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Welcome to Megatrends Q2 2015

Welcome Welcome to Automotive Megatrends Magazine - the only global publication dedicated to the business models, technologies and trends which are shaping the automotive industry of tomorrow.

Core focus areas

Connected Vehicles

Road Freight Efficiency


Manufacturing & Materials

Powertrain Innovation

Retail (R)evolution


Readership Every quarter, Automotive Megatrends Magazine is sent to 20,000+ opted-in automotive industry stakeholders:





Finance / Consultants


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The publication is downloaded in more than 150 countries worldwide:

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Publisher: Automotive Megatrends Ltd 1-3 Washington Buildings Stanwell Road, Penarth CF64 2AD, UK T: +44 (0) 2920 707 021 Registered number: 08000516 VAT number: GB 171 5423 23

Editor: Martin Kahl

Suppliers Freddie Holmes

Business Editor: Megan Lampinen

Powertrain & eMobility Michael Nash

Manufacturing & Materials David Isaiah

Production & Design: Michael Franklin & Anmol Mothy

Electronics & Safety Rachel Boagey

Chief Executive: Gareth Davies

Š Automotive Megatrends Ltd

Automotive Megatrends Magazine ISSN: 2053 776X

Megatrends | 3



> Retail (R)evolution

> About this issue S MEGATREND AUTOMOTIVE Magazine | Q2 2015

ue )evolution Iss The Retail (R obility



ncy #eM ar #FreightEfficie nnovation #Safety #ConnectedC rainI rials #Powert nufacturing&Mate

Books, music, movies, TV, banking, news, telecoms...Is the automotive industry next to be disrupted by the digital revolution? Existing boundaries are being broken down and new business models are appearing as consumers opt for usership over ownership. In the Q2 2015 edition of Automotive Megatrends magazine - the Retail (R)evolution issue - we ask key stakeholders for their thoughts on the changing shape of automotive retail. Alongside our usual mix of analysis and interviews addressing the megatrends shaping the automotive industry, we’re delighted to bring you an exclusive contribution by Margo Oge. The former director of the US EPA’s Office of Transportation Air Quality considers the types of cars people will want to buy in 2025. It’s identifying what people will want in the future, not just in terms of products, but also in terms of services, that will help the automotive industry ensure it remains relevant over the next decade and beyond.

8 - Automotive retail goes digital Anuj Monga, Team Leader, Aftermarket Research, and Neelam Barua, Industry Analyst, BSIG, in Frost & Sullivan’s Automotive & Transportation unit, discuss the new wave of digitisation in automotive retailing


Big Data’s role in customer acquisition and retention


Savvy car buyers need savvier dealers

16 - Car dealers must adapt for the buyer of the future Jared Rowe, President of AutoTrader, tells Megatrends that test drive convenience, price transparency and touch point continuity are some of the key aspects of the car sales process that need urgent attention

18 - Hail the retailer: the dealership is dead If dealerships are to remain relevant, the relevancy of car showrooms must be reconsidered, writes Simon Moriarty, Operations Director at FITCH

20 - From car to CaaS: OEMs must prepare for service delivery Cars are no longer viewed as the mechanical marvels of the industrial age, but a utility to the life we’d like to lead, write Dr. Martyn Jeffries, Head of Automotive Solutions and David Rigler, Director for UK Retail and Manufacturing at SQS

Enjoy the magazine and join the debate:

Martin Kahl, Editor 4 | Megatrends


How to reconnect OEMs with their customers


New powertrains and new sales techniques lead the automotive retail revolution


> Connected Vehicles


Cyber security: an industry-wide problem that needs an industrywide solution


Adopt Digital PLM to keep pace with in-car tech

31 - CE? Yes, says the auto industry International CES 2015 underlined the rapid convergence of consumer electronics (CE) and automotive technology. Martin Kahl asked several key automotive industry stakeholders why they hold this consumer electronics show in such high regard

> eMobility

40 - Could the Fulcrum give CV electrification the leverage it requires? Wrightspeed believes its new Fulcrum range extender is “one of the most significant automotive innovations of the last 25 years”. Michael Nash was keen to learn more


Making the connection to smart EVs


Title Fuses - the most important part of an EV?

Megatrends | 5


> Powertrain Innovation

46 - What will fuel economy really be in 2025? Drivers of the future will expect their cars to be cleaner, smarter and more efficient than today, writes Margo Oge


Small is the Next Big Thing!


Fight noise with noise‌ to improve fuel economy?


Exa, XE and the rise of digital simulation


Is North Africa the next frontier for vehicle manufacturing?


Humans, simulators and the six degrees of motion

> Manufacturing & Materials

58 - Automotive grade graphene: the clock is ticking David Isaiah investigates the viability of graphene in automotive manufacturing 6 | Megatrends


> Safety


Actively looking at passive safety


Lightweight but crash safe: the ongoing challenge

70 - OEMs prepare to up their game as safety gets serious Safety organisations are clamping down on vehicle safety standards, and ratings organisations are pushing for increased use of advanced technology. There remains little choice for OEMs but to up their safety game in all regions, writes Rachel Boagey

> Freight Efficiency

78 - SuperTruck highlights potential for further truck efficiency, says DTNA Michael Nash interviews Daimler’s Derek Rotz about the Freightliner SuperTruck concept


Cab comfort: the key to efficient operations?


The long-awaited revival of India’s truck market

Megatrends | 7

Retail (R)evolution

Automotive retail goes digital Anuj Monga, Team Leader, Aftermarket Research, and Neelam Barua, Industry Analyst, BSIG, in Frost & Sullivan’s Automotive & Transportation unit, discuss the new wave of digitisation in automotive retailing

he digital age has simpliďŹ ed the process of buying a car, allowing customers to research car models, compare prices, and even avoid the hassle of dealing with pushy car retailers. Today, all that is required is visiting a shopping centre and choosing your new car digitally as you shop for food, apparel and gadgets. In the future, buying a car at home using a virtual car showroom or remotely connecting to service centres and authorising repair work on your car is expected to become a reality. Car ownership has become a lifestyle element with a technology-assisted environment deriving brand awareness and experience involving customers at all phases of the digital cycle.


8 | Megatrends

The automotive retail revolution can be attributed to productive use of advanced technology. Pictured: Audi virtual reality experience

Retail (R)evolution Chart 1.1 Automotive retail revolutions become a major consideration for all future retailing programmes in the automotive industry. Emerging automotive retail formats The most prominent automotive retailers run by dealership groups follow the traditional model of showcasing physical inventory. The majority of their sales activity takes place offline. For example, in the US, they are mostly owned and operated by an independent dealer group under the franchise model. In Europe, OEMs and independent businesses are owned and typically operated by an independent business or dealer group.

The disruptive influence of connectivity is changing the way business is being conducted in the automotive industry. High real-estate costs, expensive resources, global presence and the need for innovation to stay afloat have compelled many automotive dealerships to shrink store space and resort to digitisation for interaction with the customer. As the traditional bricksand-mortar sales model gives way to a bricks-and-clicks sales model, automotive retailing is undergoing a revolution by offering an experientialbased approach at all levels of the customers’ journey toward a new car purchase.

Global passenger car companies are being pushed to innovate and adopt a new retail model for the next generation of young car buyers. This is a generation that engages through collaborative consumption and targeted digital marketing campaigns. Chart 1.1 indicates the new wave of digitisation in retailing, which has

The upsurge of digitisation in automotive retailing led to new channels of retailing involving digital showrooms, online retail stores, virtual stores, and short-term stores called pop-up stores. Car companies are also using fashion merchandising and combining lifestyle elements into retailing globally. New business strategies amalgamating ‘bricks’ and ‘clicks’ allow OEMs to sell vehicles online and associate with the dealer network for order fulfilment. For example, Volvo Cars (controlled by Geely group), as part of its global marketing strategy, is planning to introduce online sales and increase its digital initiatives for its entire product line. Chart 1.2 represents multiple emerging automotive retail formats and the shift focusing on in-store digitisation of existing showrooms to enhance the customer experience and improve the sales ratio.

Chart 1.2 Emerging automotive retail formats

Automotive retail revolution The automotive retail revolution can be attributed to the productive use of advanced technology, especially modern IT systems that bring together mobile platforms, computing power, and interactive solutions. OEMs and dealers are embracing the retail revolution by considering the cost of new technology as an investment, not as an expense.

Megatrends | 9

Retail (R)evolution

OEMs are being pushed to innovate and adopt a new retail model for the next generation of young car buyers. Pictured: BMW dealership in Berlin, 1929

Digital retailing becomes a megatrend One of the key macro-to-micro implications of this megatrend is that dealerships will be digitised and interactive with a key focus on the customer. The current role of the salesman will change and become more of a facilitator, while sales force training will need to evolve to cater to the new generation. OEMs are expected to invest in a global integrated channel strategy and IT platform solution. Car retailers will have to look toward futuristic technologies such as augmented reality and gamification to effectively train dealership staff. Premium automotive OEMs are taking guidance from leaders in the consumer industry, especially in luxury (Burberry) and electronic retail (Apple), to understand the implications to their future retail strategies. Audi in London, Beijing and Berlin; BMW in Paris; and Tesla in the US and European cities have consciously opened stores in high-traffic retail locations which provide opportunities to interact and educate potential customers in a less formal, more 10 | Megatrends

digitally experiential environment. Digital showrooms utilise state-of-theart technology to deliver a variety of informative experiences in a relatively small space (400-500 square metres) about one-third of a typical showroom space. The inviting showroom allows customers and enthusiasts to spend time creating, modifying and saving their car configurations to be revisited on PCs and tablets. A seamless experience across devices in connected stores integrates retail shopping into a continuous, measurable service experience. This is extended to after-sales, warranty, insurance, and finance aspects of retailing. Aftermarket e-commerce boosts the value chain Aftermarket retailing of parts and services is converging toward convenience and experience, which is evident from the growing worldwide popularity of purchasing parts online. The US and regions in Western Europe are some of the leading markets with high penetration of eCommerce in aftermarket retail. These markets have their own unique characteristics, visible

from the success of mass eRetailers in some, and pure-play aftermarket retailers in others. In terms of channels, eCommerce’s potential is being realised both in the B2B and B2C channels. OEMs also are now looking to leverage their established dealer networks in conjunction with the potential offered through eCommerce to expand their reach into the aftermarket. Another key trend that could impact the future of aftermarket retail in a significant manner will be the growing penetration of connected cars, which has already fuelled the growth in solution providers. These solutions, like Delphi Connect, have real-time diagnostic capabilities further aimed at creating an end-to-end solution that will enable in-vehicle sales for retailers. General Motors in early 2015 showcased its prognostics features and also an in-vehicle sales platform for different retailers to sell their products on the go. Use of technology will be instrumental in shaping the purchasing pathway in the future, with the bricks-and-clicks model leading this change.

Retail (R)evolution Chart 1.3 Parts eRetailing key transformative trend across regions, 2015

Digitisation will also be seen as a key enabler in transforming in-store retail with the use of technology at every step of the customers’ purchase pathway. From electronic labels and digital signage, which will help attract customers, use of gamiďŹ cation and augmented reality will entertain and assist customers in searching for the right product. On the other end of this pathway, self-ordering kiosks and mobile POS will enable easy check out, thereby making the shopping experience more convenient.

Chart 1.4 Future in-vehicle sales applications

Conclusion With the current state of franchise laws and trends, it is expected that more OEM-led, standalone digital formats will be in Europe, while digitisation within the existing franchise model will continue to dominate in North America. Soft digitisation technologies such as digital tools, signage, and kiosks will see strong growth in the short term, and thus 60-70% of new car sales leads are likely to be generated via a digital platform by 2020. The advent of digitisation in car retailing has also led to the development and introduction of new performance indicators. Factors such as brand awareness, digital customer engagement, customer age, lead response time and vehicle conďŹ gurability satisfaction will be of increasing importance in future digital retail formats.

Megatrends | 11

Retail (R)evolution

Big Data’s role in customer acquisition and retention It costs five to seven times more to acquire than to retain a customer, so it’s essential for OEMs to use Big Data to cultivate buyer loyalty, as Capgemini’s Mark Taylor explains to Megan Lampinen stablishing meaningful relationships with customers is essential to building brand loyalty, and new technology promises to reshape the process. The stakes are high. According to data from General Motors, a 1% increase in customer retention is worth US$700m. Mark Taylor, Global Lead for Customer Experience Transformation at Capgemini Consulting, believes that successfully harnessing Big Data will prove a game changer in today’s increasingly complex industry.


Meaning in complexity This notion of an opportunity for a relationship in today’s environment is challenged by the fragmented nature of the territory. “The relationships between the OEMs and the end customers, the end customers and the dealers, and the end customers and the aftersales service providers makes it a pretty complex ecosystem of relationships,” he explained. “This accounts for some of the complexity in establishing 12 | Megatrends

meaningful relationships and building loyalty with customers. The thing that’s going to change the customer relationships and loyalty with automotive manufacturers more than anything else is going to be the connected car. This gives the automotive manufacturers an incredible opportunity to build those kind of trust-based relationships with their end customers.” As cars collect data on such areas as driver habits and vehicle performance, the OEMs can - and should, argues Taylor - use that for commercial reasons. “This increase in data that will flow between the car itself, and therefore the driver, and the OEM, is an extraordinary opportunity to change the dynamics of customer relationships and therefore loyalty in the industry.” For most owners, their relationship with the brand is limited to the immediate lead up to a sale, after which point they pass on to deal primarily with the service side of operations. With the connected car, there is the opportunity

for the brand to engage with the customer on a much more frequent basis, and not just when he can be expected to make another purchase. “If I’ve got an ongoing relationship with my OEM as opposed to a once-everythree-years, end-of-lease or general-purchase-cycle relationship, it could revolutionise the way automotive manufacturers think about customer relationships. And the way they think about loyalty,” added Taylor. At the moment, it’s still early days on the connected car front, so Taylor believes this is a brand new approach. “We have not seen people thinking about the connected car as a way of reinforcing the relationships between OEMs and customers. We think it’s an enormous opportunity,” he explained. Loyalty and identity - two sides of the same coin Leading the way in this revolution will be the luxury segment, in large part because these are the cars that will

Retail (R)evolution value opportunity for brands to reinforce that identity point. “And as well, they have more money to spend on the customer relationship.” Tapping into this data effectively is going to require a hefty investment, but as Taylor observed, investment are going to be made anyway: “What we’re talking about isn’t an additional investment. It is recognising that this newly available data is a gold mine for customer relationships. It’s a focus point rather than an additional investment.” Avoiding the creep factor

have the technology first. “These will be the cars that are at the forefront of the technology, but also they are higher consideration purchasers. In this sector, loyalty and identity are two sides of the same coin. When I buy a luxury car, there’s something I’m saying about myself,” said Taylor, noting that this new data source represents a

However, there’s a fine line between a valued personalised customer service and a creepy one. “You have to be very focused on staying north of the creepy line,” conceded Taylor. “If what you do has for an objective creating value for the customer, you’re more likely to stay north of that line. Where brands may move into the creepy zone is when it’s their interests that are out of balance with the customer interests. The whole privacy point is critical and very sensitive.” Taylor likens this opportunity to early days of database marketing, where sales staff suddenly had access to customer data for the first time. “In some cases they overused it. The opportunity here for the OEMs is a new universe of customer connectivity.

Fortunately, many of the lessons around privacy have been learned.” Retention and acquisition As this data is used more effectively, overall industry loyalty rates should rise. “It’s already hard to gain that conquest customer,” noted Taylor, pointing to estimates that it costs five to seven times more to acquire a customer than to retain a customer. “It’s hard and expensive. Those brands who are doing all of the basics right - quality, customer service, overall experience - will be the ones that can build relationships which reinforce that identity point.” Taylor is keen to emphasise that this approach represents much “more than a retention play” - in fact, the benefits will spread to acquisition marketing. “If you can increase the number of interactions you have with the customer over time, that’s going to enable you to learn more about your customer. Learning more about those customers who value you as a brand will enable you to target your acquisition efforts against similar customer types, making acquisition marketing easier,” he added. “You’ve learned over the relationship what they care about, what they value, what they don’t value, and that should shape your acquisition efforts. Any good loyalty programme should operate both on the retention level but also on the acquisition level.”

Ford is studying the driving habits of more than 200 employee volunteers, using data collected by in-vehicle sensors to determine ways to optimise vehicle performance

Megatrends | 13

Retail (R)evolution

Savvy car buyers need savvier dealers Research by McKinsey and NADA found that 84% of dealers regard the highly informed consumer as the most significant shift in the industry today. Megan Lampinen spoke to McKinsey’s Robert Hiroshi Mathis to find out more

ealers are confronting ever-more highly informed consumers, and it is dramatically reshaping the entire automotive retail industry. In fact, recent research from McKinsey and the National Automobile Dealers Association (NADA) found that 84% of dealers surveyed regard the highly informed consumer as the most significant shift in the industry today. With consumers obtaining more information from various online sources and spending less time in the dealer showroom, what can dealers do to ensure they remain relevant and profitable?


company’s North American Automotive & Assembly practice, told Megatrends. “We took the survey and assessed more than 40 different factors, both across operating practices but also structural practice, and correlated that with the financial information to which we were given access. And what we found was actually quite counterintuitive to what conventional wisdom says.”


He went on to explain: “The highly informed consumer, one using multiple online sources to inform himself about products, pricing, detailed features and competitors, is leading to a phenomenon that is changing the role of the dealer.”

The answer lies in a dual-pronged approach, involving a focus on operational excellence and improving the management of marketing and sales standards across OEMs and dealers.

Operating practices

“We looked into the question of what drives dealer performance,” Robert Hiroshi Mathis, a Partner in McKinsey’s Chicago office and a leader in the

The study, Fast Forward: How U.S. Auto Dealers Can Drive Sustainable Economic Performance in the Digital Age, found that two-thirds of what

Are we witnessing the demise of the traditional dealership model?

14 | Megatrends

determines a dealer’s economic performance is down to operating practices. “People would normally assume that it’s the size of the dealer, the location of the dealer or the brand the dealer is working with Fast fo rward: H ow U which determines S can dri auto dealers v e the majority of econom sustainable in the d ic performanc the performance igital ag e e that you see across the industry,” observed Mathis. But the reality, he continues, is down to “the way a dealer runs the business within their own four walls. And that is highly determined by people practices.” In coo


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In fact, the factor that most correlates with the economic performance of a dealer is the tenure of the service manager. Having the right staff is essential, with top-performing retailers twice as likely as bottom performers to have low personnel turnover. Asked what, in today’s retail landscape, makes an ideal employee, Mathis said he believes there are multiple aspects that come into play. “They need to be product and technology savvy, serving as a product consultant, because the consumer is already obtaining all of the base information on the Internet,” he explained. “New technologies, dealing with a variety of product types and variants, is something that a sales consultant now needs to master.”

Retail (R)evolution In addition, a modern sales consultant needs to understand individual customer needs and communicate in the preferred communication channels. This could range from phone and fax to Facebook to in person exchanges. “It’s quite a big variety of different channels and communication preferences that you have to master nowadays as opposed to ten or 15 years ago,” Mathis added. A third key aspect for today’s sales staff involves taking an end-to-end perspective. “The salesman should not only think about the sale of a new car, but also about how to keep the customer loyal. How can we engage the customer to come back for repairs and service and parts?” It’s essential, he said, to connect the dots between not only selling a new car, but also keeping the customer returning to the shop and keeping customer loyalty high. Notably, over the last ten years the number of dealers that consumers visit in the purchasing process has declined significantly. “Dealers report half of the store traffic they experienced ten years ago. At the same time, the conversion rate has significantly improved,” he noted. Marketing spend At the moment, dealers and vehicle manufacturers are investing heavily in their consumer facing programmes, personnel, and other expenses. According to the survey, US$8,500 is spent on average by OEMs and

dealers during the first four years of vehicle ownership. That’s a significant amount, and raises the question, ‘Is the money well spent?’ The key, according to Mathis, is to “get the bang for the buck on the money that you are actually spending.” When it comes to making wise choices in this regard, he notes that there is a significant variance across OEMs. “Some OEMs fare much better in terms of the effectiveness with which they conduct these different tasks along the value chain versus others.” The survey did uncover one rule of thumb in this area - collaboration between OEMs and dealers is key. “The more systematic and the more coordinated the manufacturer and the dealer are at managing the marketing spend, the more likely they are to have the right return on investment,” he said. As for how this spending will evolve, Mathis explained that “the primary optimisation objective has to be improved effectiveness, and to avoid overlaps, not primarily to reduce costs. The second objective should be around freeing up resources for the investments that are needed for network improvements, for restructuring, for new technology, and to bring the industry overall into a healthy performance level.” In the end, dealers “may end up in the situation where you will save a few hundred dollars that you can hand to the customer. There is a win/win situation that you can create if you

manage the whole marketing spend effectiveness topic better.” Moving forward, effectiveness harnessing Big Data could reshape the sales approach and loyalty levels. “Big Data has a big potential to improve both the retail experience for the customer as well as retail performance. We see the emergence of several user-friendly solutions nowadays that help to automate analytics and to visualise information made out of complex sources of data, and synthesise this in a simple way,” he commented. Dealers could theoretically use these to integrate customer information along all touch points, both online and offline. “That’s the big challenge to make the transition from online lead generation to dealers.” The key for both manufacturers and dealer groups will be to manage dealer performance in a much more integrated way. Inside the dealership, Mathis believes there is considerable opportunity to incorporate new in-store technologies. “This is already happening with online configuration terminals, where a dealer can show a prospective customer very illustratively how the car will look and exactly the configuration that the customer is going to order. Even with the significant amount of new models, new features and new variants, you can still bring to life what the product looks like, even if the car is not physically on the shop floor,” he explained. “New technologies can actually make this much more attractive than it used to be in the past.”

