GAMECHANGERS AUTOMOTIVE MAGAZINE ONE / SEVENTEEN by ACQ5 Magazine

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CONTENTS

cover

A League Of Their Own, Jaguar Land Rover's Climb To The Top

20 cars that changed the automotive industry forever

Volvo picks McDonald's executive as first chief digital officer

GameChangers™ welcomes news and views from its readers. Correspondence should be sent to gamechangers@acq5.com For more information about GameChangers™ visit www.acq5.com/posts/ gamechangers/ GameChangers™ Copyright © 2017 GameChangers™ No part of this magazine may be reproduced, stored in a retrieval system or transmitted in any form without permission. SAFE HARBOR The interviews in this publication may contain certain forward looking statements with respect to the financial condition, results of operations of the businesses profiled. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements may have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in these announcements should be construed as a profit forecast.

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80 Aston Martin recruits former Ferrari, Maserati executive as chief technical office

"Safety, Convenience and Resource Efficiency"

Investing in classic cars and supercars

KPMGâ&#x20AC;&#x2122;s 17th consecutive

Global Automotive Executive Survey 2016 From a product-centric world to a service-driven digital universe

100

global automotive executive survey 2016

The automotive industry's most compelling acquisitions

TEAM David Rogan - President & Editor-In-Chief Jon Van Dyke - Editorial Director James Wiltshire - Publisher EDITORIAL J Robson - Editor-At-Large L. B. Kooler - Deputy Editor P Ramone - Senior Editor J LaRusso - Copy Chief M-C Fisher - Editorial Assistant B Sancheze - Senior Staff Writer ADVERTISING A Bott - Digital Advertising Director J Downey - Advertising Director Z Wolfel - Business Development Director C Thomas - Account Executive H Smith - Account Executive ADMINISTRATION A Kessler - Finance & Admin Director T Dolby - Technology Manager P Hughes - Operations Coordinator T. A. Black - Office Manager

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BorgWarner ready for another acquisition Supplier readies cash to go deeper in hybrid business BorgWarner, one of the industry’s top two turbocharger manufacturers, wants to beef up its expertise in power electronics and is prepared to spend to get there through acquisitions. That will put the supplier in a better position to penetrate the hybrid vehicle market, said BorgWarner CEO James Verrier. “Today we have good power electronics inside the company, but I want more,” Verrier said in an interview this month. “We’d like to build our capability.” He said BorgWarner earmarks about $400 million a year for acquisitions or stock buybacks. “But if the right deal is there and we have to go into debt, we will do so,” he said. The company took on debt when it agreed to acquire electronics supplier Remy International Inc. for $951 million in cash in July 2015, paying a healthy 44 percent premium for Remy. Remy makes alternators, starters and hybrid motors, which BorgWarner has pitched to customers seeking to electrify their vehicles. Verrier said he now can supply components for electric vehicles, hybrids or internal combustion engines. BorgWarner expects EV and hybrid parts to generate 16 percent of its sales by 2023, up from 1 percent or so this year. Remy will help make that possible, Verrier said. IHS Automotive forecasts that global production of hybrid vehicles will reach 18 million units a year by 2025, up from 3 million this year. Remy “was a great deal for us,” Verrier said. “We’re thrilled with it.” Now that BorgWarner has had a year or so to integrate the acquisition, Verrier said he’s ready for another one. “We have a robust pipeline of ideas,” he said. The election of a conservative U.S. government does not change Verrier’s attitude. Many observers speculate that the incoming Trump administration will soften or even eliminate the 54.5 mpg U.S. corporate average fuel economy target for the 2025 model year. That would seem certain to hurt profits of suppliers that have invested heavily in fuel-efficient components. But not to worry, Verrier said. The U.S. accounts for only 30 percent of BorgWarner’s global sales. Regulators in China and Europe will continue to demand fuel-efficient vehicles.

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And Verrier isn’t ready to write off CAFE goals in the U.S. “Is 54.5 mpg dead forever?” he asked. “Or will we just push it out beyond 2025? It’s very early.” Verrier expects automakers to feel competitive pressure to improve fuel economy, CAFE or not. “The push from automakers for better fuel economy will come independently of regulation,” Verrier said. “It may not be as strong, but it definitely will be there.”

Original Source: Automotive News

Brexit minister meets UK automotive industry at round table event The UK automotive industry has met with Brexit minister David Davis to call for access to the single market to be retained. At a roundtable discussion at the Society of Motor Manufacturers and Traders (SMMT) in London, Davis reaffirmed the importance the government places on the UK’s world leading automotive industry. The automotive sector is the UK’s largest manufacturing export sector and is spread nationally. In 2015, the sector employed 169,000 people in automotive manufacturing, exported 1.2 million cars and generated £34.3 billion in export revenue. Secretary of state for Exiting the European Union, David Davis, said: “The UK’s automotive sector is one of the most productive in the world and we want to see it go from strength to strength. “As the UK exits the EU, we are determined that our country remains a great place to invest and to do business. We want the best deal for trade in UK goods and services, including for our important automotive sector. Industry minister, Nick Hurd, said: “The UK automotive sector has had a remarkable year - exporting over a million cars around the world. This is thanks to our highly-skilled workforce and long-term investment in new technology and innovation, including the recent £390 million investment in electric and driverless cars at Autumn Statement. Our upcoming industrial strategy will build on this work further, by creating an environment where the auto sector can maintain its competitiveness, while upgrading productivity and creating high skilled jobs.

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SMMT chief executive, Mike Hawes, said: “Today’s discussions were a good opportunity to meet with government to reinforce the success and importance of UK Automotive, and to highlight the specific priorities for our sector when leaving the European Union.

which translates as German the paper reported the Shanghai Intellectual Property Court as saying.

“Being part of the single market has helped make the UK automotive sector amongst the most competitive in the world and a critical part of the UK economy. It is essential that we maintain those benefits and we will work with government and our partners in Europe to ensure the global success of our sector continues in the future.

BMW, Deguo Baoma Group, Chuangjia and Zhou Leqin could not be immediately reached for comment.

With the company, Zhou then bought and registered the trademark “BMN,” with a logo similar to BMW’s, it added.

Fashion firm Chuangjia, the second firm fined, then used the trademark on products including clothes, shoes and bags, changing the logo over the years to more closely resemble BMW’s.

“Today’s event was the latest in a series of roundtables the government is having with different industries up and down the country to ensure that we get the best deal for Britain as we negotiate our departure from the EU.”

The accused infringed BMW’s trademarks registered in China by taking advantage of its reputation, the paper reported the court saying.

The Secretary of State was joined at the roundtable by Minister of State for Climate Change and Industry Nick Hurd, Minister of State at the Department for Transport John Hayes and representatives from the following companies and associations:

In early December, China’s highest court ruled in favour of basketball star Michael Jordan in a long-running trademark case relating to a local sportswear firm using the Chinese version of his name, overturning earlier rulings against the athlete.

• Aston Martin • BMW • Caterpillar • Ford of Britain • GKN • GM - Vauxhall UK • Honda Motor Europe • Jaguar Land Rover • JCB • McLaren Automotive • Nissan • SMMT • Toyota • Triumph Motorcycles

Original Source: The Economic Times

Original Source: Fleet News

China fines firms for using BMW-like trademark The ruling is the latest win for a large foreign firm in China, a sign that courts are taking trademark infringement more seriously in a country dogged with fakes of everything from clothing brands to entire shops. A court in Shanghai ordered two Chinese firms and the founder of one of them to pay automaker BMW 3 million yuan ($431,617.41) for registering trademarks similar to that of the German firm, the Shanghai Daily reported. The ruling is the latest win for a large foreign firm in China, a sign that courts are taking trademark infringement more seriously in a country dogged with fakes of everything from clothing brands to entire shops. Zhou Leqin, one of the accused, registered Deguo Baoma Group (Int’l) Holdings Limited, BMW Group (Int’l) Holdings Limited, in China in 2008,

McLaren Automotive passes 10,000-car milestone ONCE the McLaren badge related purely to the super exclusive World Championship-dominating pure racebred Formula 1 and sports cars as campaigned by race team founder the late Bruce McLaren – but now McLaren Automotive is a brand with which you can do business motoring too. From the early days of a racing workshop a stone’s throw from Woking station, McLaren has burst upon the world with its ultra modern centres producing a long succession of Formula 1 World Champions and the birth of McLaren Automotive, producing high performance customer cars. And now it has celebrated the manufacture of its 10,000th car from the McLaren Production Centre in Woking. The 10,000th car, a McLaren 570S finished in Ceramic Grey paintwork from the McLaren Special Operations ‘Defined’ palette, rolled out of the Production Centre just over five years after the first car, a McLaren 12C, was completed. Commenting on the moment that the car left the Production Centre, McLaren Automotive chief executive officer Mike Flewitt said: “The production of the 10,000th McLaren is a significant milestone in the short history of the company. “The fact that it took us 42 months to build our 5,000th car and just 22 months to build the next 5,000 speaks volumes about the pace of development of the company. Much of that development is thanks to the introduction of the

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Sports Series family of cars and it’s therefore fitting that the 10,000th car is a McLaren 570S.”

GTR which, with 1,000PS, became the most powerful model ever produced by the brand.

In early 2016, a second shift was introduced into the McLaren Production Centre to cater for the increased volume thanks to the introduction of the Sports Series family, today comprising the 540C, 570S and 570GT.

The much-anticipated Sports Series became the third – and final – model tier in the McLaren range with the 570S Coupé and 540C Coupé debuting in New York and Shanghai respectively, less than one month apart.

This took capacity at the Production Centre from ten cars per day to 20 cars per day. 2016 also marked the announcement of the company’s third year of profitability in the first five years it has been producing cars – unprecedented in the automotive industry.

The end of 2015 saw the launch of the fifth model, the 675LT Spider, which was as a direct response to customer demand.

McLaren is also on target to almost double its sales this year compared to 2015, from 1,654 cars last year to over 3,000 cars in 2016, of which over 90% will be exported. This volume increase is thanks, in large part, to the ramp up in production and success of the Sports Series models. Like the McLaren Technology Centre, the McLaren Production Centre was designed by Foster + Partners and took 14 months to build, from breaking ground until the 18 July 2011 when the first car, a McLaren 12C, was approved for shipping. Since then, the McLaren Production Centre has been the only location where McLaren cars have been built, from the initial 12C and 12C Spider, through to the 650S and 675LT in the Super Series, as well as each of the 375 highly-bespoke McLaren P1 cars. Today, the McLaren Production Centre employs around 750 people out of a total of approximately 1,750 employed by McLaren Automotive. The company in its Heritage Collection will retain the 10,000th car. McLaren Automotive: The track record McLaren Automotive is a British manufacturer of luxury, high-performance sports and super cars, located at the McLaren Technology Centre (MTC) in Woking, Surrey. For the past 30 years, McLaren has pioneered the use of carbon fibre in vehicle production and since introducing a carbon chassis into racing and road cars with the 1981 McLaren MP4/1 and 1993 McLaren F1 sportscar respectively, McLaren has not built a car without a carbon fibre chassis. Following the global launch of McLaren Automotive in 2010, the groundbreaking 12C was revealed in 2011, the 12C Spider in 2012, and the limited-run McLaren P1 went into production in 2013. In keeping with its plan to introduce a new model each year, the company unveiled the 650S, in Coupé and Spider form in 2014, while 2015 proved to be a year of unprecedented growth of the product portfolio with five new models launched across the full range. The strictly limited edition 675LT Coupé premiered at the Geneva Motor Show alongside the track-only McLaren P1

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The year also saw the end of production for the first model in the Ultimate Series as the 375th McLaren P1 was completed, closing what had become a defining year for the British brand. 2016 continued where 2015 had left off with the introduction of the 570GT – a second bodystyle for the Sports Series and the most luxurious car McLaren has ever built, as well as the 570S GT4 and 570S Sprint track variants. The year also marked the introduction of the company’s new business plan, Track22, which sees the company investing £1billion in Research and Development to deliver 15 all-new cars or derivatives by the end of 2022, of which at least 50% will feature hybrid technology. The uplift in sales in 2016 also saw the launch of the second shift at the McLaren Production Centre as well as the company’s third year of profitability in just six years of trading.

Original Source: Business Car Manager

Transition to keyless automotive access systems fuels growth opportunities for specialist companies Smartphone and frictionless access to drive future vehicle access systems, finds Frost & Sullivan’s Mobility team The rising popularity of mobility services such as car sharing, rental and leasing is stoking significant interest in keyless access systems. Following the saturation of radio frequency technology, Bluetooth low energy (BLE), biometrics and near-field communication (NFC) are poised to emerge as the next wave of wireless technologies in the automotive industry.

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This evolution from legacy vehicle access system to advanced access systems opens the market to specialist companies such as cybersecurity enterprises, telematics providers and mobile application developers. “Advanced biometric technologies such as face, voice and iris recognition are highly accurate and frictionless, encouraging automotive OEMs to make them an integral authentication layer,” said Frost & Sullivan Mobility Research Analyst Meena Subramanian. “Traditional keys will exist along with smartphone based access becoming secondary option as smart devices face threats such as battery dependency, accuracy and security risks.” Strategic Analysis of Automotive Keyless Access Systems is part of Frost & Sullivan’s Mobility Growth Partnership Subscription. According to the study, by 2025, the penetration rate of smart device and biometric-based access systems in the North American market is forecast to touch 8.1 percent, while the penetration rate in EU is expected to be 9.0 percent. Automotive OEMs are cautious about incorporating new technologies and are working on resolving security-related challenges. For instance, they have been using standardized frequencies for communication as well as encryption and rotating codes for access. In the case of virtual keys, they are focusing on cybersecurity for connected devices and placing restrictions on the number of features offered remotely. “OEMs that are keen to offer advanced access systems are increasingly partnering with technology companies, as this market transformation calls for industry consolidation,” noted Subramanian. “Overall, advanced passive start and entry system (PASE) structures that include personalisation features, such as steering wheel and tuner adjustments, smartphone-based access and frictionless access, will be the future of vehicle access systems.”

Volvo Cars raises $500 million in move towards possible share listing Volvo Cars has raised 5 billion Swedish crowns ($532 million) from a group of Swedish institutional investors, taking it a step towards a share market flotation nearly seven years after being bought by Chinese carmaker Zhejiang Geely Holdings. The investors have bought newly-issued preference shares that would have “an immaterial dilutive effect” on Geely’s 100 percent ownership, Volvo said, while suggesting that the deal marks a milestone in its turnaround in Chinese hands after deep losses under previous owner Ford Motor Co. (F.N).

“Today’s move is another step towards Volvo Cars’ long expressed ambition to act as a listed company,” Volvo said in a statement. A spokesman for Geely said it stood by a previous statement that there were “no immediate plans” for an initial public offer of shares in Volvo, declining to define the term “immediate”. One of Sweden’s biggest companies by sales and staff numbers, Volvo was bleeding money during the 2008 financial crisis and Ford - which was struggling to survive - had to sell it off at a discount price. After Geely’s $1.8 billion purchase of Volvo - a byword for a safe and unfussy style of Swedish cars - many analysts were skeptical that China’s largest private-run car maker could compete with rivals such as Mercedes-Benz (DAIGn.DE) and BMW (BMWG.DE). But a wave of investment in new models and factories has silenced critics, while the company has continued to emphasize its Swedish roots with recent adverts featuring soccer player Zlatan Ibrahimovic, the star Swedish striker at Manchester United (MANU.N). The company is looking for growth in the United States and China as well as Europe, where it hopes to double its market share. Volvo sold 473,528 cars in January through November, helped by strong demand for its XC90 SUV - the first new model developed under Geely ownership - and should top last year’s record sales. Operating earnings tripled in the first half of the year to 5.59 billion crowns. Swedish Style Volvo said the fresh capital had been raised from three Swedish institutional investors, adding to speculation over the last year that the company could be looking at a dual listing in Stockholm and China. “That is up to the owners to decide, but it is worth noting that they have raised money from three Swedish investors,” said Olof Jonasson, head of equities management at one of the new investors, the state-owned First AP (AP1) pensions fund. Pension funds investor AMF and insurance company Folksam said they had bought preference shares in Volvo worth 2.5 billion crowns and 1 billion crowns respectively, while the AP1 fund said it had bought 1.5 billion crowns worth of the shares. Volvo returned to international bond markets earlier this year, with its first corporate bond raising 500 million euros ($519 million), followed by its first Swedish bond issue last month. Volvo, which has partnered with Uber Technologies [UBER. UL] to develop self-driving cars, also announced a joint venture with Swedish-U.S. car safety airbags maker Autoliv (ALV.N) to produce self-driving and driver assistance software.

Original Source: Reuters

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China sales jump 17% in November New vehicle sales in China jumped by 16.6% to a record 2.96m units in November, according to data released by the China Association of Automobile Manufacturers (CAAM). Buyers continued to pour into the market to take advantage of tax incentives on small engine cars, which are due to expire at the end of the year. Consumer confidence also has been lifted in recent months by buoyant economic growth in the country. Vehicle sales in the first 11 months of the year increased by close to 14% to 24.9m units, from 21.8m in the same period of last year, and further strong growth is expected in December. The auto industry is increasingly concerned about the outlook for demand next year, however, once the current tax incentives are withdrawn. Without additional stimulus, it is feared the market could fall sharply from current peak levels. Local auto brands such as Geely and Great Wall led the market higher last month, driven by strong demand for small, competitively priced passenger vehicles – particularly SUVs. Geely said its November sales more than doubled year on year to 100,701 units. General Motors and its local joint ventures reported a sales increase of 7% to 371,740 units last month; while Ford’s sales rose by 17% to 124,113 units; and Hyundai’s by over 15% to 127,008 units.

Original Source: Just Auto

Ford, Toyota form telematics alliance with other automakers, suppliers to stymie Google, Apple Ford Motor and Toyota Motor have formed a consortium with four other automakers to speed development of auto-industry standards for in-vehicle apps, a step toward preventing Apple and Google from controlling how drivers connect smartphones to their cars and trucks. Ford and Toyota said that Mazda Motor, PSA Group, Fuji Heavy Industries and Suzuki Motor have joined their SmartDeviceLink Consortium. The nonprofit group’s goal is to promote more choice in how smartphones get connected to in-vehicle technologies like dashboard displays and voice recognition, and in other programming, Ford and Toyota said in a joint statement today. Toyota has resisted offering Apple’s CarPlay and Google’s Android Auto in its vehicles, citing concern that doing so would diminish safety and security. Ford offers them on all its 2017 model vehicles. But the automaker still wants an open-source software platform that all app developers can use as an alternative to those of Google and Apple. “Encouraging innovation is at the center of Ford’s decision,’’ said Doug VanDagens, global director of Ford Connected Vehicles and Services. Suppliers Elektrobit Automotive, Luxoft Holding and Xevo also joined the consortium. Honda Motor had contemplated the move but wasn’t mentioned in today’s announcement. Harman, Panasonic, Pioneer and QNX have signed letters of intent to join, the statement said. Toyota first agreed to collaborate with Ford on car telematics systems in 2011. The automakers worry that if CarPlay and Android Auto establish themselves as must-have options, the influence of Apple and Google over the industry will grow.Ford’s version of the SmartDeviceLink technology is already available on five million vehicles globally, and provides drivers with popular apps like Pandora, Spotify, iHeartRadio, and AccuWeather. By enlarging the consortium, the automakers hope to maintain control over how much access infotainment apps have to vehicle data, according to the statement. “We are excited to collaborate with many auto manufacturers who share our view,’’ said Shigeki Tomoyama, president of Toyota’s Connected Company.

