EAT-I (Automotive Industry)

7/29/2019 EAT-I (Automotive Industry)

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Emerging Automotive Technology

(AEL312)

Unit: I Automotive Industry


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Topics to be covered

Present status of Automotive Industry

- Global Automotive Industry

- Indian Automotive Industry

Industry Challenges and Concepts for 21st Century

Crucial Issues facing the Industry and Approaches to meet

these challenges.

Future of Automotive Industry


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Global Automotive Industry

The automotive industry is one of the largest and mostmultinational of all industries. It is a key indicator of economicgrowth and a major contributor to the gross domestic product ofthe country. On a global level, the assets of the top tenmultinational automotive enterprises represent 28% of the

assets of the worlds top 50 companies, 29% of theiremployment and 30% of their total sales.

The automotive industry today is in the middle of a dramatic andlargely unprecedented transformation. The heart of this

transformation is not about how the auto company does its workbut rather how it defines itself.


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Global Automotive Industry (contd..)

The model of the car company that Henry Ford created andAlfred Sloan perfected integrated, scale driven, product-push-oriented prevailed for decades.

It drove the consolidation of the U.S. industry from dozens ofmanufacturers to four to three. It governed the development ofthe post-war European industry. And it was the model uponwhich the Japanese manufacturers relied as they shot up theglobal league table having made timely and effectiveadaptations that were overlooked, for a while, by the once-dominant U.S. industry.


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Today the traditional model of the auto company is under direct

attack. Alternative visions and concepts have emerged for every

piece of value that the traditional car company adds designing

cars, engineering them, manufacturing them, assembling them,

and marketing them. These visions and concepts are not justbeing tested on paper but through experiments that are getting

ever bolder and more daring.

Some industry commentators have speculated about thepossibility of creating a virtualcar company along the lines of

a Gatewayor a Dell.


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The conventional wisdom is economic pressure will force theauto industry to collapse to perhaps six major players, two ineach of the three legs of the triad (North America, WesternEurope, Japan). It is futile to try to define the future shape and

structure of an industry as large, as complex, and as politicallycentral as the auto industry.

Most of the challenges the automotive industry will face in thenext 10 or 20 years can be identified today. They are shaped bychanges in the underlying economics of the auto business, fromsupplier through consumer, and by definition they aresufficiently broad to be of interest to all the participants in theindustry.


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Indian Automotive Industry

Automotive Industry, globally, as well in India, is one of the key

sectors of the economy. Due to its deep forward and backward

linkages with several key segments of the economy, automotive

industry has a strong multiplier effect and acts as one of the key

drivers of economic growth.

The well developed Indian automotive industry produces a wide

variety of vehicles: passenger cars, light, medium and heavy

commercial vehicles, multi-utility vehicles such as jeeps,scooters, motor-cycles, mopeds, three wheelers, tractors and

other agricultural equipment etc.


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Indian Automotive Industry (contd..)

The Indian automobile industry is currently experiencing anunprecedented boom in demand for all types of vehicles. Thisboom has been triggered primarily by two factors: (1) increasein disposable incomes and standards of living of middle class

families; and (2) the Governments liberalization measures suchas relaxation of the foreign exchange and equity regulations andreduction of tariffs on imports that has fueled financing-drivenpurchases.

Industry observers predict that passenger vehicle sales willincrease substantially as the market grows and customerspurchasing abilities rise, there will be greater demand forhigher-end models which currently constitute only a tinyfraction of the market.


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According to the Society of Indian Automobile Manufacturers,

annual vehicle sales are projected to increase to 5 million by

2015 and more than 9 million by 2020. The majority ofIndias car

manufacturing industry is based around three clusters in the

South, Westand North.

The Southern cluster near Chennai is the biggest with 35% of

the revenue share. The Western hub neat Maharashtra is 33% of

the market. The Northern cluster is primarily Haryana with 32%.

Chennai, is also referred to as the Detroit of India with theIndia operations of Ford, Hyundai, Renault and Nissan

headquartered in the city and BMW having an assembly plant on

the outskirts.


