K-OPS February 2023 Edition- 1

The German Automotive Big-Three

Overview of the Industry

Germany is recognized by the world over for its outstanding automotive industry and excellence in engineering. From Asia to America, German cars embody highly cherished values of innovation, reliability, safety, and design. Germany is, by some distance, Europe’s leading production and sales market. The country’s world-class R&D infrastructure, complete industry value chain integration, and highly qualified workforce create an internationally peerless automotive environment. It enables companies to develop cutting-edge technologies that ideally address tomorrow’s mobility needs.

Being home to the modern car, the German automobile industry is regarded as the most competitive and innovative in the world. It has the third-highest car production in the world and the fourth-highest total motor vehicle production, with an annual output close to six million and a 31.5% share of the European Union (2017).

German-designed cars won the European Car of the Year, the International Car of the Year, and the World Car of the Year annual awards, most often among all countries, with BMW, Audi, and Mercedes Benz contributing and competing to be at the top of the table.

PESTEL Analysis of the Industry

Stable political environment with relatively low taxes

The automotive industry is protected from foreign competition

High regulatory standards for emissions and safety

Trade agreements with other European countries

Political

Economical

Low unemployment and high GDP

Strong export-driven economy due to the presence of automobile makers

High wages and strong labour unions

Strong economic growth in the European Union

High demand for luxury and environmentally friendly cars

Shifting consumer preferences towards electric vehicles

Growing demand from the younger generation

Social

They are investing in new technologies such as autonomous driving, connected cars, and blockchain integration

Automakers are using advanced manufacturing techniques to improve efficiency and reduce costs

Stringent environmental legislation to reduce emissions

Automakers are investing in alternative fuel sources such as natural gas and hydrogen

Shift towards electric and hybrid vehicles to reduce emissions

Stringent labor laws and regulations to protect workers

Complex taxation system that favours the automotive industry

Stringent safety regulations to protect consumers

Introduction

Bayerische Motoren Werke

AG or BMW is a German multinational manufacturer of performance luxury vehicles and motorcycles headquartered in Munich, Germany

BMW has 31 production and assembly facilities in 15 countries, as well as a global sales network

With its four brands BMW, MINI, Rolls-Royce, and BMW Motorrad, the BMW Group is the world's leading manufacturer of premium automobiles and motorcycles, and a provider of premium financial and mobility services

In 2021, BMW Group's global revenue stood at around 111.2 billion euros, with the highest revenue coming from China (33.6%), followed by the United States (14.6%)

Did You Know?

BMW's logo, the blue and white roundel, is said to represent a spinning propeller, a nod to the company's origins as an aircraft engine manufacturer

BMW also has a strong focus on sustainability and produces electric and hybrid vehicles under its “BMW i” sub-brand, which was introduced in 2011

Manufacturing Process of BMW

BMW manufactures its products at 24 sites in 13 countries on 4 continents. The company's global manufacturing and development network allows it to utilize its expertise and respond flexibly to customer requests and market changes. The manufacturing process has been divided into 5 main stages.

Paint Quality Assurance Body Interiors Electronics and Tires

With digitalization, BMW manages every aspect of its manufacturing process accurately and precisely. Their body shop, which employs more than 380 robots and requires 6 hours to complete one body alone, also uses 100 robots to paint a BMW car, which requires 12 hours to complete, with human workers providing the final touches.

Connected Supply Chain (CSC) Stream Integration at BMW

News & Events

Transportation service

CSC portal

Notification & Data Tracking

Supplier

ERP system

Master and movement data

The BMW Group utilizes a worldwide system of suppliers and works closely with various logistics companies. The Connected Supply Chain initiative significantly improves visibility within the supply chain. It provides plants' material coordinators and logistics experts with information on the location and arrival time of goods every 15 minutes. This level of transparency allows them to quickly address potential delays and take preventative measures to avoid additional expenses.

Distribution Strategy

BMW’s sales and distribution channels are 80% offline, i.e., the cars are available in stores, which the respective showrooms can provide on customers' visits. The other 20% of purchases are made online in a virtual showroom where customers can customize their cars and later pay for and obtain the cars.

The company does not appoint automobile distributors; it directly contacts authorized showroom dealers to sell cars to customers. It is to keep the sales less aggressive and to maintain their luxurious image in the market.

But distributors and stockists are at strategic locations for the distribution of spare parts, which helps maintain brand reliability.

Currently, BMW’s distribution is organized according to the "fi-fo" principle ("first in, first out"), taking into account the capacity of vehicle compounds and transport modes to create an efficient flow through the network.

The worldwide distribution of BMW’s vehicles costs $1.3 billion per year, with 60% of the output transported by rail, and the company is looking to increase this proportion for sustainability reasons. At the same time, to improve efficiency, BMW is using smart networks, data analytics, virtual reality, camera systems, and paperless operations.