Original Source: Automotive News

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Skoda Mlada Boleslav plant close to new press line trials Skoda is building a new press shop at its main plant in Mladá Boleslav and installation of the press line for the main production line is currently under way with trial operation due. “The new press shop is another important element of our ‘Green Future’ environmental strategy, which focuses on resource-efficient and sustainable production and energyefficient vehicles,” said Michael Oeljeklaus, Skoda production and logistics chief. “The system is one of the most modern of its kind in central Europe. In addition to its exemplary energy efficiency, it also enables a particularly flexible production process and significantly shorter changeover times thanks to decentralised servomotors.” The time required for changeovers has been reduced to only three minutes. Innovative servo technology is used for the new PXL II press line. The energy required to produce the pressed parts is generated directly by the 14 servomotors on the press line. In contrast, the conventional mechanical press drive utilises the energy accumulated in a flywheel. Unlike this system, the conversion energy can be flexibly adjusted and regulated as required with the new system. A further advantage is that the energy released during pressing can be partially recovered. Compared to conventional systems, the new press line consumes up to 15% less energy in continuous operation and is also characterised by its ease of use. It is one of around 20 facilities of its kind in the Volkswagen Group, and also enables the pressing of large aluminium parts for the first time. The PXL line uses the latest technologies to control the transport of pressed parts between the individual process steps. This increases the total capacity to 80,000 parts in the XL category. The optimisation phase with limited production commences on 20 December, 2016. In February, 2017, Skoda’s first press line for aluminium body parts will be in full operation– where up to 23,000 press parts will be produced for several models every day. On this project, Skoda has spent EUR 86.4m (US$108.3m) and created 140 new jobs. The automaker will be operating the new press shop in 12-hour shifts around the clock, seven days a week, with more than 1,000 employees. The try-out press was completed before the putting the main production line into operation. It is being used to prepare tools for the new press line.

Original Source: Just Auto

U.S. industry hits new peak behind solid GM, Nissan, Honda gains U.S. light-vehicle sales, led by fatter discounts, strong light-truck demand and solid gains at General Motors, Nissan and Honda in December, hit a record high in 2016. Overall sales rose by more than 56,000, or 0.3 percent, over the 2015 record. It was the seventh straight year of sales gains, an impressive streak and rebound for an industry that was down on its heels during the Great Recession. Volume rose 3 percent in December, well ahead of forecasts, pushing 2016’s final sales tally to 17,539,052 cars and light trucks. The seasonally adjusted, annualized sales rate hit 18.38 million, the highest pace of the year and fifth-highest of all time. Prior to today’s results, analysts polled by Bloomberg projected that industrywide deliveries would come in at a seasonally adjusted annualized rate of 17.6 million. U.S. lightvehicle sales totaled 15.85 million through November. That was just 6,418 ahead of the year-earlier pace, a clear sign the market had hit a plateau.Yet there was apparently more steam left for December than analysts expected. Company by company Volume rose 10 percent at GM for a second straight month. Nissan Motor Co. advanced 9.7 percent and American Honda posted a 6.4 percent gain. Toyota Motor Corp. rose 2 percent and Ford Motor Co. edged up 0.1 percent, while Fiat Chrysler recorded its third straight double-digit decline. All four of GM’s U.S. brands rose. Chevrolet led the way with a 13 percent increase, followed by GMC (5.8 percent), Cadillac (3.2 percent) and Buick (2.8 percent). GM said its rental sales rose in December but finished 2016 down nearly 74,000 vehicles, or 18 percent, compared with 2015. The company said its retail deliveries -- a key priority in recent years -- rose more than 3 percent last month. Nissan Motor’s December increase reflected an 8.3 percent gain at its namesake division and a 21 percent jump at Infiniti. The Nissan division set an all-time record with 1,426,130 U.S. sales in 2016, up 5.5 percent. And in a sign of how strong light-truck demand has become across the industry, the Rogue crossover topped the Altima sedan to become Nissan’s top-selling U.S. model for the first time, with 2016 sales of 329,904, or an increase of 15 percent. Volume rose 6.9 percent at the Honda division and 1.9 percent at Acura. For the year, Honda Division’s U.S. sales rose 4.8 percent to a record 1,476,582. At Ford Motor, sales were off 0.8 percent at the Ford division and up 18 percent at Lincoln. Toyota said volume edged up 2.6 percent at the Toyota division but slipped 0.5 percent at Lexus last month. Deliveries dropped 10 percent at FCA US behind a 6 percent decline at Jeep and a 34 percent drop in fleet shipments. Ram was the only FCA US brand to gain last month, with a 10 percent rise. Jeep and Ram posted U.S. sales records last year. Volume dropped 1.9 percent at Hyundai but rose 0.2 percent at Kia. Sales rose for the second straight month at the VW brand, but declined 7.6 percent for the year. At Mazda, volume dipped 1.8 percent last month. December deliveries dropped 6.4 percent at Mitsubishi and 7 percent at Mini.

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Forecasts

Incentives

The December results among major automakers topped many forecasts. GM sales were predicted to rise 4.4 percent, based on the average analyst estimate compiled by Bloomberg. Deliveries at Fiat Chrysler, which has discontinued compact and midsize sedans, were projected to drop 14 percent. Volumes at Ford, Toyota, Honda and Nissan were all forecast to slip less than 3 percent. Among other brands, Infiniti, Kia, Land Rover, Mercedes-Benz, Hyundai, Subaru, Audi and Porsche also set annual U.S. sales records in 2016.

ALG estimates that average incentives on new vehicles spiked 20 percent to $3,673 last month compared with December 2015. Among the biggest spenders on December discounts were the Detroit 3 and Volkswagen Group. Even Subaru, which has been able to offer some of the industry’s leanest new-vehicle deals, saw average incentives more than double to $1,162 last month, ALG says.

Light trucks, led by crossovers, continue to drive the market and accounted for a record 60.7 percent of all light-vehicle deliveries in 2016. For the year, car demand skidded 8.9 percent while light-truck deliveries advanced 7.4 percent. Last month featured one fewer selling day than December 2015 and one more weekend. Automakers and dealers used heavy promotions and generous deals to lure consumers to showrooms last month. A post-election bounce in U.S. equity markets also provided a lift to industry sales in December, some analysts say. “Key economic indicators, especially consumer confidence, continue to reflect optimism about the U.S. economy and strong customer demand continues to drive a very healthy U.S. auto industry,” Mustafa Mohatarem, GM’s chief economist, said today. “We believe the U.S. auto industry remains well-positioned for sales to continue at or near record levels in 2017.”

Since the 2008-09 Great Recession, U.S. light-vehicle sales had grown by more than a million units a year on average, through 2015, while delivering seven straight annual gains, the longest streak since 1909-17. Pent-up demand, more leasing, favorable finance deals and steady job growth have driven new-vehicle sales since the downturn. But analysts warn that rising interest rates and a peaking retail market will force automakers to cut production this year. “Substantial incentive hikes ... haven’t resulted in retail growth, while inventories continue to grow,” said Tim Fleming, an analyst at Kelley Blue Book. “An increasing supply of used cars, especially off-lease units, is already putting pressure on residual values, which could impact the sustainability of today’s high levels of leasing. We are looking for manufacturers to cut production in the new year to better match slowing consumer demand and alleviate the need for elevated incentives.”

Original Source: Automotive News

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West European car sales up 4.5% in November Car sales in Western Europe grew by 4.5% in November as demand ticked up and the annual selling rate surpassed 14m units. Data from LMC Automotive shows most national markets showing signs of improvement in the month. However, underlying growth for the region is easing now that the market is close to pre-crisis levels, with the market forecast by LMC to grow by just 1.4% in 2017 (following a projected 5.9% rise this year). The German car market was up 1.5% last month (4.9% YTD). LMC said that the French car market is on course to achieve 2m for 2016 after another solid month. The UK car market continued its progress to a record result. Confounding worries over the impact of the removal of the PIVE scrappage scheme, the annualised selling rate for the Spanish car market exceeded 1.2m a year for the second time in three months. The market was some 13.5% up on November last year and has already exceeded 1m units this year at 1.05m units - some 11.5% up on the same period last year. The Italian car market was up 8.2% in November and described by LMC as on a ‘firmer footing in recent months’. The impact of the recent referendum defeat and renewed political uncertainty in Italy could cloud the short-term outlook, but LMC expects markets such as Italy’s and Spain to continue growth momentum in 2017. As we head to the close of the year, car registrations for the region are set to be 6% higher than 2015, the third consecutive year of growth, following the 2013 low of 11.5m units. However, the dynamics of the region are set to shift in 2017 as the UK’s car market declines from its current high level under the impact of a slowing economy, higher inflation and sterling weakness. Some manufacturers have raised new car prices in response to sterling weakness, although the impact on the market is muted by the fact that a high proportion of retail sales are now on PCPs (personal contract plans) with the impact hidden in the monthly outlay. LMC expects the West European car market in 2017 to expand by 1.4% to 14.15m units. “There are certainly a number of uncertainties on the economic front as we head in to 2017,” said LMC analyst Jonathon Poskitt.”

We’ve got renewed uncertainty in Italy after the referendum result there and there are a number of important elections in Europe coming up that could generate political and economic uncertainties.“We also think the full economic impact of sterling’s devaluation has yet to play out and there may be further turmoil as the UK-EU Brexit negotiations get underway. Overall, we’ve taken a cautious approach to the European car market outlook for 2017, but the key thing is that we are still projecting growth and a market that is close to pre-crisis levels.”

Original Source: Just Auto

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M OVES

Aston Martin recruits former Ferrari, Maserati executive as chief technical office

Porsche racecar engineer Hitzinger joins Apple

Alexander Hitzinger, Auto Specialist, Apple Maximilian Szwaj, Chief Technical Officer, Aston Martin

Aston Martin has named Maximilian Szwaj, a former Ferrari and Maserati executive, as its new chief technical officer. Szwaj joins Aston Martin as the UK sports-car maker freshens and expands its aging lineup, including adding its first SUV. Szwaj will take responsibility for Aston’s global engineering operations and will be based at the automaker’s headquarters in Gaydon, England, where he will report directly to CEO Andy Palmer. “Max has a wealth of experience across engineering and product delivery, his experience, skills and passion will make him a great leader for the engineering team as we prepare the business for the next generation of Aston Martin products,” Palmer said in a statement. Aston Martin has been investing heavily to refresh its aging lineup. The portfolio update started with the new DB11, which replaced the DB9 coupe this year. The automaker also plans an electric RapideE model and a Lagonda sedan as well as its first SUV, based on the DBX concept unveiled at the Geneva auto show in 2015 and due to go on sale in 2020. The production version of the crossover will be built at a new plant in South Wales, which will begin construction next year. Szwaj replaces Ian Minards, who moved to the UK consumer electronics maker Dyson as global product development director in September. The move added weight to reports that Dyson is planning to develop an electric car. Dyson has declined to comment. Szwaj, a graduate of Trinity College Dublin, spent five years as head of innovation and body engineering at Ferrari and Maserati. During a 25-year career in the automotive industry, he also held management positions at BMW Group and Porsche.

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Apple poached the technical director of Porsche’s race car program earlier this year, Manager Magazin reported, hiring a project manager who helped engineer the sports car company’s victorious return to the Le Mans endurance race. Alexander Hitzinger is the latest auto specialist to be recruited by technology giant Apple as it explores building its own car. Earlier this month, Apple urged regulators not to impose too many restrictions on developers of self-driving cars. Hitzinger could not be reached for comment. Porsche confirmed Hitzinger had left the company in the spring. Apple was not immediately available for comment. Hitzinger helped Porsche, owned by Volkswagen, return to endurance racing and to develop the 919 hybrid sports car from scratch, much in the same way Apple is now looking into building its own vehicle. Porsche’s new racecar won Le Mans and the endurance racing world championship in both 2015 and 2016 using largely unproven technology, which beat far more established rivals. Hitzinger helped hire and build a development team and organizational structure at Porsche, expanding from ten staff to over 150 employees. Hitzinger’s LinkedIn profile states he left Porsche in March and joined a “Technology Company” located in the San Francisco Bay Area as an engineering executive in April. Hitzinger is quoted by Manager Magazin as saying he wanted to do something “which has a significant and direct impact on society”, but did not confirm he now worked at Apple.

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Renault names new EV chief as it prepares for electric-car surge

Gilles Normand, Electrical-Vehicle Chief, Renault

Renault is placing an experienced troubleshooter, Gilles Normand, in charge of its electric-vehicle business unit. Normand will begin his new job in January 2017 moving from his current role as chairman of the automaker’s Asia/Pacific region. “The EV market is now entering a new phase with longer battery ranges and emissions reduction objectives opening opportunities for zero emissions cars, around the world,” Renault said in a statement. Normand, 54, joined Renault’s product planning department in 1988. He has held key roles for Renault and its partner Nissan during his career. After the establishment of the Renault-Nissan alliance in 1999, Normand was a member of CEO Carlos Ghosn’s team dispatched to Japan to fix the ailing Japanese carmaker. Two years ago Normand was appointed chairman of Renault’s Asia-Pacific region to focus on the automaker’s China expansion including a new factory that opened in February. As EV chief, Normand will report to Renault’s sales and marketing chief Thierry Koskas, who is a former project director for Renault’s EV business. Francois Provost will take Normand’s role as Asia-Pacific chairman, Renault said. Provost is promoted from senior vice president of Asia-Pacific. Renault and its alliance partner Nissan were early pioneers of EVs, investing 4 billion euros to develop battery-powered cars including the Zoe and the Nissan Leaf. But sales have failed to gain momentum because of EVs’ high prices compared with internal combustion rivals as well as their short driving ranges. Renault is nearly doubling the range of the Zoe on a single charge to 400 km (250 miles), up from 240km now. The Zoe was Europe’s top-selling EV through October with sales of 17,038, up 27 percent, followed by the Leaf at No. 2 with sales of 15,595, up 13 percent, according to JATO Dynamics market researchers.

Original Source: Automotive News Europe

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Varroc Lighting appoints former Magneti Marelli executive as CEO Varroc Lighting Systems - a former unit of Visteon Corp. - has named Stephane Vedie as its CEO, effective immediately. He is the former head of Magneti Marelli’s lighting division in North America and France. Vedie, 42, replaces Jeff Stevenson, who has left the company. Varroc, which traces its history back more than a century to what is now the Czech Republic, is based in Plymouth, Michigan, west of Detroit, and is one of the industry’s leading providers of headlights and taillights. It operates three technical centers globally. The company is owned by Varroc Group, which is headquartered in Aurangabad, Maharashtra India. “Stephane is a proven leader with a strong understanding of automotive lighting innovation and what our customers want and need,” Varroc Chairman Tarang Jain said in a statement. Automakers have been increasingly turning to lighting signatures to help create distinctive identities for their vehicles, making lighting one of the fastest growing sources of revenue for suppliers. The distinctive LED taillights on the Land Rover Discovery, for example, are made by Varroc. Stephane Vedie, CEO, Varroc Lighting Systems

“My first priority will be to heighten our focus on innovation and deliver even more affordable technology to meet automakers’ changing needs, Vedie said. “I’m confident Varroc will deliver growth and continue to set the pace for the industry in the future.”

Renault-Nissan names Philippe Brunet as new powertrain chief Renault-Nissan Alliance named Renault veteran Philippe Brunet to replace the top executive in charge of engines and transmissions. Brunet will take over as global head of powertrain and electric vehicle engineering from Alain Raposo, who is stepping aside on Jan. 1, an alliance spokeswoman reported. Raposo will take up a new post as Alliance Powertrain Fellow and remain “part of a strong team,” the spokeswoman said. The change comes as tightening emissions regulations expose the slow pace of integration between the powertrain divisions of Renault and Nissan. The alliance was created in 1999 but is still moving incrementally towards common vehicle architectures and engine. The automakers say 85 percent of engines are already shared in some way. But that understates inefficiencies, executives privately concede - as well as the cost of protracted bickering over whose technology becomes standard. Tighter emissions regulations in the wake of Volkswagen Group’s exposure last year for cheating U.S. diesel tests have made the problem more urgent. Independent studies have since blamed Renault for some of the highest real-world nitrogen oxide emissions. Questions over whether Renault’s technology breaches EU law have been referred to prosecutors for investigation. Renault has said all its engines are legal. Brunet, an engineering graduate, joined Renault from the aerospace industry in 1989. He worked in the automaker’s Formula One and transferred Renault’s engineering division in 2000 and became project manager for the alliance’s 2.0-liter diesel engine. In 2013 he was appointed program director for Renault’s midsize vehicles.

Original Source: Reuters

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Visteon hires Daimler executive to lead driver assistance system development

Volvo picks fast-rising executive to lead R&D

Visteon Corp. has appointed Matthias Schulze of Daimler as the supplier’s head of advanced driver assistance system (ADAS) development. Schulze, 54, worked for Daimler for more than 20 years; most recently leading the group research and advanced engineering department in advanced driver assistance system development. The unit deals with autonomous driving, vehicular communication and environment perception efforts. A Visteon statement said Schulze’s role with the vehicle cockpit electronics supplier would include creating “a new centralized approach to domain controller and platform development” for the advanced driver assistance system. Schulze will start in January in Karlsruhe, Germany, and report to Visteon’s Chief Technology Officer, Markus Schupfner. “I am delighted to welcome Matthias to Visteon,” Schupfner said in a statement. “His track record in bringing new technology to market is a powerful addition to the team as we prepare to execute our technology roadmap through ADAS applications toward autonomous driving.” Both Schupfner and Visteon CEO Sachin Lawande said Schulze’s move to Visteon signals its emerging role as a developer of autonomous driving technology. David Lim, senior analyst at Wells Fargo, also noted Visteon’s growing strength in the area. “In our view, today’s development is a clear sign of [Visteon’s] commitment to active safety and autonomous drive research,” Lim said in an emailed statement. Schulze graduated from the University of Karlsruhe and the Institut für betriebswirtschaftliche Weiterbildung in Germany with degrees in mechanical engineering and business economics. Visteon is headquartered in Van Buren Township, Michigan, near Detroit, and ranks No. 64 on Automotive News’ list of top 100 global suppliers, with worldwide sales to automakers of $3.2 billion in 2015.

Henrik Green, Head of R&D, Volvo

Volvo has named Henrik Green its new head of R&D, giving the Swedish executive his fourth promotion in three years. Green, 43, replaces Peter Mertens, who is moving to Audi to become its board member for technical development. Green joined Volvo’s top executive team in October in the newly create role of senior vice president of sales, production planning and customer service, a post Volvo plans to fill again in the future, a spokesman said without providing additional details. Mertens’ surprise departure to Audi created an opportunity to put Green, a 20-year Volvo veteran, in charge of the Swedish automaker’s 6,500-person global R&D team, which has played a key role in putting the company in position to have its third straight year of record worldwide sales. Volvo is also counting on Green and his team to add plug-in hybrid powertrains across the automaker’s entire range and get a fully autonomous car on the road by 2021. “Henrik is ideally qualified to lead our team of highly talented engineers around the world as we enter the second phase of Volvo’s transformation,” Volvo CEO Hakan Samuelsson said in a statement. Prior to his October promotion, Green spent a year as Volvo’s vice president of product strategy and vehicle line management. He has extensive experience in R&D, powertrain development and other advanced areas of engineering such as software and control systems, Volvo said in the statement. Green also was one of the leading figures behind the company’s decision to switch to using only four- and threecylinder engines, a move that has been duplicated by a number of other carmakers. Green said he plans to keep pushing Volvo to the next level. “There has never been a more exciting time to work in automotive research and development and there has never been a more exciting time to do so at Volvo. The industry is changing and I intend to make sure that Volvo leads that change,” he said in the statement. Volvo’s technical operations have undergone a complete transformation since China’s Zhejiang Geely Holding acquired the automaker from Ford Motor in 2010. In 2015 Volvo’s vehicle sales topped 503,000, a number the automaker plans to exceed this year as it pushes toward its goal of increasing its global volume to 800,000 by 2020. Green is the second under-45 executive to be named to Volvo’s executive management team in less than a week. The company announced that Atif Rafiq, 43, would become its first chief digital officer. Rafig, who starts Jan. 2, was lured to Volvo from McDonald’s, where he built the fast food giant’s digital unit from scratch. Rafiq will succeed Klas Bendrik, who will leave the company next year.