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Gurgaon and Manesar in Haryana form the Northern clusterwhere the countrys largest car manufacturer, Maruti Suziki, isbased. The Chakan corridor near Pune, Maharashtra is theWestern cluster with companies like General Motors,Volkswagen, Skoda, Mahindra and Mahendra, Tata Motors,

Mercedes Benz, Land Rover, Fiat and Force Motors havingassembly plants in the area. Aurangabad with Audi, Skoda andVolkswagen also form part of the Western cluster.

Another emerging cluster is in the state of Gujarat with

manufacturing facility of General Motors in Halol and furtherplanned for Tata Nano at Sanand. Ford, Maruti Suziki andPeugeot-Citroen plants are also to come up in Gujarat. Kolkatawith Hindustan Motors, Noida with Honda and Bangalore withToyota are some of other automotive manufacturing regions

around the country.


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These trends have encouraged many multinational automakers

from Japan, U.S.A., and Europe to enter the Indian market

mainly through joint ventures with Indian firms.

The automobile industry in India is one of the largest in the

world and one of the fastest growing globally. Indias passenger

car and commercial vehicle manufacturing industry is the

seventh largest in the world, with an annual production of more

than 3.7 million units in 2010.

India, with its huge domestic market, rapidly growingpurchasing power, market linked exchange rate and well

established financial market is emerging as an attractive

destination for new investments in this sector.


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Industry Challenges

The global automotive industry today is deliveringunprecedented levels of customer value. Vehicles today arevastly superior to and more reliable than those produced just adecade ago in terms of economy, safety, comfort, functionality

and performance. Fierce global competition for customers is theprime mover behind the increase in customer value.

But the automotive industry structure that has endured foreighty years may be reaching the limit of its potential. Delivering

the next significant increment of value to automotive consumerswhile remaining profitable will require dramatic increases inproductivity across the value chain.


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Industry Challenges (contd..)

There are five common challenges facing the worlds

automakers and their implications for the structure and

dynamics of the auto industry are described below from

research and client experience:

- Globalization

- Product Differentiation

- Product Development

- Supply Chain Restructuring- Marketing and Distribution


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Globalization

North America, Western Europe, and Japan are home to 18 ofthe top 20 VMs in the world and account for nearly 90% of theglobal production. All three of these regions are mature

automotive markets with low expected unit growth rates andcapacity in excess of regional demand.

VMs therefore have turned their sights toward growthopportunities in emerging markets: Latin America, North andSouth Asia, China, India, Eastern Europe, and Russia. Thesemarkets are forecasted to grow at more than double the averageindustry rate over the next ten years.


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Product Differentiation

Competition for sophisticated consumers is fierce. Vehiclebuyers have an abundance of choices of vehicles withincreasingly similar functional and performance characteristics.

In order to increase share, maximize price realization, and usetheir capacity, VMs must offer differentiated products that winwith consumers.

Every VM, it seems, has or soon will have a vehicle thatcombines some of the key attributes of SUVs (ride height, all-wheel drive) with the passenger compartment and amenities of astandard sedan.


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Product Development

Vehicle development is expensive and time consuming, and

risky. VMs as a group have made enormous progress reducing

cycle time and cost despite growing product complexity, new

technologies, and more stringent regulations. Costs to design,

engineer, and a tool a major new model can reach into the

billions of dollars.

All are looking for ways to reduce development time and cost to

improve profitability and to better react to market changes.


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Supply Chain Restructuring

A more recent but equally powerful initiatives is for VMs to

begin to rely more fully on suppliers for systems and

modules. Systems usually are defined in terms of functions

the steering system, the braking system, the driver

information system consisting of a number of components

that are not necessarily located with each other.

A module is a number of components that may not be at all

related functionally but can be assembled and supplied as a unit

to final assembly.


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Marketing and Distribution

Competition for customers and the expense of differentiatingproducts have forced VMs to look downstream for new ways tocreate and capture value.

Two main approaches have emerged. The first, followthe car,is to participate more extensively in the stream of post-assembly transactions relating to a vehicle, beginning with theinitial sale and ending at the scrap yard. The second, followthecustomer, to build and exploit more durable relationships withcustomers over their vehicle buying lifetimes. Both of these,require radical changes in the ways that VMs define and servetheir markets.