Hyundai and Rockar launch a groundbreaking new digital retail experience

Megatrends | 15

Retail (R)evolution

Car dealers must adapt for the buyer of the future Jared Rowe, President of AutoTrader, tells Megatrends that test drive convenience, price transparency and touch point continuity are some of the key aspects of the car sales process that need urgent attention By Megan Lampinen

he automotive retail sector is quickly adapting itself to changing consumer preferences, with a growing focus on digitalisation and personalisation. According to recent research, there is still considerable work to be done. Jared Rowe, President of online automotive marketplace AutoTrader, believes that recognising the need to change will open the door to a “tremendous opportunity” to delight buyers.


AutoTrader’s latest Car Buyer of the Future study revealed that just 17 out of 4,002 people are happy with the current car buying process. However, that’s not to say they dislike all aspects of the process. “Two parts of the process that consumers want to retain - with a slight twist - are in doing online research and negotiating,” Rowe told Megatrends. Touch point continuity When it comes to performing research online, he notes that consumers are becoming more mobile and using multiple devices to shop for vehicles. According to AutoTrader’s figures, 42% of shoppers use multiple devices today. This should rise to an estimated 80% by 2020. While many shoppers want to conduct their research online, they still want to come into the dealership at some point. “The shopping and buying experience is a personal one, so the 16 | Megatrends

best thing that dealers can do to maximise shoppers’ time at the dealership is to quickly assess where they are in the process - and meet them at that point,” observed Rose. 43% of study respondents said they see the dealership as a place to learn, and these consumers are looking to validate information they found online, learn about specials and offers, and learn about warranty and service. “For those shoppers, dealers should be prepared to offer accurate, in-depth information and perhaps connect the shopper with someone who is a specialist in the vehicle they’re interested in buying,” he advised.

From these findings, Rowe emphasised that “automotive marketers need to ensure that they have a multi-platform strategy and not be focused on mobile only.” Towards transparency Contrary to what some may have assumed regarding price negotiations, AutoTrader’s study indicated that consumers actually do want to negotiate on vehicle price. “We expect that to continue being a part of the car buying process,” Rowe added. “It is important to note, however, that how and when they negotiate will evolve.

Retail (R)evolution 42% of shoppers use multiple devices to shop for vehicles, says AutoTrader; this figure will rise to 80% by 2020. Pictured: AutoTrader ad campaign featuring Bo and Luke Duke from TV series, The Dukes of Hazzard

The consumers we surveyed showed a desire to start the negotiating and dealstructuring process online, and they’d like to remain anonymous until they get comfortable with the dealer and the deal.” Notably, there remain some misconceptions between buyers and dealers on pricing. “There are perception issues on both sides of the equation that we’ll need to overcome as an industry. Some dealers think that consumers want the lowest price, which isn’t always the case,” commented Rowe. “We know from some of our other research that consumers want a fair price. Additionally, this study showed that great in-dealership experiences and great salespeople trump lowest price for consumers. On the flip side, consumers still think that dealers are making much more profit than they actually are on each vehicle.” On the whole, the gaps between the listing prices and transaction prices are shrinking, a development that Rowe hails as an indication that “more dealers are pricing their vehicles according to what the market demands and closer to consumers’ expectations for fair prices. As such, consumers aren’t negotiating as much off each vehicle on average. The more that dealers fairly price their vehicles and

consistently advertise those prices across the various platforms and channels they use, the more consumers will come to trust the prices.” Happy buyers are loyal buyers Rowe sees considerable room for improvement across several other areas of the dealership experience, including test drives. While taking the car out for spin remains a key attraction to a dealer visit, he believes “test drives are ripe for change, as much hasn’t changed in this part of the process over the last few decades. The two key factors that we as an industry need to focus on in the test drive are addressing consumers’ desires for more convenience, and less pressure.” Test drive convenience, price transparency and touch point continuity are just some of the areas within the sales process demanding attention. With such a long to-do list, what should be given top priority? “A key theme that we’ve seen time and again is that one

of the greatest frustrations consumers have is the time that it takes to complete the purchase on the day they buy,” explained Rowe. “We recommend focusing on the in-store experience, particularly on the parts of the process that contribute to purchase-day delays. In this process, one of the biggest areas of opportunity is in the Finance and Insurance (F&I) office.” Tellingly, buyer satisfaction with the dealership begins declining after 90 minutes in store on the day of purchase. With the F&I process alone accounting for an average of 61 minutes, it’s clear that timing needs to be addressed. In general, happy buyers make for loyal buyers. As personlisation gains in importance among car buyers, dealers will need to ensure they offer a customised sales approach. As Rowe commented: “Experience drives loyalty, and since buyers want a personalised experience, the dealers who do the best job at creating a compelling and customised experience in their stores will reap the best returns in terms of loyalty.” Megatrends | 17

Retail (R)evolution

Hail the retailer: the dealership is dead If dealerships are to remain relevant, the relevancy of car showrooms must be reconsidered, writes Simon Moriarty, Operations Director at FITCH

n an age where we have a world of information at our fingertips, the relevancy of car showrooms has to be reconsidered. Consumers can research the details of any product online whenever and wherever they happen to be, so why should they take a trip to out of town showrooms?


This is backed up by research that reveals that dealership visits in most Western European markets have become much less frequent as part of the path to purchase, with buyers making one or two visits at most. If dealerships are to remain relevant they need to provide an experience that caters for time-poor visitors who may already have extensively researched their potential purchase. Therefore, car brands have to be far more pro-active in engaging and enticing their audience.

sources to choose from. Buyers can even get discounted rates from comparison sites. The showroom visit is the final step on this journey, where buyers can justify their decision and test-drive their new car - although research shows that even the test-drive is on the decline. The upshot of this is that traditional key sales tactics are no longer valid – the old adage, ‘75% more likely to buy if it’s been test driven’, no longer holds true.

The industry has a mentality that’s very much stuck in the past, as dealers still operate on the assumption that potential customers will spend their valuable spare time making the effort to head out to showrooms for a hard sell and a dubious looking cup of coffee. Even online, manufacturer websites generally still have poor navigation and unclear information - a clear sign that what they really want is to bring you into their space, where they can be in control of the sale. The solution?

What of the dealerships that exist today? The automotive industry has been on the back foot as other sectors move quickly to embrace the new possibilities that digital can offer.

It may seem obvious, but dealerships need to take themselves to the customer. The advent of ‘pop-up’ is beginning to be seen on a limited but ever more regular basis. Innovative car brands, such as Tesla, are beginning

As the car-buying process continues to evolve, dealerships must introduce radical and rapid change if they are to resonate with today’s car buyer. On the decline: dealership visits and test-drives Today, nobody spends a significant amount of money on a vehicle without exhaustive investigation on the web, where potential buyers seek to understand the differences in almost all aspects across the cars they desire. In fact, researching your dream car can be done almost entirely online, with a variety of informed and opinionated 18 | Megatrends

Retail (R)evolution

to appear in high footfall shopping centres and travel hubs, while test drives are being organised through brand spaces and connections to nearby car parks. Gradually, we are seeing the forwardthinking car brands reacting to time-starved modern lifestyles, where the test drive with a 75% ‘buy rate’ comes to you. The Fiat Live Store in Brazil even allows a one-to-one consultation without the customer having to leave home. People can get an online tour of vehicles from consultants wearing head-mounted cameras as technologies such as Facebook’s Oculus Rift headsets gain more traction. In fact, visual technologies are evolving so fast they are increasingly able to give consumers a good experience of what a vehicle looks like inside and out. Innovative brands are also reconfiguring the showroom to create more contemporary, welcoming environments, which are less of a male domain in line with the role of women as more significant decision makers on car purchases. Recent research reveals that women influence 80% of car purchases in the US. The Lexus Intersect space in Tokyo, for example, focuses less on the vehicles and more on the whole Lexus lifestyle, from food to fashion. These are easily

accessible retail spaces where the customer can fully experience the brand. The traditional, slick-suited salesman incentivised to deliver the hard sell is making way for more attentive and approachable assistants who can foster a relaxed dialogue and help support a longer-term relationship that, importantly, extends beyond the purchase. Audi City in London has created a tech-enhanced space where visitors are encouraged to explore and configure their ideal car using touchscreens and multisensory displays. Staff guide the customer through a huge range of options, understanding their needs and explaining the implications of each choice. As the look and performance of cars becomes more and more similar, particularly in the C-segment, the showroom needs to highlight the importance of technological innovation and personalisation. This will become even more critical once the industry decides which way to jump on the connected car debate.

What next? Slowly but surely the dealership process is being fundamentally reinvented. Just as supermarkets have segmented into superstores and convenience stores, so dealerships must consider how alternative sales formats can better reach their existing and potential audience. A key part of this is the need to proactively begin a dialogue with customers long before they reach the showroom, and maintain it long after they have left. The service experience must be outstanding, and in an environment where the customer can get to know the brand and vice versa. Above all, creating a reason to visit is key to the success of the dealership. Create a space where customers can dream, explore and locate; where they can meet and connect with the brand and get a taste for each manufacturer’s experience signature. This is what will drive sales - not bad coffee on an industrial estate. Megatrends | 19

Retail (R)evolution

From car to CaaS: OEMs must prepare for service delivery Cars are no longer viewed as the mechanical marvels of the industrial age, but a utility to the life we’d like to lead, write Dr. Martyn Jeffries, Head of Automotive Solutions and David Rigler, Director for UK Retail and Manufacturing at SQS

ver the coming years, the automotive industry is expected to change drastically from the traditional dealership model we know today. With the connected car making its way onto our roads, the future of the car - in terms of conceptualisation and digitisation of the automotive industry is set to be both dramatic and exciting in equal measures. Digitisation has slowly trickled up through lower value transactions to higher ticketed items and is now ready to shake up the automotive sector. From the user experience (UX) to the supply chain, the sector is starting to see the value of embracing the modern consumer’s lifestyle and connective expectations to influence and in turn re-invent the core values of the automotive industry.


Demographic split has a huge impact upon purchasing decisions and processes within the sector, but what dealerships need to remember is that people and lifestyle need more consideration than the product. With two-thirds of consumers now conducting the majority of their prepurchase research online, resulting in as little as one visit to a dealership before making a purchase, the role of the salesman has changed forever. Cars are no longer the mechanical marvels of the industrial age, but a utility to the life we’d like to lead. In order for the industry to fulfil its utilitarian need and provide a service reflective of the new role cars now play in our day to day life and become the hosts of information, which is what consumers are looking for. 20 | Megatrends

User experience With consumers now having a stronger influence upon the changes in the industry, manufacturers need to realise that a retail approach, blended with an integrated UX, is needed to keep up with changing lifestyles and demands. Retailers are able to provide customers with a convenient, customised and fun experience; all values that should form a starting block to transform the stereotypical salesman that so many consumers sadly want to avoid. As the industry as a whole has realised, it’s time to up the game in terms of UX. In response to this, manufacturers have started to incorporate virtual showrooms, where consumers are able to experience their potential future car entirely in a virtual 360 degree environment, both online and in-store. This ensures the manufacturer is one of the main points of focus for a consumer’s online research before entering the dealership. It gives the customer an opportunity to customise a model of interest with alternative fabrics, trims and colours on offer, whilst also providing transparency of cost and the financing options that are available. However, manufacturers aren’t just stopping with the online experience. From polarisation to interactive communications, dealerships will have a strong part to play in the digital revolution and become reflective of each region. Functions of the dealership will be dependent on location; flagship dealerships will have

a concentrated retail focus providing indepth information, with a highly engaging and virtual customer experience. The smaller dealerships will provide a virtual experience on a smaller scale, but will ultimately give those that need to interact with something tangible the opportunity to do so. However, the big questions is: with customers more concerned about connectivity than ever before, will the automotive experience go as far as encouraging purchasing online, almost leaving the physical dealership redundant in sales process? Will the automotive experience just become the final link in an extended and complex value chain of companies tasked with meeting customer needs, in this case focussed on supporting and enhancing the user experience? For the growing group of consumers that prefer a service instead of a product (e.g. Spotify and Netflix), there is the genuine option of ceasing to own a car outright but instead utilising a caras-a-service (CaaS) approach. In these cases, the “buying” decision is more about what car services a user’s immediate needs. The CaaS providers who will win in this space will be those that can be flexible enough to meet a wide variety of demands from innercity, one-person, short journeys to grand touring holidays with four children and towing a boat. Software dependency The huge advances in the automotive industry in the hundred years or so since

Retail (R)evolution

Henry Ford introduced the first affordable car, have led to a fragmented buying market which has become softwaredependent, not just from the buyer’s perspective but also the dealer network. Worryingly, with individuals prioritising connectivity over functionality, car manufacturers ultimately rely on software to deliver their best and most customer-relevant features. However, the old quality assurance paradigm just isn’t designed to find problems associated with a future of softwarecentric vehicles, meaning those that can apply rigorous quality assurance to the intangible world of software will have a distinct advantage in satisfying customers’ demands. Software development along with affordable sensor and hardware technology will be the key enablers to both full autonomy and semi-automation going forward. Digitising the supply chain Digitising the value chain can optimise profits by highlighting the various cost components, such as the creation of virtual showrooms which have given consumers the ability to customise a car, placing an increased importance on zero inventory. Vehicle manufacturers are worried not just about a lack of suitable suppliers, for example for high volume electronics systems, but also

about the ability of those that do exist to deliver components at the speed and volume required by the vehicle manufacturers. There is a perception that suppliers in many countries lack the technical or processing capability to undertake the business. What can the automotive supply chain do to address these concerns and ensure they can offer the kind of world class, high technology products required by these manufacturers – and offer them quickly, efficiently and cost-effectively? For many years the manufacturing sector has struggled to successfully implement Product Lifecycle Management and Enterprise Resource Planning (ERP) software systems. Despite the fact that ERP was initially developed to help the automotive sector manage increasingly complex supply chains and process automation, many firms can find themselves wrestling with what calls one of “the most expensive, timeconsuming and complicated tasks an IT department can take on.” However, in an increasingly IT-enabled, machine-to-machine, Big Data world, creating and delivering world-class parts and systems relies on the effective use of software at every stage.

From research and development through to production, performance and distribution, and even within the parts and systems themselves, software is everywhere, embedded and critical. Software is the enabler, but when it becomes excessively complex or even fails, it becomes the barrier, halting operations and even growth in its tracks. With the industry set to become increasingly digitised, many may question whether it would be easier for a software company to integrate the features of a car which drive user experience and let traditional hardware suppliers provide the parts. As a connected car now requires more coding than a space shuttle, it will be vital for software to become integrated within the whole manufacturing process, ensuring software testing is included within the final safety checks as cars come off the manufacturing line. In turn, the coming digitisation will lead us to ultimately question the role of a traditional vehicle manufacturer; will OEMs simply become a host of information to guide the purchasing process, reversing the roles and giving customers the upper hand? Or will manufacturers find a way to gain indepth customer insight to influence the online journey and claw back glory? Megatrends | 21


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Retail (R)evolution

How to reconnect OEMs with their customers Many OEMs find themselves trapped in traditional retail structures. Jan-Philipp Hasenberg, Principal, and Philipp Grosse Kleimann, Partner, in Roland Berger Strategy Consultants' Automotive Competence Center, outline how OEMs can offer their customers a multichannel experience

uying a car could be so much fun, if it didn’t fill people with dread. In recent years, the shopping environment and customer needs have drifted farther apart in the automotive business than in any other industry. Worse, customers perceive buying a car, for which they spend more than a year's salary, as an unpleasant duty instead of an exciting experience – a bizarre paradox in a buyer's market.


Millennials, who are as comfortable interacting with devices as they are with people, unfortunately find the

traditional car buying process a nuisance and associate the sales experience with negative attributes such as physical pain. Microsoft/Wakefield research revealed that 70% view dealers more as an obstacle to a fair and transparent transaction than a help, while 67% believe buying a car is one of the most intimidating purchases a person can make. At 56%, more than half even feel that negotiating with a salesman is as pleasant as a trip to the dentist. The consequences for automotive players: third party providers like TrueCar and

AutoNation (US) as well as (Germany) and Aramisauto (France) benefit from the low appeal of traditional sales channels to younger car buyers. The four retailers have adapted their business model to these new patterns of behaviour. Customers can purchase a car that is tailored to their exact requirements conveniently from their own home with complete price transparency at any time of the day. Whether it is moving from offline to online channels, from stationary to

Source: AutoScout 24 "Autokauf in der Zukunft" (2015); Autotrader "Car Buyer of the future" (2015); Capgemini "Cars Online" (2014)

Megatrends | 23

Retail (R)evolution

Fully integrated multichannel operations (e.g. BMW i, Tesla) and enhanced customer interaction centers (e.g. Fiat Live Store in Brazil) are on the rise

mobile showrooms or from tangible to virtual customer experiences, the winds of change are disrupting the automotive retail industry. Fully integrated multichannel operations (e.g. BMW i, Tesla) and enhanced customer interaction centers (e.g. Fiat Live Store in Brazil) may still be scarce for now, but quite a few players are rolling out new retail formats (e.g. BMW Brand Experience Center in Shanghai, Audi City in London, Mercedes me Store in Hamburg) and setting up their own online sales activities (e.g. Mercedes in Germany and Poland, BMW i in many markets, Dacia in Italy, UK, Netherlands). Modelled on Apple’s soft-sell retail stores, BMW introduced the ‘Product Genius’ – customer service personnel that do not work on provision and consequently are not incentivised to sell but to satisfy customers. This approach is also followed by other OEMs, such as the ‘Product Concierge’ at Mercedes-Benz or Hyundai Rockar's ‘Angels’. In our experience, there are concrete reasons that explain why the process of retail innovation is more evolutionary rather than revolutionary. Path dependencies increase structural inertia within the retail organisation and prevent true innovations from spreading. A comprehensive multichannel approach would, for example, require a closer collaboration between marketing, sales and 24 | Megatrends

aftersales, as well as a redistribution of power between wholesale and retail operations, all of which is difficult to implement. This is why "greenfield" solutions with no legacy systems in place (e.g. BMW i and Tesla) allow for more progressive solutions. As a consequence, many initiatives of established OEMs remain in an experimental phase or are decentralised activities driven by the markets. Their focus often lies on digital sales and digitisation of the point of sale, whereas the actual goal should be to increase the overall efficiency and effectiveness of the entire retail process (e.g. reducing investment requirements in facilities, improving conversion and loyalty rates). In many cases, this leads

to fragmented sales activities. Often the cost structure behind the innovations is neglected and a comprehensive vision of how the multichannel landscape will look in the end is lacking. Some premium OEMs are drawing important lessons by looking at other business sectors for inspiration. Having started early, they are at the forefront of multichannel retail within the industry. Premium OEMs have the advantage of financial leeway to undertake comprehensive experiments. The volume OEMs operate within tight margin structures, and thus have resources that by comparison are far more limited. Priorities differ, too: while brand experience is the focus for

Audi City London

Retail (R)evolution

Illustrative customer journeys along new retail formats Illustrative Pre-sales phase Sales Channel



Vehicle Configuration Search

Test Drive

Sales phase Custom. Vehicle Evaluat.


Contract Conclusion


Pop-up store/shop-in-shop

Ownership phase Vehicle Handover

Customer engagement

After sales (equip./ acc. sale)

Service appointm. scheduling

Service drop-off

Service consultation

Service pick-up


Standard dealership

Stationary Experience center

Mobile test drive fleet



Mobile sales force

Customer contact center

"Traditional" customer


Customer online portal (incl. online sales)

Digital affine customer

Drop-off point

Mobile service force

Mobile sales force

Cust. cont. center

Comfort oriented customer

Source: Roland Berger

premium manufacturers, maintaining an affordable sales network is the most important aspect for the activities of volume manufacturers. After conducting extensive research into retail innovations and best practices found in other industries, we can suggest many useful ideas that would help position manufacturers for the next developmental stage in automotive retail. Our proposals are flexible enough to enable an evolutionary multichannel approach for both premium and volume segments. 1. Be open about exploring the right formats – but in the end choose a manageable portfolio We have compiled a library of interesting formats for retail innovation,

which can address various targets – but not all can be met at once. For example, stationary formats like brand stores increase brand accessibility and exposure and support the premium brand experience. Differentiated, yet complementary stationary formats, such as inner-city sales outlets, offer a different approach: they help to bridge white spots in the network. It may also be necessary to redefine the role of the dealer network if OEMs do not consider a transition to direct sales. Automotive dealers have a unique position within the traditional sales process. Instead of circumventing them by offering direct purchases from the OEM, e.g. via the Internet, they should be integrated into a multichannel model. A first online sales experience may even exclude the transaction itself.

