 2012. Celestica rebounded on profit with 16.4 million RON in 2013, so that in 2014 and 2015 it had losses of 24.3 million RON and 6.6 million RON respectively. 

INTERVIEW

DRAEXLMAIER TO LAUNCH NEW PROJECTS IN PITESTI, SATU MARE AND BRASOV Interview with Iuliu Cadar, Draexlmaier Satu Mare

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raexlmaier has been working this year on finalizing some important investments, such as the expansion of the Hunedoara and Brasov plants, but also on updating the systems to the latest technology standards, says Iuliu Cadar, plant Manager at Draexlmaier Satu Mare.

“We have developed several projects for the communities where the company is active in: Pitesti, Satu Mare, Brasov,” he tells Automotive Today. And we are preparing two more projects by the end of this year. Our focus is on education, culture, social areas and sports. These projects are very important for us and we are very happy to see that our colleagues are very involved and participate gladly to these actions.”

For the Draexlmaier Group as an owner-managed business, a core element of its strategy to continuously invest in research and development and to further go on technical transformations.

“For example, the Draexlmaier Group started to develop solutions for E-Mobility already in 2009 and today, the company is a series supplier for total battery systems for a German premium automotive manufacturer,” says Cadar. “With automated vehicles, more and more electronics are finding their way into the car. In order to master this complexity, Draexlmaier develops concepts for the wiring system of the next generation.

Future demands of automotive industry like automated and connected driving and E-Mobility will also influence interior solutions of cars, that is why the Draexlmaier Group is currently putting high efforts in developing future orientated interior systems.”

More than 70,000 employees work at Draexlmaier Group worldwide, in over 60 locations in more than 20 countries.

“In Romania we have one of the largest teams of the Group,” Cadar explains. “The recruitment campaigns are carried out according to the demands raised by the orders of our clients and target both specialists and production staff. We have an encouraging retention rate with employees who have worked in the company for ten to 15 years. In order to promote and develop our employees, we focus on training courses, for example in order to deal with the latest technologies and machines. We offer our employees also professional trainings and different development opportunities. In Romania, we introduced the dual training system based on the German model and hired many of our graduates. We thus promote young talents and ensure uniform training standards. To promote young talent, we cooperate with universities and schools in the region.”

The Draexlmaier Group is a German automotive component supplier that develops and manufactures electric and electronic systems, luxury interiors and instrumental panels for the premium brands of the industry.

In Romania, Draexlmaier Group has five production centres in Pitesti, Satu Mare, Timisoara, Hunedoara and Brasov.

In the past years, several locations in Romania were extended. New production halls have been built in Satu Mare, Brasov, Hunedoara and new spaces were rented in Pitesti for the extension of the production activity.

“In the same time, all locations worked to update the production lines to the new technologies,” says Cadar. “Draexlmaier Group is involved in the professional education program as a promoter of the dual education system. Nowadays all five locations are involved into the program, having stable partnerships with several educational institutions involved in the training of the future professionals. Every year more than 200 students are part of the company’s professional education program. The partnerships with Universities have been also developed throughout the years. Master programs in Timisoara and Brasov provide important training opportunities to the students interested in the automotive industry. As part of the internship program, students can learn about the company’s activities and the challenges of the field in which they wish to build their future.” 

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FUJIKURA PRODUCES WIRING FOR ELECTRIC CARS IN ROMANIA

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ujikura Automotive Romania says it is one of the largest car wiring manufacturers in the local industry, with Volkswagen Group as its main client. The company has been in Romania for 17 years and currently has about 4,000 employees in its factories in Cluj-Napoca, Dej and the R&D Centre in Sibiu.

It produces wiring for electric models designed for urban traffic.

The VW car has an electric propulsion system and other new technologies, delivering a range of up to 160 kilometres with a fully charged battery.

Fujikura Automotive Romania started its activity in Dej in March 2013, producing wiring, which is the basic element for transmitting the signals and the electricity supplied by the battery. At the moment, the production volume for 2018 has reached around 3,000 pieces.