Introduction

Mercedes-Benz, commonly referred to as "Mercedes" and sometimes as "Benz", is a German luxury and commercial vehicle automotive brand established in 1926. MercedesBenz AG is headquartered in Stuttgart, Baden-Württemberg, Germany

In 2021, the company made a revenue of $176.46 billion

According to MercedesBenz's 2022 financial reports, the company's revenue for the year is $153.95 billion

Mercedes-Benz Mobility AG offers financing, leasing, car subscription and rental, fleet management, digital services for charging and payment, insurance brokerage, as well as innovative mobility services

Manufacturing Process of Mercedes-Benz

The manufacturing process has been divided into 8 main stages:

Preproduction planning

Sketching and prototyping

Testing of prototype

Production of components

Delivery

Inspection and testing

Assembling

Painting

The manufacturing process at MBUSI was designed to be flexible, producing each model "Just In Time," which results in an agile assembly line that can quickly adjust to market demands and model changes.

It is one of the reasons Mercedes-Benz models can reflect the latest technological changes each year. Instead of being stuck with a single template for a model generation for several years, the assembly line can easily react to smaller updates for each model year.

Factory 56 of Mercedes-Benz: The future of production

Flexible, digital, efficient, and sustainable: Factory 56 embodies the future of production at Mercedes-Benz and sets new standards for the automotive industry. With an investment of approximately 730 million euros, the Mercedes-Benz factory in Sindelfingen's factory is committed to Germany as a business location.

Mercedes-Benz is investing about 2.1 billion euros at the Sindelfingen site. At the same time, the company is increasing efficiency in Factory 56 by 25 percent compared to the previous S-Class assembly.

The assembly hall is 100 percent flexible so that all Mercedes-Benz model series can be integrated into ongoing production in the shortest possible time, depending on demand—from compact vehicles to SUVs.

Alongside CO₂ and energy balance considerations, the sustainability approach at Mercedes-Benz has other ecological aspects. There are plants on approximately 40% of the roof area. It not only compensates for the sealed ground area but also improves the interior climate of the building by retaining rainwater.

Introduction

Audi AG is a German automotive manufacturer of luxury vehicles headquartered in Bavaria, Germany. It is a subsidiary of the Volkswagen Group

Going back to the early 20th century, the initial enterprises (Horch and the Audiwerke) were founded by engineer August Horch (1868–1951)

In 2021, Audi realized total revenue of US$62.0 billion worldwide. The largest passenger car segment, SUVs, accounted for 39% of Audi's revenue. Audi's second-largest segment was the Executive Cars

Four interlocking rings symbolised the merger of four automobile manufacturers based in the German state of Saxony: Audi, DKW, Horch and Wanderer became Auto Union AG

Did You Know?

Audi was the first company to crash-test it's cars

Audi was the first automaker to gain victory at Le Mans with both hybrid and diesel powered vehicles

Manufacturing Process of Audi

AUDI AG has one of the most flexible and efficient production systems in the automotive industry: The Audi Production System (APS) is based on the fundamental principles of cycle, flow, pull, and perfection. Audi consistently applies these principles not only in production but throughout the company.

A robot of the future generation also assists the assembly lines. The “PART4you” robot works hand-in-hand with humans – without any protective fence and adapted to the employees’ working speed.

The manufacturing process has been divided into 8 main stages:

Press and Cutting Shop

Delivery Paint Shop

Production and Plant Planning

Hot Stamping

Body Shop

Assembling

Inspection and testing

Supply Chain Process at Audi

Most Important Pillars of Audi's Sustainable Supply Chain

Distribution Strategy

AUDI distributes its product through authorized streamlined distributors, making the AUDI flagship vehicles available to the customers; the company will continue to invest in the creation of flagship stores to maximize the consumer experience. At the same time company is also expanding the number of authorized dealers.

The critical factor in the distribution strategy for Audi is the location of stores. The stores are recommended to have a lot of area for the display of the various cars. At the same time, the locality should be posh too. Due to the high investment involved, dealers' margins are also high.

The company has production facilities at nine locations across the world. They are also targeting new markets in search of potential customers. As a result, Audi has made global investments and continues growing in the Asian market.

Currently, Audi’s distribution is organized according to the “fi-fo” principle (“first in, first out”), taking into account the capacity of vehicle compounds and transport modes to create an efficient flow through the network.

Distribution expenses of EUR 1,365 ($1,598) million mainly include labor and material costs for marketing and sales promotion, advertising, public relations activities, and outward freight, as well as depreciation attributable to the distribution function. At the same time, Audi is using smart networks, data analytics, virtual reality, camera systems, and paperless operations to improve efficiency.