Original Source: Automotive News Europe

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Volvo picks McDonald’s executive as first chief digital officer

Atif Rafiq, Chief Digital Officer, Volvo

Volvo Cars has named Atif Rafiq its first chief digital officer, luring the longtime Silicon Valley executive from the McDonald’s, where he built the fast food giant’s digital unit from scratch. Volvo is looking for Rafiq to lead the company’s continued digital transformation. That includes “helping to evolve how consumers interact with Volvo cars across the buying, driving, entertainment and service experience,” Volvo said in a statement.

well as McDonald’s World Cup effort, which included an augmented reality game. Before joining McDonald’s he held general management roles at Amazon, Yahoo, and AOL. Representatives for McDonald’s did not immediately respond to a request for comment on Rafiq’s departure. Volvo’s pending tech initiatives include implementing what it describes as “the world’s largest autonomous driving experiment” starting next year.

Rafiq will oversee the “consumer-facing applications, digital touchpoints and enterprise systems supporting the company’s products, processes and services,” Volvo said.

The automaker’s Drive Me pilot will put 100 families in autonomously driven XC90 on roads around Gothenburg, Sweden. Volvo also has a deal in the U.S. with Uber to develop cars for autonomous driving.

Rafiq, 43, will succeed Klas Bendrik, who has been Volvo’s senior vice president for group IT and chief information officer since 2010. Bendrik, 47, will help Rafiq transition into his new job, which he starts Jan. 2, and will then leave Volvo for a new position, the automaker said.

“In many ways, the development of cars that are autonomous, electrified and connected overlap,” Samuelsson said. Rafiq will help ensure that all of these developments are pursued in a “cohesive, strategic and technologically advanced way, the CEO said.

Speeding up development

The auto industry is facing “its biggest inflection point in literally 100 years,” Rafiq said in the statement. “Whether it’s new technologies like computer vision and machine learning, or changing consumer behaviors around sharing and mobility, the scope for leveraging digitization is huge. I see in Volvo a company that has fully embraced these challenges and can lead the industry into the future.”

Volvo CEO Hakan Samuelsson said in the statement that Volvo chose Rafiq because the company needs to rethink how customers buy its cars and how the automaker interacts with its customers after the purchase. Rafiq“is “ideally qualified” to speed up our development in this area, Samuelsson said. Rafiq set up McDonald’s Silicon Valley outpost in 2014 to better train and recruit digital talent. Projects he has overseen include tests of mobile ordering and payment, as

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Rafiq’s LinkedIn profile says he has built his career within the Internet over 18 years. He calls himself a “digital native senior executive” and says his background is steeped in e-commerce, mobile, digital media, social media and retail.

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Before joining McDonald’s as its first chief digital officer in 2013, Rafiq was at Amazon, where he says he helped to give shape to the future of content and books, through my work in Kindle. Prior to that he says he helped AOL pioneer the idea of an Internet portal and helped the company dominate web 1.0. Lots of changes Rafiq’s arrival pending arrival is the latest in a series of personnel changes at the top of Volvo’s organizational chart. When Bendrik departs in 2017 he will be the third member of Volvo executive management team to exit the company in less than a year. Last week Audi said Volvo r&d boss Peter Mertens would become its board member for technical development “as soon as possible” while Lars Wrebo stepped down as head of manufacturing and logistics in September. Volvo has not named Mertens’ replacement yet, while Wrebo was succeeded by former PSA Group executive Javier Varela on Nov. 2. Varela spent 26 years at PSA, where he last served as executive vice president of the French automaker’s joint venture with Toyota Motor in the Czech Republic.

Original Source: Automotive News Europe

Nissan, Harman executives join World Congress panel Rachel Nguyen, executive director of Nissan Future Lab, and Dinesh Paliwal, CEO of Harman International, will speak at the Automotive News World Congress on Wednesday, Jan. 11. Nguyen and Paliwal will participate in a panel discussion on the future of the auto industry and of autonomous driving. Nissan Future Lab opened in 2014 and looks 10 years ahead, helping Nissan’s advanced planning group focus on trends and consumer insights.

Visteon names former PayPal CTO for board Vehicle cockpit electronics specialist Visteon has elected James Barrese to its board of directors, describing the Silicon Valley native as “a highly skilled technology executive with deep expertise in cloud, platform strategy and execution”. Barrese was chief technology officer and senior vice president, payment services, for PayPal from 2012 to June 2016, leading its global technology organisation, including technology strategy, product engineering, programme management, data management, system operations and professional services. He previously spent nearly 10 years in executive technology roles at eBay Marketplaces, most recently as vice president of technology. “We are thrilled to welcome James to our board of directors,” said Visteon chairman Francis Scricco. “Developing an effective cloud and platform strategy is critical to the future of automotive electronics, and James brings unique experience and insight in these areas. At PayPal, he executed a very difficult and successful platform transformation; this experience makes him well-suited to join our board as [we develop] next-generation platforms that will solidify our standing as a top-tier technology company.” Barrese said: “Visteon has established a leading position in one of the fastest-growing segments of automotive technology, and has a compelling vision to be an even more influential player in cockpit electronics and connected car solutions. I look forward to working with [the] board and executive team to continue to advance technology.” The supplier also nominated Barrese as a key member of its technology committee. Chair Rouzbeh Yassini said:

Nguyen has been with Nissan since 2001, working on a variety of advanced planning projects including the thirdgeneration Nissan Altima.

“Converging on rapid autonomous driving technology-based innovation is a perfect opportunity to have James involved.”

Paliwal has been CEO of Fortune 500 supplier Harman since 2007. Harman supplies high-end infotainment and connected-car systems.

Baresse has been vice president of engineering at Charitableway, a lead architect and manager at Accenture (formerly Andersen Consulting), and a programmer in the materials science department at Stanford University.

The company has made several acquisitions in the past two years, focusing on software architects, over-the-air updates and cybersecurity. In November, Samsung Electronics agreed to acquire Harman, which should speed development of vehicle infotainment products.

He got his start in technology with the signal corps in the US Army.

Original Source: Just Auto

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VW’s new Moia brand hires high-profile former Daimler executive

Robert Henrich, Chief Operating Officer, Volkswagen

Volkswagen Group’s new mobility services brand, Moia, has hired Robert Henrich as its chief operating officer. Henrich is one of the leading figures in car-sharing services and was a high profile executive at Daimler until his departure in February. Henrich founded Daimler’s Car2Go unit in 2009 as a pilot project. It was the world’s first non-station-based car-sharing service. Today Car2Go is the world’s largest “free-floating” car-sharing operation with services in 29 cities in Europe, the U.S. and China. It has a fleet of cars over 14,000 vehicles and over 2 million registered customers. Its success prompted other automakers to set up similar operations such as BMW Group’s DriveNow. Henrich stirred controversy with views that undermined traditional automotive business model. He predicted automobiles would lose their status symbol, a key selling point for premium automakers such as Daimler’s Mercedes-Benz brand. As CEO of Daimler’s mobility services business Moovel, he expanded the business through acquisitions such as MyTaxi, RideScout and GlobeSherpa. His vision was to create an “Amazon of Mobility Services” by creating one dominant mobility-on-demand platform much like Amazon achieved in online retail. Henrich was replaced in February as CEO of Daimler’s mobility services business, Moovel, by Joerg Lamparter, a former sales manager at Mercedes-Benz Bank, over strategic differences. A Mooval spokesman declined to comment.Henrich starts at Moia on Jan. 1. VW Group’s new focus on mobility services is an about-turn. Company sources say that under former CEO Martin Winterkorn there was no interest in providing mobility services since a start-up would generate losses while simultaneously undermining its core business of selling car ownership to millions of customers every year. The arrival of Matthias Mueller as Winterkorn’s successor has changed the attitude within senior management and in May VW announced it was investing $300 million in a strategic stake in ride-hailing services provider Gett. VW said it has set up the Moia brand for its mobility services.

Original Source: Automotive News Europe

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â&#x20AC;&#x153;A Gamechanger changes the way that something is done, thought of or made; they transform the accepted rules, processes, strategies and management of business functions. They shift behaviour, shape culture and make clever happen.â&#x20AC;?

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Finnish Rightware sold to China for $68m

Group 1 Automotive takes over CMH Gowrings Ford site

China’s Thundersoft has acquired Finnish startup Rightware, the provider of automotive user interface software, for $68 million.

Group 1 Automotive has taken the lease on the Ford dealership in Basingstoke formally operated by City Motor Holdings, which has gone into administration.

The 2009-founded Rightware raised $9.5 million from local VC firms Nexit Ventures, Inventure and Finnish Industry Investment.

The deal was completed in October 2016, and the new site is likely to be branded Think Ford, in line with its four existing dealerships nearby in Farnborough, Bracknell, Wokingham and Guildford.

The deal is expected to be closed in early 2017 and Rightware will remain “an independent company” headquartered in Finland. Rightware’s 2016 turnover is expected to reach around 7 million euros, with profitability being reached by the end of the year. Rightware’s flagship product, Kanzi, is used by over 20 global automotive brands. Kanzi enables the creation of digital instrument clusters and infotainment systems that enhance automotive brands and the overall driving experience. “Kanzi is expected to power over 25 million cars by 2022. With Thundersoft, we can expand this footprint further and support our customers even better,” Rightware CEO Jonas Geust said in a statement. “The arrangement further strengthens our presence in the growing Asian automotive market and complements our strong footprint in the European and American automotive markets. Thundersoft is already an established software player in the automotive industry and the perfect fit for Rightware,” Geust said. Thundersoft, founded in 2008 and listed on the Shenzhen Stock Exchange, provides operating system technology and services globally for the mobile, automotive and IoT markets. With its first overseas acquisition, Thundersoft enters the European market and further expands its platform technology and services within the automotive industry. “The automotive market is one of the fastest growing segments for Thundersoft, and we are providing in-vehicle infotainment and cluster OS solutions to our customers worldwide,” said Larry Geng, CEO of Thundersoft. “Rightware has the best user experience design technology, which will be featured in more connected cars in the market. In combination with Rightware’s unique technology, design know-how and world-class talent, we can bring more value to our customers and transform the automotive industry with our innovations,” Geng said. The current Rightware management will remain and re-invest in the company. Rightware currently employs around 50 professionals and has a 12-month plan to recruit 20 new experts, approximately half of which are expected to be recruited in Finland.

Original Source: Arctic Startup

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Snows Motor Group also announced the take-over of three of CMH’s centres. Knight Frank negotiated the Snows lease on behalf of the landlord, BlackRock, and also on this latest deal on the business that traded as Gowrings. Tom Rigg, associate – automotive at Knight Frank, said: “The swift uptake on these dealerships, both of which have been taken on long leases, reflects the underlying quality of the assets. “Dealership property continues to trade well in both the occupier and investment markets and this is testament to the continued confidence throughout the motor retail sector.”

Original Source: AM Online

RouteOne acquires MaximTrak in bid to boost digital retail business RouteOne has acquired F&I sales tool provider MaximTrak, effective as of now, RouteOne Holdings said. Together, their goal is to position RouteOne for the future of digital retail by enabling customers to finance their vehicles and buy F&I products from wherever they’re comfortable: in the finance office, on the showroom floor or online. Jim Maxim will continue as president of MaximTrak, but he’s also been named chief digital officer of Route One Holdings. Justin Oesterle, CEO of RouteOne, will sit on MaximTrak’s senior management team. The full RouteOne suite, including MaximTrak services, will be available to RouteOne’s dealership clients, but the company will continue to provide an open integration platform if dealers prefer other services, Oesterle said. Still, “the value proposition will make sense for a healthy number of customers,” he said.

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“Automotive buying has changed in pretty fundamental ways” and the pace of change has sped up, Oesterle said. Because of that, RouteOne, which provides a portal connecting auto dealerships with finance sources, wanted to support the entire F&I process. To do that, it needed to offer more than the finance aspect of F&I. MaximTrak has a “niche focus” on the ‘I’ -- or insurance -side of F&I, he said. MaximTrak builds tools for F&I product sales, such as interactive menus, presentation technology, performance dashboards and electronic contracting. Propelling e-contracting was one driver in the acquisition, Oesterle said. RouteOne has built an e-contracting platform for vehicle financing and was in the process of developing e-contracting for F&I product sales, which MaximTrak has already built. “Bringing those together will offer a dramatic acceleration to offer a complete e-contract package,” Oesterle said. Maxim hopes the e-contracting advancement, which eliminates some administrative responsibilities, will shorten the F&I process by about 30 minutes. “It’s designed to streamline that experience. Our concept is to limit the time associated to bring a bundle of documents together,” he said. Beyond traditional F&I Through the acquisition, Maxim said, “we want to engage the consumer and meet them wherever that interest lies.”

Oesterle said that ensuring dealers are in a position to drive their F&I business is a priority. The indirect model “remains our strategic orientation,” he said. Combined, RouteOne and MaximTrak now serve more than 18,000 dealerships, more than 80 percent of which are franchised, new-vehicle stores. They work with more than 1,400 finance sources, more than 130 dealership service providers, more than 80 aftermarket insurance providers and more than 10 automakers. MaximTrak will continue to operate out of Wayne, Pa., while RouteOne is based in Farmington Hills, Mich.

Original Source: Automotive News

Automotive output increased across Britain In years gone by the words Made in Britain were messages of assured quality. As time passed and Britain became more reliant on overseas manufacturing, the badge became something of a rare sight. But today the UK car industry is back. In November last year manufacturing output reached its highest level since 1999. Almost 170,000 vehicles rolled off production lines, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

Customers want to have the option to discuss F&I in the traditional finance office, online or on the showroom floor. RouteOne, which already offers financing on an iPad, will add MaximTrak services, giving customers a mobile option for financing and buying F&I products in the F&I office and on the showroom floor.

Year-to-date volumes also achieved a 17-year high, with production in the first 11 months of the year rising to 1,613,495 units – already nearly 56,000 units ahead of yearend 2015.

Next, RouteOne’s goal is to give car buyers the option to finance their vehicles and buy F&I products online, Maxim said, although he did not say when that might happen.

Production for the home market was particularly strong in November, rising 14% to 33,745 units, while exports also saw robust growth, up 12.5per cent. Output was up across the board, with domestic demand increasing 4.2% and exports up, beating last year’s record by 2.5%.

“In the time ahead, we will be looking to integrate [online financing and F&I product sales] so that our dealers, OEMs and other industry partners can enjoy a complete F&I offering to facilitate the sale process online and in-store … and, very importantly, to enable a seamless transition between online and in-store,” a company spokeswoman said.

Mike Hawes, SMMT chief executive, said: “Made in Britain is a badge coveted by car buyers worldwide, and these latest figures highlight not just that international appeal but the fact that the UK is a globally competitive place to make cars.

Dealers will have access to MaximTrak services through RouteOne by the end of the first quarter of 2017, “with the goal of a more robust functional interaction between the platforms from the second to third quarter, particularly in the area of a fully integrated e-contracting” for the full F&I package, the spokeswoman said.

“These latest results are the product of significant investments made over the past few years, but which will continue only if we can maintain the competitive trading conditions that have enabled the UK to become an automotive success story.”

Consistency is key

The automotive industry is a vital part of the UK economy accounting for more than £71.6 billion turnover and £18.9 billion value added.

Whether the process is online or in-store, it’s important that dealerships keep the experience consistent, Maxim said.

With some 169,000 people employed directly in manufacturing and 814,000 across the wider automotive

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industry, it accounts for 12% of total UK export of goods and invests £2.5 billion each year in automotive research and development. More than 30 vehicle manufacturers currently build in excess of 70 models in the UK supported by more than 2,000 component providers and some of the world’s most skilled engineers

Original Source: Black More Vale

BASF acquires Chemetall BASF has completed its acquisition of Albemarle’s global surface treatment business, Chemetall, expanding the supplier’s coatings division’s portfolio. A statement from the supplier noted the combined businesses will benefit from each other’s global infrastructure, scale and market access, driving new growth opportunities. “The acquisition of Chemetall allows us to significantly expand our market,” said BASF Coatings division president, Markus Kamieth. “By combining the expertise and innovation power of two global market leaders, we will accelerate innovation and make our customers more successful.”

like dashboard displays and voice recognition, and in other programming, Ford and Toyota said in a joint statement. Toyota has resisted offering Apple’s CarPlay and Google’s Android Auto in its vehicles, citing concern that doing so would diminish safety and security. Ford offers them on all its 2017 model vehicles. But the automaker still wants an opensource software platform that all app developers can use as an alternative to those of Google and Apple. “Encouraging innovation is at the center of Ford’s decision,’’ said Doug VanDagens, global director of Ford Connected Vehicles and Services. Suppliers Elektrobit Automotive, Luxoft Holding and Xevo also joined the consortium. Honda Motor had contemplated the move but wasn’t mentioned in the announcement. Harman, Panasonic, Pioneer and QNX have signed letters of intent to join, the statement said. Toyota first agreed to collaborate with Ford on car telematics systems in 2011. The automakers worry that if CarPlay and Android Auto establish themselves as must-have options, the influence of Apple and Google over the industry will grow. Ford’s version of the SmartDeviceLink technology is already available on five million vehicles globally, and provides drivers with popular apps like Pandora, Spotify, iHeartRadio, and AccuWeather. By enlarging the consortium, the automakers hope to maintain control over how much access infotainment apps have to vehicle data, according to the statement.

Chemetall develops and manufactures customised technology as well as system solutions for surface treatment. Their products protect metals from corrosion, facilitate forming and machining, allow parts to be prepared for the painting process and ensure proper coating adhesion.

“We are excited to collaborate with many auto manufacturers who share our view,’’ said Shigeki Tomoyama, president of Toyota’s Connected Company.

These chemicals are used in a wide range of industries and end-markets, such as automotive, aerospace, aluminium finishing, and metal forming. Chemetall’s sales for the full calendar year of 2015 were US$845m.

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To prepare for integration, BASF has established a Global Integration Management Team.

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The Korean company’s biggest ever acquisition places it at the heart of the car-tech market Samsung has announced this morning it’s buying US audio company Harman in an all-cash deal worth $8 billion. The acquisition is Samsung’s largest ever, and places the electronics company in the vanguard of the automotive industry — which Harman supplies with infotainment technology. This space has become of increasing interest to tech companies in recent years as cars become more connected. Samsung says its expertise in displays, user interfaces, and semiconductor technology would create “significant growth opportunities” for Harman’s auto-parts business. The latter company, which owns a number of brands including Harman Kardon, AKG, and JBL, is expected to double its revenue over the next five years. The firm recently struck large deals with conglomerates including Fiat Chrysler and General Motors, and as of June 30th this year had a backlog of orders worth approximately $24 billion.