Company’s representatives said that wiring for the automotive industry must evolve at the same pace as the technological development of the new car models.

Electric vehicles are the future of the automotive industry, they added, with European governments already committed to supporting the production of very low emission vehicles and the number of electric cars sold increasing every year. 

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INTEVA PRODUCTS INCREASES PRODUCTION CAPACITY IN ORADEA

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merican-based Inteva Products will start a new investment in Oradea, by building a large production capacity in Industrial Park II. According to official data, the total investment will amount to 12.2 million Euro and will lead to the creation of 440 jobs. The company aims to start work in the new location in December 2018.

Inteva Products operates in the automotive industry, producing components for closure systems, interior systems, motors and electronics, and roof systems.

In Romania, it opened two factories in Salonta and Oradea. The Salonta plant started its activity in 2007 and has over 700 employees, while the one in Oradea started production in 2015 and has over 200 employees.

The most important customers of the company are Mercedes, Volkswagen, Peugeot, Citroen and BMW. Since its founding in 2008, Inteva has continued to expand in Eastern and Central Europe with plants in Romania, Slovakia, Poland, and Czech Republic.

Inteva employs more than 15,000 people in 18 countries and is headquartered in Troy, Michigan USA. 

KIRCHHOFF AUTOMOTIVE FOLLOWS FORD TO THE INDUSTRIAL PLATFORM IN CRAIOVA

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irchhoff Automotive opened its first plant in Romania on the various grounds of the Ford plant in Craiova, where it delivers numerous body structural parts

The company is also a service supplier for metal and hybrid structures in body-in-white, crash management systems, chassis applications and cross car beams.

Since mid-2012, the company has been supplying the cross-car beam and a variety of body-in-white components, along with front and rear bumpers to Ford.

Ford is one of Kirchhoff Automotive’s largest customer.

Kirchhoff Automotive is the largest business unit in the Kirchhoff Group, with 9,000 employees and about 30 production plants in 11 countries.

The plant covers 15,800 sqm of production and logistics area, robot welding technology, and component deliveries every two hours. Kirchhoff started in Craiova by supplying car parts for the Ford B-Max model. Components came from Kirchhoff’s factory in Hungary, were finished in Craiova and later assembled in the Ford factory.

The company was established in 1785 in Germany, today it is a part of the Kirchhoff Group, which includes Kirchhoff Automotive, Kirchhoff Ecotec, Kirchhoff Mobility, and Witte Tools business units. 

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PIRELLI TO EXPAND ITS TYRE PLANT IN SLATINA

talian tyre producer Pirelli will add a new production unit to its tyre factory in Slatina, southern Romania, on a six-hectare land plot.

The land first needs to be included in the city’s build-up area before the Italian investor can build on it and the city Local Council has such a decision on its agenda Pirelli plans to develop a new factory and a warehouse on this land plot.

In 2016, when it celebrated ten years of activity in Romania, Pirelli announced it would invest another 200 million Euro in expanding its local operations by 2021. The investment plan would increase the group’s production capacity in Slatina from ten to 15 million units per year and create new jobs.

The company aims to hire 50 people each month at its factory in Slatina until the end of this year. The producer needs all personnel categories, from operators to specialists, according to Pirelli Romania CEO Wolfgang Meier.

“We have a permanent recruitment campaign as we continue to create jobs,” Meier said.

Pirelli is the fifth largest player in the tyre market, after Bridgestone, Michelin, Continental and Goodyear. The company, founded in 1872, has production facilities in 19 countries and operates a sales network of around 14,600 points in over 160 countries.

In Romania, Pirelli is present through the factory in Slatina, inaugurated in 2006. Last year, with more than 3,000 employees, the company had a turnover of 488 million Euro and a net profit of 17.4 million Euro. 

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LEONI UPS PRODUCTION IN ROMANIA

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eoni opened a new car wiring plant in the Bumbesti Industrial Park, Gorj county, following a 750,000 Euro investment. Employing about 500 people, the new unit is the sixth plant owned by Leoni in Romania. Stretching over 8,500 metres, it is located on the site formerly occupied by the Pirelli unit.