R e c e n t n e w s a b o u t B M W

BMW Group India sets a new record for the highestever annual customer deliveries in terms of both motorcycles and Cars

The BMW brand sees a 36.8% increase in sales from 2021 to 2022

The MINI brand sees an 11.4% increase in sales from 2021 to 2022

The motorcycle brand sees a 40.3% increase in sales from 2021 to 2022

The company is proud of its achievement and is dedicated to continuing to provide quality products to their customers

BMW also revealed that its sports utility vehicle

(SUV) range — BMW X1, BMW X3, BMW X5, and BMW

X7 — grew more than 60 percent, while its luxury sedans BMW 3 Series, BMW 5 Series, and BMW 6 Series — continued their strong run

India was the fastest-growing global market for Mercedes-Benz in 2022; CEO Ola Källenius Mercedes-Benz Reports 21% Growth in Q4; 2022. Total sales of 350,949 vehicles, +6.5% Versus 2021 Mercedes-Benz emphasizes focus on decarbonization by kicking off the annual India edition of Sustainability Dialogue

Mercedes-Benz to Launch Global Branded Highpower Charging Network, Starting in North America Mercedes-Benz to Offer Level 3 SelfDriving in America Mercedes-Benz Energy and Lohum Advance Battery Sustainability Through a Multi-Year Second Life Partnership MercedesAMG One Hypercar Deliveries Start The Bengaluru-based Mercedes-Benz Research and Development India (MBRDI) is the Daimler Group's largest R&D center outside of Germany. This hi-tech facility employs over 11,000 engineers who are helping accelerate product development by simulating real-world scenarios in the virtual world

R e c e n t n e w s a b o u t M e r c e d e sB e n z

Multi-Modal Logistics Park At Kadakola

By December 2023 - Audi

The Multi-Modal Logistics Park or Inland Container Yard (ICD) at Kadakola in Nanjangud, being built by the Container Corporation of India (CONCOR), will be ready for inauguration in December this year.

The project is being undertaken with stringent adherence to quality and as per the CONCOR standards and is coming up at an area of 67 acres of land that has been acquired by the Karnataka Industrial Area Development Board (KIADB) and handed over to CONCOR.

This is the third Inland Container Yard in Karnataka by CONCOR after Whitefield in Bengaluru and one in Mangaluru, and the Mysuru facility is being built for Rs. 100 crores. The project will cut transportation costs, boost merchandise activities and give a fillip to regional industrial development.

As part of the project, there are two Railway lines and a huge warehouse. The electrified double track between Bengaluru and Mysuru will help transport container shipments from this ICD to different locations, including Mangaluru Port and other logistically important destinations.

The ICD will enable industrialists to transport finished goods and raw materials through the CONCOR setup to major ports and cities, as there is rail connectivity to almost all major cities, towns, and ports, including Mangalore Port and Chennai Port.

Future Research - BMW Blockchain Integration

The BMW Group is using innovative digital technologies to optimize its processes; the next step in the line of process is integrating a Blockchain initiative, the World’s Largest Automakers, Along with MOBI, Announce a Joint Proof of Concept for the First Vehicle Identity on Blockchain, The Mobility Open Blockchain Initiative (MOBI) is working with BMW, Ford, GM, Groupe Renault, Honda, and other major automakers to develop a multi-stakeholder Proof of Concept (PoC) for a blockchain-based Vehicle Identity (VID).

MOBI members started a cooperative project to test the first VID standard, a crucial step toward the new blockchain-based economy of movement. The standard creates a trusted digital identity for vehicles, unlocking the potential for a mobility payments network and enabling direct and low-cost micropayments between various parties.

Applying the Vehicle Identification (VID) standard in the automotive industry can revolutionize how vehicles interact with each other and with their surroundings. With blockchain technology, the VID standard provides vehicles with a secure and trusted digital identity. This digital identity opens up numerous opportunities for developing new mobility services and technologies. For example, with a trusted digital identity for vehicles, it becomes possible to develop a mobility payments network that enables direct payments between vehicles, grid integration for electric vehicles, usagebased services, fleet management, congestion pricing, and carbon footprint management. The use of smart contracts will ensure that these transactions are secure, transparent, and efficient.

The BMW Group started the PartChain project to provide seamless and immediate traceability of components and data transparency in supply chains. Using cloud and blockchain technology ensures the origin of components can be tracked between all partners without the risk of manipulation. In 2019, two BMW Group plants and three supplier locations participated in the pilot project, expanding the project and aiming to eventually track critical raw materials from mine to smelter and create an open platform for safe, anonymous data exchange across the industry.

The BMW Group recognizes the need for common standards and control models to maximize the benefits of an open platform that connects partners in their business processes. The company co-founded MOBI in 2018, a cross-industry initiative with 120 leading automotive, mobility, and technology firms to achieve this. The BMW Group leads a working group on supply chain issues within MOBI and aims to promote the adoption of blockchain technology in the mobility sector.