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“Harman perfectly complements Samsung in terms of technologies, products and solutions, and joining forces is a natural extension of the automotive strategy we have been pursuing for some time,” said Samsung CEO Oh-Hyun Kwon in a press release. “[This acquisition] immediately establishes a strong foundation for Samsung to grow our automotive platform.” The South Korean company’s push into the automotive world will likely bring it into competition with other tech giants like Google and Apple. Although much of the focus on Silicon Valley’s car ambitions has been on self-driving capabilities, outfitting vehicles with more prosaic connected technology could be more immediately lucrative. Earlier this year it was reported that Apple had scaled back its car initiative, dropping plans to build its own electric vehicle in favor of developing software for existing automakers.

Original Source: The Verge

Siemens acquires Mentor Graphics for $4.5 billion, eyes connected device, building expansion With the move, Siemens has created a host of software tools that can work in a series of products and converged systems. Siemens said it will acquire Mentor Graphics in a deal valued at $4.5 billion to pursue what it dubs “mechantronics,” or the convergence of mechanical, electrical and software design. Mentor Graphics makes design automation and industrial software and will add to a series of purchases intended to make Siemens a key software player. According to statement, Siemens will buy Mentor Graphics for $37.25 a share, or a 21 percent premium. Siemens said the purchase of Mentor Graphic’s will give it electronics integrated circuit and systems design to fold into its digital enterprise software portfolio. What Siemens is really hoping to do is leverage its software into smart connected products found in home and cities. Siemens said its software will become a key part of Industry 4.0 where the digital and physical converge. In a presentation, Siemens outlined how a car illustrates what it is trying to do with its design tools. Here’s Siemens software stack in a nutshell.

Volvo Cars raises $0.5bn in step towards IPO Geely-owned Volvo Cars has raised SEK5bn (around USD0.5bn) from a group of Swedish institutional investors in a step towards its ambition to achieve a public listing. The group of investors comprises two Swedish pension funds, AMF and the First Swedish National Pension Fund (AP1), as well as Folksam, a Swedish insurance company. The preference shares may be repurchased or converted into listed ordinary shares upon the majority shareholder’s decision. At this time, no decision has been taken. The company said the issue had been conducted to further diversify Volvo Cars’ long term funding sources and that the transaction “will have an immaterial dilutive effect on the current 100 per cent ownership of Volvo Cars by Zhejiang Geely Holdings”. The share sale follows two bond issues earlier this year, a EUR500m bond to global institutional investors in May, and a further SEK3bn to Swedish institutional investors in November. The bonds were issued for general corporate purposes and aimed at increasing the company’s financial flexibility. Volvo Cars said the move “is another step towards Volvo Cars’ long expressed ambition to act as a listed company.” The company also stressed that Volvo Cars’ financial performance is ‘strong’ and that it expects 2016 to be ‘another record year in terms of sales, with growth coming across the board from its three main sales regions of Europe, China and the US’. Operating profit for the first nine months of the year was SEK7.7bn compared to a full year operating profit for the whole of 2015 of SEK6.6bn, prompting Volvo Cars’ expectations for the full year to “substantially improve” profits compared to last year. Volvo Cars says it has successfully built a sense of momentum around its transformation since it was acquired by Zhejiang Geely Holdings in 2010, driven by the ongoing renewal of its complete product range, powertrain and chassis technologies and safety and connectivity technologies. The company says it ‘will continue to reposition its brand to compete with its global premium rivals, revive its operations in the US and develop its global manufacturing footprint, grow further in China and double its market share in Europe’. It will also introduce an entirely new model range, embed its new engine technologies and maintain its position as the leader in car safety and autonomous drive (AD) technologies.

Siemens will offer integrated design software with its product lifecycle management tools with the aim of reaching everything from infrastructure to industrial equipment, smartphones, automotive and smart home and buildings.

Volvo Cars also intends to set up a joint venture with Autoliv to design and manufacture separately branded AD and driver assistance software technology packages for sale to third party OEMs. Volvo Cars has also joined forces with Uber, the ride sharing company, to build and co-develop base vehicles for AD cars.

Original Source: ZDNet

Original Source: Just Auto

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Bugatti Chiron It doesn’t matter how good the Bugatti Chiron turns out to be on the road, because like the Veyron before it, talk will be forever dominated by the numbers: eight litres, 16 cylinders, four turbos, 1,479bhp, 261mph and £1.9million. This is the very pinnacle of what a supercar can be. Its official on-sale date is this autumn, but with interest among the world’s wealthiest at fever pitch, Bugatti’s build schedule is already occupied for years to come. Beneath the numbers lie more true wonders of engineering, including a carbon-monocoque chassis, carbon-silicon carbide brakes and an extremely advanced supplementary air brake system. The tyres are also unique to the Chiron, to help rein in that 261mph top speed.

Carbon Revolution CR9 Carbon Fiber Wheel Set These forged carbon fiber wheels will blow every last penny of your wheel budget, but they’ll also leave you with the lightest and most impressive set of wheels money can buy right now. By far the most impressive carbon fiber innovation to hit the auto industry mass-market, these carbon fiber wheels are a pricey and incredibly unique way to stand out from the crowd. Due to the lightweight nature of the material, these wheels are often 40 to 50 percent lighter than a stock wheel – again improving performance significantly.

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Waylens, Camera System for Drivers The Waylens Horizon is an automotive camera system beautifully designed to amplify your fun behind the wheel. The Waylens Horizon allows drivers to easily capture, edit, and share interesting moments - in real time - right from the road with their innovative camera, OBD-II transmitter, remote, and mobile app. The Horizon camera is a finely crafted and worthy companion for your drive. With a full aluminum body and 7-element lens assembly combined with a gorgeous circular OLED retina display, it breaks the rules of traditional boxy action cameras to enhance any car’s interior. Capture high-quality and high-speed video at 1080p/60fps with ease. Hop behind the wheel anytime of day or night thanks to the state-of-the-art CMOS sensor that captures more light - providing sharper, brighter, more effective video. The Waylens App allows highlighted moments to be shared within seconds. So keep your hands on the wheel - Waylens has the rest covered.

BMW's 3.0L Turbo charged DOHC I-6 Engine Since 1995, when Wards began its 10 Best Engines awards, BMW has walked away with 32 of them. As a new trim for BMW’s line of 3 Series cars, the 340i nestles on the top end in terms of refinement and power and carries on the tradition. Capable of 320 horsepower thanks to a larger twin-scroll turbocharger, higher compression ratio and “the impeccable balance afforded by an inline layout, BMW proves once again an engine need not make outrageous horsepower or torque numbers to be enormously rewarding and thrilling to drive.”

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The Hyundai Sonata's "Virtual Guide" Augmented Reality User Manual Cars tend to be really quite complex these days. Even simple vehicle-related tasks can be can be difficult if you’re not car-savvy and you need to follow the instructions in the ever-growing owner’s manual. To make life easier for its owners, Hyundai has built an augmented reality app called the Virtual Guide. It allows owners to use their smartphones to get more familiar with their cars and learn how to perform basic maintenance. You can use the app to get an augmented reality view of the engine compartment or interior of the car, with floating digital dots illustrating different points of interest like the windshield washer bottle or the location of the air filter. Tap one of the dots and you can get an illustrated, step-by-step walkthrough of the related maintenance item or, if you’re inside the vehicle you can get a tutorial in how to use different functions of the car like pairing a phone with Bluetooth. It’s a great alternative to the owner’s manual from Hyundai and aims to help owners perform basic tasks without needing to delve into a multi-hundred-page paper manual.

FOBO, Bluetooth Tire Pressure Monitoring System By using the power of latest Bluetooth 4.0 technology, the FOBO Bluetooth Tire Pressure Monitoring System can help you measure the pressure of your car’s tyre on the go. It will work directly with any Android or iOS device. The intelligent car-monitoring unit can work on its own or with your smartphone. This tire monitor is capable of monitoring up to 350 kPa (50 psi) and will alert you in case your smartphone is absent or not by your side. The set comes with four tire sensors and one in-car unit. Together with this system and your smartphone, you can now measure your car’s tyre pressure anywhere you go and stay prepared for any upgrade too. It’s definitely a useful accessory for your car.

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Roav, Dashtop Head-Up Display Computer Protect yourself and the passengers in your car with the Roav Dashtop Head-Up Display and Computer. Placing all relevant and necessary information right in front of you, youâ&#x20AC;&#x2122;re able to keep a clear view of the road ahead while following directions, checking your speeds, and even viewing notifications without reaching for your device. The Roav Dashtop syncs with the entire Roav Smart Driving System, which includes cameras, sensors, and apps to keep you safe while driving. The device even allows you to automatically reply to texts while your driving so you remain alert and in control while keeping your friends and family informed. Designed to help your journey, the Roav Dashtop gives live traffic routes and reroutes, traffic alerts, trip stats, speed limit alerts, and can even help you find your car in the parking lot.

Clair B, Portable Air Purifier Opt for clean air wherever you go with the Clair B Portable Air Purifier. This small yet mighty device has been designed to fit perfectly in your vehicleâ&#x20AC;&#x2122;s cup holder so you can breathe with ease even on the road. Armed with a swivel vent, the Clair B Air Purifier can rotate a full 180 degrees to spread the freshest air throughout your room or vehicle. The Clair B Air Purifier runs at 5 volts so it can be used virtually anywhere. You can plug it into your computer, the 10v lighter in your car, a portable charger, or even your smartphone charger. Using magnetic air filtration, the Clair B Air Purifier is able to catch and filter even the tiniest micro dust particles as small as .1 micrometers as well as viruses, allergens, pollen, bacteria, volatile organic compounds, and much more.

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A League Of Their Own, Jaguar Land Rover’s Climb To The Top Jaguar Land Rover Automotive PLC (JLR)

is a company that has brought together two highly prestigious British car brands in recent years. Its focal activity is the design, development, manufacture and sale of both Jaguar and Land Rover vehicles - both considered British staples in the automotive industry and have a longstanding history together dating back to the 1940s. 1968 stands as their first “coming-together” as part of the ill-fated British Leyland conglomerate and later existed independent of each other’s subsidiaries of BMW for Land Rover and Ford Motor Company (Ford) for Jaguar; Ford later acquired Land Rover from BMW in 2000 following the dispersal of former Rover Group which was what remained of British Leyland. In 2008 Tata Motors Limited (formerly known as Tata Engineering and Locomotive Company) (Tata) acquired JLR from Ford, it merged the two marques into a single company and since has been noted that its success has flourished, with memorable vehicles and innovative technologies that credibly add to a long-lasting legacy. “Jaguar is as dynamic as our name and logo suggest. We’ve always believed that a car is the closest thing you can create to something that is alive. Find out more about our awardwinning approach to designing and building cars and what makes them as alive as you are.” “Land Rover continues to build the world’s most capable allpurpose vehicles. A blend of refinement, performance and unmatched all-terrain capability make our vehicles so distinctive and unique.” - Jaguar Land Rover In recent years the fall of the world’s economy, fueled by cheap credit and ruthless speculation, led to the demand for motor vehicles had virtually halved in late 2008. Since Tata bought JLR, the Indian automotive business has turned JLR around; the combined business now stands as the biggest UK automotive supplier.

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The origins of Jaguar can be traced back to a company that began by making motorcycle sidecars in 1922. The ‘Swallow Sidecar Company’ began building automobiles and moved down the road to Coventry, switching its name to Jaguar after the Second World War. It produced premium saloons and sports cars, including the legendary XK120. Later that decade Rover began developing a new all-terrain vehicle, inspired by the classic American Jeep. Both lightweight and rustproof, the first Land Rover was clad in aluminium alloy – a feature selected due to the post-war steel shortage – and cost £450. It was here that the introduction of 4x4 capabilities to road cars was implemented and later adopted by the military. Jaguar’s credibility continued to flourish with its motorsport success in the 1950s, winning the world’s oldest active sports racing race ‘Le Mans 24 Hours’ twice with a C-Type in 1951 and again in 1953 – and then with a D-Type in 1955, 1956 and 1957. In 1961, the company launched what became what some consider being the most iconic sports cars of all time, the E-Type, which still today holds a crucial part in 1960s motoring history. In 1968 it merged with the British Motor Corporation (BMC), which later became part of British Leyland and included Rover. With a growing demand for recreational offroaders, the Range Rover launched in 1970, making its debut in the world of SUVs. The success of the Range Rover resulted in British Leyland making Land Rover a standalone company 1978. Minimal amendments were made to the Range over the years - 1981 saw the introduction of the four-door modification, followed by the arrival of a diesel model in 1986. Over the years the Range Rover became seen more and more up-market, leading on to the Land Rover Discovery which was launched in 1988 as a third model in the range. After separating from British Leyland, Jaguar became independent again in the 1980s, before being acquired by Ford in 1989. Meanwhile Land Rover was purchased by BMW in 1994, where the range later expanded with the introduction of the Freelander. Rover and Jaguar united when Ford bought Rover in 2000, the two companies were closely linked, sharing engineering knowledge and facilities in West Midlands, England.

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In 2008, one of the largest acquisitions for both companies took place – Tata bought the two. They officially joined together as one company in 2013 and since, sales and profits have positively risen year after year. Could it even be questioned whether the timing was right with these figures? Tata is headquartered in Mumbai, Maharashtra, India and a subsidiary of the USD $108.78 billion, Tata group, founded by Jamsetji Tata in 1868. Manufacturing passenger cars, trucks, vans, coaches, buses, construction equipment and military vehicles, it is the 17th-largest motor vehicle manufacturing company in the world, 4th largest truck manufacturer, and 2nd-largest bus manufacturer by volume. It has auto-manufacturing and assembly plants, as well as research and development (R&D) centre’s across India in Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad and Pune, as well as in Argentina, South Africa, Thailand, and now the UK. Listed on the Bombay Stock Exchange, it constituents of the BSE SENSEX index, the National Stock Exchange of India, and the New York Stock Exchange. It is ranked 287th in the 2014 Fortune Global 500 ranking of the world’s biggest corporations and so far holds 254th position for 2015, sandwiched between engineering and construction company ‘Power China’ and food production company CHS. They pride themselves in sustainability and the spirit of ‘giving back to society’ as a core philosophy, with good corporate citizenship strongly embedded into their DNA. The Tata acquisition of JLR is a useful and educational example to include for anyone who considers themselves an M&A enthusiast and generally for any M&A activities. At the time in early 2008, Tata’s investment in JLR was criticised to for its poor timing and amongst those critics were individuals who questioned the strategic logic of the move as well as its timing. Soon after the acquisition, the financial crisis in the UK amongst other countries caused the demand in the global market for luxury cars to collapse. In spite of this, Tata reclaimed any doubt ever made – to date, the takeover appears to be a undeniable example of a successful acquisition which is generating substantial shareholder value for Tata as well as continued support from JLR’s many stakeholder groups in the UK. We don’t predict a checkered flag is on the horizon for Tata, still remaining always one lap ahead.

When the United Kingdom faced some of their worst financial difficulties this decade, what we know as the “credit crunch”, there was a significant slump in new car sales as a result. UK government considered a financial aid package, indicating the strategic importance of JLR and their potential with Tata to the UK economy. In February 2010 Tata secured a £340 million loan from the European Investment Bank to support JLR through the recession. In May 2011 Tata announced a £5 billion five year investment programme in JLR - focused on new product development & new equipment at their then-three UK sites, along with investment in a planned factory in China and a closer link with Tata Steel to provide new lightweight steel alloys for new car models. Later that year JLR announced 1,000 new jobs as the result of a Land Rover’s Solihull site boosted by rising demand for SUVs in China, Russia, India and Brazil. Little did Tata know that when it first acquired JLR for £1.15 billion 2008, it would eventually help the India automotive industries become one of the world’s hottest performing autostocks – what we’d consider the most impressive stocks, period. On February 18th, 2010, two years after Tata’s successful take-over, Dr. Ralf Speth was appointed Chief Executive Officer of JLR. Since then he has overseen a remarkable turnaround of the business, with increased sales, over 8,000 jobs created and high profile launches including the new XJ and marque-defining F-Type. A self-confessed car lover, much of the success JLR has seen since 2010 is down to Dr. Speth’s insistence on a design focus in every aspect of the company’s approach – not just in the cars themselves, but in the way the whole organisation works.

“I’m talking about how we design all our processes, how we design the research and manufacturing, how we design the training, the recruitment plans, the personal skills. And how we design our relationships with suppliers and ultimately with our customers… we are becoming more international, developing more products, investing in lots of different technologies in lots of different areas.” - Dr. Ralf Speth, CEO, Jaguar Land Rover

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Dr. Speth sees this as the key to not only his own personal achievements, but also the success of JLR – creating value and innovation to generate the right economic return to justify further investment in innovation – the perfect virtuous circle. Following a degree in Economics Engineering from Rosenheim University, Germany, he earned a Doctorate of Engineering. He is also an Industrial Professor at the University of Warwick in the UK. Dr Speth’s career began working as a business consultant for a number of years before joining BMW in 1980. In the early 2000s, he moved to Ford’s Premier Automotive Group as Director of Production, Quality and Product Planning. His previous job at BMW was Vice President of Land Rover when BMW owned the brand – he became director of production, quality and planning for Ford when BMW sold Land Rover to Ford in 2000. He was Head of Global Operations at the German international industrial gases and engineering company Linde Group, before moving to JLR. In a recent interview in April 2015, Dr. Speth discussed how such a successful turnaround had been achieved at JLR since he was appointed, commenting: “By a clear focus on product, by improving quality, by listening to our customers globally, by great new vehicles like the very successful Range Rover Evoque... It’s powerful British design combined with creative engineering. Our innovation includes lightweight technology [JLR is an acknowledged leader in lightweight aluminium platforms]. We must continue to innovate to win.” Both global sales and the workforce have doubled in the past five years since Dr Speth’s takeover, with turnover tripling. How will Dr. Speth continue to boost JLR’s promising future? Only time will tell.