“As the volume and diversity of the order grew, we needed to open this new plant. At this moment, we have about 500 employees in the plant in Bumbesti Jiu and by the end of this year we estimate that we will reach 650 employees, while by the end of 2019, 800 employees will work at this plant,” said Lidia Tonea, Leoni’s plant manager.

Leoni entered the Romanian market in 2000 with the opening of the first WSD (Wiring Systems Division) plant in Arad.

There followed the plants in Bistrita (2002) and Pitesti (2005) and afterwards the satellites in Beius, Ludus, Marghita and Bumbesti-Jiu were opened. In 2016, the first Leoni Shared Service Centre (SSC) was established in Cluj-Napoca.

With over 17,000 employees, Leoni is one of the biggest foreign employers in Romania and company officials say next year’s investment stands at around 800,000 Euro Leoni is a global provider of products, solutions and services for energy and data management in the automotive sector and other industries. The group of companies has about 88,000 employees in 31 countries and generated consolidated sales of 4.9 billion Euro in 2017. 

YAZAKI TO DOUBLE STAFF IN ROMANIAN R&D CENTRE

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apanese producer Yazaki Component Technology plans to hire 100 engineers for its research & development (R&D) centre in Timisoara, Western Romania.

The Timis county has attracted other companies such as Continental, Delphi Packard, TRW Automotive and Hella.

The firm is looking for engineers in areas that include software, electronics and mechanics, to join a team of more than 100 employees. The company has decided to increase the team after relocating to bigger headquarters in the north of Timisoara, said Alexandru Stoica, the company’s branch manager.

Yazaki has also launched an internship programme for students and graduates in Timisoara.

Timisoara is home to other companies active in the automotive sector, so it’s a challenge for the Japanese producer to recruit engineers.

The company created 3,100 new jobs in the past year, while sales increased by 42 per cent in 2017. The Japanese producer, which has five plants in Romania, last year reached 10,052 employees on the local market, thus entering into a club of only 12 firms with 10,000 or more employees in Romania. 

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TRW AUTOMOTIVE TO CLOSE STEERING WHEEL FACTORY IN ROMANIA

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erman-based car parts supplier TRW Automotive will close its steering wheel factory in Baia Mare, in northern Romania.

The closure will lead to the loss of some 194 jobs, according to the director of the Maramures County Employment Agency.

The factory opened five years ago and produced steering wheels for Ford, Volkswagen and Fiat, among others. The group had to close the factory after losing some export contracts, according to the local authorities.

TRW has been operating in Romania for 14 years and also owns factories in Marghita (Bihor county), Oravita (CarasSeverin county) and Lupeni (Hunedoara county), where it also produces airbags. The company’s business in Romania totalled over 260 million Euro and the number of employees amounted to almost 3,000 in 2017.

TRW Automotive is a provider of automotive safety solutions, producing active and passive safety technologies.

It develops and produces driver assist systems, foundation brakes, inflatable restraints, seat belt technologies and the electronics and software advancements for vehicle safety.

TRW is part of German group ZF Friedrichshafen, which also has two factories in Romania, in Timisoara and Roman. 

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OUR BIGGEST CHALLENGE IS TO FIND THE HUMAN RESOURCES FOR OUR PROJECTS

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ktrion Romania has had an intense year, marked by the expansion through new clients and the consolidation of projects started in 2017, according to Ciprian Bacoi, general manager of the company.

“Through our engineers and technicians’ teams, we offer quality control services at the factories of both car manufacturers in Romania: Dacia and Ford,” he tells Automotive Today. “Over the past two years we have formed a new team in Turda, dedicated to local clients.”

Last year, Aktrion managed to increase its operations’ turnover by more than four times compared to 2016, says Bacoi.

“Today, or biggest challenge is to provide the human resources needed for current operations and the start of new projects,” he explains. “Although the services we offer have a high technical load, the recruitment criteria are based on the personality of the candidates, the employees being trained at the workplace. Even so, we encounter major difficulties in the recruitment process. In addition, the increased competition on the labour market and the artificial increase of the minimum wage led to an increase of over 50 per cent in the cost of employees in the last two years.”

