September 15, 2009
Innovation vs. gloom
By Christoph Hammerschmidt

The 63rd IAA motor show in Frankfurt (Germany) has started with a gloomy note. The industry expects a slow recovery. And before a recovery can take place, many jobs will be lost. However, the innovation speed seems to pick up.

Robert Bosch GmbH as one of the world's largest automotive electronics suppliers will likely cut 8.000 jobs in its automotive branch alone amidst a revenue decline of some 20 percent, explained Bosch CEO Franz Fehrenbach in his speech at the company's IAA press conference.

Tier one Delphi recently announced some 200 job cuts, but EE Times Europe learned that the real number of jobs that will fall prey to Delphi's ongoing restructuring process is at least twice as high.

The industry is in an upheaval. Experts such as Stefan Bratzel, head of the Center of Automotive at the University of Applied Sciences Bergisch Gladbach predicted that for the tier ones the worst has yet to come. According to media releases, Bratzel expects between 30.000 and 50.000 jobs at automotive suppliers to be cut over the next months.

Not all of the jobs to be eliminated will be related to electronics, but the suppliers of electronic parts won't be spared completely. Fehrenbach pointed out that the structural challenges of the industry will become evident as the worst turbulences seem to be over.

However, it is obvious that the crisis also offers chances for experts in the field of electronics and related topics. More or less all enterprises along the automotive value chain highlight at the fair that they are working with high pressure on the development of greener cars and novel power trains which help to reduce fuel consumption and CO₂ emission. Apparently the crisis drives the innovation speed. "We are surprised how many innovations have been announced just in the two weeks ahead of the fair," said Matthias Wissmann, president of the German automotive industry association VDA.

In the realm of conventional internal combustion engines, many companies followed the downsizing approach with their exhibits. Combined with variants of mild hybrid techniques, the CO₂ emission has been reduced significantly; some mid-size cars now even sport emissions of less than 100g per kilometer. Nevertheless, electric cars take center stage — for instance Opel's Ampera, the European adaption of GM's Volt. Audi shows an impressive study of an electric sports car. The e-tron is equipped with four engines which brings them from zero to 100 km/h within 4.8 seconds. And unlike earlier designs the car has enough battery capacity for a 248 km trip.

Audi was also the company that highlighted the chances for electronics and for EEs in the crisis. The company announced to hire 100 engineers dedicated to the development of an electric car that will be closer to volume production than the e-tron. 100 engineers may appear a drop in a bucket compared to the job losses imminent to the industry. But Audi's move shows that innovation is the right strategy to overcome the crisis.
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September 03, 2009
Home alone, with a hangover
By Christoph Hammerschmidt

The fiesta lasted for half a year, and the champagne flowed like water. Car dealers didn't trust their eyes: the crowd snatched the vehicles as if tomorrow the production would end.

Now the coffers are empty; the internet counter to apply for the scrappage bonus is closed — at least in Germany where the largest such bonus program was in place. In the USA, the 'cash for clunkers' program already had closed earlier. While France continues to celebrate its 'Prime a la casse' party and the UK meditates over the right way, it is time to strike a balance.

During the program, most car makers achieved extraordinary sales increases — some of them even in the triple-digit percentage range. Fiat, for instance, boosted the number of units sold by 125 percent. With an increase of more than 270 percent, the Romanian OEM Dacia topped all competitors.

The scrappage bonus, a magnificent idea then?

Rather not. As after every good party the hangover comes afterwards. Yes, the bonus program helped OEMs to keep their staff over the worst phase of the financial crisis.

But for the automotive industry, the crisis is not over; it is just about to begin. The scrappage bonus did not generate additional demand; it only motivated buyers to bring forward what they would have done anyway sometime in the future. Since the overcapacities in the automotive industry persist, the overproduction will go on. It will be difficult to find buyers for the oodles of vehicles that will well out of the factories in the months to come. There is already word the industry is heading for fierce rebate battles. Rebate battles: An euphemism for the cut-throat competition we will witness. Well, no, the German market is not the center of the universe nor is the German industry. But the problems are similar elsewhere. The approach to intensify exports to compensate for declining local sales (an argument heard several times in this context) is ridiculous: The crisis has hit other societies and geographies equally bad.