OEMs could allow buyers to make most choices along the way online – including model configuration, test-drive booking, trade-in evaluation and credit check. For the final price negotiation and contract closure, the customer may then be handed over to a branch office or dealer. Moreover, after sales and service are key tools for an OEM to maintain customer loyalty, so dealers remain an essential part of the equation. 2. Base your multichannel concept on the customer journey – but focus on connections and governance Implementing new retail formats alone will not be enough to capitalise on the benefits of a multichannel retail approach. The new landscape has to enable a seamless customer journey.

BMW Brand Experience Center in Shanghai

Megatrends | 25

Retail (R)evolution

Implementing stable, systematic linkages between the various formats and adapting the governance system to new technological developments are key to success, but often ignored by practitioners as they are less visible than new stores or digital touch points. In order to avoid creating multiple silos, all formats must be interconnected in an intelligent way. This is a prerequisite for actively guiding customers to the next step across various formats (i.e. from configuration to test drive). This necessitates generating and distributing consistent data at all touch points linked to the customer. This is a true challenge for OEMs because it entails changing one's perspective on the ownership of customer data between manufacturer and dealer, and it requires specific competencies in analytics and customer handling. One other crucial factor: it involves employing new technologies. It is also important to ensure that multichannel activities work as an integrated system. Therefore, the overall issue of governance must be revisited, including processes, organisational structure and for example also a realignment of dealer compensation. Today, only the dealership that successfully concludes the contract receives the full remuneration ("the winner takes it all"). This is not really a problem in today's world as only standard dealerships with comparable ranges of services compete with each other. However, in a multichannel environment this may change. Retail formats are then set up to fulfill specific and complementary services along the 26 | Megatrends

The Mercedes me Store in Hamburg offers vehicle presentations, food catering, events, information and advice as well as digital interaction

customer journey and may sometimes even not include a sales functionality. Brand or pop-up stores may only be directed to lead-generation and not cover contract conclusion. Test drive centers will be focused on a very specific step in the purchase experience. How can they be remunerated for their contribution to the overall sales success in a way that allows for profitable individual business cases? We recommend a more differentiated approach. In the future, formats should be provisioned for the service they have offered (e.g. test drive or consultation) when they contribute to a successful sale of a car or service – no matter in which format the customer finally concludes the contract. 3. Be open to significant changes but remain realistic about top-line benefits We believe that multichannel retail operations can lead to a more effective and profitable retail business than traditional structures. However, the financial success won't come in every case, nor without comprehensive measures. To realise benefits instead of sitting on additional costs, OEMs have to realign the structure of sales partners and points of sale. The set-up of a multichannel organisation cannot be efficient if new channels are established on top of old ones. Apart from additional investment costs, the competition between sales activities

of the same brand would increase. In most cases, this calls for reducing and even replacing old structures with new ones. Often neglected, the real potential of a multichannel approach lies in its lower cost of retail: OEMs can offer more qualified support to their dealers. A Customer Interaction Center could prequalify prospects and forward hot leads to the dealer, for example, while a centralised test drive hub could cut financing costs for demo cars at dealerships. Higher operating costs for these new formats can be offset by retaining a share of the dealer margin or charging commission fees from dealers. As a consequence, we believe that multichannel business cases should be calculated without the pressure of generating additional topline benefits, such as immediately increasing sales volumes or prices. A business case should not take this for granted, but rather view it as upside potential and focus on increasing efficiency of the sales system first. In the end, automotive customers should be able to enjoy buying a car or car related services again. Car manufacturers should become benchmarks for customer experiences and offer consumers the convenience they expect. They should re-connect with their customers through tailored retail formats and individualised interactions while not losing sight of the efficiency of their retail system.

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Retail (R)evolution

New powertrains and new sales techniques lead the automotive retail revolution The global automotive industry is in an unprecedented era of change, led by new and alternative powertrains and direct sales, write Sam Abuelsamid, Senior Research Analyst, and Lisa Jerram, Principal Research Analyst at Navigant Research oday, the global automotive industry is experiencing an unprecedented era of transformation with changes occurring in areas well beyond the technologies that make vehicles go, turn, and stop. The conventional vehicle powertrain is going through a revolution in North America and Europe, where greenhouse gas emissions standards mean that the majority of vehicles sold will have some level of electrification by 2024. Vehicles will be increasingly connected to each other and to infrastructure, and they will have some level of automated driving capability.


The way in which consumers purchase new vehicles is also changing, particularly in the United States. Unsurprisingly, Tesla Motors is at the

28 | Megatrends

forefront. Just as Tesla has proven that the battery electric vehicle (BEV) can be fully performance competitive with traditional internal combustion engine (ICE) vehicles, the startup’s decision to bypass the franchised dealer system has the potential to be a real boon to consumers. In the early years of the industry, independent dealers provided a valuable benefit to nascent OEMs by providing a buffer between the factory and the consumer. Dealers provided cash flow to manufacturers as vehicles were delivered and then took their profits on the sales markup and services to consumers. Over time, these increasingly wealthy, locallyowned businesses influenced US state franchise laws that entrenched their

position in the automotive ecosystem by preventing the manufacturers from selling directly to consumers. The state-level bans on direct sales by manufacturers have restricted the ability of these companies to experiment with innovations in how new vehicles are sold. Traditionally, dealership sales staff have worked at least in part on commission, so they have a financial incentive to move customers through the sales process as quickly as possible. That wasn’t always such a bad thing, but since new vehicles and the decisions required of consumers have become more complex, some additional handholding is required at the retail level. The absence of this extra attention is likely playing a part in consumers’

Retail (R)evolution quality perceptions and lower-thananticipated sales of vehicles with electrified powertrains. Customers today enter dealerships armed with information and are often more knowledgeable on vehicle features than the sales staff. Rapid turnover among dealership sales staff exacerbates this problem, as the staff have little time to become familiar with all the features of a brand’s models. They are more likely to know about the models that sell the most - and through the next decade, these will still be models based primarily on the ICE, although with increasing levels of stop-start capability or hybridisation. Navigant Research expects plug-in electric vehicles (PEVs) to account for less than 10% of US annual light duty vehicles sales in 2024. Moreover, reportedly, it takes more of the salesperson’s time to sell a PEV than a conventional car. And PEVs don’t offer the same post-sales revenue opportunities that dealerships currently count on, since these vehicles require less service and maintenance than ICEs.

OEMs are taking inspiration from Apple, which created a network of stores with staff trained to guide customers to the right product and then provide both training and support after the sale

homes or with shorter commutes, will find the low operating costs and reduced service requirements of a PEV hugely beneficial. However, if a salesperson isn’t willing or able to take the time to listen to what a customer needs and then educate them on the pros and cons of the available options, that customer is more likely to just drive off with what they already know.

would follow a similar model with company-owned stores and staff that would guide customers through the purchase. With a much more limited product lineup than most other OEMs, Tesla can implement this model more easily than an incumbent. OEMs are highly motivated to sell PEVs, as they are a critical component to meeting federal fuel economy and greenhouse gas emissions standards. If US states were to allow manufacturers to start selling directly to consumers, at least on a limited basis, all automotive industry players could learn how to serve customers better, put them into the vehicles that will best serve their needs, and support greater PEV sales.

Tesla learned this lesson early by watching Apple’s retail store success. Apple created a network of stores with trained staff that could guide customers to the right product and then provide both training and support after the sale. In 2007, more than a year before delivering the first Roadster to a customer, Tesla announced that it

As it is currently designed, the traditional dealership model may have a detrimental effect on sales of electrified vehicles. PEVs, including both plug-in hybrid and battery electric versions, can be a great fit for many customers’ lifestyles. Many drivers, especially those living in single-family





































Legally allowed

Challenged in court

Legally allowed with restrictions

Tesla has no current stores

No formal legal challenges known


The state of Tesla: guide to the US states where Tesla has retail stores

Megatrends | 29

C om so in on g !

All new cars will be connected by 2025.

Check out our free guide to the companies making that happen.

Connected Car

CE? Yes, says the auto industry International CES 2015 underlined the rapid convergence of consumer electronics (CE) and automotive technology. Martin Kahl asked several key automotive industry stakeholders why they hold this consumer electronics show in such high regard he convergence of consumer electronics and automotive technology is undeniable – and unstoppable. The car can no longer be the Internet black spot that it has for so long been; consumers will not accept it, OEMs are doing everything they can to enable connectivity, and a host of third parties are lining up to identify and exploit its commercial potential, from infotainment providers to insurance companies and even national and regional authorities.


Every year, International CES, the consumer electronics show held in January in Las Vegas, becomes steadily more ‘automotive’. Indeed, the 2015 edition hosted ten OEMs over a floor space reportedly 20% larger than in 2014 – and there were many more Tier 1 automotive suppliers exhibiting

than in previous years. The event, which in 2015 welcomed a record 176,676 visitors, enjoys widespread mainstream media coverage and most of the column inches about CES 2015 highlighted the developments in automotive technology; not just connected cars and autonomous drive technology, but also the car’s place within the Internet of Things, over the air (OTA) software updates, data analytics, cyber security and data protection, wearable tech and voice and gesture control. With a calendar of automotive trade shows to choose from, why is CES so attractive to the automotive industry? “The amount of automotive technology here is tremendous, and it grows every year,” says Walter Sullivan, Head of Elektrobit’s new Innovation

Lab in San Jose. “The difference between here and the Detroit Auto Show is that the focus of the car companies here is on the technology that’s in the car. At the Detroit Auto Show, it’s more about the car itself the design of the car and the efficiency of the powertrain.” Ironically, adds Martin Schleicher, Vice President Strategy and Key Partnerships at Elektrobit Automotive, it’s also easier to meet German customers at the Las Vegas event than to drive across Germany to visit them. “Everybody we want to work with, and everybody we do work with, is here. Even though we’re not a consumer facing company, this show gives us the opportunity to meet and talk to our customers. We can engage with all of those car companies.” Megatrends | 31

Connected Car

Elektrobit Mercedes-Benz S-Class Simulator, CES 2015

“We participate in several trade shows throughout the year, but from a pure customer engagement standpoint, CES is probably the most valuable trade show to be at,” says Sullivan. “And being here as an exhibitor also shows your state of the art in terms of technology, what you’re doing, and your innovations. Our being here has been very well received by our customers,” adds Schleicher. Broadcom is a regular at CES; it is also a founding member of the OPEN Alliance, a special interest group (SIG) established to encourage wide-scale adoption of Ethernet-based automotive applications. “Five years ago, we had no interaction with car customers in general and no reason to talk to them, because we didn’t do automotive products and they didn’t care what we made. Now we see the exact opposite happening,” Scott McGregor, President and Chief Executive of Broadcom, tells Megatrends. “CES is a very important show for us. We have quite a number of the major automotive manufacturers coming to talk with us here at the show, to discuss taking the technology you see here for the living room and understanding how to get that into the car. Why should you settle for lower quality content in your car than you have in your living room?” CES is also a major event in the calendar for infotainment supplier Harman, which hosts a booth at the event highlighting its home 32 | Megatrends

entertainment and automotive technologies. “CES has become our biggest automotive show,” says Dinesh Paliwal, Harman’s Chairman, President and Chief Executive. “We go to Geneva, Shanghai, Frankfurt and other shows, but this is the biggest because almost every automaker is here. Every automaker has spent time with us and we have all our infotainment and car audio and our software suite of services fully in demonstration mode here. At other shows, we may not have as much space to do that.” Although popularly known as the show where tech giants launch new phones and tablets, drones and ever-higher

definition TVs and curved screens, look more closely and you’ll find the tech behind the tech. Michiganheadquartered TRW has traditionally been viewed as a safety company, supplying products that consumers cannot see and hope to never use, like airbags and other safety equipment. In recent years, it has broadened its electronics technology offerings to include not only advanced driver assistance systems (ADAS) technology that ties in with everyday consumer features and benefits that drivers use, like Adaptive Cruise Control - and it’s looking to the future with a suite of semi- and fullyautonomous drive solutions.

TRW’s stand at CES highlighted the supplier’s suite of semi- and fully-autonomous drive technologies, under the slogan “Automated driving starts with safety”

Connected Car

“As we move into automated driving, the automated driving systems use those safety building blocks that are TRW’s area of expertise,” explains Andy Whydell, the company’s Director Product Planning for Global Electronics. “But this isn’t something that you use once a year or hope to never use, it’s something you want to use every day. So the products that we’re working on are going to be interacting much more than ever with consumers.” CES, he says, is a way for TRW to communicate directly with consumers and show them some of the technologies it is developing. “It’s also an opportunity for us to listen and get some ideas. And as we get further down the road into automated driving, we need to get an understanding of what people are looking for and what their expectations are.” Tim Yerdon, Global Director of Innovation and Design at Visteon, describes the place of a supplier of automotive electronics technology as being positioned somewhere between the automotive industry and the consumer electronics industry. He likens it to three cogs moving at different speeds: “The auto industry is spinning on a four-year cycle. The consumer electronics wheel spins about eight times faster, and every six months or so there is usually a new product out. We are somewhere in the middle. We have to mesh this and take the best of the consumer world into

automotive, and ensure the expected levels of robustness and reliability.

potential for over the air software updates.”

“We are building in headroom with the microprocessor and the electronics in order to future proof some of these products,” says Yerdon. Visteon claims to be the number 1 supplier of displays, number 2 in driver information and number 3 in cockpit electronics. “In terms of display technology, we have had programmes where, over the three-year development cycle, the display spec has changed four times to higher-resolution displays. This of course affects other graphics and processing speeds. We are really starting to get much better at the prediction side of future proofing technology, and tying that hardware future proofing together with the

If the show hadn’t already secured its place in the global automotive industry events calendar, then the 2015 edition of CES, the ‘car electronics show’, did just that. With cars on the stands of non-traditional automotive companies – Intel had a Jaguar F-Type, Panasonic hosted the unexpected appearance of the Tesla Model X – CES 2015 became the world’s most car-focused non-car show. There might be a case for a separate ‘automotive CES’, but that’s a selfish automotive insider’s view; a key part of the show’s attraction to OEMs and suppliers is the wide range of offerings at the show, and the wider CE industry’s emphasis on the car’s place within the Internet of Everything.

“We have to take the best of the consumer world into automotive, and ensure the expected levels of robustness and reliability” - Tim Yerdon, Visteon

Megatrends | 33

Connected Car

Cyber security: an industrywide problem that needs an industry-wide solution The automotive industry is in need of a solution to a future problem: cyber attacks could come from any quarter, and the solution appears to lie in collaboration with other industry stakeholders and with other industrial sectors. Rachel Boagey investigates lthough previously a strategic choice by those who were ahead of the game, building security into the connected car to protect it against cyber attacks is now becoming a necessity for all OEMs.


In the current automotive landscape, software is beginning to take over many automotive applications, making the car ever more vulnerable to outside threats. But car companies are not software companies, and without a background in security, how can they possibly design adequate security into their vehicles? With a little help from my friends John Ellis, Principal at Ellis & Associates and formerly Ford’s

34 | Megatrends

Global Technologist and Head of the Ford Developer Programme, explained to Megatrends that the automotive industry needs to look to other industry verticals and experts if it is to make the connected car secure. “The vehicle isn’t just a car any more, it is the car plus the smartphone plus the Cloud. Suddenly the manner in which the data was stored or protected is not simple. So how can the industry cope?” Someone else who believes in the importance of industry collaboration to protect and secure the connected car is James Moar, Research Analyst at Juniper Research. Moar believes that companies are putting work into fixing vulnerabilities in their systems before they get to the consumer but that in an ideal world, they should work together to increase their

chances of protecting the car from cyber attacks. Speaking to Megatrends, Moar noted, “Collaboration is an ideal situation, but it is difficult to engineer. While cyber security is now an omnipresent issue, trying to achieve collaboration where company-level security is sufficient would be wasted energy.” However, Moar also believes that information sharing via specialist third parties such as cyber security firms is key. “That way information can be spread to where it is needed, rather than requiring broad standards.” Previously Chief Technical Officer at Ford, Paul Mascarenas was appointed in June as FISITA President for a two-year term, alongside his

Connected Car recently acquired role as a member of the Board of Directors at ON Semiconductor, an automotive semiconductor supplier. Megatrends spoke to Mascarenas about his views on how the industry can secure the connected car. He explained, “Ensuring the highest levels of automotive security does require collaboration between auto manufacturers, network providers, content providers and other interested parties. Several relationships already exist, facilitated by organisations such as SAE International, USCAR and the Alliance of Automobile Manufacturers. Although no common solution exists across the industry - that complexity may in itself provide additional robustness - there is much to be gained from sharing information in a non-competitive environment around potential threats, including the likelihood of such attacks, the vulnerability or risk level involved and the possible consequences.” A secure ecosystem As intelligent transportation systems (ITS) are increasingly developed, where vehicles are in communication

with each other and the infrastructure, Mascarenas believes “that this is where collaboration becomes even more important as the threat to a particular vehicle could come from elsewhere on the network.” Ellis agrees, explaining that even if one other OEM is vulnerable, this could still cause problems and vulnerabilities for the ecosystem. “Even if one company is absolutely perfect and makes sure that its cars are never in any way shape or form vulnerable, the fact that

infrastructure systems might be vulnerable can still potentially cause problems for them. The industry is vulnerable until all the industry is not vulnerable. And the only way to ensure the industry – that is, the vehicles and the infrastructure – is not vulnerable is through collaboration.” Building it in from the ground up The challenge within the industry in securing the connected car could boil down the ‘us versus them’ mentality

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Connected Car

that divides the open source community and the automotive community currently. However, industry analysts believe that in future, this traditional attitude must change moving forward to the car being equipped with more software. Nexor is a UK-based cyber security company with expertise in the defence and intelligence sectors. The company is passing its cyber security know-how on to the automotive industry through a recent collaboration with an automotive Tier 1 to support the company’s infotainment systems and make sure it is offering a secure system to its automotive customers. “Collaboration is vital to build security frameworks and security models,” explained Nexor’s Innovation Director, Colin Robbins. “The last ten years has shown us that security needs to be designed and built by experts and the way experts do it is by using things that they know work and are tried and tested.” Vulnerabilities are brewing Robbins relates the current direction of the connected car to the connected kettle. “The kettle connects to your iPhone so that when alarm clock goes off in the morning, your kettle boils. It’s a great idea in principle, but the kettle now has complete wireless access to your Internet at home. They may be great kettles, but they were not made by made by security engineers, and so open up the home Internet to potential 36 | Megatrends

malicious attacks,” he explained. Robbins therefore notes that security needs to be designed by security engineers: “It’s important that this message is translated across to the automotive industry.” Standards, frameworks, methodologies Not every company can become a security expert, explained Robbins, who also suggested that security engineers such as Nexor need to lay out a framework by which the industry needs to abide. “Standards are critical here, rather than everyone starting afresh on something completely proprietary. As this technology moves forward, there’s going to be a greater demand. Building in security is becoming critical, and this is going to come through standards,” he said. At the GENIVI Alliance’s Open Automotive ‘15 event in Stuttgart, the topic of the connected car was high on the agenda – but how to protect it was even more so. Working together requires a change of thinking, and at the event, Georg Doll, Vice President of Automotive at Wind

River said he believes that tackling cyber security problems will not happen overnight. “To stay one step ahead of security threats to the connected car, OEMs need to work together with different players. With this collaboration, an ecosystem can be established.” Also speaking at the event was Dr. Michael Müller from Argus Cyber Security, who believes that cyber security needs to be an on-going consideration throughout the lifecycle of the car; Müller, who is also the founder and Chief Executive of Magility, a management consultancy, noted that the industry may struggle to adjust to this change. “Many partners have to play together to develop a secure ecosystem,” he said. “They all have to be qualified in cyber security – not just the OEM.” Ultimately, the future of the connected car is dependent on whether cyber security is acted upon in the correct way, and whether the industry will learn to collaborate to ensure this security. If the industry gets it right, the connected car will be a success; if not, the industry could potentially lose everything that connected car technology has to offer.

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Connected Car

Adopt Digital PLM to keep pace with in-car tech Adoption of Digital Product Lifecycle Management (PLM) can help companies manage the influx of software and hardware applications needed to enable the latest in-car technologies, writes Eric Schaeffer, Senior Managing Director, Accenture Product Lifecycle & Manufacturing Services

n-car technology has dominated a number of automotive and consumer technology shows this year, reflecting a growing trend, where traditional hardware manufacturers are focusing more on software development to compete in a marketplace increasingly driven by digital technology. But this shift is creating new product development obstacles for such companies, and the rise of the connected vehicle epitomises this challenge.