Ciprian Bacoi, Aktrion Romania In the medium term, Aktrion’s priority is to continue to grow and consolidate its local operations. In the long run, the company intends to launch integrated services that include advanced metrology and logistics.

Aktrion Romania has almost 80 employees and wants to have a steady growth in the upcoming years. 

AUTOLIV EXPANDS ITS ACTIVITY ON ROMANIA’S AUTOMOTIVE MARKET

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he local subsidiary of Swedish group Autoliv, a manufacturer of automotive safety systems, has opened an engineering centre in the Palas Iasi mixed-use complex, in the centre of Iasi, eastern Romania.

Autoliv has signed a partnership with local real estate developer Iulius, which owns the complex.

The centre is located in the United Business Centre (UBC), the office buildings of the Palace complex.

Autoliv is one of the biggest international investors in the local automotive sector. The group has factories in Brasov, Prejmer, Lugoj, Sfantu Gheorghe, and Resita and engineering centres in Brasov and Timisoara.

As of 29 June, 2018, Autoliv completed the spinoff of its electronics segment. The new independent company has expanded its engineering centre almost four times in one year since it moved in Palas Offices.

The partnership between the two firms began in Timisoara, where, at the beginning of 2017, the local subsidiary of Autoliv relocated its engineering centre to the first of the seven office buildings of the Openville mixed-use project, developed by Iulius.

Veoneer inaugurated the Iasi centre in June 2017, starting from a rented area of 330 square meters, in the United Business Centre 6. Then, a team of engineers from Timisoara, where the company is present for 11 years, has been relocated to Iasi to support the foundation of the company there.

The engineering centre in Palas Iasi became operational in 2017. The engineers are developing software for Active Safety products, as well as for Passive Safety systems. Autoliv Romania plans to reach over 200 employees in the Iasi centre in the next two-three years.

The company currently has a total area of 1,200 square meters in the office in Palas Iasi. Veoneer develops automotive safety systems in its offices in Timisoara and Iasi. The company designs and builds hardware, software for Active Safety, ADAS, autonomous driving, control of fastening systems and braking systems. 

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ECKERLE REPORTS 45 MILLION EURO TURNOVER IN ROMANIA

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erman-based Eckerle Automotive reported a turnover of 45.2 million Euro last year, 15 per cent higher than the previous year, according to data from the Ministry of Finance.

The production unit’s main client is German group Bosch. The Eckerle products are used to equip car brands such as Porsche, BMW, Audi, Nissan or Toyota.

However, the company posted losses of 1.4 million Euro in 2017 from a net profit of almost 65.000 Euro in 2016. The average number of employees rose from 857 in 2016 to 928 in 2017, according to mfinante.ro.

German group Eckerle, a supplier of parts and components for the automotive industry, expanded the production capacity of its plant in Cluj-Napoca, following a 400,000 Euro investment, and also created 100 new jobs.

At its plant in Cluj-Napoca, Eckerle produces components for the automotive industry, such as comfort devices (window lifters, windscreen wipers), manoeuvrability devices (ABS, cooling), door locks and ventilation valves.

The Eckerle Group was founded in 1968 and now employs nearly 4.500 people at its ten sites worldwide. The company develops and produces more than 160 million brush systems and engine control modules a year. 

TENNECO CLOSES FEDERAL-MOGUL ACQUISITION

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enneco, a provider of technology solutions for automotive and commercial vehicle original equipment markets and the aftermarket, announced that it has completed its acquisition of Federal-Mogul, a supplier to original equipment manufacturers and the aftermarket, with two plants in Romania.

The transformational acquisition was first announced in the second quarter of 2018.

This transaction precedes the planned separation of the combined businesses into two independent companies that will establish an aftermarket and ride performance company and a power train technology company. The spin-off is expected to be complete in late 2019.