So in the absence of further government aid, the industry has to overcome its hangover and find its own ways out of the crisis. Developing more fuel-efficient and environment-friendly cars could be an alternative. But this idea is not new either, and the industry in this context has already proved an impressing inertia.

BMW these days announced to invest one billion euros into its German manufacturing sites. The question is if (and how) this can strengthen the luxury car makers' competiveness. It would have been much better to invest in innovative mobility concepts. In the end, the only one to benefit is the manufacturing robot industry.
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August 19, 2009
Show time in Berlin
By Christoph Hammerschmidt

The German government has aired plans to

Is this the right strategy to save the German automotive industry in the crisis and at the same time doing something good for the environment? Will it be the bold move the industry needs to catch up with Japanese and other competitors? The answer is clearly no. Well, it might be a step into the right direction. But it is a very small one, it is too little, too late and too half-hearted.

The one million e-cars the government is aiming at is a rather modest goal, given the fact that currently about 50 million vehicles are registered in Germany. We do not expect that this number will decrease significantly by 2020, so the market share the national development plan is promising adds up to an almost ridiculously low market share of 2 percent for the e-cars. So the 'National Development Plan Electromobility', announced with much ado, is more a side-effect of the current election campaign in Berlin than a strategy with lasting substance.

Other economies have moved faster and more forcefully. France, for instance. Like in Germany, car buyers at the Seine get a bonus when they scrap their old clunker and buy a new one. Unlike in Germany however, French consumers get a higher bonus if the decide to invest into a car with an alternative drive — electric or HEV.

The British government rewards buyers of electric cars with an amount of between 2300 and 5800 euros — in cash. Similarly, the US administration offers rather high bonuses for e-car buyers.

In Japan, the world's most advanced market for HEVs and e-cars, the government pays 50 percent of the additional costs associated with the electric or hybrid drive. Additional scrapping incentives for old cars as well as regional and local stimulus programs for 'clean' cars add up to almost 15.000 euros for buyers of electric cars.

Some of these incentives have been in place already for quite some time. For instance, the US HEV incentive has been introduced already in 2006; in Japan the public authorities have launched their bonus system for e-cars already ten years earlier.

The German scrapping bonus program however has failed to show any steering effects with respect to fuel consumption and / or CO₂ emission reduction. It was not designed for this purpose; all it was supposed to do was to stimulate the consumption of vehicles during the crisis. Now it is too late to change the concept: The program will expire by the end of this month. Perhaps it has been very efficient in that it indeed cranked up the production during in a time when the crisis threatened to seriously affect a key industry. But the government gave away any option to promote the development of innovative technologies.

Perhaps it would be a good idea for the future to coordinate such public activities on a pan-European level. Today, the multitude of measures resembles a rag rug with different, sometimes contradicting effects. After all, we should not forget that climate change and the dependency on oil are transnational issues.
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July 09, 2009
Guardian Angel, off-guard
By Christoph Hammerschmidt

Driving along a high-speed highway is a safe thing nowadays. After all, cars are more safe than they used to be — with anti-lock braking systems, electronic stability programs, and, for the worst case, airbag systems, right? I admit, I also feel safer today than I did in my first car, a 14-year-old VW Beetle back in 1971. No disk brakes, no power brakes, not even safety belts, and of course no airbags. Compare this with today's safety standard.

Perhaps I should feel less safe. Data suggest that of all electronic subsystems in my little mobile universe the live savers are the least reliable ones. This awareness is based on statistical data from mandatory technical check-ups in Germany, but they could have been levied just as well in any other European country. The data are alarming. If the car radio is broken, one notices immediately. If an anti-lock brake controller has silently died away, one will notice only in a situation when he has damn little time to take any measures. Even worse if an airbag fails.

So are all these safety bells and whistles just Potemkin villages, created to dip into car buyer's purse?

I don't believe so. Statistical accident data show that despite today's much higher traffic density the number of traffic fatalities in 2008 has reached the level of 1950 after having hit an absolute high in the seventies. Since then it is decreasing, and the most decisive factors for this trend are technical safety measures within the vehicles including electronic devices. Again, these data refer to Germany but they apply to other geographies as well.

Apparently most of our electronic guardian angels are doing their job correctly. But each traffic fatality is one too many, and car vendors, component designers and all engineers along the value chain should bring their grey cells to speed in order to make these systems more reliable. After all, an accident could also hit each one of them.
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