Aims JLR views operating responsibly as key to their success, as a sustainable business. They possess impressive plans for the future with eversucceeding targets being met week after week. “We have ambitious plans for the future. We also recognise that we operate in a resourceconstrained world. So we are evolving our business to adapt to these challenges, nurturing the resources and communities on which we depend.” “Not only does this reflect our commitment to

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being a good global citizen; this is modern, intelligent business. A way of thinking that is fundamental to sustainable business growth.” “Our 360 degree approach examines our products and operations; as well as our work with suppliers, customers, employees and wider stakeholders - creating new partnerships and business practices.” - A representative of Jaguar Land Rover JLR outline how they aim to demonstrate leadership in sustainable business practices in all activities across the world, whilst creating products that meet their future customers’ needs with less environmental impact and inspire future generations with the potential of technology; advancing knowledge and developing a more sustainable way of living. They are keen to lead the way in sustainable social development that improves lives, in their local and global communities, engaging their people, customers and partners in their Responsible Business vision. Further commenting “We have set ourselves some stretching targets for 2020 to help us achieve these goals; measuring and monitoring progress right across our business. We’ve made great strides over the last five years, winning recognition both within and outside our industry. But there’s still more to do. Our exciting agenda will ensure that strong commercial performance is coupled with long-lasting benefits to our social and natural environments.” - A representative of Jaguar Land Rover

Sales In 2008 the UK automotive manufacturing sector had a turnover of £52.5 billion, has generated £26.6 billion of exports and produced around 1.45 million passenger vehicles and 203,000 commercial vehicles. It was also recorded that in 2008 180,000 people were directly employed in automotive manufacturing in the United Kingdom, with a further 640,000 people employed in automotive supply, retail and servicing. Within 5 years JLR were producing a third of that with 425,000 cars sold worldwide. This was up almost a 5th for the company. The United States, Germany and India were then considered the manufacturer’s fastest growing markets. The figures came amid resurgence in the wider vehicle market as the economy recovers both in the UK and in many key markets overseas. The UNITE

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union’s assistant general secretary Tony Burke said “Jaguar Land Rover is a remarkable manufacturing success story…our members in Unite and the company worked together to turn JLR’s fortunes around. The manufacturer’s fantastic performance is testament to both the direct and indirect workforce.” The following year, Society of Motor Manufacturers and Traders (SMMT) recorded car sales in Britain were at their highest since 2007 thanks to a recovering economy, cheap financing packages and repayments of miss-sold payment protection insurance. A BBC business correspondent remarked in an article on January 12th that year, that JLR had seen a remarkable turnaround in its fortunes. At the height of the recession, the company’s owners asked for financial support from the British government. After £11 billion of investment, JLR stood as one of Britain’s most profitable companies in 2014. The sheer scale of the turnaround under Tata’s ownership was clearly illustrated in the company’s financial performance. In 2008 – the year Ford sold JLR to Tata – they made a £41.6 million pre-tax loss on revenues of £2.1 billion. In 2013, they posted £2.6 billion of pre-tax profit on £21.9 billion of revenue - staffing has doubled to 36,000 and in 2014, the carmaker sold an incredible 462,209 vehicles - standing as the company’s 5th successive year of growth in sales. Earlier this year, Andy Goss, Sales Operations Director at JLR commented: “Jaguar Land Rover has once again outperformed prior year performance, with retails up across all of our key regions. 2015 has seen 12 significant new product actions and the introduction of the new Jaguar XE and the Land Rover Discovery Sport, we anticipate retailing over half a million vehicles for the first time in the company’s history. 2014 was a year of significant achievements for JLR, recognised by more than 100 international awards. 2015 has proved even better, by creating ever more exciting cars that deliver great customer experiences.” JLR’s global performance for the full year 2014 showed a balanced portfolio with sales up across all key regions: 122,010 in the China Region, up 28%; 96,505 for Overseas, up 1%; 86,310 in Europe, 2014 was considered a historic year for JLR manufacturing, with the business expanding from three plants to five. JLR opened its first ever overseas manufacturing plant, in China, as well as a new Engine Manufacturing Center in the West Midlands. This facility, together with major

recent investment and increased headcount at Castle Bromwich and Solihull, West Midlands; Halewood, Merseyside, underlines Jaguar JLR’s commitment to the UK as well as exciting future ventures expanding internationally. Earlier this year it was released that JLR was doubling the size of its engineering and design centre base in Coventry, UK as the premium manufacturer develops greener vehicles. The company completed a “multi-million-pound” purchase of 62-acres at its R&D base in Whitley, UK, more than doubling the facility’s size and employment. JLR said the extra land would accommodate product engineers and support the development of future generations of cars that use new power systems such as electric motors to reduce the volume of pollution that increasingly calls for concern. Dr. Speth, said: “Our expansion at Whitley

will help ensure the sustainable growth of JLR, with the development of ultra-low emission technologies… Design leadership, technical innovation and engineering excellence lie at the heart of this business and we are committed to investing in the skills needed to continue this success into the future.” The purchase was the latest element of £3 billion of investment in new facilities and technology so far in 2015 as the company grows under Tata. Over the course of the past five years the company has tripled the number of staff it employs to 34,000, with all but 1,700 of them in the UK. News of the expansion came when Tata announced its plans to boost its capital levels with an INR ₹75 billion (£800 million) rights issue, which will help fund investment in JLR and Tata themselves. As of May 2015, JLR had clocked up pre-tax profits of £2.6 billion in the tax year to the end of March, after strong sales continued abroad. They sold 462,209 vehicles in the year continuing on from 2014, 19% were sold to UK customers. A quarter were sent to China, mainland Europe accounted for a 5th of sales, while customers from North America made up 17% of sales. The company reported a 13% rise in revenue to £21.87 billion. Since the acquisition in 2008, that saw Tata purchase JLR for £1.4 billon, the company has

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driven £10 billion into the business, with plans for a further £3 billion of investment to continue just this year. Since the opening of their enginemanufacturing centre in Wolverhampton, in October 2014, in a £500 million investment – JLR has also opened a new factory in Solihull, West Midlands, early on this year, where the new Jaguar XE is being produced. Dr. Speth, said: “Jaguar Land Rover has

delivered five years of solid financial results, enabling us to invest in our long-term future. This has positioned the company strategically and financially for continued sustainable growth. The past year has been one of significant achievement, with the expansion of our vehicle ranges and our manufacturing footprint,” Britain’s car industry has undergone a revival in recent years and now has an annual turnover of £64 billion, employing 160,000 people directly.

Meanwhile new car sales recently rose to their highest level since the introduction of the biannual registration change. Automotive dealers registered 492,774 new cars in March 2015, an increase of 6% on the same month from 2014 and the highest number since 1999, according to official industry data from SMMT. The UK also has a significant presence in auto racing and the UK motorsport industry currently employs around 38,500 people, encompasses around 4,500 companies and was last reported to have an annual turnover of over £6 billion in 2014. Most recently, JLR reported their best ever October retail sales of 41,553 vehicles in 2015, up 24% on October 2014. The company sold 390,965 vehicles in the first ten months of 2015, 2% up on the same period in the prior year. Retail sales for the month of October were 40% up year-on-year in the United Kingdom, 74% up in North America, 24% up in Europe and 9% up in China. Other overseas markets were down 5% for the month, reflecting the challenging macro-economic environment in countries such as Russia and Brazil. Jaguar

delivered 7,467 vehicles in the month, up 39% on October 2014. Calendar year-to-date sales were 67,612, down 1% year-on-year. Europe and the UK recorded outstanding year-on-year growth of 150% and 64%, respectively, for the month of October and retails in the ‘Overseas’ region were 27% up year-on-year. Sales of the new Jaguar XE were 3,515 for the month, with a total of 15,716 retailed since sales began in the summer. This new mid-sized sports saloon has recently joined the line-up in China and will go on sale in the USA in spring 2016. Marking its best October to date yet, Land Rover retailed 34,086 vehicles in the month, up 21% yearon-year. Calendar year-to-date sales reached 323,353 vehicles, 2% up on the prior year. Bestsellers for the month included the Range Rover Sport, 40% up year-on-year, the Land Rover Discovery, 41% up, and the Range Rover, which was 21% up on the previous year. The new Discovery Sport continues to grow in popularity, with retails of 7,182.

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Manufacturing Both Jaguar and Land Rover icons of British motoring history! The automotive industry in the United Kingdom is best known for their premium sports car marques, standing at the forefront are Jaguar and Land Rover, amongst others including Aston Martin, Bentley, McLaren, Mini, Morgan and Rolls-Royce – commercial vehicle manufacturers active in the UK including Ford, Leyland Trucks and London Taxis International. The UK is an old but also still a major centre for engine manufacturing with such a vast range of successful and key suppliers. In 2008 SMMT reported that 3.16 million engines were produced in UK alone. In October 2015 it was reported that engine production saw a rise of 4% compared with the same month the year previous and exports continue to rise, with manufacturing demand for overseas markets up 13.2% month-onmonth. In 2014 there were major investments into UK engine manufacturing, which has enabled for the likes of JLR to keep suppliers and future sourcing within the UK alone without further expansion abroad.

“Last year was one of underlying positivity for UK engine manufacturing with full year output down on 2013, due to retooling for new products at a number of plants,” said Mike Hawes, SMMT Chief Executive. “Investment exceeding £1 billion over the last few years from manufacturers, including BMW, Ford and Jaguar Land Rover, is expected to add £2.5 billion to the sector’s turnover in the coming years. This is beginning to manifest itself in monthly output growth.” With JLR experiencing global sales growth, it is increasingly important for them to expand their global presence. Manufacturing their vehicles internationally allows the company to reach markets and customers, creating a stronger, more sustainable and increasingly agile business. They continue to evaluate opportunities to increase its manufacturing footprint in the future, primarily in markets with strong growth potential and customer demand. The company has made significant progress in building their international manufacturing footprint – a new business process that focuses on developing the right configuration of manufacturing plants around the globe,

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where to locate them, what their roles should be and how they interactions should progress. In 2014 JLR opened its joint venture in China and commenced construction of the local manufacturing plant in Brazil, launching it’s first overseas manufacturing facility. The 50:50 partnership between JLR & Chery Automobile Company Ltd. is also the first British-Chinese automotive joint venture. Located in Changshu (north of Shanghai), the 98-acre facility represents a total investment of RMB 10.9 billion (approximately £1 billion) demonstrating their commitment to the Chinese market, holding a production capacity of 130,000 units. The Range Rover Evoque & Land Rover Discovery Sport are both produced in Changshu for customers in China, with further models to come in 2016. The award-winning Range Rover Evoque was the first model to be built under the first Chinese-British automotive joint venture. The plant inauguration of Chery Jaguar Land Rover Automotive Company follows the two-year construction of a factory, which is almost 400,000 square-metres. At the plant inauguration, Dr Dr. Speth, said: “The opening of this

world-class facility is an important milestone for Jaguar Land Rover. Since its launch, one in five Range Rover Evoques have been sold in China. Our decision to manufacture the Range Rover Evoque in Changshu is a result of our commitment to bringing more Chinese vehicles to Chinese customers.” Mr Yin Tongyao, Chairman and Chief Executive Officer of Chery Automobile Company added:

“Chery Jaguar Land Rover remains committed to delivering excellence in its quest to lead the Chinese premium automotive industry through its historic British lineage, world-class quality and unique shared value approach.” JLR has had a local assembly presence in India since 2011 and currently manufactures the Range Rover Evoque, Jaguar XF and XJ and most recently the Discovery Sport; most recently reporting in November 2015 that the company has plans to increase production in India, further expanding its foothold in the country by increasing the number of locally manufactured

models in 2016. JLR first established a presence in China just over a decade ago and has a long-term commitment to its Chinese customers. JLR is the first British automotive manufacturer to build a new local manufacturing facility in Brazil; the company’s first wholly-owned overseas local manufacturing facility. The 14acre site is located in the state of Rio de Janeiro and represents an investment of R$750 million (approximately £240 million), with the first vehicles expected off the production line next year in 2016. In the programme’s commencing phase, the new 60,000m² manufacturing facility in Itatiaia planned to employ 400 people and will have an annual capacity of around 24,000 vehicles. As part of its on-going commitment to the Brazilian automotive industry, JLR has been sourcing a range of components from local suppliers as well as importing selected parts from its global supply chain – an aim consistent within JLR’s activities. In addition, JLR is investing in its technical assistance services to help suppliers support increased levels of localisation in the future for Brazil. The new Discovery Sport has been confirmed as one of the vehicles that JLR plans to build, with the first customer cars expected to drive off the production line in 2016. Since its reveal at the Sao Paulo Motor Show in 2015, the Discovery Sport has received a very positive reaction from Brazilian customers. In 2012, JLR welcomed the UK’s Prime Minister David Cameron to its Solihull site where they had recently invested £370 million in its site’s facility. The Prime Minster saw the results of this investment first hand when he visited the company’s brand new state-of-the-art aluminium body-shop – the largest of its kind in the world. Prime Minister David Cameron said: “Jaguar Land Rover’s continued success, and rising exports, demonstrates the strength of the automotive sector in the UK, and the crucial role this industry plays in growing and rebalancing the economy. Their success, particularly in fast growing markets like China and India, shows that UK manufacturing can compete and thrive on the global stage, and is testament to the excellent and highly skilled work force they have here in Solihull. This Government is backing business; dealing with the deficit, cutting taxes and investing in exports, enterprise and growth, to ensure the UK is equipped to get on and win in this global race.”

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The following year in 2013, JLR announced an investment approaching £1.5 billion, later introducing an all-new technically advanced aluminium vehicle architecture. To support this strengthening of the Jaguar product profile, thousands of new jobs were created in the UK at their Solihull site. The following year Chief Secretary to the treasury Danny Alexander visited the Solihull site to see one of the largest manufacturing growth stories in a generation. In the previous two years there had been significant investment and growth at the site with 3,000 new jobs been created and currently investing £1.5 billion in new manufacturing. Following a record-breaking year for overall sales in 2013, the site had ambitious plans for growth to meet increasing customer demand and they were well on their way to meet their 1,700 employment target made in the previous year. In August 2015, JLR signed a Letter of Intent with the Government of the Slovak Republic for the expansion of a new manufacturing plant in the city of Nitra, western Slovakia – proposed to commence in 2018. The feasibility study explores plans for a factory with an installed capacity reaching up to 300,000 vehicles over the next decade. Earlier in the year, JLR agreed a manufacturing partnership with Magna Steyr, an operating unit of Magna International Inc, to build some future vehicles in Graz, Austria. In October 2014, the company opened a new manufacturing centre in Wolverhampton, United Kingdom, the same month as manufacturing began overseas for the first time in Changshu, China and later the construction of another in Brazil. The company has recently been looking at expanding its production with an engine production facility in the UK and another manufacturing plant in China to address the emerging Chinese market. JLR is world leader in the area of aluminum body construction

for vehicles. For those unaware, the use of aluminum in an automotive application brings many benefits in terms of mass reduction, high strength with superior malleability, improved fuel efficiency, lower emissions, proven increased crash safety and even better vehicle dynamics with easy machining for whatever use be it mill, drill, cut, punch, bend, weld, bond, tape. Around 8% of the Earth’s crust consists of aluminium in the form of different minerals. The use of aluminum across their range of cars is increasingly growing – from the most recent Range Rover and Range Rover Sport, to the new Jaguar F-Type sports car and Jaguar XJ saloon. With the introduction of aluminum body structures to the Jaguar line initially, the car’s mass was reduced by around 40%, using aluminum stamped panels, castings and extrusions. The same principles are now being applied to new Range Rover models – with weight savings some in excess of 400kg. As well as lowering emissions, there are other major environmental benefits in the lifecycle of the cars. For example, the aluminium used to form the body panels are made of recycled material – aluminium can be reused for the same purposes over and over again, unlike many other materials; aluminium does not lose its unique properties.

“We aim to increase this to 75% of the entire vehicle when feasible. The reduction in weight even has an impact on the environmental footprint of the cars when it comes to their shipping: less fuel is needed to transport them to the showroom and on to new customers.” In 2015 Jaguar released that it is developing an all-new advanced aluminium monocoque vehicle architecture, on which a new range

of prospectus Jaguars will be built – stating

“High-strength, lightweight and extremely stiff, the modular and scalable architecture will enable flexible high-volume production without compromising the unique character, dynamics, performance and luxury that Jaguar is famous for. This will enable Jaguar to grow its product portfolio, targeting high-growth areas of the premium market.” Mike Wright, Executive Director at JLR said:

“We need to continue to invest in world-class manufacturing technology and source the best people to produce our award winning vehicles. The plans are further evidence of our commitment to advancing the capability of the UK automotive industry which benefits the wider supply chain and overall UK economy.” JLR employ around 29,000 people globally and support around 190,000 more through our dealerships, suppliers and local businesses. All of our vehicles are engineered and designed in Britain and while we have ambitious plans for global growth, the heart of the business remains in the UK. We have invested billions of pounds in our state-of-the-art production, research and development facilities. In fact, Jaguar Land Rover is the biggest UK investor in R&D in the manufacturing sector and is in the global top 100 for R&D spend. This investment, along with our ongoing support of local communities and encouragement to get young people to seek jobs in engineering, has led to Jaguar Land Rover winning the Responsible Business of the Year Award 2013. Last year Jaguar Land

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Rover sold 425,000 vehicles in more than 170 countries – up 19% from the previous year. These figures make Jaguar Land Rover one of the largest exporters by value in the UK, with 80% of our vehicles produced in the UK being sold abroad. Whilst remaining one of the headline-grabbing success stories of the manufacturing industry in Britain today – with employee numbers doubling over the last four years, it is also the country’s most dynamic automotive business. Jaguar Land Rover’s UK operations take place at five locations, with three vehicle manufacturing plants – two in the West Midlands at Castle Bromwich and Solihull, one near Liverpool in Halewood – and two advanced design and engineering centres at Gaydonand Whitley in the Midlands. It is from these five sites that Jaguar Land Rover currently produces the range of vehicles that sell in over 170 countries. The company is greatly expanding its UK facilities with a new £500m Engine Manufacturing Centre near Wolverhampton, while large-scale global growth and investment will see the construction of further manufacturing plants in China and Brazil in 2014and beyond. Jaguar Land Rover is also regularly investing in its existing UK facilities. The continued expansion at our sites has resulted in a substantial increase in jobs in recent years. With more than 80% of the vehicles produced being sold abroad, JLR are one of the largest exporters by value in the UK. Their operations are currently split across five sites with three motor-manufacturing plants – two in the West Midlands (United Kingdom) at the home of the Land Rover, Solihull, and Castle Bromwich, and another near Liverpool in Halewood – there are also two advanced design and engineering centres at Gaydon and Whitley in the Midlands (United Kingdom). It is across these five sites that JLR produces the vehicles that sell into 178 countries around the world, meeting the demands of the company’s dealers across each continent. JLR is continually investing in these sites to ensure the demand and appeal is constant. They are the largest investor in automotive R&D and engineering in the UK, with continued expansion at their sites having resulted in a steady increase in jobs. Each of the company’s five sites is thriving as demand continues to rise for new JLR vehicles.

Suppliers Earlier this year, JLR launched the company’s first inaugural Supplier Excellence Awards. British actress, Joanna Lumley, at a ceremony

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held in the West Midlands, presented companies from across the globe with trophies. Explaining the rationale for the new award programme, Ian Harnett, Director of Human Resources and Purchasing at JLR said: “These

awards recognise the role that our supply chain plays in meeting our business objectives and celebrate the achievements of companies that have excelled on quality, delivery, cost and absolute certainty of supply. We are also saying a special thank you to those supplier facilities that have shown “Above and Beyond” flexibility, or have worked quickly to meet production or design challenges.” With a total of ten trophies were presented for performance in 2014: two gold, four silver and four bronze, awarding for individual plants or facilities, rewarding on-time delivery, continuous quality, accreditation to international and Jaguar Land Rover standards and flexibility to meet the company’s developing needs – it was the perfect opportunity for everyone to gain an insight into the supplier chain for JLR. With a bright future ahead for JLR, the company’s innovation will continue, with 50 major new and model-year upgrade product launches planned for the next five years, offering increased opportunity for its supply base. Ian Harnett continued: “Jaguar Land Rover

is gearing up for the future and we need our suppliers to do the same, enabling us to deliver class-leading vehicles to our customer base across the globe. The ten facilities recognised through our first annual Excellence Awards are the leading examples of how our strong supply base is stepping up to the mark.” According to a representative at JLR, they

“chose to award individual supplier locations, rather than overall groups, in recognition of the importance of a close working relationship with each facility, founded on principles of integrity, honesty and trust”. In response to its acknowledging approach to supplier relations, only a few weeks ago in November, JLR was named most trustworthy OEM in a recent study conducted by global

information and analytics provider, IHS Inc Automotive, an international automotive information and analysis company. Annually JLR also produce a supplier report titled ‘Supplying Jaguar Land Rover’ – identifying future expansion, purchasing function and discussing company’s relationship with its suppliers. In July this year, their most recent report covers an in-depth interview with Dave Allen, Purchasing Director, and Michael Mychajluk, Supply Chain & External Engagement Manager for JLR. Alongside this JLR hold supplier days, breaking down Jaguar Land Rover team by team – an incredible opportunity for suppliers of JLR to take the pedestal JLR’s vision for the future set, enabling suppliers to work their magic for the cars of our future.