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Federal Mogul entered the Romanian market in 2014, after the acquisition of Honeywell Friction Materials. The US group opened a plant in Ploiesti in 2016, producing car windshield wipers.

The company also operates a factory that produces brake pads in Ploiesti West Park. The investment in the brake pad factory was initiated by US group Honeywell, which subsequently sold it to Federal Mogul for 155 million USD. Besides Honeywell’s initial 58 million USD investment in the brake pads factory, Federal Mogul invested another nine million Euro in installing a fourth production line. 

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The Diplomat – Bucharest invites you to participate at Automotive Forum & Awards for Excellence Gala 2018, to be held on 13 November at JW Marriott Hotel in Bucharest – Constanta Ballroom, starting at 15:00.

Automotive Forum & Awards will bring together delegates from the Romanian automotive sector and Government representatives, in a halfday event, with engaging keynote sessions by industry leaders, interactive panel discussions, networking opportunities and gala awards dinner.

The event will also see the launch of the annual Automotive Today print publication, which analyses the trends that are driving the transformation in the automotive industry and how companies should fall in line for future success.

EVENT AGENDA 15:00 – 15:30 Event Registration & Networking Lunch 15:30 – 15:45 Opening address 15:45 – 17:30 AUTOMOTIVE INDUSTRY IN ROMANIA - LEADERS DEBATE CONFIRMED SPEAKERS: • PAULA PIRVANESCU, State Secretary, Ministry for Business, Trade and Entrepreneurship • ADRIAN SANDU, Secretary General, Member of the Board, ACAROM • CHRISTIAN VON ALBRICHSFELD, Country Head, Continental Romania • ATTILA SZABO, Managing Director, Ford Romania • CODRIN T. SCUTARU, Managing Director, International Government Relations, McGuireWoods Consulting LLC (Event moderator) • CATALIN STRATULAT, Delivery Head Europe Product Engineering Services, Wipro • ORACLE representative • NOERR representative TOPICS: • Romania’s Automotive landscape • Trends for the Automotive Industry: Evolution of IoT for the Automotive Industry, connected cars, Blockchain, Predictive Analysis, 3D Printing, Overcoming supply chain complexities with big data analytics and complete visibility • Tax incentives, financial support, and fiscal facilities, or how can one manufacturer thrive on a rather volatile market, taxation-wise?

• Infrastructure – wishful thinking? When and how will the ailing sector catch up to industry demands?

• Legislative framework for professional and dual education; workforce trends 17:30 –17:45 Q&A 17:45 – 18:30 Networking cocktail

18:30 – 21:00 AWARDS FOR EXCELLENCE GALA 18:30 – 18:45 Official opening / Dinner 18:45 – 21:00 Awards ceremony JURY MEMBERS: • PAULA PIRVANESCU, State Secretary, Ministry for Business, Trade and Entrepreneurship • DAN NECHITA, Co-founder and President, Smart Everything Everywhere • COLIN C. LOVERING, VP - British Romanian Chamber of Commerce • CARMEN ADAMESCU, Partner Advisory, EY • CODRIN T. SCUTARU, Managing Director, International Government Relations, McGuireWoods Consulting LLC • DANIEL ANGHEL, Tax and Legal Services Leader, PwC Romania • CATALIN STRATULAT, Delivery Head Europe Product Engineering Services, Wipro • ADRIANA RECORD, Executive Director, CCIFER • CIPRIAN GAVRILIU, Partner Tax & Legal, Deloitte • ANDREI MIHAI CRACIUN, Head of office for Innovation, Technological Transfer and Intellectual Property Office at West University of Timisoara AWARDS CATEGORIES: ▪ INNOVATION AWARD ▪ SUPPLIER EXCELLENCE AWARD ▪ CSR AWARD ▪ COMPANY OF THE YEAR ▪ LOGISTICS EXCELLENCE AWARD ▪ AFTERMARKET PARTS COMPANY AWARD ▪ CEO OF THE YEAR ▪ LIFETIME ACHIEVEMENT AWARD ▪ JURY SPECIAL AWARD