The integration of one of the largest forms of hardware, the automobile, with today’s software is enabling the operation of in-car technologies that define the connected vehicle, a concept which is driving the new vehicle market’s direction. Yet, while surging demand for such technologies is helping automotive manufacturers compete and grow, it also is increasing the complexity of producing them. Today, OEMs not only must merge their processes and tools to manage the interface between vehicle dashboards and new software, but keep pace with the latest software applications to enable smartphone capabilities that consumers want replicated in their cars. According to Accenture research, drivers are twice as likely to choose a vehicle based on in-car technology options as on its performance. To address this challenge, OEMs will need to adopt a unified approach to integrating hardware and software product development using digital processes – processes that will become ever more critical to their 38 | Megatrends

future success, as well as that of hardware producers in other industries facing similar challenges. A digital solution Today, the process of differentiating products has been dramatically improved, as manufacturers now have the ability to customise a variety of products and capabilities through simple software changes. Product configuration changes can be made much faster without having to rely on costly and time-consuming hardware replacement components. Optimising this capability and effectively integrating it with the vehicle’s hardware will become increasingly critical to competing in the connected vehicle market as the pace of technological advances that can be combined with the vehicle continue to accelerate.

ensure consistent communication across all hardware and software development functions, which is critical to overcoming today’s product development challenges. Moreover, it would enable OEMs to better manage and be more nimble in responding to frequent product configuration changes driven by unrelenting demand for the latest in-car technologies. Accenture recently launched a similar process called Unified Application Lifecycle Management-Product Lifecycle Management (ALM-PLM).

One strategy that can help OEMs keep pace with such demand is to pursue a robust, digital management approach. This would include unifying product lifecycle management (PLM) tools for hardware with application lifecycle management (ALM) tools for software under one, integrated system. Such a system would help

Connected Car As part of using a digital approach, OEMs also should consider adopting a new product development system, namely Digital Product Lifecycle Management (PLM). Digital PLM creates an environment that further enhances communication and innovation in the product development process. The system serves as a central hub for product development, digitally disseminating the flow of frequent and varied information between all process functions, including engineering, product development, supply chain management, manufacturing, services, and marketing. Adopting it elevates standard PLM practices to higher levels of efficiency, productivity, and data intelligence compared to the traditional linear method. The linear approach communicates with functions sequentially, slowing the development process. Conceptually, picture a square configuration with Digital PLM in the centre. Surrounding this central hub on all four sides are all of the processes previously used for linear product development, comprising the product concept stage through product retirement. Digital PLM results in a highly interactive network with many more inter-connections than a linear model. The key difference, and inherent advantage, is that information can flow back and forth between the central hub and all surrounding processes much more directly and efficiently, enabling faster and more varied back and forth data transmission, sharper insights, and better decision-making.

Not only can Digital PLM help OEMs overcome the difficulties of managing an unrelenting and rapid stream of incar technology devices and services, but contribute to their ability to innovate in the connected vehicle segment. If ever there was a time for such an approach that can help accelerate product develop and speed-to-market, it is today as vehicle manufacturers pursue success in a highly promising, but volatile market. Expand Digital PLM As the car moves closer to resembling a smartphone, as well as being a mode of transportation, offering a range of infotainment and using an app-based approach, in-car technologies will increase in sophistication and demand for diverse technologies will grow. And this will make product development even more complex. To continue effectively managing the process while capitalising on market opportunities, OEMs also should consider optimising the use of Digital PLM by incorporating with it a range of digital technologies, including social media, analytics, Big Data, mobile, and the Cloud. Doing so can enhance their ability to establish a more agile, responsive and intelligent PLM network to continually capture the pulse of the segment. By incorporating social media networks in the Digital PLM process, for example, OEMs can not only solicit their customers’ input for the next generation of in-car technology systems and services, but receive it much faster. Using this approach can also enable OEMs to receive critical feedback on product performance, which will become increasingly critical in this segment as industry observers and government agencies take a greater interest in

the functionality, quality and safety aspects of in-car technology. The use of analytics and Big Data also is essential to understanding the connected vehicle market. These digital technologies can enable data capture, which can lead to sharper insights and better decision-making. Leading companies can see how consumers are using in-car technologies, as well as get a better idea of which capabilities are popular and which are not. OEMs can then use this information to help prioritise which new devices and services to focus on for the next generation of in-car technologies, as well as update existing technologies and applications on current vehicles. Greater PLM connectivity is made possible through mobile technology. Customers, suppliers, employees and other stakeholders can communicate and participate in PLM processes more quickly and easily, reducing wait time and increasing speed-to-market. Then there is the Cloud, which can enhance Digital PLM by contributing flexibility to an already faster product development process. With its pay-peruse commercial framework, swift implementation and flexibility, the Cloud allows OEMs to quickly and effectively scale up their computing needs during the various phases of product development and then scale back when needed. This alleviates the need to continually build new engineering infrastructure to support development, as well as the need to pay for such infrastructure in an environment as fluid as the connected vehicle market. Be prepared The connected vehicle, which is dominating car-buying preferences, has given auto manufacturers an opportunity to significantly strengthen their competitive position and increase growth in an intensely competitive market segment. But it also has created new product development complexities relative to managing the influx of software and hardware applications needed to enable the latest in-car technologies. Integrating PLM and ALM tools under a unified management system and adopting Digital PLM can help companies better oversee the intricacies of this process and respond faster to new opportunities in a market that seems poised to offer endless possibilities. Megatrends | 39


Could the Fulcrum give CV electrification the leverage it requires? Wrightspeed believes its new Fulcrum range extender is “one of the most significant automotive innovations of the last 25 years”. Michael Nash was keen to learn more Silicon Valley-based company that specialises in the electrification of powertrains for large commercial vehicle (CV) applications, Wrightspeed prides itself on supplying highly efficient powertrains that allow fleet operators to obtain maximum payback per load. Chief Executive Ian Wright, who also happens to be a Co-Founder of Tesla, gave Megatrends an insight into the world of CV electrification.


Dubbed the Fulcrum, the range extender uses an 80kW turbine generator that is one-tenth the weight of its piston generator counterparts commonly found in conventional internal combustion engines (ICEs). It is also 30% more efficient than existing turbine generators and is fuel agnostic, with the ability to burn diesel, compressed natural gas (CNG), liquefied natural gas (LNG), biodiesel, propane, kerosene and others.

Appetising platform Wrightspeed has recently launched a new vehicle range extender, which the company believes is “one of the most significant automotive innovations of the last 25 years.”

“The Fulcrum has huge advantages over piston engines with the power to weight ratio. A 10,000 hour life engine like the Fulcrum with integrated generator only weighs 250 pounds. You can make a 10,000 hour life piston engine generator, but it

weighs about 2,500 pounds. So immediately the Fulcrum offers a 10:1 weight advantage,” explains Wright. When it comes to the CV segment, saving weight is a “vitally important part of saving fuel”. Therefore, Wright believes that the lightweight design of the Fulcrum is one of its most important features. “There’s also a 10:1 advantage in emissions,” he continues. “As turbine engines use continuous combustion, and because there is a lot of excess running a very lean burn, the emissions are radically low. We believe the Fulcrum is at least ten times cleaner than any piston engine, allowing us to meet California’s strict emission standards without using any kind of after treatment.” Without the need for catalytic converters or particulate filters, Wright believes that the weight savings “slowly start to make a huge impact”. However, he is quick to point out that it is not all about weight saving. Wright is confident that the Fulcrum’s flexibility to use a variety of fuels, coupled with its

"We believe the Fulcrum is at least ten times cleaner than any piston engine, allowing us to meet California’s strict emission standards without using any kind of after treatment” - Ian Wright, Wrightspeed

40 | Megatrends


Dubbed the Fulcrum, Wrightspeed's range extender uses an 80kW turbine generator that weighs 1/10 of its ICE piston generator counterparts, operates 30% more efficiently than existing turbine generators and can burn any fuel

advantages in noise, vibration and harshness (NVH), will make it a platform for the future of CVs: “The CV segment is very interested in using alternative fuels like natural gas because of the savings. But the conventional engines suffer from pumping losses, resulting in rapidly declining efficiency. You don’t get this problem with a turbine engine – the efficiency is exactly the same, no matter what fuel you use. The fact that the Fulcrum makes for a smooth and comfortable ride, is quiet, clean and light makes it a very appetising platform.” Enormous savings So what makes the electrification of the CV segment “appetising” for fleet operators? Wright explains that not all CV fleets would benefit from applications like the Fulcrum, but larger trucks “could see enormous savings if they adopt electric powertrains.” This is due to scalability. “Heavier trucks need more power, they

need more torque, they need more storage, and the costs of powertrains go up. Simultaneously, as you go into that heavier vehicle segment and harder drive cycle, you find that the fuel savings go up much faster than the costs,” he says. Using the Nissan Leaf as an example, Wright describes the economy of scale. The Leaf is “a little electric car, with a powertrain that is cheaper than one found in a medium-duty delivery truck. Its powertrain will be around 60% of the cost; but in the medium-duty truck, you are displacing a vehicle that’s burning 14,000 gallons of gasoline a year, and we can save well over half of that.” Conceding that it may cost “twice as much” to build a powertrain for a Class 8 garbage truck as it does for a small delivery van, Wright suggests the heavy upfront cost can act as a strong deterrent to many fleets. On the other hand, “saving three to four times as much fuel leaves some people gobsmacked, and they can’t wait to receive their payback and start reaping the rewards.” Wright is confident that most people’s reaction to the Fulcrum will be the

latter. He has high hopes for the range extender, and thinks it will push Wrightspeed in the direction of segment domination: “In five years or so, we intend to be the dominant powertrain supplier in these applications. I think we will spread our technology wider than that by then, and you’ll start seeing some of it in high performance cars, and in other vehicles that you may not have considered at first. But in the heavy-duty segment, we will be dominating the high efficiency powertrain market.” Misplaced aura If the electrification of the CV segment is so compelling, why do some industry experts question its viability? Wright says that it comes down to engineering preference. “There are people who are zealots of one sort or another, and they believe in pure battery electric vehicles (BEVs) with no fuel burning at all, so they eliminate range extenders from their worlds,” he explains. Taking this approach, Wright admits that pure electric CVs are not feasible. “We would need to put 16 of our battery packs on a Class 8 garbage truck if we didn’t use a range extender, which cost around US$15,000 each. This would take up half the useful payload of the garbage truck, and half the space they need for the load itself,” he says. Using the Fulcrum enables Wrightspeed to have three battery packs onboard. Essentially, Wright says for the electrification of CVs to work, “you must use a range extended architecture.” Megatrends | 41


Making the connection to smart EVs Megatrends investigates how connected technologies can provide solutions for more efficient eMobility By Freddie Holmes

onnected technologies are being integrated within new vehicles to improve comfort and safety by communicating with traffic, infrastructure and road signage. Suppliers also see a significant potential for connected technology to enhance the battery range of electric vehicles (EVs) by planning – and adapting – to the most efficient route available at the time.


It has been widely discussed that connected technologies help to address the issue of range anxiety, the term used to describe the fear of running out of battery charge. However, this is an issue that particularly concerns the driver when

42 | Megatrends

trying to find a nearby charging station. Connected EVs could potentially make the most of the available battery charge in the first place by planning energy efficient routes and cutting out traffic congestion before the driver gets stuck in energy draining start-stop situations. Helmut Matschi, Member of the Executive Board and Head of the Interior Division at Continental, recently discussed the rapidly changing societal demands on mobility at the 2015 SAE World Congress in Detroit. Megatrends caught up with Matschi to discuss how connected technology can assist in the development of eMobility.

The connected car connected powertrain



According to Matschi, Continental’s connected eHorizon (pictured) technology which was recently updated before the 2015 International CES – uses map data “to give vehicle electronics a glimpse into the future.” This technology allows the vehicle to adjust to the upcoming route early on and actively reduce consumption, and has led to development of the ‘connected powertrain’. Driver

eMobility assistance systems (DAS) or actuator behaviour – such as braking and steering – can be prepared for traffic situations before the vehicle sensors detect the situation. Matschi explains: “If the dynamic eHorizon alerts the driver to the tail of a traffic jam after a bend, a vehicle that can ‘see ahead’ could gently reduce its speed, rather than initiating full braking once the sensors have detected the obstacle.” Addressing the all-important question of whether there is potential for connected technology to make EVs more efficient, Matschi acknowledges that “range maximisation of electric vehicles is a key benefit”. Highly accurate maps will allow EVs to maximise their range by choosing uncongested routes or where traffic is flowing smoothly to keep acceleration at a stable level. At this point, it is important to note that the same can be said for all vehicles – whether powered by gasoline, diesel or electricity. However, with limited charging stations available, the rewards are potentially greater for EVs. Think ahead Continental has been working with HERE, a leader in mapping and location services, to develop highly accurate map technology for the eHorizon. These maps incorporate a range of road information, including lane markings and connectivity, speed limit changes and road signs. Using this information, vehicles can react to shifting circumstances, such as variable speed limits, automatically.

“These days, it is hard to imagine life without the Internet – and soon that will be true in the car as well…Connectivity is the key to electrified and automated driving" - Markus Heyn, Bosch

Matschi notes that the assistance of HERE’s 3D route profile and information on traffic or weather “may influence the range of EVs.” In addition, “hybrid vehicles can drive even longer without assistance from the internal combustion engine if the vehicle has dynamic traffic information,” he said. This was a view shared by Bosch’s Markus Heyn, Member of the Board of Management and responsible for Automotive Original Equipment Sales and Marketing, during his presentation at the 2015 Bosch Automotive Press Briefing in Boxberg, Germany. “These days, it is hard to imagine life without the Internet – and soon that will be true in the car as well…Connectivity is the key to electrified and automated

driving,” he mused. Online connectivity means that drivers have access to information about congestion and where to find available parking spaces – and charging points for that matter – all in the name of efficient eMobility. “On one hand, the detection of road work sites can be communicated to drivers, but it can also be done practically when we have traffic lanes ahead of zones where only EVs may be operated,” said Heyn. Bosch anticipates that around 15% of all new vehicles will be electrified as early as 2025, and will rely heavily on connected solutions. Rapidly transferred traffic data allows connected vehicles to anticipate what is coming around not only the first bend, but several bends after, as well. When applying this system within an EV, “recuperation and charge levels are optimised,” said Heyn, concluding: “A connected car is always the better car.” Just part of the puzzle Epitomising the view of these Tier 1 suppliers, Chairman and Chief Executive of Bosch, Volkmar Denner, recently voiced the opinion that “electric cars are good, but connected electric cars are better.” Improving the driving experience of an EV is only part of a puzzle, where all of the pieces are yet to be made. What is apparent is the need to ensure that EVs can interact with the infrastructure around them and understand traffic conditions to maximise battery life.

Megatrends | 43


Fuses - the most important part of an EV? Get the fuse right or pay the price, says Eaton Bussmann By Michael Nash lectric vehicle (EV) product development has traditionally centred around improving range and performance. However, choosing the right fuse is essential for protecting the EV and its components, and for ensuring the continued development of the technologies.

Automotive Megatrends webinar, Mudge and his colleague Saffiya Osman, Application Engineer, explained the importance of fuse selection for EVs and hybrid vehicles, and highlighted the increased complexity in fuse selection as vehicle electrification has evolved.

Changing climate

“In order for hybrids and EVs to become a viable option and compete with internal combustion engine (ICE) counterparts, there are some significant technology advances to make in a relatively short space of time,” said Mudge.


An EV is comprised of a number of expensive components, notably the electric motor and the battery pack. An essential aspect of the EV powertrain is the choice of fuses, required to protect these components from power surges and faults, both of which could be significantly damaging, says Sam Mudge. Mudge is Product Manager for Eaton Bussmann, the electrical division acquired by Eaton in 2012. In a recent 44 | Megatrends

He is certain that as the popularity of EVs and hybrids grows, there will be a greater need and demand for the vehicles to obtain higher power and speed, coupled with longer range. These factors present a number of challenges for companies, but to allow

OEMs to address these, they must first choose the right fuse for the right application. Don’t scrimp OEMs have a choice of two main types of fuses. The first is supplied by companies like Eaton Bussmann, and is “designed specifically with the application in mind”, explained Mudge. It is also typically implemented into the system “early in the design cycle, to best protect all the equipment around the fuse”. The second type of fuse is a cheaper alternative, which comes “off the shelf” and is not capable of protecting certain applications. Mudge admitted that these are “great, but do not always offer the critical protection that fuses are designed for in their application.”


Mudge pointed out the fact that both the vehicle and the charging stations are very expensive, “and so you need to be adequately protected against a fault or a short circuit in both. Also, you’re in a little bit of trouble if you have an EV and your charging circuit goes, as you can’t charge your vehicle.” In short, the growing popularity of EVs and hybrid vehicles will ensure there is a “high growth market” for fuses, concluded Mudge. As for whether the rising demand will make the cost of components like electric motors drop dramatically, and therefore see the fuse selection become less critical, remains to be seen. But for now, Mudge is adamant that fuses are one of the most important components in EVs and hybrid vehicles.

When choosing the latter option, Mudge thinks that “OEMs start to compromise on quality and performance.” He also reiterated the fact that the cheaper fuse does not offer adequate protection for high value components, and suggested that spending a little more on appropriate fuses is a far more sensible investment: “When we look at the cost effectiveness of an item such as a fuse, you really can mitigate against technical issues with much more expensive items such as commercial batteries and motors.” To put things into perspective, using Eaton Bussmann’s fuses to protect all the necessary components of an EV or hybrid vehicle will cost around US$100. Using “off the shelf fuses” will allow OEMs to save “a few dollars,” said Mudge, but when the fuse is protecting a US$10,000 EV battery pack, it’s

“critical” to spend a few extra dollars spent on a better fuse. “To scrimp on the choice of fuse could really impact what you have when you get to the roadworthy vehicle. You are compromising very expensive components in the car that will cost significant sums of money if they are damaged,” he cautioned. Moving on up The choice of fuse is not just important within the EV or hybrid vehicle itself. “It’s absolutely critical to have the appropriate fuse both within the charging station and the charging circuit. We do, and have done developments, for fuses in charging circuits,” he said. Megatrends | 45

Powertrain Innovation

What will fuel economy really be in 2025? Drivers of the future will expect their cars to be cleaner, smarter and more efficient than today, writes Margo Oge new age of greenhouse emissionsbased fuel economy standards went into effect under the first term of President Obama that stands to increase the average fuel economy of 2025 model year cars and light trucks to a fleet average of 54.5 mpg. These standards are in large part behind a new wave of innovation in the automotive industry that stands to alter the cars we drive in the next several decades.


However, in 2025, the average mileage of passenger cars may not exactly be the 54.5 mpg - but it will be very close and much better than what we have today. In part, this is due to the flexible nature of the new fuel economy rules. The standards are specific to the size -

or “footprint” - of a model and can be met without car companies introducing a fleet packed with subcompacts or electric vehicles. But it is also because of the huge level of innovation the industry has already shown. OEMs have had no trouble meeting these goals so far. In 2013, the industry averaged a record high fuel economy of 24.1 mpg, 1.4 mpg higher than the regulations require. The introduction of new technologies is accelerating. For example, there are currently 76 alternative powertrain models - out of a total of 265 available in the American market. 15 years ago, there were just two - Toyota Prius and Honda Insight. But most of OEMs’ recent gains in fuel

The world got its first glimpse of the Toyota Prius at the 1995 Tokyo Motor Show

46 | Megatrends

The 1999 Honda Insight

economy have relied on less exotic offthe-shelf technology like turbocharging, more efficient transmissions and lightweight materials. In the coming years, as the innovation cycles driven by these regulations begin to produce more advanced, efficient and cleaner automotive technology, car companies’ capacities to improve efficiency are likely to accelerate significantly. Batteries with much higher levels of power density will drive hyper efficient, long-range electric vehicles. Broader technological developments like autonomous cars and vehicles that are integrated into the “Internet of Things” will further promote safer and more efficient operation. As long as the enormous expertise and innovation of global car companies - as well as that of new entrants like Tesla remain focused on low carbon efficient technologies, massive improvements in mileage over the next decade are possible. And when forward-looking car companies ask the drivers of the future

Powertrain Innovation

what vehicles they want, they will also see their necessity. One group of future drivers, young people in the wealthier OECD nations, is already forcing OEMs to reevaluate transportation. Teenagers and adults in their early twenties view cars as less important than previous generations. Today, online networking and streaming entertainment takes teenagers places that only cars used to. This generation also increasingly employs car sharing or on-demand transportation services like Car2Go and Uber in the US or France’s BlaBlaCar. The result is a decrease in both car ownership and licensed drivers among the so-called Millenials. Some OEMs are adapting to retain these reluctant drivers. BMW’s i3, for example, is specifically designed to appeal to this market both in a traditional ownership model and as part of a fleet of on-demand vehicles. The i3 is produced from a totally new manufacturing process that uses carbon fibre manufactured in a plant

powered by clean hydro energy. The car is powered by batteries and an electric powertrain, which combine to deliver the equivalent of 124 mpg. Another, much larger group of future drivers, will need vehicles that make sense in the rapidly expanding urban jungles of the developing world. For the foreseeable future, the fastest growing new vehicle markets will be found not in Europe or North America but among the expanding middle classes of China, India, Brazil and other countries. These drivers of the future are increasingly likely to live in burgeoning cities. And these megacities will be facing unprecedented environmental demands. Many cities - from Paris to Beijing to Singapore - have already taken action to reduce pollution and congestion. Some prohibit vehicles with dirty emissions from entering parts of the city. Some seek to discourage driving altogether with high taxes on car registration or fees to enter the city centre. Other cities encourage the use of high-efficiency electric vehicles by

creating a huge network of publicly available charging stations. As a result, future drivers will have less of the “range anxiety” associated with purely electric vehicles. Finally, drivers around the world will be following rules that are similar to the US CAFE and greenhouse rules. Today, roughly 70% of all the cars made in the world need to meet standards for emissions and fuel economy and will converge by 2025. Over the next ten years, the greenhouse gas and fuel efficiency targets set by the four largest car markets - US, Europe, Japan and China - will converge. These megatrends will create a brand new opportunity for OEMs: fuel efficient, clean “global cars” that could be sold to an unprecedentedly large market. When future drivers speak, they will want and need cars that are even cleaner and more efficient than today’s offerings.