Technology Advanced design, engineering and technology developments have all played a crucial part in JLR’s success over the years, especially in most recent years since Tata’s takeover. The company invests more in R&D than any other manufacturing company in the United Kingdom, which has allowed thousands of world-class engineers to develop world-class innovations and the products that we know today. It is these breakthroughs that JLR can rely on to manufacture better-performing vehicles, lower their environmental impact and stand as an inspiration to both their consumers and the public. First-rate designers, engineers and production specialists who ensure that every Jaguar and Land Rover vehicle designed and manufactured is as innovative as it is desirable, lead their technological development. Credit goes to the vast investments made across all of JLR’s facilities across the globe in the last decade and since Tata’s takeover, they now have the most advanced tools at their disposal to manufacture vehicles with cutting-edge technologies. The initial discovery and constant advancements in 3D design rooms and printers are key to JLR’s virtual engineering, cutting down both the time and expense involved in the manufacturing of new vehicles. The smart use of aluminium has also led to the development of lighter, more ecofriendly cars, while test facilities, such as those provided by the Product Compliance Centre at their Solihull site, ensure that the range meets and exceeds the required legislative standards for production from around the world. “Technology is also enhancing the appeal to buyers and not simply by making the cars more desirable. Now, with our dealership’s

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Virtual Customer Experience, it is possible to spec a vehicle and have it projected onto a screen at full size, then view it from every angle and interact with it, almost as if it had been delivered to the showroom.” Jaguar Land Rover JLR continues to invest in new technologies, new architectures and new products in order to drive future growth. While there have been many breakthrough technologies from JLR over the decades, including their most recent £11 million autonomous car project (vehicles that can map their environment, communicate securely with other vehicles, and understand and interact with their drivers); their extensive investment in R&D means there are plenty more to come. As the UK’s biggest investor in manufacturing R&D, JLR is leading the way in developing innovative new solutions in several key areas. Major advances are currently being made in ‘powertrain’ development and the use of hybrids, electronics and entertainment, and advancing even further into the future and the potential in autonomous cars, technologies that will enable for driverless vehicles. One of JLR’s key aims is to improve existing technology, to evolve interiors and exteriors, discover new energy storage and transmissions concepts, and to enhance mass distribution and vehicle performance. These developments are formed by the company’s overall strategy of looking to continually reduce its CO2 emissions. In order to create an environment that will result in such progressive ideas and overall successes, JLR has partnered with a number of leading companies, such as Williams Advanced Engineering known for their worldclass technical innovations for F1 vehicles; who offer their own expertise. This is accompanied by plans to educate and develop engineers in the UK and abroad, partnering with schools, colleges and universities, forming a union with the Warwick Manufacturing Group (WMG) at Warwick University, whilst also nurturing resources in India and China. With such a huge focus on development, the company cements its status as a world leader in innovation and technologies of the future. Strengthening its engagement with the globe’s leading technology businesses and academic bodies by being some of the first to conduct a significant number of research projects investigating a range of technologies from new materials to future ‘powertrain’ solutions. A representative at JLR commented: “We are involved in a consortium with MIT AgeLab, DENSO and Touchstone Evaluations that aims to reduce the potential for driver distraction in future vehicles’ human machine interface (HMI)

systems by developing methods for measuring the demands made on drivers by the latest HMI technologies. Jaguar Land Rover and Intel have already begun work on multiple levels across engineering, research and marketing as Jaguar Land Rover progresses its ambitions to deliver the best in-car infotainment experience. A new Open Software Technology Centre in Portland, Oregon, USA, opened in 2014, complemented the established JLR infotainment team based at the company’s product creation facility in Gaydon, UK. The Portland technology centre fosters long-term research projects – including

electrification, smart and connected cars and HMI – that undertake by the Jaguar Land Rover R&D team at the new National Automotive Innovation Campus (NAIC) at the University of Warwick for when it opens in 2016. The NAIC is designed to create a large-scale collaborative research environment, bringing academics from the UK’s leading universities together with researchers and engineers from Jaguar Land Rover and the company’s supply chain, in a single, multi-purpose, state-of-the-art research facility.”

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Environment Automotive manufacturing has been a global industry since day one – acting as a major employer and, over the last 100 years, it has provided safer, environmentally friendlier and more accessible transport for increasing number of consumers, including in more recent industrialised countries. In spite of this, carrelated pollution and congestion still remain a call for concern in many major cities. Environmental responsibility is a priority of JLR’s. Carbon emissions, water, waste, materials, they’re all factors that influence the decisions made. Using all their research and expertise to challenge both their products and operations. Through innovation, JLR state that they aspire to increasingly develop business, whilst continuing to drive down their environmental impact in the future, demonstrating an exciting new synergy between sustainability and performance.

“Vehicles that meet the needs of our customers now and long into the future.” Luxury performance cars and advancements in SUVs are some of the grounds for JLR success globally. Their future ability to deliver such levels of performance, capability and luxury, in a responsible way, is what will truly set them apart as creators of world-leading manufacturing and driving experiences.

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JLR recognises that with their success comes greater responsibility to minimise the environmental impacts of their manufacturing and general operations. According to the company, they are “modifying

everything from factory processes to logistics; investing billions [GBP] in new products, facilities and R&D; monitoring supplier performance against sustainability criteria, and building partnerships to deliver our CO2 reduction strategy.” For JLR, using more sustainable materials is a major long-term goal as a responsible business – with the planet’s resources are dwindling, choosing and using materials conscientiously will not only benefit the environment, it will also help tackle their future price fluctuations as demand for these precious resources increasingly rises.

“The amount of recycled aluminium we use in our vehicles continues to rise. We work in partnership with the REAL CAR initiative that develop ways to employ recycled aluminium in our products. Together we have identified a method of re-melting scrap aluminium generated in our own presses with those of our principle

suppliers into a high-grade sheet metal alloy. Both the latest Jaguar XJ and the All New Range Rover feature recycled aluminium sheets.” “We also now have a closed loop waste recovery and recycling system at our Castle Bromwich Jaguar production centre, as well as a trial process at Solihull, where Land Rover’s new all-aluminium models (The Range Rover and Range Rover Sport) are manufactured. Switching to Organic Materials - Beyond the main car body, there are even wider opportunities to make responsible choices. We are reducing our use of synthetics and plastics by looking at more organic materials such as leather and natural rubber (a key feature of the new Range Rover – whose leather interiors were sourced from Bridge of Weir in Scotland). Wood too, can be sourced responsibly from a sustainably managed forest to make stylish, premium interiors for our vehicles. These are just some of the ways we are working to define a more sustainable form of luxury and performance.”

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In 2013 Jaguar Land Rove released their third Sustainability Report for 2012/13 that outlined their progress to date in sustainability in relations to both products and operations, along with their strategy and new objectives that they intend to form the next evolution of sustainability strategy in the coming years. In 2014, Mike Wright, confirmed in the release of the Corporate Sustainability Report that the majority of objectives set in previous years were not only actively in progress but the majority already being achieved, well on their way to their 2020 sustainability targets.

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Awards Jaguar Land Rover won around 200 international awards in 2013. In November 2015, JLR received a 2015 Queen’s Award for Enterprise in Sustainable Development, for reducing the environmental impact of its products and its operations. This is the 14th Queen’s Award that Jaguar and Land Rover have received since 1967 - the second year of the scheme. It follows a 2014 award for International Trade, in recognition of JLR’s outstanding overseas sales growth.

“Jaguar Land Rover is honoured to receive this 2015 Queen’s Award for Enterprise in Sustainable Development,” said Dr. Speth. “We are focused on growing a long-term, sustainable business, as leaders in environmental innovation and making a positive impact on society.” The award was announced during Responsible Business Week, only days after JLR was named Responsible Business of the Year 2013/14 by the leading Corporate Responsibility Index, Business in the Community (BiTC). The prestigious award recognises JLR’s significant investment in all areas of the business, in particular their jobs and facilities within the UK. The company’s outstanding environmental performance, and commitment to education skills, training for young people and current employees were also

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identified as key areas for recognition. BiTC’s Chief Executive, Stephen Howard praised the company’s approach, stating JLR “perfectly

embodies the mutuality of responsible business – an understanding that by transforming business you can transform communities.” The award takes into account a number of specific achievements by JLR over the last 12 months, including being the UK’s principal investor in automotive R&D, as well as engineering - providing £2.75 billion worth of support over 2013/14. In 2015, the business is spending £10 billion with over 2,500 suppliers, with 60% of the money being spent on materials going to other UK companies. The 2013 award is a milestone in JLR’s history, resulting from a culmination of effort stretching across all areas of the business. The group has praised progress as a responsible business over the last five years with JLR’s receiving a Platinum Corporate Social Responsibility rating in 2012. In response to receiving the award, Dr. Speth said the award “recognises the achievements of our employees, suppliers, stakeholders and academic partnerships to deliver sustainability improvements across our business.” Jaguar later announced: “We’re pleased

to say that we’ve marked some significant achievements over the last

few years. We’re proud to have been awarded Responsible Business of the Year 2013 by the UK’s Business in the Community (BITC). An accolade that recognises all the progress we’ve made in recent years – letting us know that we’re heading in the right direction.” JLR has made significant improvements in a number of areas, reducing their environmental impacts compared to 2007 levels and as of March 2013: • Tailpipe CO2 down by 21% oOperational carbon emissions per vehicle down by 21% • Waste to landfill per vehicle down by 75% • Water use per vehicle down by 17% • Carbon emissions from logistics down by 18% per vehicle The ‘Jaguar Land Rover CO2’ offset programme has also replaced more than 6.5 million tonnes of CO2 over the last six years by funding no less than 60 sustainable development projects - positively impacting the lives of over 1 million people. Jaguar reported in 2015 to have acknowledged the positive benefits they have been able to bring to their communities. In the area of education, JLR are proud to have won the national Business in the Community ‘Education

cover Award’ 2013 which recognises businesses that are building sustainable partnerships with schools to raise aspirations of young people and enable them to build successful working lives. In addition, JLR is the only vehicle manufacturer in the United Kingdom to have achieved the highly regarded Community Mark. Awarded by Business in the Community, the Community Mark is widely recognised as the national standard of excellence for community investment and was awarded in acknowledgment of their significant investment in community programmes, including their Education Business Partnership Centres and national educational initiatives. In response, Jaguar released: “We’re proud

of what we’ve achieved but with the global landscape changing we must climb higher. The JLR Sustainability Reports lay out the progress we’ve made towards our vision, as well as the ambitious targets we’re now working towards.” And with an impressive array of environmental, charitable and educational collaborations under their belt (see all listed below) including the Carbon Disclosure Project (enter description), ClimateCare, International Federation of Red Cross and Red Crescent Societies, Royal Academy of Engineering and Engineering UK. Is it a wonder JLR are so highly acclaimed?

Globalisation

Little over a century ago the car as it was known then was still a very new mode of transport that only those of aristocracy or the financially flushed could even consider. It is true to say that the automotive industry has been globalised from its early days. There has been consistent competition between countries to invent better cars and obtain finance to support or allow for manufacture. Over time, it has become increasingly automated and workers far more skilled than ever before. In 2010, the world’s population of vehicles reached one billion. High growth rates of ownership in Thailand, Indonesia, China, India and Brazil reflect economic development and catch-up demand in those countries. The rapidly rising middle class in China is engaging with the world through the internet, television and mobile phones, and purchasing luxury items at a vast rate, including increasing percentages for both Jaguars and Land Rovers. Private car ownership in China is increasing rapidly. The total number of motor vehicles has grown from 37 per 1,000 people in 2008 to 47 per 1,000 in 2009 and 58 per 1,000 in 2010. Data from World Bank Globalisation has increased wealth and demand for vehicles in newly emerging economies. Expanding markets mean continued growth for car manufacturers and related employment. Congestion, pollution, fuel and steel availability challenge future expansion, but research continues to improve safety and efficiency.

According to a representative for JLR, substantial investment in the UK should see the rising demand for the products being met and does not appear to be a concern of the companies. For JLR, Tata’s Motors’ acquisition has accelerated India’s progress. Capital investments and R&D expenditures are two of the main incentives for the industry’s sustainability. Europe is still in a sturdy position with regards to R&D, vehicle design and for the United Kingdom, engine manufacturing. Jaguar and Land Rover spend almost £1 billion annually on R&D in the UK, accounting for a large percentage of the entire annual sector expenditures. Dr. Speth says the company will remain British and that the future looks bright for JLR with regards to manufacturing and technological advancements. The German CEO confirmed,

“JLR is, at its heart, a British company built around two iconic British brands. We have reaffirmed our position as the UK’s largest premium automotive manufacturer this year through significant investment and job creation.” JLR is one of the success stories of British manufacturing and with plenty more exciting chapters in the history of JLR still to be written, we look forward to seeing what’s next in line for JLR.

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M&A in the global automotive supply industry: Study finds a bull market with room to grow As reported by Strategy&, mergers and acquisitions in the global automotive supplier sector are occurring at an unprecedented level in 2015, according to the Strategy& seventh annual “Consolidation in the Global Automotive Supply Industry” report.

Exhibit 1: Record deal making in 2015

Based on data from the first six months of 2015, Strategy& anticipates that deal value will top US$48 billion for the full year, a 340 percent increase over 2014. What is particularly striking about the current trend is the rise in deal value. The figures indicate a slight decrease in the overall number of deals for the year, but a vast increase in the number of megadeals. The gains in deal value are themselves the payoff from a host of positive factors in the supplier sector: several years of healthy profitability; technological advancements in the areas of fuel efficiency, lightweight materials, connected cars, and autonomous driving; and increased private equity interest. For the third year in a row, the report identified North American suppliers as the largest consolidators, followed by European, South Korean, Japanese, and Chinese companies. The majority of global consolidators and their targets were powertrain and chassis suppliers. The study’s findings also proved that it pays for automotive suppliers to be acquisitive: Strategy& analyzed the top consolidators over five years, from 2009 to 2013, and found that more than 70 percent of top consolidators outperformed their peer group in EBITDA growth. Moreover, five of the 10 top consolidators grew EBITDA margins by more than 50 percent. Based on this analysis, it is believed that the M&A boom in the supplier industry still has room to grow, and there are plenty of opportunities for significant returns on investment. Strategic shifts under way Since 2007, consolidation has been a familiar theme among automotive suppliers. Suppliers have been jockeying to build the scale and capabilities that will ensure profitability and keep them near the top of the automotive value chain. But something unprecedented related to suppliers’ mergers and acquisitions activity is occurring this year: The value of these deals is skyrocketing to uncharted levels. In 2015, it is expected that the total price tag of auto supplier M&A to reach nearly US$50 billion, more than three times that of the year before (see Exhibit 1). The previous high was $35 billion in 2007.

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These numbers are more than just statistics. They reflect real and significant changes in the auto supplier sector, involving global auto manufacturing expansion, new vehicle technologies, regulatory requirements, an abundant capital pipeline, and lucrative opportunities for profitability and growth. These trends are a galvanizing force for the sector; as auto supplier companies realize they have to make strategic shifts to adapt, they are turning to M&A deals to acquire the assets and expertise they need. That finding is at the core of the latest Strategy& “Consolidation in the Global Automotive Supply Industry” report. This study - conducted for the seventh consecutive year - emerged from an in-depth analysis of financial, operational, and strategic data covering the top 100 global automotive suppliers as well as 715 additional suppliers from Brazil, China, Europe, India, Japan, North America, South Korea, and Southeast Asia. Positive economic signs The most curious aspect of the supplier M&A explosion is that the number of global deals has actually fallen in 2015, to about 200, down from 217 in 2014. And the average acquisition price tag — between $50 million and $100 million — has barely budged. What has changed in 2015 is the number of deals worth more than $500 million. There were twice as many of these mega-transactions in 2015 as in prior years. The hefty premium placed on supplier acquisitions is the result of a series of extremely positive macroeconomic factors in the industry. First, the auto supply sector is girding up for a period of stable, multiyear growth in global vehicle manufacturing. Annual worldwide automobile production is forecast to increase at a compound average growth rate (CAGR) just shy of 4 percent between 2014 and 2021, according to PwC’s Autofacts (see Exhibit 2).

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China is expected to experience the most dramatic growth, producing more than 9 million vehicles over that seven-year period. Second, average global auto supplier profit margins are at extremely high levels — about 11 percent earnings before interest, taxes, depreciation, and amortization (EBITDA) — bringing them on par with the average margin of the five largest original equipment manufacturer (OEM) alliances. Exhibit 2: Projected growth in global vehicle production

That was the thinking behind BorgWarner’s recent purchase of Remy International, a deal that will give BorgWarner a foothold in advanced electronics for turbocharged engines in traditional cars and hybrids. The payoff for suppliers attaining the skills to improve engine fuel efficiency could be significant. Technologies that address this problem, such as direct injection and turbo- or supercharging, are forecast to reach a global vehicle penetration rate of 57 percent and 40 percent, respectively, by 2021, according to PwC’s Autofacts (see Exhibit 3). Exhibit 3: Penetration levels of turbochargers and direct injection

And finally, these attractive growth and profit numbers have enticed private equity (PE) firms, which have begun to pour money into the auto supplier sector, churning up industry M&A activity. Typically, PE firms are involved in 10 percent of auto supplier deals, but thus far in 2015, they are spearheading more than 25 percent of acquisitions. And these are not small bets: Three of the top 10 deals in the last 12 months were PE driven, including the acquisition of Gates by Blackstone and the purchase of TI Automotive by Bain Capital. Clearly, PE firms have increased the ante. Impact of technology Many supplier acquisitions are prompted by the need to keep up with recent rapid changes in automotive technology. Globally, OEMs are racing to improve engine technology to satisfy government-mandated fuel standards and consumer demand for more connected vehicles with autonomous driving capabilities and new infotainment equipment. In order to meet the pace of innovation and regulation, automotive suppliers are acquiring firms that have track records for delivering next-generation technology. For example, in its $12.6 billion acquisition of TRW, ZF Group essentially purchased fundamental radar and vision systems and advanced electronic control units, which ZF hopes will give it leverage in pursuing its goal to become a leader in autonomous vehicle equipment. “We’re following a building block approach to automated driving functions showcasing what is achievable today using proven technology,” Peter Lake, executive vice president of sales and business development at ZF TRW, announced in July.1 Other mega-suppliers are using M&A to better compete in offering fuel-efficient powertrains in all types of engines as automakers are facing new standards in the U.S. and Europe that will require fleet averages above 50 miles per gallon in 2021 and beyond.