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Crucial Issues facing the Industry

At the beginning of the twenty-first century, the worlds loveaffairwith the car is a source of concern on several fronts suchas:

- The impact of the car on the environment, especially in terms

of its contribution to CO2emissions and global warming;- the anticipated growth in the worlds car population, mainly indeveloping countries, which has the potential to increase thisimpact;

- traffic accidents, which are a major cause of death and injury,particularly among the young;

- the cars current reliance on oil;

- the economic and social cost of road traffic congestion.


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Crucial Issues facing the Industry (contd..)

Environmental

Transport is a major user of energy and contributesconsiderably to carbon dioxide (CO2) emissions. The adoptionof the Kyoto protocol by the EU, calling for a significant

reduction in greenhouse gases, is a major driver towardscutting emissions.

The EU and individual Member States, in cooperation withmanufacturers, have pursued a policy of emission reduction formany years. Emission standards have been progressivelytightened over the last two decades, but the increasing numberof vehicles has limited the overall improvement in air quality.


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A plan for gradual achievement of international pollution

standards/ norms by domestic vehicle manufacturers such as in

India has been adopted. Emission norms came into force in

1991 for petrol vehicles and 1992 for diesel vehicles. These

norms have been progressively made stringent.

Environment concerns led to India narrowing the gap with Euro

norms at a rapid pace and currently BS-IV or Euro IV equivalent

norms are in force throughout the country.


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Fuel

Transport consumes about a third of all energy used in the EU15and road transport alone accounts for more than a quarter.About half ofoil, around 80% of which is imported, is consumedby road transport. Dependence on imported supplies, whichmay not be secure, are subject to growing competition from theemerging economies. At the same time, approaching the limitsof production may reinforce the pressure for increasedefficiencyand alternative fuels.

Some electrically powered vehicles have been in use for severalyears. These vehicles have a limited range and dependent onheavy battery packs, which require frequent recharging from thegrid.


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Fuel (contd..)

In the 1990s, car producers such as Toyota and Honda

developed hybrid vehicles, which use an internal combustion

engine in tandem with an electric driving system. These are

more efficient and less polluting than conventional engines but

still rely on oil.

Research in this area is proceeding along two main lines:

- finding alternative sources of fuel for the internal combustion

engine; and

- developing an alternative means of powerfor road vehicles.


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Safety

Every year there are many road accidents. Road vehicleaccidents are the main cause of death. Despite the increase inthe level of traffic the number of accidents has fallen. However,the situation is still unacceptable and difficult to justify. In order

to reduce the number of road deaths, the action program aim at:- encouraging road users to improve their behaviour;

- making vehicle safer;

- improving road infrastructures.

As far as the automotive industry is concerned, the second aimis the most important. The industry is pursuing severalmeasures in the interests of both passive safety, to protectoccupants when an accident occurs, the active safety, designedto avoid accidents altogether.


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Safety (contd..)

Vehicles are developing into platforms for advanced electronicsystems which can control a vehicles safety functions. Thistechnology offers great potential for a quantum leap in the field

of road safety, thanks to smart active and passive safetymeasures which can improve compliance with driving rules, inparticular regarding speeding and impaired driving ability, aswell as providing intelligent protection in the event of anaccident.

The priorities for accident protection or passive safetymeasuresare:

- audible or visual seat belt reminder systems;

- safercar fronts for pedestrians and cyclists;


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Safety (contd..)

- the impact of increasing numbers of 4x4s, sports utilityvehicles (SUV) and multipurpose vehicles.

Accident prevention oractive safety measures are focusing onthe development of intelligent transport systems including:

- speed management devices to reduce stopping distances,increase stability and prevent roll-over accidents;

- warning to detect driver fatigue or worsening of performance;- devices capable of alerting the driver to the risk of collision.


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Safety (contd..)

Other devices under consideration are:

- driving by wire-control systems;

- improving visibility, particularly at night.

Navigation Systems

Developments in IT made it possible for navigation andguidance systems based on digital mapping. These are available

with the coming into service of the Satellite Positioning System.The development of automated highways where computerscontrol the vehicles has long been


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Future of Automotive Industry

There is plenty of evidence that the automobile will change more

in the next ten years than that it did in the last fifty. The

automobile will keep making history. And the fascination with

the automobile will continue to know no political, national or

cultural borders.

Automobile will become safer, greenerand more electric.

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EAT-I (Automotive Industry)