BMW i3 DriveNow

Margo Oge is the former director of the Office of Transportation Air Quality for the US Environmental Protection Agency (EPA). Ms. Oge is the author of Driving the Future: Combating Climate Change with Cleaner, Smarter Cars [Arcade Publishing, April 2015]

Megatrends | 47

Powertrain Innovation

Small is the Next Big Thing! Chris Needes, Global Market Manager, Automotive Chassis and Powertrain at Saint-Gobain takes a look at how manufacturers are adapting to trends for the urban car uch of the talk in the automotive industry in recent years has been about the rise of the urban car. Growing demand from consumers for these lightweight vehicles has been reported in Europe, the US and the booming BRIC economies of Brazil, Russia, India and China as well. As a result, car manufacturers worldwide are developing their own urban car models to tap into this burgeoning market.


An urban – or city – car is a small, lightweight passenger vehicle intended for use primarily in a built-up area. In Europe, such cars are normally known as ‘A-segment’ vehicles, while in the US, they are generally termed ‘subcompact’; in Japan, they are called ‘kei’ cars and have been popular in the country since the 1950s. The urban car has slightly different connotations according to size, seating and engine capacity around the world. In Europe, there are no formal criteria to define A-segment cars, with classification based on comparison with other

Suzuki WagonR

similar sized models. However, in the US and Japan, vehicles must meet strict government-defined specifications regarding seating capacity, interior volume and engine size to be

termed an urban car. For example, a Japanese kei car must be no more than 3,400 millimetres (mm) in length with a maximum engine displacement of 660 cubic centimetres (cc). Worldwide demand for urban cars in the so-called Triad markets of US, Japan and Europe is projected to increase 55% by 2018, with sales in the BRICs swelling by 63% in the same period (according to KPMG’s Global Automotive Executive Survey 2013). The urban car’s growing market share has been attributed to several key factors. Asegment cars have been popular in Europe for many years as a solution to congestion and lack of space in towns and cities. However, growing urbanisation in North America and emerging nations is causing consumers in these regions to follow suit. Megatrends | 49

Powertrain Innovation

The ongoing effect of the 2008 recession in the Triad markets as well as the boom in the BRICs has led to a rise in fuel costs. This has resulted in an increasing number of consumers looking for new smaller, more fuel efficient vehicles. The economic difficulties in the US have also resulted in a new trend that has become known as “right-sizing”. Declining disposable incomes in the region mean that consumers are increasingly choosing cars that are sized to suit their needs, such as commuting, driving children to and from school and carrying the weekly shopping rather than simply selecting the largest or most prestigious model. For a rising number of Americans,

aspiration is no longer the principal factor in car purchasing decisions.

How are manufacturers meeting this trend?

In addition, international vehicle manufacturers now have to comply with government legislation demanding carbon emissions reduction. For example, European Commission regulations that came into effect in 2012 stated that vehicle manufacturers will face fines of at least €20 (US$23) for every gram of carbon dioxide (CO2) emitted over the limit of 130 grams per kilometre per car across their entire fleet of vehicles, rising later to a staggering €95/g. Vehicle weight reduction is an important step in enhancing fuel efficiency to meet these strict requirements for automotive manufacturers.

Responding to market demand for urban cars is not simply about producing ever smaller cars. Consumers in both developed and emerging economies still require space and comfort from the vehicles they purchase. Car manufacturers are now actively lightweighting their vehicles to achieve the required fuel efficiency, through the use of plastics and aluminium as well as innovative composite materials in the car body, engine and car interior. This smart design can be achieved by using lighter and smaller components such as composite bearings that offer the same strength and robustness as those manufactured from traditional materials, at a fraction of the weight. Car companies are also developing new hybrid engines that consume less fuel as well as smaller electric power steering (EPS) motors in steering systems. Ensuring quality To guarantee that new designs and mechanisms, made of lighter materials, work as well in automotive applications as traditional solutions, it is necessary to use components developed to enhance the material’s positive attributes and compensate for any

50 | Megatrends

Powertrain Innovation potential performance issues. Even the smallest parts can make a big difference to the way the mechanism, and the car as a whole, functions. For example, by using lightweight composite bearings with a selflubricating polytetrafluoroethylene (PTFE) liner in applications such as the belt tensioner, automotive manufacturers can achieve the same consistent friction values and durability as with heavier rolling element bearings. By adding different filler compounds to the PTFE liner, composite bearing manufacturers can alter and control the friction and wear inside the bearing according to the automotive manufacturer’s needs. In this way, a composite bearing can be customised to provide the low friction required in a belt tensioner or the slightly higher friction required in a door hinge to ensure smooth movement while preventing the door from swinging shut uncontrollably. Consistent controlled friction coupled with the composite bearing’s wear and tear resistance ensures the mechanism’s long life. When used in steering racks and gears, composite bearings can enable car designers to reduce the weight of the power steering system while improving the driving experience for the motorist. Over the past few years, manufacturers have increasingly abandoned traditional heavy hydraulic power steering systems, consisting of a steering pump, hoses and hydraulic fluid, in favour of lighter EPS motors. As well as being heavy, old hydraulic systems had a negative impact on fuel and operating efficiency, as their drive belts and pulleys continually drained power from the engine.

(NVH) can be amplified and transmitted to the steering column, impacting driver experience. Composite bearings, when used in powertrain mechanisms, such as the dual mass flywheel, can cushion and absorb NVH from the engine to minimise its transmission to the passenger area of the car. This enables vehicle manufacturers to devote more car body space to the passenger area without risking an increase in obtrusive noise or vibration, resulting in a more comfortable, noise-free driving experience for drivers and passengers. Manufacturers are using a greater selection of lightweight alternative materials in powertrain and steering applications to help them reduce weight and meet CO2 reduction regulations. However, these materials often have different thermal expansion rates from each other, which can increase friction between mating components, reducing performance, and causing additional wear in the vehicle. Tolerance rings can be used to circumvent this. The tolerance ring acts as a spring between the housing and the shaft, allowing them to expand at different rates, ensuring a perfect fit between mating parts. This can help vehicle manufacturers reduce NVH regardless of the varying expansion rates of the materials used, enabling them to use several different lightweight metals in the same component to help minimise overall vehicle weight without sacrificing performance. Additionally, relaxed tolerances eliminate the need for secondary machining operations, simplifying the assembly process.

Small is the Next Big Thing The international automotive market will expand over the next five years. Despite on-going weakness in Europe and North America, the car market is showing remarkable recovery from the lean years of the 2008 recession. However, demand in Asia and South America is driving sales growth globally, particularly for the urban car. In all major developed and emerging economies, the market share for small cars is expected to increase for the foreseeable future, due to their unique ability to overcome current motoring challenges for cost-conscious, environmentally-aware and increasingly urbanised consumers. A growing number of automotive manufacturers are choosing to launch their own urban cars to tap into this new area of growth. As they do so, it is becoming increasingly necessary for brand owners, already offering urban car models, to adapt their design and technology to enhance fuel efficiency and performance and differentiate their products in increasingly crowded car showrooms. Innovative components, such as composite bearings and tolerance rings, can be used in a number of automotive applications to contribute to weight reduction efforts in passenger vehicles and maximise performance. Vehicle manufacturers making such small changes in design will ensure that their new model will be the Next Big Thing on the market.

Composite bearings used in the yoke between the steering rack and pinion gear offer consistent lower friction values between the mating components over their lifetime than those traditionally used. Increasingly, the engines of urban cars are being designed to take up less room in the car body to maximise the space available for passengers to enhance comfort. As the individual mechanisms are much closer to each other in these compact engine designs, noise, vibration and harshness

Megatrends | 51

Powertrain Innovation

Fight noise with noise… to improve fuel economy? Innovative audio technology could be used to help reduce fuel consumption – Hendrik Williams explains onsumers are now increasingly accustomed to great audio in the home – in part, thanks to the proliferation of surround sound home cinema – and already have high expectations on availability of good quality audio in the car cabin. This demand has led to more advanced incar audio systems, especially with factory-fit systems now offering improved clarity and resolution. In fact, so good is the current in-cabin audio quality offering that a recent survey conducted by infotainment supplier Harman showed 88% of respondents recognising that music in the car makes driving a more pleasurable experience. Of particular note is the rise among younger age groups enjoying music on the move - over 70% of 18-24 year olds now prefer listening to music in the car over anywhere else. Coupled with the opportunities to upsell premium audio, unlocking further revenue streams, it is not surprising that nearly all OEMs offer a branded infotainment system.


Yet, there remains one sound that can completely destroy this experience and ruin the best designer’s efforts to create an appealing in car environment: road noise. The continuous low frequency rumble and drone caused by vibrations 52 | Megatrends

transmitted from the road surface into the vehicle cabin can sometimes make even basic conversation difficult, let alone enjoying quality audio. Exacerbated by design trends, notably increase in wheel size and the usage of light weight structures, in-cabin noise intrusions appear to be set to stay for the long haul. Counteracting this increase in noise by increasing the music volume offers little solace and only adds fuel to fire in the form of increased distraction and stress. However, the answer could well be to fight noise with noise - by applying “anti-noise” to one of the harshest and most challenging of environments – namely the vehicle’s in-cabin space. Anti-noise is created by generating a sound wave that is opposite in phase to the unwanted noise, effectively cancelling it out; the process is similar to that used in noise cancelling headphones. Lighter vehicles, wider tyres: noisier vehicle interiors? Trends in vehicle design and manufacturing have a significant impact on noise levels in vehicle cabins. Multilink suspensions create multiple noise paths into the vehicle. While stiff

bushings are often the best choice when trying to design a vehicle with great handling and cornering, they tend to allow more unwanted noise into the cabin. When combined with the universal trend toward wider, low-profile tires, the result is more road noise being transmitted through the structure of the vehicle, creating a ‘droning’ low frequency noise. Moreover, in their pursuit to meet regulations around fuel economy and CO2 emissions, OEMs worldwide place considerable emphasis on weight reduction. The latest Peugeot 208, for example, is 100kg lighter than the previous model, and the new BMW M4 tips the scales at 80kg less than its predecessor. To pare down the weight, OEMs often use light weight structural materials, which in turn negate the chassis capability to damp-out noises coming from the road surfaces, causing in-cabin noise intrusions. With car manufacturers becoming more weight conscious, any solution to mitigate road noise inside the car must work without putting back in the weight that OEMs are trying to save. Traditional NVH (noise, vibration, and harshness) methods typically involve adding heavy damping material to tackle the low frequency noise. The added weight increase increases fuel

Powertrain Innovation

consumption and emissions and can lead to degradation in vehicle handling and overall performance. Make some noise It’s here where supplier innovation might be able to provide a novel solution – and from unexpected quarters. At International CES 2015 in Las Vegas, Harman’s booth featured a demo vehicle equipped with an electronic solution that uses the car’s standard audio system, to cancel low frequency road noise transmitted into the car-cabin – a solution that does not induce the weight gains normally associated with traditional NVH damping measures.

To develop such a solution, Harman partnered with automotive development specialist Lotus Engineering to create the HALOsonic suite of noise management solutions, built on patented Active Noise Control Technologies. The suite included Road Noise Cancellation (RNC), a first-of-itskind technology for the automotive industry, which works by generating anti-noise to counteract the road noise. By minimising the low frequency road noise in the cabin, RNC aims to enable OEMs to use lighter materials and improve fuel economy without compromising in-cabin noise levels. To implement RNC, accelerometers are placed along the suspension and

chassis of the vehicle, to provide a reference for the cancellation signal thereby enabling the system to measure correlation of vibration coming from the road and the resulting noise inside the cabin. Subsequently, the proprietary algorithm in the controller creates inverse sound waves that are delivered through the car’s standard audio system, cancelling out the noise caused by the road-induced vibrations. Additionally, error microphones in the roof of the car provide adaptive feedback on the cabin noise level in order to fine-tune the cancellation, helping occupants enjoy an enhanced driving experience. As a reminder of its audio experience from the music and recording industry, Harman has included in its RNC system offering its patented True Audio technology; this technology ensures that only unwanted road noise is cancelled, while preserving music signals in a similar audio range. The supplier says an uncompromised sound experience is more important than ever to today’s drivers. A quieter vehicle interior means drivers and passengers are less likely to become tired or distracted, particularly over long journeys. By taking the stress-inducing low frequency road noise out of the mix, RNC technology provides OEMs with greater opportunities to use lightweight materials and improve fuel economy without the risk of compromising quality and harmony in the car cabin. Expect to be hearing much more about such technologies in the future...

Megatrends | 53

Powertrain Innovation

Exa, XE and the rise of digital simulation The Jaguar XE is the first car to move into production without a prototype build for aerodynamic testing. Megatrends talks to Exa, the company that made it happen, about the rise of digital simulation in automotive R&D By Martin Kahl

ne of the big draws at the 2014 Paris Motor Show was the unveiling of the Jaguar XE. Critically acclaimed, the compact executive sedan took centre stage on the Jaguar stand, lauded for its design, fuel efficiency and its potential for the Jaguar brand.


The BMW 3 Series contender is the first Jaguar to use the company’s new aluminium modular vehicle architecture. 54 | Megatrends

It is also the first car in its class to make intensive use of aluminium – the material accounts for threequarters of its structure. Less well known about the XE is that it is the first car to have moved into production without a prototype build for aerodynamic testing. Instead, digital simulation was used for all aerodynamic testing, as well as key

thermal management applications such as heat exchanger performance, grille sizing (with active shutters), brake cooling and aeroacoustic wind noise design evaluation. The work was carried out using simulation software developed by Exa Corporation, a US$54.5m Burlington, Massachusetts-based software company headed up by Steve

Powertrain Innovation Remondi, Executive.




The use of simulation software in automotive R&D is on the rise as the technology becomes more reliable, and viable when compared to physical testing. Crash testing, for example, is by its very nature expensive, and so OEMs are exploring ways to take those tests into the virtual world. Despite this new and growing acceptance of simulation software, switching from the physical to the virtual requires a major leap of faith on the part of the OEM. The only way to ensure that level of trust is to prove the simulation software’s accuracy over time. Exa’s development work on the XE was the culmination of many years’ collaboration between the two companies. “We've been working with JLR for almost 15 years, and we've moved through the development process,” Remondi tells Megatrends. “Jaguar used our software to influence the design process and brought the drag down to just under 100 grams per kilometre. With an aerodynamic Cd rating of 0.26, it's the most efficient drag Jaguar has ever developed. And it was done with our software.” Although Remondi is able to confirm that Exa worked extensively on the Renault EOLAB concept car, which was also launched at the 2014 Paris motor show, he will not allow himself to be drawn on other production cars in development along the lines of the XE

Megatrends | 55

Powertrain Innovation alongside physical prototypes. The leap of faith from physical to virtual has been made by Jaguar; but what role can simulation software play among the mainstream brands? “On mainstream brands, it's equally important,” says Remondi. “There are US pick-up trucks that have extra thick side glass to reduce wind noise. That means a higher cost of materials and thus lower profitability, because they didn't get the wind noise right during the early stages of development.”

programme. Nonetheless, he is proud of Exa’s customer portfolio: “Most of the top OEMs use our product at some level. JLR is one of the more advanced, using it on more disciplines than many others. Jaguar is pushing the envelope, and pushing our envelope faster, but that's mainly because it’s a more aggressive and agile company.”

“By using digital simulation, you can move the vehicle up into the studio, and have ongoing conversations about every part of the car every day. As the designer works on the car, the software provides feedback on how it performs, not only to the designer, but to any other parties looking at the software at the time, no matter where they are located.”

With a limited number of wind tunnels available to vehicle manufacturers, the cost and wind tunnel time are at a premium. In addition, OEMs spend vast sums of money on the physical prototypes. Switching from physical prototypes to simulation has considerable benefits, explains Remondi. Cost aside, these include the ability to make design changes earlier in the development cycle, and the ability to involve all relevant parties throughout the OEM in every stage of the vehicle’s development by sharing real time data.

All of the aerodynamics and fluid simulations are calculated by the software, which results in countless lines of code. To facilitate analysis of that code, the software also creates a visual display. “We present a realistic lifelike view that means the data can be explained to designers and marketing and sales and management so that they understand what's going on.” To develop a level of trust with a vehicle manufacturer that permits a switch from physical to virtual prototyping requires years of running the software

Assessing the interior noise of a vehicle can help an OEM to cut down on unnecessary material usage for sound dampening. “Wind noise is one of the top customer complaints. It's often caused by the A-pillar vortex. We can calculate exactly the pressure fluctuations, transfer that to the interior and play precisely what that wind will sound like inside the car. JLR uses this heavily on this car because it wants a quiet interior. That’s very important to Jaguar customers, Jaguar has done a lot of work on this up front because changing the A-pillar or the hood means changing the front cowl, and the transition to the windshield, and from the windshield to the side glass. That has to be done up front, because it’s the most critical aspect of the car. Traditionally, the NVH guys, the noise guys, get the car last.” For reasons of cost, finding a solution for a higher end car is less complex than for mainstream models. “It’s often easier to solve a problem if you have premium brands that can absorb the costs. And

Aerodynamic testing is relevant for heavy trucks as well as light vehicles, and Steve Remondi says Exa's simulation software can help OEMs and fleets significantly improve fuel economy: “We showed them that we could make a truck almost double its fuel economy, mainly by using aerodynamic devices.” Pictured: Lawrence Livermore National Labs, Navistar and the DOE conduct a smoke test demo in the NFAC 80' x 120' wind tunnel (Image credit: NASA Ames/Dominic Hart)

56 | Megatrends

Powertrain Innovation

“We worked on the SuperTruck programme in the US. The EPA allows our truck customers to certify to government fuel economy standards based on our results” - Steve Remondi, Exa

this applies to everything. Fuel economy matters in every car in every segment. Now noise matters in every car, in every segment. Jaguar is going to have a low interior, and it will use premium materials to achieve that. But other brands still have to work on it, because if they don't work at it at all, they'll be worst in class. Wind noise shows up in your JD Power scores. So if you're worst in class, no matter what class you're in, that's going to hurt sales.” In addition to working with car manufacturers, Exa works with truck OEMs. “We worked on the SuperTruck programme in the US. The EPA in the US allows our truck customers to certify to government fuel economy standards based on our results.” The SuperTruck programme involves a whole range of different stakeholders in addition to the OEMs. “We're doing a lot of work with the trailer manufacturers as well as the tractor guys. And there are third parties and even fleets involved. The big fleets even have the economic incentive to now look at their own devices and their own configurations. We showed them that we could make a truck almost double its fuel economy, mainly by using aerodynamic devices.”

cycle. “Most car manufacturers will tell you that the design is supposed to end at a certain point, and the engineering work is supposed to end when they release the tooling and the design to manufacturing,” says Remondi. “And the costs keep going up because this is when they're testing and finding problems.” The real world is full of unpredictable conditions, such as road bumps and incorrectly inflated tyres. Remondi grins; the software, he says, can also account for unpredictable road surfaces, weather and environmental conditions. “We have the ability to do surface roughness, vary tyre conditions, we can even do upstream turbulence if we have measurements over what turbulence comes to the car from the upstream traffic. We can plug that into the system

too and do everything required for full real world predictions.” The XE is proof that the best aerodynamics can be achieved through virtual prototyping. Looking to the future, what else could this technology enable OEMs to do? “The next thing we're doing is fuel economy over the entire drive cycle.” At the moment, drive cycle testing involves fixed test rigs and human drivers driving cars for tens of thousands of miles on test tracks. Switching such tests to simulation software would enable an OEM to run numerous simultaneous tests to assess differing outcomes, further increasing efficiency. “With simulation, OEMs get a better car. No panics, no rushes at the end at the end, and still they get a better car. That's ultimately what we're after.”