Future plans of Mercedes-Benz

Daimler AG’s Supervisory Board has approved the Mercedes-Benz Business Plan for 2022–2026, endorsing the strategic plan for Mercedes-Benz to go fully electric.

For the transformation into a softwaredriven and emissions-free future, the Supervisory Board signed off on an investment plan of more than 60 billion euros.

Although the company plans to reduce CapEx, research and development expenditures for the electrification of the product portfolio and digitalization measures, including steps towards automated driving, will remain at a high level.

Mercedes-Benz is also set to refocus its efforts on the higher end of the luxury car market as part of its plan to bolster profits and reaffirm its status as the world’s most valuable luxury car brand. Although the focus will shift towards the brand’s more premium models, it is not yet giving up on the compact family of vehicles. The future model range will be divided into three categories: entry luxury, core luxury, and top-end luxury. Mercedes-AMG is going big on electric models. The concept will be built around a brand new dedicated electric car platform called AMG EA. Speaking of electric cars, the G-Class is also set to get a battery-powered variant, which will feature advanced Sila Nanotechnology battery cell chemistry. The company also intends to launch numerous limited editions and exclusive collaboration vehicles, such as the Limited Edition Maybach by Virgil Abloh.

Future Research: Audi Sphere Concept

Questions about the future of mobility have always occupied Audi. The brand provides answers by presenting fascinating concept cars and studies that repeatedly demonstrate technological possibilities, pioneering innovations, and exciting designs. Creating the future is an expression of Audi’s attitude. More than anywhere, this attitude is made tangible in the brand’s studies and concept cars. In those areas, Audi demonstrates that the mobility of tomorrow is fascinating.

The four members of the Sphere family - sky sphere, grand sphere, urban sphere, and active spherepresent Audi's vision for the premium mobility of tomorrow. The concept vehicles are united not only by a fascinating design but also by the electric drive and the design for the possibility of automated driving.

Audi Active Sphere Concept: At 2023 Monterey Car Week, Audi was previewing the next chapter of sphere concept vehicles; the Audi active sphere concept combines elegance, suitability for everyday use, and performance into a new design, making it the perfect companion for ambitious outdoor adventures. Whether it's water sports, skiing, golfing, or challenging mountain roads, the active sphere concept offers ultimate variability for all activities. In addition to its extraordinary elegance and outstanding off-road performance, the communication technology in the concept car creates a unique experience beyond the car itself.

The Audi urban sphere concept was designed with the human needs of actual customers in mind and was created using a “co-creation” approach with the firm’s design studios in Beijing. It offers the largest interior space of any Audi to date and intelligently coordinates this with technologies and digital services that appeal to all the senses, offering a whole new level of experience. It was initially created for use in traffic-dense Chinese megacities but is also suitable for any other metropolitan center in the world.

The Audi grand sphere concept provides a glimpse of tomorrow’s first-class automotive comfort, electric, automated, intuitive, and with plenty of individual space for immersive experiences. The 5.35 m long grand sphere sedan combines the luxury of private travel with the greatest of comforts for a comprehensive, holistic onboard experience.

ed driving ensions of ble and erior into a experience ing wheel, s. The front first-class mum space, ccess to all a holistic into which

the Audi grand sphere is integrated.

The Audi Sky Sphere Concept is a two-door electric roadster representing Audi's future vision for automotive design. The car combines automated driving, a new interior design, and a digital ecosystem to offer a captivating driving experience. The concept has two driving modes - grand touring and sports - that utilize a variable wheelbase to provide passengers maximum freedom. The wheelbase and exterior length of the car can be adjusted by 250 millimeters, while the ground clearance can be changed by 10 millimeters to improve comfort and driving dynamics.

The Senior Team

Kedar Ashtikar ( Co-Convenor )

Prabhat Mishra ( GSCM-President )

Antarip Biswas ( Co-Convenor )

Nobarun Choudhary ( GSCM-VP )

Aditi Darekar ( GSCM-VP )

Simantini Maiti ( Head - KSS )

Tanya Singh ( CO Head - KSS )

Viram Vora ( Senior Member )

Parshwa Shah ( Head - RW )

Saeem Chini (Co Head - RW)

Ipsha Bhattacharya ( Senior Member )

The Junior Team

Key Contributors

Saran Gopinath

Parangat Kapur

Rijul Khandelwal

Shashank Lonkar

Tejas Talavdekar

Sharvaree Pitke

Shubham Sumbe

Janhvi Heda

Shrey Gosavi

Jayank Panchal

Harshwardhan Deshpande

Aniket Singh

Shubham Sharma

K- PS

“Coming together is the beginning. Keeping together is progress. Working together is success.”

Edition 1, February 2023

Henry Ford