New digital components, particularly electronic backbones of connected car and infotainment features, are similarly attractive to OEMs — and, thus, M&A targets for suppliers seeking to expand their offerings and revenue streams. That goal was behind Harman International’s decision to purchase two software companies that make programs to manage Wi-Fi–based computer updates in vehicles. Our analysis shows that most auto supplier deals in the last 12 months targeted chassis (20 percent of all global supplier M&A) and powertrain subsystems (19 percent). Electronics was the fourth most-active category, at 16 percent (see Exhibit 4). Exhibit 4: M&A deals by vehicle system, July 2014 – July 2015

The relatively high M&A activity in interior systems is a different story altogether: During the past several years, automakers and their Tier One interior equipment suppliers have been in something of a tug-of-war over design and integration. OEMs have tried to assert more control over the costs for interior parts by commoditizing designs and materials for, say, instrument panels and door trim.

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In response, some Tier One suppliers have turned to vertical integration, bringing more of the manufacturing under their roof, hoping to eke out earnings from a wider revenue stream. For the most part, OEMs have succeeded and profitability for the Tier Ones in this auto supply sector has flagged measurably. In the last five years, average global EBITDA margins were about 8 percent for interior suppliers, a whopping 5 percent lower than for chassis or powertrain system providers. As a result, some of the largest suppliers have boosted their EBITDA margin and, with that, their value, by selling their interior operations to competitors and exiting the business. That was the case in Grupo Antolin’s acquisition of Magna’s interior operations and in Yanfeng’s purchase of Johnson Controls’ interior unit. The biggest global consolidators For the fourth year in a row, North American automotive suppliers were dominant global consolidators measured by buyer score and buyer attitude score in the Strategy& supplier industry report. The buyer score assesses the ability to make acquisitions, based on financial and operational factors, while the buyer attitude score gauges a supplier’s likelihood to acquire another company, based on its recent M&A record and announced future inorganic growth strategies, among other indicators. Nine of the top 10 ranked consolidators (and 12 of the top 23) were North American suppliers (see Exhibit 5). Only six of the top 23 were European, two were Japanese, two were South Korean, and one was Chinese. On average, each of these suppliers was involved in eight deals over a five-year period — or about 1.5 deals per year over a half decade.

Besides enjoying the highest regional average buyer score of 6.9, North American suppliers also had the lowest potential distress score, only 2.8 (see Exhibit 6). The distress score measures the viability of a supplier; a lower rating means that it is less likely that the company will fail. Also of interest, the Global 500 European automotive suppliers topped their divestor rankings, which gauge the possibility that a diversified supplier will sell off underperforming units, with a score of 5.8. This makes sense: In each of the last six years, European suppliers have been the most likely to be acquired. In 2015 alone, European companies were targeted in 37 percent of all deals. Exhibit 6: Auto supplier average scores by region

Exhibit 5: Profile of the top 100 suppliers based on buyer score and buyer attitude

Does M&A translate into profits? It’s common wisdom in the business world that more often than not, mergers and acquisitions do not translate into improved performance. The top line may grow as a result of an acquisition, but profits often lag. However, Strategy& found that between 2009 and 2013 the most acquisitive automotive suppliers were in fact rewarded for their M&A activities.

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During that period, seven of the top 12 consolidators and more than 75 percent of the top 25 consolidators easily outpaced their competitors in increasing EBITDA margins (see Exhibit 7).

The outsized price tags in recent deals in the supplier sector might naturally scare off some acquirers that are also hesitant to pour significant money into an industry already feeling the pressure of feverish competition.

The top consolidator, a German-based Tier One primarily focused on engine management, made 39 acquisitions and improved its EBITDA margin by 35 percent, compared with only 24 percent for its major competitors.

The high valuations are frequently justified and there is more headroom for performance gains.

Exhibit 7: EBITDA margins of the top 12 global consolidators

The Autofacts forecast CAGR of about 4 percent from 2014 to 2021 could even be an underestimate, particularly if the economies of emerging nations rebound from their current doldrums. In spite of the slowdown in growth and sales, China still has a growing consumer market, and Strategy& estimates that the number of Chinese families that can potentially afford to buy a car will more than double from 150 million today to more than 300 million by 2021. Growth like that could result in significantly higher orders for suppliers that are fortunate enough to make the global cut. However, although optimism about the overall automotive supplier sector is justified, investments in these companies must be made carefully and diligently.

A value game ahead The M&A explosion in the automotive supplier sector is just beginning to heat up. Perhaps the primary catalyst for more activity will be the efforts among many automakers to gain efficiency, improve margins, and increase scale by implementing more global architectures and platforms for their vehicles, designs that can be used in any market around the world with minor modifications. This shift and the desire to decrease wasteful complexity in the supply chain will significantly reduce the number of direct material suppliers that OEMs will contract with, in some cases by 50 percent or more. For example, Ford has already publicly stated its plans to reduce its global supplier base in the next few years, from around 1,500 now to 750. Suppliers that hope to survive this round of massive consolidation will have to be active and innovative partners for automakers, offering new answers to connectivity, safety, and autonomous driving questions and fresh ideas that sell vehicles. Supplier technology skills, lean capabilities, and geographic reach will be at a premium and precisely what automakers will look for before engaging in long-term supplier relationships.

Both private capital firms and suppliers that want to be active in M&A should make acquisition decisions based on the value of the products, innovation, and capabilities that the targeted company has â&#x20AC;&#x201D; and not on merely the desire to expand revenue. Suppliers today should be focused on taking leading positions in connectivity, fuel efficiency, component electronics, and the like â&#x20AC;&#x201D; in other words, the features that OEMs find most attractive, which may change over time â&#x20AC;&#x201D; and, hence, their acquisitions should be based on furthering their ability to fuel the most critical industry trends. In many ways, the automotive supplier sector is in a privileged position, providing products to an expanding and creative industry. Yet simultaneously, suppliers have perhaps never faced a more difficult landscape, littered by too many companies chasing customers that want to do business with fewer firms. M&A will shrink the competition a bit. But only innovation in design, development, partnerships, and acquiring critical capabilities will separate the survivors from the also-rans.

Original Source: Strategy&

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The automotive industryâ&#x20AC;&#x2122;s most compelling acquisitions Car companies and technology companies are becoming one and the same Inverse Innovation has released their Top 8 most compelling acquisitions within the automotive industry, looking at how the race to create driverless cars is crowded with expensive acquisitions and high-profile partnerships. Itâ&#x20AC;&#x2122;s seen traditional automakers join with tech companies to develop autonomous vehicles, and the partnerships have hit a high over the past couple of years. This is happening just as manufacturers and developers have begun to see where the future of transportation lies. A new concept of overall mobility has blurred the lines between car manufacturer and technology company. As featured in their Autonomous Carsâ&#x20AC;&#x2122; section, the Tesla is one of the most visible examples of a vehicle manufacturer that is just as much a technology company, and Google started advancing autonomous technology before many car companies put skin in the game.

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1. Toyota and Jaybridge Robotics Jaybridge Robotics, a 16-person A.I. software firm started at the Massachusetts Institute of Technology, announced that it had been acquired by Toyota in March. It joins the Toyota Research Institute, which has a five-year, $1 billion budget to advance the company’s autonomous development, led by former DARPA program manager Gill Pratt. Jaybridge started seven years ago with a focus on creating A.I. software for industrial work like agriculture and mining. Jeremy Brown, Jaybridge’s CEO, said in a statement in March that the team is looking forward to “going after the big one: helping to reduce the nearly 1.25 million traffic fatalities each year, worldwide.” The purchase was just one of several power moves GM has recently made. Earlier in 2016, GM invested $500 million in ridehail company Lyft, and the two companies have made it known that they are working on a fleet of autonomous vehicles. The companies plan to roll out app-summoned autonomous Chevy Bolt’s in 2017. 2. General Motors and Cruise Autonomous technology darling Cruise Automation joined GM’s Autonomous Vehicle Development team in San Francisco in March. It cost GM $1 billion to bring Cruise in. The purchase was just one of several power moves GM has recently made. Earlier in 2016, GM invested $500 million in ride-hail company Lyft, and the two companies have made it known that they are working on a fleet of autonomous vehicles. The companies plan to roll out app-summoned autonomous Chevy Bolt’s in 2017. 3. Tesla and Mando and Mobileye Tesla’s Autopilot is arguably the most advanced autonomous system on the road today. The company claims to gather data on around a million miles a day as well, so development is moving quickly.Tesla has relied on Mobileye, an Israeli company, for much of the development up to this point. Of course, Tesla’s semi-autonomous technology hasn’t come without incident. Tesla is attempting to bridge the gap with a partnership with the Mando Corporation for a “fail-safe” autonomous system. 4. Fontinalis and nuTonomy Fontinalis, a venture capital firm founded by Ford chairman Bill Ford, is a big fan of autonomous car company nuTonomy. Fontinalis has invested millions of dollars in nuTonomy twice now, and it’s clear why — nuTonomy’s goal is to put autonomous taxis on the streets of Singapore by 2018. Fontinalis makes it clear that the company is not a part of Ford despite Bill Ford’s involvement. But it also “only invests in next-generation mobility opportunities,” which sounds pretty similar to the Ford Smart Mobility LLC subsidiary Ford announced this year. Which such close ties, it’s not hard to imagine that Ford is closely watching what nuTonomy is up to. 5. Apple and Chris Porritt Apple and Tesla have a habit of swapping employees — so much so that Elon Musk called Apple the “Tesla graveyard.” One of the most notable is Apple’s hire of former Tesla vice president of vehicle engineering Chris Porritt for “special projects.” The “special project” might be Apple’s Project Titan, which has been kept under wraps. More and more evidence points to Apple wanting to get in the autonomous car game, and Porritt’s hire gives Apple a guy who knows how to engineer a car with style. Apple also recently announced a $1 billion investment in Chinese rideshare company Didi Chuxing. 6. Uber and Carnegie Mellon University Uber announced a “strategic partnership” in February 2015 with CMU for the Uber Advanced Technologies Center in Pittsburgh. The partnership was created as a way for Uber developers to work with faculty and students at CMU’s prestigious National Robotics Engineering Center for “mapping and vehicle safety and autonomy technology.”Uber has since hired away 40 of CMU’s top researchers and put an autonomously modified Ford Fusion on the roads. 7. Nissan and NASA In January 2015, Nissan and NASA announced a five-year research partnership to focus on “autonomous drive systems, human-machine interface solutions, network-enabled applications, and software analysis and verification.” It’s a win-win for both: Nissan gets some government backing and NASA gets some corporate-funded technology for autonomous rovers. “The work of NASA and Nissan — with one directed to space and the other directed to earth, is connected by similar challenges,” Carlos Ghosn, president and CEO of Nissan, said in a statement at the time. “The partnership will accelerate Nissan’s development of safe, secure and reliable autonomous drive technology that we will progressively introduce to consumers beginning in 2016 up to 2020.” 8. BMW and Baidu BMW partnered with the leading Chinese search engine company Baidu in 2014. The goal was to produce a semi-autonomous prototype by the end of 2015, and sure enough, they did it. In December 2015, a 3-Series BMW whipped around an 18.6 mile road in Beijing. All of this shows that autonomous technology is coming sooner rather than later — now public perception just has to catch up to the hype in the auto industry.

Original Source: Inverse

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20 cars that changed the automotive industry forever We take an in-depth look at some of the most paradigm-shifting cars in automotive history.

• The family hauler that replaced the station wagon • First wide-release hybrid

Over the years, there have been thousands of car models, some very beautiful, many more less so. Others have been extremely fast, spacious, capable, etc. The car has typically evolved with most manufacturers content to imitate rather than revolutionize. It makes sense after all, as there is no risk in being conservative. But few have been truly innovative and revolutionized the industry. Among those that have, inventions span from deceptively obvious, such as the electric starter, to a mere rethinking of features in order to create a new segment (such as with the Jeep Cherokee). And lest you think that the most innovative cars belong to the earliest periods of motoring, there is still plenty of revolutionary thinking taking place today. In fact, the last three cars on this list are less than fifteen-years old. What else is on the list? Here’s a brief overview, how many can you correctly identify?

• First mainstream hybrid • First hybrid you’d actually want to drive Now that we’re in the car’s second century, we can’t wait to see what the future holds. Indubitably, it will include allelectric cars and autonomous vehicles, but what else? One caveat: while we recognize the impact Tesla has made, it’s still to early to call it both revolutionary and mainstream as it is only affordable to a very small portion of the global population, not to mention its limited sales network. Without further delay, following are the twenty most paradigm-shifting cars.

• First car designed from the outset as a self-powered vehicle, back in 1885 • A car that took advantage of the mass-production assembly line’s efficiency • First car equipped with an electric starter • First mass-production car that was fully enclosed • First affordable V8 • World’s first front-wheel drive, steel monocoque, massproduction car • First concept car • A true global car that is among the best selling-ever • First mainstream city car • The car whose layout would define front-engine, FWD cars to this day • The racecar whose layout has lasted over fifty years • A sporty segment-establishing car aimed at America’s youth • The sports car that helped Japan earn legitimacy • The compact car that established Japan’s reputation • The rally car that proved AWD’s value • The vehicle that defined the crossover segment

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01. Benz Patent-Motorwagen Effectively the world’s first car, the Benz Patent-Motorwagen included several innovative features beyond being designed from the beginning as a self-propelled car (rather than a retro-fitted buggy). Not only was it first, having been patented in 1885 but the two-seater also included a high-speed single-cylinder four-stroke engine mounted horizontally at the rear, along with a differential (previously used on bicycles), tubular steel frame with wooden inserts for non-structural components and three wire-spoke wheels. Besides being the first car, the Patent-Motorwagen spawned two other auto-industry firsts - the publicity stunt and the road trip. In order to prove its roadworthiness, Benz’s wife (and financial backer), Bertha, took the car and her two sons on a road trip from Mannheim to Pforzheim and back home three days later. The total trip covered 194 km and she acted as her own mechanic fixing issues as they arose with implements such as her hatpin and garter.

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0.2 Ford Model T The Ford Model T was revolutionary for two reasons. First, it was due to the benefits of the standardized assembly line rather than hand-fabrication that the Model T could be produced so reliably and efficiently. And while Henry Ford didn’t invent the assembly line (it was used as early as 1901 by Ransom Olds), he and his engineers were able to affect changes that ostensibly made the assembly line his. And second, due to the assembly line and its streamlined processes it made the car affordable to the middle-class public. It essentially democratized the automobile whereas before the car served more as a wealthy person’s diversion than a tool for shortening distances. The car was also the first global car as it was so popular that Ford opened manufacturing plants all over the world to keep costs in check, rather than raising them by shipping the car. Sadly, Ford was so focused on keeping prices low that he was unwilling to spend on design and styling, allowing competitors to consume market share by producing fresher, more elegant cars.

03. Cadillac Touring Edition Founded initially by Mr. Henry Ford (and originally called the Henry Ford Co.), he left Cadillac following a dispute with his financial backers. The company persevered and in 1912, with the Cadillac Touring Edition, pioneered an invention that helped establish Cadillac’s reputation as a luxury car: the electric starter. Prior to its invention, people had to start their cars by hand-cranking the engine. It was a task that grew more and more difficult as engines began to get bigger to power larger cars. But it was also a dangerous task as hand-cranks had the potential to kickback (if the spark was not retarded prior to starting the car) and cause serious injury (broken thumbs and wrist injuries were not uncommon). But the introduction of the electric starter had another effect: it made cars more accessible to women as the need for great physical strength to start a car was no longer a pre-requisite. Cadillac realized and capitalized on this by introducing women into their advertisements.

04. Essex Closed Coach Relatively late to the Detroit automotive boomtown, Essex was established by the Hudson Motor Co. in 1918 as a subsidiary of the Hudson brand to build small, affordable cars and lasted only four years as a nameplate. In 1922, the Essex reverted to Hudson but even during its short time as a proper car company (rather than a model) it made a lasting impact on the auto industry. You see Essex is widely recognized as beginning the trend away from opentop passenger cars toward the fully enclosed compartments that are today’s norm. Essex was well regarded as a mid-stream passenger car manufacturer, but it was the introduction in 1922 of the closed coach, priced at about twenty-five percent more than the touring car, that really caught peoples’ attention and by 1925 it cost less than the open touring car. Perhaps we should blame Essex for making convertibles more expensive?

05. Ford Model 18 If the Ford Model T put the masses on the road then the 1932 Model 18 put them in the fast lane, as it was the first affordable V8-powered car. An all-new model, not just a refresh of Ford’s Model A, the 18 was powered by a 3.6L valve-in-block Flathead that initially produced about 65hp. When the Model 18 and its four-cylinder brother the Model B were introduced, the Model B was intended to carry on where the Model A had left off. However, the V8-powered Model 18 was such a sales success that it rendered the Model B obsolete. The car’s power was such that it supposedly inspired bank-robber Clyde Barrow (half of the ‘Bonnie and Clyde’ team) to write Mr. Ford a letter thanking him for producing such a fine car. The letter indeed exists, but its origin is somewhat suspect. The Model 18’s status as a revolutionary car however is not.

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06. Citroën Traction Avant

08. Volkswagen Beetle

Traction avant is French for front-wheel drive, but the 1934 Citroën Traction Avant wasn’t the world’s first front-wheel drive car. It was however, the world’s first front-wheel drive, steel monocoque, and mass-production car. As a result, the Traction Avant was relatively light (weighing between 1025kg and 1170kg) and had a low-slung appearance that was fairly futuristic for its era.

The VW Beetle is to Germany (and a few other countries) what the Model T was to the USA. Conceived in the 1930s and improved gradually over many, many years it was designed to be simple, reliable, and inexpensive. And much like the Model T, the fact that Beetles were economical made them popular around the world, leading to their manufacture on plants spread across the globe.

Additionally, because it featured monocoque construction, unlike other front-wheel drive contemporaries (like Alvis and Cord), the occupant package was very spacious. Other advanced features include hydraulic brakes, a fully independent torsion bar front suspension, and a cast-aluminum alloy transaxle. The transaxle was mounted in front of the engine (which was longitudinal) and its aluminum construction also aided in the car’s weight savings. Interestingly, the transaxle would later be lifted for use in another significant car.

While production began in 1938, it didn’t really take off until after World War II in 1945. Incredibly, it was in production until 2003, a span of sixty-five years, during which it remained largely unaltered. To that end, it remains the longest-running and most-manufactured (over 21,000,000 were produced) single platform car, ever. Also worth noting is that the VW Beetle (or Käfer in German) was designed by none other than Dr. Ferdinand Porsche. Later he would use the Beetle’s same rear engine, rear-wheel drive layout in his own cars.

07. Buick Y-job If you enjoy going to the local yearly car show and ogling the concept cars with their promises of connectivity and autonomous driving, then you have the 1938 Buick Y-job to thank. General Motors’ Head of Design Harley Earl’s idea, the Y-job was the world’s first concept car. It was conceived to showcase new technology and new potential styling directions in order to gauge public response. So what kind of futuristic technology did the Y-job include? Well, it had pop-up headlights, power electric windows, wraparound bumpers, flush door handles, and advanced styling elements used by Buick until the mid-‘50s as well as a vertical waterfall grille design, which is still used by Buick today. Even the taillight treatment forecasts post-war Cadillacs (also a GM brand). And the name ‘Y-job’ was derived due the letter ‘Y’s extensive use in the aviation industry (it signified advanced prototypes).

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09. Fiat Cinquecento Like the Beetle and Model T, the Fiat Cinquecento (500) was built around the world (but usually under license, rather than by Ford or VW’s direct overseas production method). And while it did help to put the Italian masses on the road like its American and German counterparts it was the first true city car, as it measured less than three meters. It was also nimble, light, and fuel-efficient due not only to its diminutive power plant (initially a 479cc inline two-cylinder) but also to its aerodynamics (its coefficient of aerodynamic drag was about 0.38, quite low for a family car). While it was in production for eighteen years, it failed to match the Model T and Beetle’s longevity as tastes evolved towards the end of its life. Even though it was adored by a generation, it was no match for more powerful, more sophisticated cars being produced in the mid-1970s.