A key difference between using a physical prototype model in a wind tunnel and using simulation software is that when developing with simulation software, a final prototype is built to confirm behaviour, not discover behaviour. Traditionally, changes have been left to the end of the development

Megatrends | 57

Manufacturing & Materials

Automotive grade graphene: the clock is ticking David Isaiah investigates the viability of graphene in automotive manufacturing

lthough the market for graphene is in its infancy, an increasing number of suppliers are expected to drive investment over the coming years. This is likely to result in a wider adoption of graphene. While North America currently dominates this market, a report by Visiongain suggests that Asia-Pacific will be the fastest growing region for the adoption of this material.


“For 2015 we forecast the global graphene market to reach US$24.4m. However, high costs, the fear of the unknown, immaturity of the market, poor knowledge and difficulty with mass production will be the main growth restraints that may result in a number of current companies going bankrupt in the coming years,” the report states. On the basis of graphene’s superior properties alone, there is likely to be a strong growth in demand for the material - in the longer term. Graphene’s properties are astonishing. A million times thinner than a human hair, yet stronger than diamond and 200 times stronger than steel, graphene is the world’s thinnest, strongest material; it’s also an efficient conductor of heat and electricity, it’s 58 | Megatrends

very flexible, and it’s very light. Not surprisingly, it’s being hailed as a likely disruptive technology in many industries – including automotive. Applications in the automotive sector The potential applications for graphene are many, but there are currently none being marketed in the automotive sector. However, research activities are under way to study the material’s potential, and all stages of the automotive value chain need to be involved in this effort. One of the most immediately likely applications for graphene-based products in automotive applications is in composite materials. Professor Ahmed Elmarakbi is a Professor of Automotive Engineering at the University of Sunderland in the UK, Founding Editor-in-Chief of the International Journal of Automotive Composites, and a Member of the EU Graphene Flagship. He told Megatrends that graphene has tremendous potential for the automotive industry, where it could be used to enhance the composite materials in cars.

Thanks to the anticipated future demand for lightweight vehicles, the automotive industry is expected to be the highest user of advanced composite materials by volume, said Elmarakbi. “Nowadays, several advanced materials are widely used in the automotive industry, but vehicle safety is usually compromised by lightweighting. Due to the trade-off between light vehicles and safety standards, new directions need to be adopted to overcome safety issues. Several attempts have been made to strengthen vehicle structures to enhance crashworthiness, but safety issues remain the main obstacle to producing lighter and greener cars.” Unsurprisingly, cost is one of the most challenging aspects of adapting graphene for automotive applications, and it will require collaboration across the entire value chain to reduce as much as possible the manufacturing costs associated with using this material. Research has revealed that dispersing a small amount of graphene in polymers can significantly improve many properties of the resulting composites, such as tensile strength and elastic modulus, electrical and

Manufacturing & Materials

thermal conductivity, thermal stability, gas barrier, and flame retardancy. Based on these multifunctional properties, graphene/polymer composites are promising as both structural and functional composites, with integration of functionalities within the automotive sector. Challenges While graphene is in the long term expected to offer a wide number of solutions, numerous challenges have to be overcome even in developing a fundamental understanding of graphene related materials (GRM) and their polymer composites. One of the challenges that automotive engineers and researchers face is the lack of new methods of large scale production of graphene-based products, especially since mechanical exfoliation is not scalable to an industrial process. Frank Macher, Chief Executive Officer of Continental Structural Plastics (CSP), a US-based supplier of composite materials, said at Automotive Megatrends USA 2015, an annual conference held in Dearborn, Michigan, that at the present time, no

methods exist for the mass production of graphene, “But once that is figured out, there are great possibilities for sustainable and substantial weight reductions in future. “We are working with the University of South Dakota, and they have been studying graphene for some period of time. One of the biggest problems with graphene is the absolute challenge of producing it in any kind of quantity,” he told Megatrends. Other challenges include a lack of new methods of functionalisation; investigation of the exfoliation process of graphene-based material during the process; insufficient knowledge around attainable strength/stiffness of graphene thermosets/thermoplastic polymer composites; the absence of a materials model for understanding graphene-based composite materials for high performance structural applications; etc. The list goes on. There are also some challenges that are very specific to the use of graphene in the automotive industry. For instance, there is the matter of expected low ductility of graphenebased composite structures.

Considering implementation on several vehicle components (i.e. front end), this will lead to high vehicle deceleration, something which minimises vehicle safety. There is also a lack of knowledge around on how to design graphene composite automotive structures that can offer high stiffness, strength and predictable and safe failure modes. “In addition to the above challenges, a large amount of work remains to be done to develop a practical, reliable and capable tool to analyse and design the new graphene-based polymer composites and study the crashworthiness optimisation for its structures and their applications in the automotive industry. The graphenebased polymer composites are still in infancy stage with regard to highperformance structural applications,” said Elmarakbi. “There are no theoretical studies available in the technical literature on dynamic analysis and crash behaviour, as well as the fracture and failure behaviour of graphene composites under severe loading conditions typical for automotive applications. The reliability of determining the Megatrends | 59

Manufacturing & Materials

Lightweight graphene based components by Fiat Lightweight Graphene based materials for structural applications

Graphene nanocomposites for integrated sensors

Nanostructured TE materials (cooling/heat recovery)

Functional textile

Nanofluids (friction/thermal management)

Sensors for pollutants detection and safety

homogenised response of such materials depends upon the ability to accurately capture the interfacial behaviour between the graphene and the polymer matrix,” he told us. The Graphene Flagship Launched in 2013, The Graphene Flagship is the EU’s biggest ever research initiative. With a budget of €1bn (US$1.14bn), it represents a new form of joint, coordinated research on an unprecedented scale. The Graphene Flagship is tasked with bringing together academic and industrial researchers to take graphene from the realm of academic laboratories into European society in the space of ten years, thus generating economic growth, new jobs and new opportunities. Elmarakbi is the leader of Graphene Flagship: Task 10.11, Composites for Automotive. The group’s current work in Task 10.11 within WP10 (Nanocomposites) advances innovative lightweight graphene-based materials and their related modelling, designing, manufacturing and joining capabilities suitable for the automotive industry, which requires unique levels of affordability, mechanical performance, green environmental impact and energy efficiency. According to Elmarakbi, it also revolutionises computer-based as well as experimental validation approaches, and their combinations, to allow for a fast, efficient and reliable development process. “We are expecting huge success for graphene as a main player on 60 | Megatrends

Smart adhesives

developing composites for automotive applications,” he told Megatrends. “Our goal is to combine these novel materials concepts with the latest safety design approaches through the development and optimisation of advanced ultra-light graphene-based polymer materials, efficient fabrication and manufacturing processes, and life-cycle analysis to reduce the environmental impact of future vehicles.” Before anyone even begins to think of the use of graphene in vehicles featuring composite structures, it must be emphasised that impact resistance and crashworthiness optimisation studies of advanced composite components remain at an early stage. A large amount of work still remains to be done to develop a practical, reliable and capable tool to analyse and design the new graphene-based polymer composites and study the crashworthiness optimisation for its structures and their applications in the automotive industry. This also requires an affordable, large-scale production process for graphene-based products. Other lines of thought for graphene use Used on its own or in conjunction with other materials or substances - there is no doubt that the possibilities for this material are vast. One line of thought is that graphene could be used to protect steel from corrosion. Tata Steel, along with the Engineering and Physical Sciences Research Council (EPSRC) in the UK, has been studying graphene-based steel coatings, which could potentially be

used in a number of applications, from automotive lighting to solar energy systems, thanks to its high levels of electrical conductivity. Future direction The research and development required to make graphene a viable manufacturing material is considerable. Work is needed to understand the behaviour of these material systems in most suitable joining methods, and advancements in joining technologies are required to develop realistic industrial solutions which can reliably and repetitively join a variety of materials. More work needs to be done to “increase reliability in service and improved crashworthiness including protection of vulnerable road users, through the application of the developed graphene-based composite materials and implementation of advanced energy absorption capabilities, enabling the application of next-generation materials in safetycritical parts,” explained Elmarakbi. One aspect repeated over and over is that of developing high throughput manufacturing technologies for advanced lightweight graphene composite materials, which would achieve lower costs and increase economic viability. However, given that even composite materials used in the automotive sector, such as carbon fibre reinforced plastic (CFRP), still cost much more than conventional materials, it will be some considerable time before automotive graphene use becomes a reality.

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Manufacturing & Materials

Is North Africa the next frontier for vehicle manufacturing? North Africa’s growth potential is immense, writes Indraneel Bardhan of EOS Intelligence

apid urbanisation, a growing consumer base with rising disposable income, significant infrastructure investments, and proximity to the EU are some of the key reasons why automotive companies are increasingly attracted towards the North African markets. In spite of the impact of political upheavals on the region’s economy in recent times, the value proposition for global vehicle manufacturers remains strong.


The North African markets of Algeria, Egypt, Morocco, and Tunisia have attracted the eyes of multinational OEMs in the last few years, thanks to rapid urbanization, rising disposable incomes, and continuous investments in infrastructure. In recent years, several automotive companies have assessed and entered these markets due to its favourable demographics. North Africa’s market attractiveness relative to other regions has improved dramatically over the past years. According to EY’s Africa Attractiveness Survey of 2014, nearly three out of four respondents believed that Africa’s attractiveness will improve further over the next three years. Morocco and Egypt were seen as the two most attractive countries in North Africa by 55% of the respondents. Despite several political and economic challenges, there is growing consensus that the region’s growth is on an upward trajectory, aptly supported by improvements in the EU economies, steadier inflation rates, and policy reforms undertaken by individual governments to harness growth.

Real GDP Growth for North African Countries (2013-2017F) 6.0 5.0 4.0 3.0

4.0 2.8

3.8 3.9







5.3 4.5 3.5


2.1 2.2



2.3 2.3

2013 2014E 2015F 2016F

1.0 0.0


2017F Algeria




Source: Oxford Economics

While the FDI inflow statistics shows a different picture, the trend is expected to change as investors have been encouraged by the gradually restored political stability in these countries, as well as recent government initiatives to create business friendly regulatory frameworks. What’s attracting OEMs to North Africa? In the North African region, Algeria, Egypt, Morocco, and Tunisia together accounted for a giant share of over 90% of the total new passenger car sales in 2014, as per statistics from International Organization of Motor Vehicle Manufacturers (OICA). These four countries represent approximately 42% of the total African passenger car market. After witnessing a steep decline in 2013 due to weak external demand as well as the region’s volatile political environment, new car sales picked up in 2014. With the region’s growth back on track, rising investor confidence, and an uptick in tourism, these sales figures are projected to increase in the coming years.

For global OEMs, lower labour costs, proximity to Europe, expanding port facilities, various financial incentives, and an increasing network of automotive suppliers and subcontractors are making the region’s value proposition stronger. North Africa’s strategic geographic location and its skilled labor force at competitive wages, has provided a perfect solution for vehicle manufacturers, allowing easy exports in order to cater to the needs of the European automotive industry. Furthermore, the region also serves as a gateway to the rapidly growing African and Middle-eastern automotive markets. The region’s favourable demographics – a young and rapidly growing population, increased urbanisation, and rising income levels are attracting many global automotive players. Consumers today in North Africa are more brand-conscious and technologically savvy. Forecasts from OPEC suggest that car ownership in the Middle-East and Africa will nearly triple to 66 million by 2035, compared to 23 million in 2010, making it among Megatrends | 63

Manufacturing & Materials the fastest growing markets in the world over the next few decades. Individual governments have also played a vital role in the industry’s growth story by creating a favorable investment regulatory framework. Despite economic pressures and tight budgets, governments in these countries have continued to make significant investments towards infrastructure across ports, roads and railway networks. In addition, a range of financial incentives are offered to foreign investors in the automotive industry. This includes free trade zones, multiple tax incentives, special land allotment, and partial contribution towards infrastructure expenses for automotive industry projects. Further, the government has also invested in training programs to build a skilled labour force that can fulfill the demands of the growing automotive industry. Morocco has aggressively marketed itself as the new regional automotive hub for global automotive players. According to a 2013 report by PwC the Kingdom will be among the top-20 largest vehicle producers in the world by 2017. Renault, Delphi, Lear, Leoni, Yazaki, Faurecia, Sumitomo, and Hirschmann Automotive are some examples of key investment projects in recent years. These companies are not just providing employment, but, are also supporting a thriving automotive SME sector. Renault’s operations in Morocco have provided a major boost to its automotive industry, as more than 40% of the parts are sourced locally. Renault aims to further expand its production capacity in Morocco and is also considering setting up an engine production plant to serve the two car production plants. This represents large scale potential opportunities for automotive suppliers. In October 2014, the Moroccan government announced the signing of five MoU deals with A Mercedes-Benz in front of the pyramids outside Cairo, Egypt, in 1926

FDI Flow (in US$ billion, 2011-2013) 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 -1.00

6.88 5.55 2.58 1.50






3.36 1.15






2012 2013


Source: UNCTAD, 2015

leading manufacturers of automotive wiring, vehicles interior and seats, metal stamping, and batteries. As demand from both local and export markets grows, the industry is going to witness higher investment growth in the near future. Further, OEMs that enter the Moroccan markets are also able to benefit from the pool of skilled labour and network of more than 40 Tier-1 suppliers. Algeria’s automotive industry relies heavily on imports from Europe and China, importing approximately 75,000 cars annually. The age of current passenger vehicles plying on Algerian roads and low ownership rates present a significant potential for passenger car manufacturers. The Algerian government has played its part by promoting investments, and creating a business-friendly environment for the automotive sector. Mercedes-Benz recently announced that it aims to transfer its investments from Egypt to Algeria in 2015 in order to take the advantage of benefits and facilities provided by Algerian government to foreign OEMs. Renault’s production unit that became operational in 2014 has facilitated the development of local subcontracting and network of suppliers to create a local automotive industry. In order to meet the growing demand, Renault plans to triple its production output to 75,000 units by 2019, and has also committed to increase the level of local content.

With an increased interest of OEMs in the Algeria story, several opportunities will arise for suppliers of automotive spare parts, plastic injection, paint as well as bodywork facilities. In spite of being one of the smaller countries in the region, the automotive industry in Tunisia boasts of more than 80 companies, employing over 60,000 people, with a turnover of TND 2bn (US$ 1.02bn) in 2013. The recent MoU signed with Iran for co-operation in car manufacturing will also help the Tunisian automotive industry grow further in the next few years. Tunisia has a robust network of suppliers in the automobile wiring sector, and an abundant pool of skilled engineers and technicians at its disposal. The bigger benefit is the fact that the cost of hiring such talent is not only one-third the cost of that in the EU, but is also lower than its North African peers. Investment in manufacturing automotive components for exports is a priority sector for the government and in order to attract more investments, the government offers fully integrated sites with industrial, logistics, and infrastructure support to companies seeking to establish their manufacturing operations in Tunisia. There are plenty of opportunities for companies that manufacture automotive electronic, mechanical, and plastic components dedicated for exports to European and African markets. New passenger cars sales in Egypt posted a solid growth of nearly 25% in 2014. With ongoing government plans to develop and encourage investment in the sector, and the improving tourism industry, new car sales are expected to grow further beyond 2015. In October 2014, Nissan announced that it will invest an additional US$60m towards expanding its assembly operations in Egypt. The government is also encouraging a vehicle production joint venture between domestic firm Nasr Automotive Manufacturing and

64 | Megatrends

Manufacturing & Materials North Africa’s Big 4 Markets – Morocco, Algeria, Egypt and Tunisia Morocco !!Morocco’s automotive industry growth is largely due to the country’s political stability, financial and tax incentives, and the development of specialised free zones for the auto industry in Kenitra and Tangier "! There is a shortage of qualified technicians and engineers dedicated to the automotive industry. Although government and industry players have jointly launched a training incentive scheme dedicated to the needs of the sector, the change will still take some time

Tunisia !!Skilled engineers and technicians, improving infrastructure, and strong network of local suppliers are the key strengths for the national automotive industry. In addition, there are attractive financial and tax incentives for foreign OEMs "! Tunisia’s growth potential is significantly impacted by its outdated policies. Many multinationals perceive the Tunisian bureaucracy as cumbersome and slow. The regulatory environment in Tunisia also lacks consistency

Egypt Algeria !!The government has introduced new reforms as well as reintroduced state-sponsored car loans to prioritise the purchase of vehicles produced locally. In addition, new local law requires automotive trade agencies to start manufacturing within three years of establishing an agency in Algeria "! Protectionist legislation and domestic bureaucracy might impact the industry’s growth potential. The Algerian government needs to further liberalise trade and ease FDI restrictions. More reforms are needed in order to create a business friendly investment climate

Russia’s AvtoVAZ. The deal will not only provide a major boost to vehicle manufacturing, but it will also create opportunities for automotive parts manufacturers and suppliers. For example, tyre manufacturer Pirelli signed a MoU to invest US$107m over a three-year period to increase production capacity in order to meet the growing demand. Egypt is well poised to see a stronger automotive growth, driven also by very favourable demographics and its proximity to the Middle-East.

!!Egypt represents great market potential due to the low rate of vehicle ownership, large youth population, and nation’s growing domestic demand. There are opportunities for companies to bring new affordably priced cars that are small and more fuel efficient "! Stringent credit policies for vehicle loans may continue to hamper passenger car sales, particularly in the lower priced passenger car market. The government needs to frame more business friendly policies and lucrative incentives to attract more automotive industry investments

but, also a lucrative market for vehicle manufacturers seeking to tap the potential of the African passenger car markets. There are a few challenges, political and economic, that need to be managed, in order to encourage OEMs to set up shop in North Africa. On the economic front, it is imperative to demonstrate an investor-friendly regulatory environment, as well as the willingness to provide tax breaks and similar financial incentives to OEMs to

establish a production base and export hubs. On the political front, ensuring stability and managing issues surrounding external factors such as ISIS will be critical to convince automotive companies to invest both monetary and technological resources in the region. At this point in time, given the political, economic and social dynamics of the North African region, the potential for growth of the automotive sector is immense.

A final word – immense scope, manageable challenges OEMs must accept that the North African countries will be unable to match the potential of the BRICS, MIST or ASEAN countries; however, given the region’s positive economic growth trend and rising investor confidence, the outlook for automotive industry is upbeat. Various initiatives taken by individual governments have provided a boost to the automotive industry, and continue to attract global OEMs to establish local presence for both regional and export markets. The region’s favourable demographics, strategic location and competitive wages not only make it an attractive hub for automotive exports,

Inauguration of the Renault Nissan Tangier plant in Morocco, attended by King Mohamed VI, Director Tunc Basegmez and Renault Nissan Chief Executive Carlos Ghosn

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Manufacturing & Materials

Humans, simulators and the six degrees of motion Evolution in driver-in-the-Loop (DIL) simulation has recently seen it positioned at the forefront of vehicle development programmes By Hendrik Williams

river-in-the-Loop (DIL) simulation has long been trumpeted as an effective tool for vehicle and component development but it is fair to say that drivers’ and engineers’ experiences have, to date, been mixed. Motion sickness and Simulator Adaptation Syndrome (SAS) certainly create a less than satisfactory experience and can lead to a general distrust of DIL technologies. In some OEM facilities, costly simulators lay idle. Now, a very different, emergent approach to DIL simulation, with more emphasis on the human element, is attracting enough of a following that DIL is being positioned at the forefront of vehicle development programmes.


It may seem obvious to say that driver feedback is instrumental when developing a vehicle in the real or virtual world. Drivers are, of course, the ones who really feel vibrations and accelerations and experience the true character of a vehicle as it is driven. 66 | Megatrends

As such, properly trained and experienced drivers are relied upon by all vehicle manufacturers to offer the subjective feedback that no data acquisition system can provide. This is a part of the reason that so many hopes (and investments) have been pinned upon DIL simulators for the last several decades. “Most vehicle manufacturers can see a clear value proposition in conducting test drives with real drivers in a laboratory setting as either a compliment to traditional real car proving ground tests or as a partial replacement for it,” explains Kia Cammaerts, Technical Director and founder of Ansible Motion. “Sophisticated and expensive DIL simulators have thus evolved that try to replicate real driving experiences. Unfortunately, these simulators can fail to properly engage skilled drivers, and can inadvertently induce motion sickness, in part because they are heavy and large, often relying upon legacy technology from the aviation industry.”

Eradicating motion sickness resulting from simulator usage is linked to the brain’s perceptions. Motion sickness is a result of expectation conflict, the brain’s failure to accept as real the virtual environment in which it has been placed. A proper DIL simulator has to make a driver believe he or she is engaging a real car on a real road. This involves playing ‘tricks’ on multiple human senses responsible for optical (vision), haptic (touch), audio (sound) and vestibular (movement) reckoning. Six degrees of freedom The human vestibular system is of particular interest. It is essentially a miniature organic six-degree-offreedom (6DOF) gyroscope located in the inner ear which detects accelerations in the vertical, lateral and longitudinal directions as well as yaw, pitch and roll. During any movement, this information is transmitted to the brain via nerve impulses. The vestibular system needs

Manufacturing & Materials to believe that it is moving and spatially oriented in a sensible way. Understanding this as it relates to vehicle dynamics, engineers can ensure accurate motion cues are achieved in a DIL simulator, thus stimulating the driver’s vestibular system into the necessary realm of perception. One surprising aspect for those responsible for specifying ground vehicle DIL simulators is that in order to attain effective driver engagement, a simulator need not provide an exact replication of a real vehicle’s movements. Instead, as long as the correct level of physiological engagement with the driver is delivered, a driver will engage a vehicle (or vehicle physics model in this case) with his or her hands and feet in a highly realistic manner, one that can be validated against in-car data from driving sessions in real cars. With traditional DIL simulators potentially struggling to achieve the desired dynamic performance levels for vestibular cueing and motion sickness elimination, Ansible Motion, a UKbased driving simulator developer,

began a quest in 2008 to develop new concepts more appropriate for the ground vehicle sector. Introduced this year, Ansible Motion’s Delta simulator series is the flagship of the company’s new generation of ‘engineering class’ DIL simulator. Comprising Ansible Motion’s motion system and integrated vison, computation, and driver immersion systems, it is a driving simulator suitable for skilled drivers who wish to evaluate handling, steering, and dynamic performance on virtual proving grounds. Ansible’s Cammaerts explains how the Delta simulator works: “At the heart of the Delta simulator is Ansible Motion’s S2 motion system, which abandons altogether the traditional hexapod architecture found in most dynamic driving simulators. Instead, a 6DOF stratiform machine moves horizontally, longitudinally and rotationally whilst

pivoting on three additional axes. A vehicle cabin is mounted directly to the machine to accurately represent the driver’s surroundings.” This, however, is no regular cabin – it is specifically designed for performance. As it turns out, mounting a real car would not be suitable, as its mass would lead to slower response rates. Increasing the response levels and reducing latency fundamentally determines the level of realism that any simulator can achieve, and so the basis of most of Ansible Motion’s design decisions are biased towards performance optimisation. “The S2’s motion system’s unique design was derived from first principles,” continues Cammaerts, “expressly for ground vehicle simulations, with lightweight dynamic machinery and control architecture that is unlike that which is used in, say, flight simulators where the requirements are quite different.”

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Manufacturing & Materials

At the heart of the simulation software: the human driver With OEMs understandably cautious based on historical experiences with DIL simulator technology, Ansible Motion says it ensures its simulators perform acceptably with a multi-layer validation process. The first layer is objective, wherein a comparison of data between the simulator and a real vehicle draws out any exaggerated or understated driver control behaviours. The second layer is subjective, wherein qualified driver feedback is used to analyse whether specific experiences in the simulator match expectations. Once the objective and subjective layer corrections are in place, then finally there is the third layer, which is the ultimate test. “Carefully developed vehicle and simulator tuning changes are deliberately introduced to see if the driver feedback matches the known changes,” explains Cammaerts. “Only once this has been achieved can the vehicle engineering work truly commence.” Ansible Motion’s approach, which is centred on delivering engineering-class DIL simulator solutions, is currently being leveraged by automotive OEMs around the world, who are utilising this technology as a trusted tool for testing anything from chassis fundamentals to advanced driver interaction systems. “What once took ten days of testing for 68 | Megatrends

a prototype subsystem such as electronic stability control (ESC) can now be completed within three days when the test parameters have been vetted in advance in a capable DIL simulator lab,” grins Cammaerts. “This is because the required test matrices for performance tuning and failsafe testing can be reduced to just 30 parameter sets that require physical verification.” From simple driver training tool to effective product development tool Testing active safety systems such as forward collision warning, collision mitigation braking, pedestrian avoidance, intelligent headlight systems and cooperative driving systems are other systems that could benefit, and be developed more efficiently through the use of engineering-class DIL simulators. DIL simulators are now being used for autonomous vehicle development as well, particularly with regard to emergency situations and human driver hand-overs. This is because the simulators’ performance capabilities

are such that they can be used for validating dynamic vehicle responses to unpredictable situations. “Over the last 20 years or so, DIL simulator technology has undergone a transformation that has seen it evolve from a simple driver training tool into a comprehensive and effective product development tool,” concludes Cammaerts. “It is no secret that if an automotive OEM can successfully integrate engineering-class DIL simulation technology into its development processes, then the floodgates of product development efficiency are thrust wide open.” For decades, this has been the OEMs’ diligent quest, but technological roadblocks have perhaps been in place all the while from the vendors proposing to provide the key pieces of this technology to the OEMs. If Ansible Motion’s own internal quest has indeed resulted in the technologies and capabilities that it describes, it may be that the OEMs now have some new and exciting options for pursuing their ambitions.

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OEMs prepare to up their game as safety gets serious Safety organisations are clamping down on vehicle safety standards, and ratings organisations are pushing for increased use of advanced technology. There remains little choice for OEMs but to up their safety game in all regions, writes Rachel Boagey 015 has been dubbed the year for safety and thus far, it has lived up to its name. Organisations like the National Highway Traffic Safety Administration (NHTSA), the Insurance Institute for Highway Safety (IIHS) and the various NCAP organisations around the world are doing everything in their power to push automotive safety to the next level.


The newly appointed head of NHTSA, Mark Rosekind, has continued to send a clear message to OEMs that this year marks a fresh start for the automotive industry, vowing that the safety agency will work harder than ever to ensure OEMs are offering cars that meet the highest possible safety standards, and that any safety issues are resolved quickly. To continue to push these standards, requirements for vehicle safety are set to change significantly in the next few years, meaning that there remains little choice but for OEMs to up their safety game in all regions.

long way to go to reduce casualties on its roads. 2015 sees the end of the current Euro NCAP roadmap, with the next roadmap, running from 2016-2020, set to determine the best strategies and focus areas to further reinforce safety in the region. “After five years of overhauling the rating system, the results now show that what used to be a five-star car is, today, a three-star car, if not a two-star car,” says Michiel van Ratingen, Secretary General of Euro NCAP. “That’s how quickly demands on vehicles can be increased.” Taking safety to the next level

Testing, testing

Mark Rosekind, NHTSA Administrator

70 | Megatrends

2016 heralds the arrival of new testing and ratings strategies and philosophies at several of the world’s major crash testing and safety ratings organisations. Although its cars are ahead of many regions when it comes to safety, Euro NCAP believes that Europe still has a

From 2016 onwards, much of the focus of the NCAPs and associated organisations will be on active safety, advanced driver assistance systems (ADAS) and crash prevention. In the US market, the Insurance Institute for Highway Safety (IIHS) has added to its vehicle safety evaluations the

Safety small overlap frontal crash test, and has begun rating front crash prevention systems. According to David Zuby, Executive Vice President and Chief Research Officer at IIHS, “We’ve been doing both for a couple of years each, and we’ve integrated those into our Top Safety Pick award programme so that a minimum level of performance in the small overlap crash test is required to earn Top Safety Pick. The availability of Front Crash Prevention with automatic braking is required for a Top Safety Pick Plus award.” But requirements for safety are changing significantly, with a surge of new technology meaning vehicles can not only perform well in crash tests, but they can also avoid crashes from happening in the first place. From 2015, Forward Collision Warning (FCW) alone will be insufficient for an IIHS Top Safety Pick Plus award; fitment of automatic emergency braking (AEB) will also be required. To keep up with these changing safety requirements, many OEMs have announced plans to offer some form of semi- and fully autonomous drive technology by or from 2020 (although to what degree remains to be seen). Speaking to Megatrends, Euro NCAP’s van Ratingen noted, “the industry now is really driven by this hot topic regarding self-driving cars and semiautonomous driving cars.” Crash avoidance technology is new, both conceptually and technologically, and as a result, testing is being developed collaboratively amongst the regional testing organisations. The greater the proliferation of active safety technology, the better informed the industry and appropriate authorities can be about their effectiveness; and that knowledge helps to shape the progression of NCAP star ratings.

But these increasingly automated technologies will require further testing and development. “We need more assurance that, in normal circumstances, the car can actually make the right call. And that’s something that’s really on our agenda for the next five years. That’s why our Roadmap is written the way it is, because we believe that lateral support and frontal support are the key ones, together with driver assistance support,” said van Ratingen. “Towards the end of the roadmap, you will see the driver monitoring technology emerging more significantly. The only key factor that is still missing in our vehicles today is that we don’t really monitor the driver and what he’s doing and take that information into account in making decisions on what to do.” Do consumers really care? As NHTSA cracks down on OEMs’ and suppliers’ safety standards – it recently pressured Takata to recall millions of vehicles in what has been described as a “major step forward for public safety” by Transportation Secretary Anthony Foxx – OEMs may be facing an uphill battle. Vehicle manufacturers will now have to make vast improvements in the safety of their cars for the worry of a bad reputation - but how concerned really are the people buying the cars? Recent research by AutoTrader, the US online vehicle marketplace, shows that when consumers are made aware of a recall on their vehicle, only 56% take it in for repairs every time. Only 61% of consumers make an effort to stay

informed about recalls on vehicles they own, and only 35% research recalls when shopping for a vehicle to purchase. Speaking to Megatrends about these findings, Michelle Krebs, AutoTrader Senior Analyst, explained, “The huge number of high-profile recalls recently makes it even more imperative for automakers to get consumers to come into dealerships for repairs and for consumers to proactively check to see if their cars are recalled. But consumers are suffering from recall fatigue. Last year saw a record number of recalls, and this year will surpass it. The number of recalls becomes mindboggling so consumers generally ignore them.” Krebs believes that the record-setting recall of vehicles equipped with potentially flawed Takata airbags “could ultimately result in new approaches by the government and manufacturers on how recalls are addressed.” Whether as a result of consumer demand or government pressure, vehicle safety is set to experience vast improvements in coming years. Looking to 2020 and beyond, increased autonomy is inevitable. That doesn’t mean a completely safe environment for cars however. “The more realistic expectation is that, as we further automate the car, the crashes that occur will be less severe,” concludes Zuby. “There still will be crashes, and so it will still be important for cars to be designed with some level of crash detection. I think the day in which motor vehicles don’t crash at all is a long time off.”

Van Ratingen’s view is that active safety technology must be a requirement for a five-star car, otherwise such technologies will not be fitted due to prohibitive costs in their early years on the market. “As volumes increase, prices drop significantly, but in the initial years it’s very important to tie a highly equipped vehicle to a fivestar level and not give stars for budget cars. It should be clear to the consumer that if they bargain on price, they can’t expect the same level of performance in the marketplace.”

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Actively looking at passive safety With the growing importance of collision avoidance technology, how will the role of passive safety evolve? By Freddie Holmes ctive safety is making its way into an increasing number of vehicle segments, with advanced driver assistance systems (ADAS) becoming a necessity for OEMs in the quest for semi-autonomous driving and to achieve five-star crash test ratings.


The primary aim of adopting active safety systems is to reduce the chances of a crash occurring in the first place, or at least to mitigate the effects of an unavoidable collision. Systems such as lane-keep assist (LKA) and

72 | Megatrends

autonomous emergency braking (AEB) contribute toward keeping the occupants out of a collision, but what happens if the collision cannot be avoided? This is where passive safety remains a key technology. Seatbelts and airbags aren’t going anywhere, for now, but they will be placed and used within the car in new ways.

avoidance manoeuvres such as emergency stops without driver input. Active safety may help to avoid collisions, but passive safety cannot dodge the trends that are happening within the industry – notably, autonomous driving, lightweighting, and increasing electronics content. “A surge in demand”

In future, lightweight autonomous cars will navigate through smart cities, communicating with other cars around them, even performing collision

Despite the advances in safety electronics, there is still considerable potential for passive safety technology.

Safety Volvo issued this image in 2013 as an April Fool’s Day joke - but the increasing number of active safety technologies being fitted could offer drivers and road users similar or even better all-round protection

Indeed, passive safety systems will see a technological renaissance, believes Sourabh Banik, an automotive research analyst at Transparency Market Research. Banik expects passive safety systems such as airbags and seatbelts to witness “a substantial surge in demand within the next six years.” This growth is mainly attributed to the growing production of cars around the world, which in itself is being governed by government regulations. Many countries mandate the compulsory installation of airbag

systems by OEMs across their various vehicle segments, including low-cost small cars, notes Banik. Active safety systems have been typically reserved for the premium segment, where higher price points make it easier to absorb the cost of the technology. Admittedly, certain active safety systems – such as AEB – are becoming common across more vehicle segments thanks to insurance incentives and even mandatory fitment, but the current trend is that the value segment is not seeing such a strong uptake. According to a report by Transparency Market Research, the global airbags market is expected to reach US$29.72bn by 2020, growing steadily at a CAGR of 8.1%. Of particular mention is the frontal airbag segment, says Banik, which accounted for more than 50% of the market share in the global airbags market, “and is expected to remain so throughout 2014 to 2020”.

Rear Seat Bag-in-Roof Protection

A key driver in this growth is the wealth of opportunities arising in new vehicles to integrate airbags in new, innovative ways. “Airbag manufacturers are making huge investments in R&D to explore new technical possibilities in the passive safety system and improve the safety standards of its existing products,” says Banik.

TRW in particular – one of three manufacturers that collectively hold 71% of the market share for automotive airbags – has developed a range of new airbag applications. Citroen’s new C4 Cactus was declared the 2015 World Car Design of the Year, and featured TRW’s latest bag-in-roof airbag technology. This technology replaces passenger airbags that would typically be mounted in the instrument panel, which the supplier says can allow for “improved interior design aesthetics, ergonomics and functionality, while saving space in the instrument panel.” Taking safety lightly? Seatbelts were first fitted as standard in a passenger car in 1958. On the face of things, the trusty three-point seatbelt with which drivers are familiar has not undergone any significant change of late. This poses the question: What more can be done to innovate seatbelts? Addressing this question, Aziz Canatar, Global Director of Engineering at TRW’s Seatbelt division, told Megatrends that there are still opportunities for innovation, particularly in terms of weight reduction. “Going into the future, with new hybrid materials, this could overcome certain stress, durability and Megatrends | 73


TRW provides seat belt systems for driver, passenger and rear seat occupants. This photo gives an example of some of the various technologies included in the seat belt system

endurance issues. In the next five-plus years, I think there are some opportunities in weight reduction.” Although passive safety systems are still being developed by companies like TRW, many within the industry believe the future of passive safety lies in the hands of active safety systems. JensUlrich Wiese, Director at business advisory firm AlixPartners, believes there will still be some “incremental improvements” in passive safety, but suggests that changes in vehicle safety will now come primarily from active safety developments. The force behind this – as with other areas of car design – is the onset of semi- and fullyautonomous driving. This is a common debate between the airbag and seatbelt divisions of TRW, says Canatar. “I always say, for the seatbelt business, the future is bright,” he notes. If the speed of a crash can be mitigated to the point where the impact of a collision is far slower, is the requirement of a seatbelt as significant? “If in future cars can

74 | Megatrends

reduce the potential impact themselves, maybe the structure of the seatbelt will change,” he suggests. “Maybe you don’t need to have two buckles, you could have one instead. It is about finding opportunities to eliminate areas that do not add any benefit, if of course you can control the speed of the impact.” For Brian Loh, the supplier’s VP Active Safety and Semi-Automated Portfolio in the Global Electronics division, the future of passive safety technology lies in the integration of active and passive safety. “If your sensors detect that something is about to happen, how do you adjust your passive safety system to get it to respond either faster or more appropriately? That’s additional information that most passive safety systems are not taking advantage of today. Additionally, autonomous cars present a whole new set of challenges. How do you keep a person safe when they’re out of the normal assumed position? We definitely see continued room for growth and innovation in passive safety.”

As with most aspects of a passenger car, autonomous driving is set to drastically change the way occupants are protected, and it is reasonable to expect traditional safety systems such as seat belts and airbags in untraditional placements within the car interior in future. If passengers are no longer required to face the road, can a traditional seatbelt system still protect them in a crash? Andreas Eppinger, Group Vice President, Technology Management at Johnson Controls Automotive Seating, believes this an area that requires investigation: “We will still have seat belts, airbags and all these things, and in order for them to work properly, you have to be in a reasonable sitting position,” he told Megatrends. The onset of autonomous driving will require a new way of looking at the placement and functionality of traditional safety systems, as the driver’s ability to do other tasks within the car increases.” The role of the driver is evolving, with autonomous drive technology even promising to take some responsibilities away from the driver entirely. At the same time, the pressure for OEMs to develop lighter cars is increasing. Passive safety systems are thus likely to become more compact – yet stronger – and will be integrated within the car to protect a range of occupant seating positions. Ultimately, however, passive safety systems look set to take on an important ‘back office’ role, supporting the new active safety technologies that prevent collisions in the first place.

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Lightweight but crash safe: the ongoing challenge Safety and lightweight construction no longer contradict each other – and new joining techniques mean OEMs can mix aluminium and steel to suit their needs By Rachel Boagey

he trend of vehicle lightweighting stems from increasingly stringent global regulations for efficiency and emissions, which are putting pressure on OEMs, and in turn, their suppliers. Future vehicles will have to be lighter with lower fuel consumption and CO2 emissions, and if OEMs do not dramatically reduce the average CO2 emissions of their cars, they will face hefty fines.


But with vehicles becoming lighter for efficiency purposes, is there a danger that their structural safety will get left behind? Apparently not. With a new lightweight construction technology, researchers are making it possible to do both. According to Markus Wagner, a scientist at the Fraunhofer Institute for Material and Beam Technology (IWS) in Dresden, “Safety and lightweight construction need not contradict each other.”

the Dearborn Truck Plant to support the installation of the truck’s variety of new features, including its aluminium body panels.

Safe and lightweight The 2015 F-150 is the only full-size, light-duty truck to earn the National Highway Traffic Safety Administration’s (NHTSA) highest rating, a five-star crash test rating, for the driver and passenger for all crash test modes and cab configurations. To build the 2015 model, Ford has incorporated new technologically advanced processes at 76 | Megatrends

Accompanied by Brian Kinnie, Assistant Plant Manager at Dearborn Truck, Megatrends took an exclusive behind-the-scenes tour of the Ford Rouge plant in Dearborn, Michigan. The facility houses production of Ford’s F-150, the most popular passenger vehicle in the US. During the tour, Kinnie explained the OEM’s choice to use aluminium for the truck body. “Why

have a heavier box and cab when it’s equally as strong and safe for less weight?” said Kinnie. The new F-150’s aluminum and highstrength-steel construction posed some unique challenges to truck’s engineers. “The team had to invent new ways to manage crash energy, because advanced materials like highstrength steel behave differently,” explained Matt Niesluchowski, the truck’s safety manager. “We found that changing certain shapes led to a weight reduction, while also improving crash performance.”

Safety underbody to help improve performance in crashes. Like the F-150, the 2015 Silverado 1500 crew cab model earned a five-star safety rating in crash tests. Multi-material approach At any one time, up to 80 new grades of high-strength steel are under development. Due to its fuel efficiency benefits as well as providing increased strength and safety properties, advanced high-strength steel is the fastest growing material in the automotive sector, and is due to further increase in coming years. ArcelorMittal expects orders for such

Kinnie continued, “Engineers added an extra crossmember and increased the use of high-strength steel to improve stiffness, durability and safety – while also helping reduce the frame’s weight by up to 60 pounds.” In a statement, Vice President of Global Product Development at Ford, Raj Nair explained that the five-star rating achieved by the model is an example of One Ford collaboration and innovation. “Our truck team worked together for years to deliver this accomplishment, using an unprecedented combination of advanced materials throughout the allnew F-150. The 2015 model is engineered to be the safest F-150 ever, which matters to customers who depend on this truck to not only get the job done, but also get them safely home.” A lightweighting battlefield A “battlefield” between aluminium and steel-intensive vehicles is emerging in the automotive industry, according to Louis Schorsch, Member of the Group

Management Board and Chief Executive of ArcelorMittal. This is particularly true within the truck segment, he said, where “the most major – or obvious – battlefield is, with the announcement of the aluminium intensive F-150.” But the choice of materials used for lightweighting purposes varies from OEM to OEM, with some opting for aluminium while others opt for highstrength steel. General Motors, for example, continues to believe in steel, and recently added its new Chevrolet Silverado ‘Toughnology’ concept to its lightweighting portfolio. Approximately 67% of each Silverado cab is constructed of steel, including stronger ultra-high-strength steel (UHSS) in the A-pillars, B-pillars, rockers and roof rails, as well strategic sections of the interior structure. UHSS is also used in areas of the rocker panels and

advanced grades to rise from 20% of total automotive steel orders in Europe today to 35% in the next five years. Megatrends spoke to Dr. Greg Ludkovsky, Vice President of Global Research and Development at ArcelorMittal, about the company’s recent developments in enabling OEMs to meet their fuel emissions targets, as well as increase safety. “No longer do you have to sacrifice things for strength. As well as being light and efficient, our third-generation steels make sure car occupants are safe and protected,” he said. The battle between the two leading materials in the automotive industry rages on – and it looks set to continue for many years to come. The most likely scenario sees OEMs and suppliers continuing to use a multi-material approach to decrease the weight of their vehicles, while increasing efficiency and crucially, safety. Megatrends | 77

Freight Efficiency

SuperTruck highlights potential for further truck efficiency, says DTNA Michael Nash interviews Daimler’s Derek Rotz about the Freightliner SuperTruck concept 78 | Megatrends

Freight Efficiency hen it unveiled its Freightlinerbranded SuperTruck concept at the 2015 Mid-America Trucking Show (MATS), Daimler Trucks North America (DTNA) illustrated the future technologies that it believes will enable the trucking industry to improve fuel efficiency.


The concept truck achieved some impressive figures, not least of which is its ability to return 12.2 mpg – double the current industry average. Megatrends spoke to Derek Rotz, Senior Manager, Advanced Engineering at DTNA and Principal Investigator for the SuperTruck programme co-funded by the US Department of Energy (DOE). In the interview, Rotz outlined the challenges, hurdles and issues surrounding some of the technologies included in the SuperTruck. What message does the SuperTruck convey to the industry? The Freightliner Supertruck concept suggests that a 115% freight efficiency improvement will be achievable in the near future. SuperTruck is an R&D programme to investigate high-risk, high-reward technologies that improve the efficiency of Class 8 vehicles, and ones that Daimler may not have otherwise pursued. It is really about understanding what is technically possible, in addition to identifying existing hurdles that have prevented the adoption of various technologies.

The SuperTruck’s hybrid system takes kinetic energy generated from downhill braking to charge its battery. Making the system even more efficient, eCoast technology senses downgrades or when the truck is about to crest a hill, and automatically shifts the drivetrain into neutral. This reduces friction, and increases efficiency and fuel economy

We estimate that about 60% of the efficiency gains over the 2009 baseline model consist of current and near-term technologies - things that we either already see on the road today or could be ready within five years without major hurdles. Do you believe 12.2 mpg will be reached and surpassed in future models through the advancements made in the SuperTruck programme?

The final SuperTruck demonstration vehicle contains a mix of technologies that contributed to the 12.2 mpg measurement. These include systems that are currently feasible, systems that have potential but where hurdles remain, as well as systems that are not feasible. How did you decide which technologies to use for this concept truck? Several SuperTruck solutions were ready for immediate technology transfer, including the aerodynamic package on the current Freightliner Cascadia Evolution and the integrated Detroit Powertrain launched earlier this year. In other cases technologies are not feasible, as they may still be too immature, or the customer payback period would not make economic sense. The hybrid electric powertrain, waste heat recovery and lightweight materials are examples of these. Also, in other instances, such as the rearview camera systems, regulations that mandate mirrors impede technological progress. Current Federal Motor Vehicle Safety Standards won’t allow these camera systems, which could improve trucks’ efficiency by 1.5%. We [DTNA] have petitioned the National Highway Traffic Safety Administration (NHTSA) to modify the

Megatrends | 79

Freight Efficiency

regulations to eliminate required exterior mirrors when replaced by cameras to improve aerodynamics and achieve optimal visibility. In the future some of these concepts might mature and the ROI might improve, but for now the heavy system demands of a commercial truck and the costs of implementing these technologies don’t make them practical for deployment. The SuperTruck project gave us the opportunity to really explore and understand the potential and hurdles of these challenging technologies. What are the primary components of the SuperTruck that improved its efficiency?

Major contributors to freight efficiency on the SuperTruck include enhancements to the core engine, external tractor and trailer aerodynamics, an improved powertrain including a 2.28:1 rear axle ratio, smart 6x2 axle configuration, eCoast, direct drive AMT and low rolling resistance tyres. How do the SuperTruck and its technologies fit in DTNA’s portfolio? Will future models reflect the programme? We have long been a leader in fuel efficiency for commercial vehicles. This is reflected in the success of our flagship products, including the Freightliner Cascadia and Detroit

engines. The company continues to innovate and make constant improvements, most recently on the Cascadia Evolution, which was launched in 2013, and the integrated Detroit Powertrain launched earlier this year. What is the benefit to Daimler of being so heavily involved in the DOE’s SuperTruck programme? Daimler seized the opportunity to work on SuperTruck, since it is a natural extension of our core strategy to maintain fuel efficiency leadership. Efficiency is embedded deeply in the company’s DNA. It makes Freightliner products competitive, but equally important is the positive impact it makes on the profitability of our customers to reduce their operating costs as well as the environmental benefits provided by improved efficiency. If you were to suggest one aspect of the SuperTruck for the industry to take on board in the next generation of trucks, what would it be? Integration is one key takeaway that can make or break the SuperTruck design. Previously, we tended to think about efficiency as a collection of technologies that contribute more or less independently to efficiency. But that is only part of the story – it turns out with SuperTruck, system interaction also provides huge benefits.

Truck HVAC systems are usually powered by energy created by the engine. The SuperTruck’s AC system runs entirely off electricity powered by the hybrid system, avoiding the need to use expensive fuel to run a small compressor

80 | Megatrends

For example, SuperTruck studied aerodynamics of the tractor and trailer

Freight Efficiency

systems. When looking at the tractor and trailer as a single unit, you can attack drag much more effectively. The team also discovered that improved aerodynamics opened up opportunities for the engine, and efficiency gains from aerodynamics mean less torque is needed to drive down the road. This allowed us to downsize and downrate the engine to match the SuperTruck, further reducing fuel burned. If the components are all integrated, do they end up competing for the same job? Yes. Integration doesn’t always amplify benefits, and multiple systems may in fact compete for the same inefficiency. A parallel hybrid electric powertrain was incorporated in SuperTruck to manage kinetic energy while driving across hilly terrain. Another onboard system, called ‘Predictive Technologies’, uses GPS, 3D-digital maps and clever software to adjust the cruise speed, shifting and coasting, optimising kinetic energy across terrain. In one case, a large expensive and heavy system is used to save fuel across terrain. In another case, software alone is used to achieve the same ends.

How significant are the lessons learned from the SuperTruck programme for DTNA moving forward? It is very significant to have a deep understanding about the potential of SuperTruck technologies and to have identified hurdles that prevent widespread adoption. For technologies that demonstrated a positive business case, the benefits can be seen in today’s product from Cascadia Evolution to the integrated Detroit Powertrain. As for other technologies, we now understand whether or not it is even possible to overcome the hurdles based on how significant they are. What can we expect from the company next, in terms of bringing breakthrough technology to the truck segment? Over the course of the programme, the knowledge gained from SuperTruck was used to support enhancements on production vehicles. Moving forward, DTNA will continue to refine what we’ve learned and achieved during SuperTruck, and use the knowledge, skills and tools we acquired in the process to bolster our leadership in fuel efficiency.

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Freight Efficiency

Cab comfort: the key to efficient operations? The importance of increasing comfort for long-haul truck drivers has been identified by an unlikely supplier By Freddie Holmes

n a business where uptime is paramount, any form of downtime gets the warning lights flashing for long-haul truck fleet managers.


A study carried out by members of the Truckload Carriers Association (TCA) has revealed that exposure to jarring and shaking has a significant impact on driver fatigue and pain, a key contributor to downtime, particularly in an industry which struggles to recruit and retain drivers. OEMs are developing trucks that help fleet operators achieve high fuel efficiency, but there remains a challenge in maintaining efficient operations. In short, this means increased downtime, decreased revenue, and an industry that is struggling to keep drivers behind the wheel. The cab is the driver’s office, place of work, and home. For the average passenger car commuter, road noise, vibration and harshness (NVH) is in most cases no more than a nuisance, but for long-haul truck drivers travelling day and night, it can be dangerous. In fact, long haul truck driving is one of the top ten most dangerous jobs in the US, according to Forbes. The combination of long hours, quick turnarounds, and the stress of operating heavy machinery all contribute to its ranking. Driver health is becoming an increasingly important issue. To address this issue, a new under-seat suspension system has been developed by Bose, a company known primarily as a supplier of high quality sound systems. The suspension technology – which 82 | Megatrends

completely replaces a traditional truck seat – counteracts vibrations from the road. Ride quality is improved by responding to changing conditions in road surfaces and continually analysing forces from the road, and counteracting these vibrations before the driver can feel them. Play to your strengths Why has a supplier that primarily develops audio equipment produced an anti-vibration seat for trucks? Mike Rosen, General Manager, Bose Ride Systems, explained to Megatrends that a “deep expertise in electromagnetic motion control is part of how we make our speaker systems. This knowledge was utilised in helping to develop the Bose Ride system and its regenerative electromagnetic motor.”

this by sensing, analysing, and counteracting the forces from the road. “As a result, it is proven to dramatically reduce the fatigue and pain experienced every day by heavy-duty truck drivers,” explained Rosen. “Truck drivers spend around 11 hours a day on the road, suffering a ride that is much worse than a passenger car,” he added. “Even with the best conventional air-suspension seats, these drivers experience constant roadinduced shaking, bumps and jolts - a form of what is referred to as whole-body vibration (WBV).”

In the early 1980s, the company’s founder, Dr. Amar Bose, began research in automotive suspension systems using electromagnetic technologies. In 1994, the company extended this research in an attempt to solve the problem of shaking and jolting that affects heavyduty truck drivers. The first generation of the system was introduced five years ago, and was updated earlier in 2015. A conventional air-suspension truck seat is replaced with a Bose suspension base and a third-party seat top to protect drivers from road-induced shocks and vibration. The system achieves

Freight Efficiency product. “They told us that they felt safer, took fewer breaks, recovered faster at home, and expected to have longer driving careers,” Rosen noted.

Renowned for its high-end audio technology, Bose used its understanding of waves and vibration to develop a seating system for truck drivers that “is proven to dramatically reduce the fatigue and pain experienced every day by heavy duty truck drivers”

Independent scientific research has shown that WBV can increase fatigue, put stress on the driver’s spine and body, and drastically reduce comfort levels. Rosen believes these issues contribute to many of the transportation industry’s challenges, including driver attrition, reduced driver productivity, increased health care costs, and safety concerns. In short, these are “factors that impact and disrupt business.” A matter of economics

Significant benefits OEMs are clearly seeing the potential benefits of increased driver comfort, but how significant are these improvements? In a recent fleet study of heavy-duty truck drivers using the Bose Ride system, participants experienced dramatic reductions in fatigue and pain as a result of using the

The statistics speak for themselves: of drivers reporting fatigue and back pain serious enough to interfere with their work, 97% reported reduced back pain, and 94% reported reduced fatigue. Nearly 90% of drivers expected longer driving careers as a result of using the system, and 71% reported feeling they were safer drivers overall. The system was originally developed for the heavy-duty trucking industry after Bose recognised that shock and vibration issues are substantially greater in heavy-duty trucks than in cars. As for whether there is an opportunity to bring this technology into the passenger car market, Rosen confirmed that “it could be brought to other markets” in future, as the technology has progressed significantly since first focussing on the truck market.

Volvo Trucks North America offers the Bose Ride system as a factory fit option

Keeping drivers healthy and happy behind the wheel has become increasingly important for fleet economics. Industry analysts have evaluated the effect of poor health on driver performance through ‘median Days Away From Work’ (DAFW). Truck drivers missed 19 DAFW in 2012; that was the third highest among all occupations, and resulted in an estimated annual revenue loss to the industry of US$1.4bn. What is more, drivers are not only taking days off work, some of them are not returning to their job at all. According to the report from TCA, there are currently 25,000 unfilled truckdriving jobs nationwide across the US. Truck fleets “strive to retain veteran drivers,” it notes, because despite the upfront investment, 39% of new drivers leave the industry after 90 days. Rosen – along with fleet operators that have integrated the new system – hopes that Bose Ride could help to get drivers back on side with the role, and positive results have been yielded so far. Along with OEM fitment in new Volvo trucks in North America, Daimler Trucks North America recently announced that the system is available as a factory fitted open in its Freightliner Cascadia and Cascadia Evolution models.

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Re N gist ow e ! r

What’s next for India’s passenger car and commercial vehicle industries?

Find out at Automotive Megatrends India in Pune on December 2-3.

Freight Efficiency

The long-awaited revival of India’s truck market Imminent GST introduction, rail freight taxation, replacement demand and a mining revival: could India’s truck market be on course to fulfil earlier growth expectations? David Isaiah talks to key industry stakeholders about the prospects for trucking in India, as the CV market emerges from a long cyclical downturn

ollowing two consecutive financial years of declining sales, growth is once again visible in the Indian automotive industry. The state of a country’s commercial vehicle segment is a fair indicator of a country’s economic activity in the country, and India is no different.


The CV segment in India, especially the medium and heavy CV segment, has now been posting continuous growth over the past nine months. The light CV segment, on the other hand, has yet to recover from the slump. LCV sales in India have been declining for seven consecutive months. Market recovery The Indian CV industry began the current financial year on a positive note, posting combined sales of 45,872 units in April 2015, which translates into year-on-year growth of 6.5%, according to the Society of

Indian Automobile Manufacturers (SIAM). Out of the total, the M&HCV segment accounted for sales of 19,277 units, up 24.9% compared with April 2014. The concern for the industry, however,

is the LCV segment which failed to post year-on-year sales growth, even compared with the already depressed levels witnessed in 2014. This segment managed sales of 26,595 units, dropping by 3.8% compared with the corresponding month a year earlier. “The CV segment sales were a mixed bag for most manufacturers. While LCV sales continue to be in the slow lane, gradually increasing sales of M&HCVs indicate that the new fiscal year may bring new gains for manufacturers, based on resumption in mining activity and infrastructure spending by the government,” Abdul Majeed, a partner at Price Waterhouse in India, told Megatrends. Due to economic development initiatives in the country, industry experts feel that the CV segment is likely to see steady growth until 2020. Such initiatives that have been announced by the government include Megatrends | 85

Freight Efficiency plans to privatise ports, set up Ultra Mega Power Projects (UMPP), revive the manufacturing sector, and increase allocation to the roads and highways sector. “Indian commercial vehicle OEMs are also enjoying a rising acceptance in the SAARC (South Asian Association for Regional Cooperation) region, the Middle East and in the African continent. Most domestic players have compensated for their sluggish domestic sales by increasing exports,” a founder and managing partner of EOS Intelligence, Indraneel Bardhan told Megatrends. The Indian government has also started the auction of mines, which augers well for the heavy CV segment. This will especially benefit the likes of heavy truck manufacturer AMW Motors, which has significant presence in the mining sector. According to the OEM, there is definitely a recovery as far as on-road CVs are concerned; however, in terms of work trucks, such as tippers and transit mixers, the recovery in the industry is yet to take off. “Definitely the auctions have cleared coal mining and will lead to mining getting initiated in the majority of mines across the country, but the action on ground will only commence by the second half of this fiscal. The only caveat here is the drop in the energy prices across the globe. This may lead to mining getting delayed as the user industry will be locked in a conundrum of mining the coal or buying the coal,” RN Rao, Director – Marketing, AMW Motors told this publication. “But having said that, India is a power deficient country and the majority of power plants are thermal power plants;

coal mining has to start sooner rather than later. Mining will be one of the biggest triggers for growth in the M&HCV space and overall in the growth of GDP.” Effects of the budget The eagerly awaited budget for the financial year 2015-16 was presented on 28 February, with Indian industry expecting much from Prime Minister Narendra Modi’s government. Earlier, the Central Statistics Office released a new series for GDP, which involves a number of changes relative to the old series. Based on the new series, estimated GDP growth for 2014-15 is 7.4%, while growth in 2015-16 is expected to be between 8-8.5%. The Indian CV industry naturally had high expectations of the new government’s first budget, specifically for further cuts in excise duty and other industry-specific incentives to increase demand. However, this was not to be. It ended up as a fairly neutral budget for the automotive industry in general.

“In order to push local manufacturing, the government increased the effective tariff rate on imported commercial vehicles from 10% to 20%, making the imports of CBUs (completely built-up units) expensive. This is in line with the government’s ‘Make in India’ initiative that encourages local manufacturing of CVs in the country. The move is not going to have any drastic impact on the industry, as it affects only high-end players like Volvo and Mercedes, which currently import not more than 1,000 units annually,” said EOS Intelligence’s Bardhan. “The budget gave a lot by way of statements of intent, but is lacking ground level action,” said AMW’s Rao. “Lots of new projects were announced, vis-a-vis infrastructure development, smart cities and road development on PPP (Public Private Partnership) basis, but the entire industry is sceptical of PPP projects due to the projects getting delayed on account of various clearances. “The budget does not give any clear direction on financing the new projects and also clearing up the old projects which are on hold due to various government clearances,” he continued. “The excise rollback was also lifted in this budget but the market was able to absorb it and thus we don’t see any negative impact on account of this.” There were, of course, positives as well. For instance, the increase in infrastructure spending by the government is likely to boost the demand for trucks. Coal mine auctions too may increase mining operations, which will, in turn, spur demand. “Old vehicle replacement is expected to drive up sales. Moreover, the

86 | Megatrends

Freight Efficiency government’s strategy to boost growth by enhancing infrastructure, improving ease of doing business, increasing public investments, etc., is expected to fuel growth in the CV industry, as well as provide growth opportunities for OEMs across the entire automotive value chain.” Daimler India expects the medium and heavy-duty segment to be the largest and fastest growing of the commercial vehicle categories, with the focus on infrastructure development. With the hub and spoke model gaining significance, small and light CVs are expected to return to growth as well. However, growth in this segment may not happen immediately. budget had an increased focus on infrastructure development and investments which will help in increasing demand in the segment. It is expected that the M&HCV segment will report volume growth of 13-17% year-on-year in fiscal year 2016,” Sreeram Venkateswaran, Vice President - Domestic Sales, Product Management and Network at Daimler India Commercial Vehicles (DICV), told Megatrends. The elusive GST The implementation of the Goods and Services Tax (GST) is something that the entire industry has been looking forward to for many years. There is significant productivity loss owing to the many check posts and toll plazas between Indian states, resulting in massive delays. Implementing GST would reduce costs associated with logistics and distribution, resulting in better capacity utilisation. “Under the new GST, tax rates are expected to reduce and there is likely to be a consolidation of warehouses across the country resulting in more demand for trucks for last mile connectivity. This will boost logistics efficiency. There is also a possibility of less paperwork at check posts when goods are being transported from one state to another resulting in supply chain efficiency and quick turnaround times. This will definitely generate new demand for the CV segment,” Price Waterhouse’s Majeed told Megatrends. At the time of writing, GST implementation was expected to take place by 1 April 2016, or so the Minister of Finance says. The CV industry has been excited about GST as well. This is, no doubt, one of the

biggest taxation reforms in India, as DICV’s Venkateswaran puts it. “The commitment to implement GST from 1 April 2016 as the biggest indirect tax reform would pave the way for uniform tax structures across the states, thereby simplifying and standardising vehicle pricing. This will also help in states receiving higher revenues. Once implemented, GST would mean faster delivery times from point to point. When that happens, it will lead to faster adoption of the hub and spoke model,” he told us. Outlook

“Recovery in the LCV segment could be gradual, based on improvement in consumption expenditure and the availability of bank credit,” said Abdul Majeed. AMW Motors, meanwhile, believes that the M&HCV segment is closely linked to economic development and GDP growth. The company expects growth to come from replacement demand, freight rates holding up, and the start of mining activity in the second half of the current financial year. “The factors which will further enhance growth include firm action vis-a-vis financing of new projects in power, infrastructure and roads, clearing of old projects and increased fleet utilisation. But the government looks to be in a tight spot as far as financing these projects is concerned and thus growth may be limited to 10-12% in the CV industry,” said AMW’s Rao.

So far, our analysis has focused on the Indian CV industry as it is today, emerging from a prolonged slowdown. Parts of the sector at least have already left behind the days of sluggish sales, and are now posting strong year-onyear growth, albeit from a low base. The budget brought no major policy initiative to directly impact the CV segment, but positives such as increased infrastructure spending will, no doubt, boost sales in the medium term. GST is still a year away, and the best the industry can do is to trust the Finance Minister’s confidence in the April 2016 timeline. So what is in store for the Indian CV sector in the medium term?

In addition to these factors, EOS Intelligence expects demand for new CVs to receive a boost over the longer term, through gradual acceptance of advanced trucking platforms, adapting BS V emissions standards, and new technologies in the Indian CV space, such as anti-lock braking systems.

“India’s CV industry is expected to grow at a CAGR of 5% or more during 20152020. Massive urbanisation will be the key driver of this growth as one of the key focuses for the new government is to create 100 more urban cities over the next five years,” said EOS Intelligence’s Bardhan. “Further, the ‘Make in India’ strategy promoted by the new government as well as resumption of mining activities will fuel further growth in the segment. The present

“Going forward, utilisation levels are expected to improve further due to the recent hike in rail freight charges by 2541%. As road transport becomes cheaper, the demand for new CVs is expected to rise. This will also aid in improving the credit environment for CVs, which has been particularly challenging for small fleet operators and first-time buyers due to the sharp rising delinquency levels,” said Bardhan. Megatrends | 87


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Automotive Megatrends Magazine - Q2 2015