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10. BMC Mini From an Italian car to The Italian Job, the BMC Mini was truly revolutionary. Designed by Sir Alec Issigonis as an economical response to the 1956 Suez gas crisis, it completely changed the small car market. The Mini is the reason that most economy cars today are transverse front-engine, front wheel drive. Quite simply it allows for a maximized passenger compartment in a very small footprint. Not only was the layout innovative, but also the suspension used rubber cones for dampening, rather than tradition springs, due to the space savings they afforded. And as if this wasn’t enough, its light-weight and FWD layout, which gave it excellent traction over slippery surfaces, helped it win the Monte Carlo rally three times. It also won the British Saloon Car Championship five times as well as a few events in Australia. And best of all, you could walk down the street and buy one.

11. Cooper T43 Much like the Mini reversed fifty years of small car engineering, so too did the 1958 Cooper F1 reverse fifty odd years of racecar design. Remember the aforementioned Citroën transaxle? Well, the Cooper T43 (built in 1957, actually) used the transaxle from a Citroën Traction Avant to transfer power to the rear wheels from a longitudinal two-liter, four-cylinder Coventry-Climax mounted behind the driver. Indeed, the T43 became the first racing car to win (Sir Stirling Moss drove one to victory in the ’58 Argentine Grand Prix) a World Drivers’ Championship race with a mid-engined layout. It was quickly replaced by Cooper’s own T45 (in the next race, which it won!) and the following season came the T51, which was dominant. Most amazing however, is that the T43 beat cars running the maximum-allowed 2.5L against its smaller 2.0L. This is the car that established open-wheel racing as we know it.

12. Ford Mustang The 1964 Ford Mustang didn’t upend the establishment with a new layout like the preceding two. It did however create a new segment that thoroughly resounded with the era’s youth—the “pony car” segment. It was based on a “compact”-sized economy car’s (the Ford Falcon) platform but fitted with an aggressive body that sported a long hood and short deck, which spoke to the power underneath. There were a few optional engines (more than one V8), two seats in the [cramped] back, and seemingly endless customization options. It was a recipe for success - Ford built over 1,000,000 models in the first eighteen months. It became Ford’s bestseller since the Model A (built until 1931). What is truly surprising about this is that the car wasn’t a family-oriented model, but one with sporty pretensions. It also made for a heck of a platform for club and sports car racing and was competitive in Trans-Am.

13. Datsun 240Z The Fairlady in other countries, Datsun’s 1970 240Z was based on the European sports car tradition but it was built to exacting Japanese standards so it was actually reliable. Moreover, it included lively performance on par with mid-tier OEMs (courtesy of a straight-six engine, RWD, and fully independent suspension) and looked great. Best of all, the price was moderate enough so that most of the middle-class in the US could afford it. Due to Datsun’s (Nissan outside the USA) large dealer network they were able to sell more models than many foreign competitors. But the reason this car was a game-changer is that it succeeded in helping Datsun (and other Japanese OEMs) earn legitimacy. It meant that the Japanese were no longer building boring econoboxes - they now had compelling products that could compete on a global stage. The rest is history.

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14. Honda Civic CVCC When the 1975 Honda Civic CVCC (Compound Vortex Combustion Chamber) debuted, the Civic had already been out for two years. But the CVCC helped to turn Honda into a sales leader in the U.S., all because of the ingenious cylinder head design. The combustion process was so efficient due to the shape of the head and negated the need for any sort of emissions equipment to be fitted to the car (unlike nearly every other car in the US market). Additionally, it allowed drivers to use any sort of petrol that was available, a key feature when fuel rationing was in effect due to the period’s oil embargos. As the Civic’s profile rose, so too did Honda’s and, like the Datsun before it, Japanese cars’ in general. After all, here was a car that didn’t pollute, was economical, and more advanced than many American cars.

15. Audi Sport Quattro The 1980 Audi Sport Quattro (rally car) debuted at the Geneva Motor Show on March 3rd, 1980 and was subsequently the first rally car to capitalize on the then-recently changed rules permitting the use of four-wheel drive in competition rallying. It then proceeded to dominate rallying for the next three years. It marked the beginning of the all-wheel drive period in rallying and won two drivers’ championships (1982 and 1984) and two manufacturers’ championships (1983 and 1984) in those three years. What made the Ur-Quattro revolutionary is that it was a racecar that proved the efficacy of four-wheel drive in a sports car and it received a much larger stage (than previous attempts, such as Jensen’s) for its performances. In some ways it foreshadowed the rise of today’s hypercars that demand all-wheel drive.

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16. Jeep Cherokee Jeep had been around for a while by the time the 1984 Jeep Cherokee came to market. But the Cherokee made Jeep increasingly relevant as time passed. Not only did people begin trading their station wagons for this closed, four-seat Jeep, but also it effectively redefined a segment. SportUtility Vehicles existed when the Cherokee debuted—the Ford Bronco and International Harvester Scout are two examples of competitors (from ten years prior)—but the Cherokee combined four-wheel drive with a [very small] bit of luxury that was absent from the aforementioned Ford and International. How significant was this model? Well, Mr. Robert Cumberford of Automobile Magazine called the small Jeep a “masterpiece” designs as well as paradigmatic. It helped to establish the crossover segment and sold for seventeen years in the US. While relatively reliable and surefooted, it was neither the first, nor the best. But its combination of drivability and features made it a hit and helped to define a new segment.

17. Dodge Caravan Another segment-defining vehicle from Chrysler. Much like the Jeep Cherokee, the 1984 Dodge Caravan / Plymouth Voyager only improved upon an idea (the van) to make it friendlier and more marketable. And just like the Cherokee too, it cannibalized the station wagon market. Despite being taller than cars they were based on, from the beginning the Caravan was designed to have a car-like feel and road manner. Chrysler’s executives wanted the minivan to feel immediately familiar. While the car was a Chrysler, the idea first occurred to Messrs. Lee Iacocca and Hal Sperlich while they both worked at Ford. However, Mr. Henry Ford II didn’t like it, even after a prototype was built and killed the idea. After moving to Chrysler, Iacocca and Sperlich revived the concept and developed a winner. Families responded accordingly by snapping up over 13,000,000 during their first fifteen years of sales.

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18. Honda Insight

19. Toyota Prius

The 1999 Honda Insight was the first modern hybrid to market in the US, beating the original Toyota Prius by a few months.

There was a generation prior to this Prius, but the 2003 model was the first Toyota Prius that broadly resonated with the mainstream - and sold accordingly.

It used a 1.0L three-cylinder engine as well as a 144V, 10kW motor to provide power to the front wheels.

With enough interior space to comfortably fit four adults, and positioned between Toyota’s Corolla and Camry, the 2003 Prius was the first hybrid that didn’t make sacrifices for efficiency (unless you consider decent acceleration).

The battery pack was composed of commercial-quality Nickel-Metal Hydride cells used to drive the electric motor. The car was light, weighing in at less than 900kg, and very aerodynamic which allowed it to achieve over about 4.4L of fuel consumed per 100km. Sadly, the Honda was not very well received by the public. Not because of any performance shortcomings or battery-related issues but rather because people needed it to provide more utility, in the form of more seats, than it could.

The previous generation also had four seats but the car was smaller and rather uncomfortable for rear-seat passengers. Additionally, the ’03 Prius was equipped with a smaller and lighter battery than the previous generation and was both more powerful and more efficient, too. And even though both generations were sold for six years (although the first gen was home market only for about two of those years), the second generation outsold the first by a ten-to-one factor. Hybrid family cars finally made sense.

20. Porsche 918

This is where hybrids begin to get exciting. As all modern cars face the same environmental constraints, it was only a matter of time before a sports car was designed to use a hybrid drivetrain (and there are now at least two others). But the 2013 Porsche 918 was first. It uses 4.6L V8 and two electric motors, one each per axle to help the car along, for a combined output of 887hp. It is capable of close to 350km/hr and can accelerate to 100km/hr from a complete stop in about 3.0s. It also achieves a combined fuel economy of 11 L/100 km or nearly double the Porsche Carrera GT’s economy.

Original Source: High Snobiety

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Automotive engineering clusters: driving innovation Autonomous vehicles may be making most of the headlines in the world of automotive engineering, but behind the scenes, collaboration rather than autonomy is proving to be the road to successful automotive innovation. Jonathan Wilkins, Marketing Director of EU Automation looks at some of the most exciting automotive engineering clusters around the world for The Manufacturer. Engineering clusters aren’t a new concept. First noted in the UK in the early 1900s, highly concentrated and localised industries – otherwise known as industry clusters – became home to a rising population and lucrative activities. Industrial clusters now span the globe, with highly innovative companies dedicated to some of the fastest moving (in more ways than one) industries. Automotive engineering clusters are particularly prevalent worldwide. Silverstone, UK Where better to start our journey than in the country that gave birth to engineering clusters – Great Britain? Silverstone may be one of the most prestigious racetracks in Formula One, but its name is also becoming synonymous with hi-tech automotive technology and engineering companies. The High-Performance Technology & Motorsport (HPTM) Cluster is home to around 4,000 firms operating in precision engineering, based within a one-hour radius of Silverstone. These firms benefit from collaboration and competition from within the cluster, which allows them to adapt their innovative technologies and products for a variety of industries, not just automotive. Engineering companies enjoying concentric competition in the Silverstone Cluster include big names the likes of Ducati, Porsche and Lotus, as well as innovative smaller companies. These span those employing supercomputers to monitor how airflow and water droplets affect speed, to high accuracy inertial navigation system manufacturers. ACICAE, Basque Country, Spain Founded in the north of Spain in 1993 with support from the Basque government, ACICAE is a non-profit making association with the aim of improving the competitiveness of the automotive industry in the region. The automotive cluster comprises of 300 companies, invoicing more than €13bn and employing over 75,000 people. Since ACICAE began, it has evolved rapidly, contributing to the four-fold increase in turnover of the Basque automotive industry over the past 15 years. Threefold India The majority of India’s automotive industry is divided evenly into three clusters — Chennai in the South, Maharashtra in the West and the National Capital Region in the North.Thanks to government initiatives and heavy investment by global automobile manufacturers, the automotive industry in India is one of the largest in the world with an annual production of 23.37 million vehicles between 2014 and 2015. The Indian government aims to make automotive the main driver of its manufacturing initiative, ‘Make in India’. With the auto component industry having registered a turnover of $39bn in the financial year 2015-2016 and a growth rate of 8.8%, the strategy seems to be working. Furthermore, other government initiatives in the country include promoting eco-friendly cars and implementing a mandatory 5% biofuel (ethanol) blending in petrol. The government has also created a scheme for faster adoption and manufacturing of electric and hybrid vehicles, under its National Electric Mobility Mission 2020, which aims to encourage the introduction of reliable, affordable and efficient electric and hybrid vehicles to the country. Thanks to the size and spread of India’s automotive engineering clusters, such progressive policies are tipped to have a much better chance of thriving. Finish line As the automotive industry continues to grow and smart technology players enter the fold, engineering clusters will play an even bigger part in creating, connecting and securing the vehicles of the future. Who knows, the next automotive engineering cluster we’re reporting on could be Silicon Valley.

Original Source: The Manufacturer

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Is automotive logistics ready for the impact of Brexit? In light of the recent Brexit vote and looming technology advances, those in the UK’s automotive logistics sector would be well advised to take some bold decisions to prepare themselves for the future… Analysing trends and predicting change in the logistics industry has been relatively simple over the last few years – it has largely been a matter of explaining new technologies. But we now have something huge and unexpected thrown into the mix in the form of Brexit. So what is the likely impact on the automotive logistics sector? Automotive companies in the UK are already looking for different methods to control inbound processes as well as the distribution of spare parts. For the past 35 years (if not longer), automotive assembly plants and OEMs have used traditional large 3PL organisations to solve their problems for them. One of the challenges for the 3PLs, however, is that there has often been a significant amount of internal logistics expertise within automotive plants themselves. This has often left 3PLs reacting to what they are told, rather than creating a true solution to a problem. As the triggering of Article 50 draws closer (assuming the UK’s referendum decision is not now to be reversed by a parliamentary vote, that is), will the prospect of Brexit transform the way OEMs operate, or have they already started to change their ways? And if so, will Brexit speed up that change? One major automotive manufacturer based in the UK has worked with 3T recently to change the way that it handles inbound logistics. The company has taken back control from the large 3PLs, using a software solution developed in-house by 3T. As a result, the manufacturer is now able to manage its own operation using a number of regional UK and continental carriers who are interchangeable at short notice. The new software provides integrated optimised planning with supplier communication portals, offering real-time information and visibility over each component at any time.

In reality, the operation has become more complex, but the combination of multiple carriers with synergy and the increased visibility and control has resulted in a more streamlined operation offering improved service levels. This is not an isolated case. The major automotive manufacturers in the UK are all looking at tackling the same problem but in different ways. In typical conversations, industry personnel ask: ‘Should we do it ourselves? Do we force our big 3PL partners to be creative? Or do we look towards the more agile, technology-led software companies?’ The key trend here is that they are all looking for technology to solve the problem – and while that isn’t anything new, it is a tough challenge for the big fragmented 3PLs. A cultural shift Everyone has an opinion about Brexit. But it looks like it will take at least two years after Article 50 has been triggered to really understand the future of trading with Europe – and even then, many things could still change.Assuming Brexit is a tad harder than most people would want, this suggests the UK will need to be at least 10% more efficient in production to overcome some of the potential obstacles and tariff barriers. That means much greater pressure on decision-making around technology and cost-effectiveness. Companies will have to make sustainable savings and sustainable changes in the way that products are produced and shipped. In terms of transport, making things more efficient and less expensive will be all about vehicle utilisation – keeping delivery vehicles filled up throughout their working day.

Logistics is a fragmented industry: 99% of companies look at their contracts in isolation, while many carriers are only regional. So, adopting strategies and technology to maximise utilisation will require a significant cultural shift. Decisions, decisions If the automotive industry wants to survive and grow, it will have to increase productivity. When something with the magnitude of Brexit happens, decision-making becomes more focused and decisions on bigger projects happen because there is no alternative, other than shutting up shop. The cost of such projects can be huge, so a company will explore all the avenues before taking such a decision. If the UK can implement some of the dramatic technological advances that are on the horizon quicker than its competitors on the continent, however, it will help keep manufacturing in the UK and improve export rates – both of which will be sorely needed in the decade to come. Of course, there is really no precedent for the situation we find ourselves in with Brexit. And alongside it, in terms of transport, we are looking at the introduction and impact of driverless vehicles as well as the full utilisation of vehicles driven by robotic technology, ultimately involving far less human input than today. With all this in mind, the logistics systems that the car manufacturing industry is implementing today and in the next few years will need to be adaptable. It is to be hoped that 2017 will be the year that the automotive sector takes another leap in order to help prepare itself for an uncertain future.

Original Source: Automotive Logistics

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The death of the car company is the biggest change in automotive history The car company is dead. In its place, the mobility company is emerging. The names remain the same: Ford, Audi, Kia, BMW, Citroën, Toyota etc… these brands are not on the endangered species list, but the product they’ve built over the past five years is. As reported by Erin Baker for the Telegraph, in the place of the fossil-fuelled car come hybrid and electric vehicles, and in the place of the driver comes the autonomous software. But beyond all that, what? Some of the answers come from one of the most impressive women working in the global automotive industry today: Sheryl Connelly, Ford’s global trend and futuring manager. Erin interviewed her a few months ago on the short- and long-term trends that will affect the way we drive and purchase cars, and she’s just released her Christmas message, the chief point of which is this idea that Ford is no longer just an auto company, it’s a mobility company; a company that spends less time building cars and more time trying to figure out how to make people’s lives better in a world that uses a lot of cars.

“What’s fascinating is how Ford is adapting and innovating”, she says. “[We’re] offering customers and society at large tangible ways to improve their mobility needs and ultimately their daily way of life.” Connelly’s Christmas report highlights seven “up-and-coming trends for the future”. She’s an ultra-wise cookie, so we’d better listen up and lean in. The Good Life 2.0 is the first emerging trend. Bigger isn’t always better, these days, and ownership does not equate to happiness, which should make manufacturers sit up and take note. Consumers are finding joy in less, where “good” encompasses not just possessions, but also experiences and values. The second trend is Time Well Spent. Anyone with children will know this one: in an on-demand world, punctuality is “a dying art”, and procrastination can apparently be a strength. Conventional ideas about time are often discarded. Hence, we can work flexi-time, or from home, and still get the job done; we could easily work in autonomous cars during the commute, dialing in and out of conversations at any time.

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The third: Decider’s Dilemma. The internet has given consumers a huge amount of choice, impacting their attitude towards commitment. Products and services are adapting to a “sampling society” – try before you buy, if you will. Dealers and online buying sites must adapt to this new expectation. Fourth is Tech Spiral. Is technology improving or eroding our way of life? It has made our lives more efficient, more convenient, but have our attention and retention capabilities shrunk in equal measure? The fifth trend is Championing Change. “For decades the buck was passed between individuals and institutions,” says the report. “Now who really has the greatest opportunity – and influence – to make a difference?” Sixth: The Parent Trap: Unsure that this is an emerging trend – it seems to be as old as the hills, but the report states: “It used to be there was only one way to raise a child. Now, as parenting styles proliferate so does judgment – yet parents are more open and forthcoming about their struggles, looking to their peer for empathy and advice.”

And lastly: Community ties. This one seems to be the one with the most direct and obvious impact on how we view cars going forward: the idea of community has shifted totally, to a fragmented form, where smaller groups in all shapes and sizes, comprising citizens, teachers, economic leaders and governments act in more coordinated, local ways to build multiple societies. As that happens, the idea of a block of manufacturers selling to a large group known crudely as the ‘general public’ will vanish, replaced by smaller demographics preferring more individual ways of buying, owning, sharing or renting their forms of transport. It’s a mind-boggling transformation, with the vehicles we own, the owners themselves – not to mention the way in which we own them – changing totally. Luckily, it’s a gradual evolution, not an overnight revolution, but we’re certainly going through the biggest period of change in the history of the automobile, albeit one that’s a little less daunting with people like Connelly pointing out the way.

Original Source: Telegraph

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Jeep future models - a global analysis

The penultimate feature in Just Auto’s series concerning the future model plans of FCA’ passenger vehicle brands is an analysis of what’s ahead for Jeep. Having observed the Indian market success of the Renault Kwid crossover, FCA is said to be considering the potential for a global sub-Renegade model. If an A segment SUV is given the go-ahead it would likely share a platform and mechanicals with the Trekking version of Project 170, the next Panda. The little Fiat is due to reach European markets in 2018 or 2019 so a baby Jeep would be as far off as 2020. The Panda will be manufactured in Italy at Pomigliano d’Arco so that would be the most logical place to produce a mini-Jeep. However, Kragujevac is presently having troubles producing anywhere near capacity numbers of the 500L and 500L Living MPVs and FCA has spent a lot of money on the Serbian plant. Putting another SUSW architecture model into that low-cost factory could be a clever move. The littlest Jeep could end up being quite a big deal. Such a vehicle would also potentially be very successful in Brazil and India: it could be made there too. Project B-SUV/530 (and 521 for Brazil’s localised model), which became the Renegade, has been in production since mid-2014. The first plant was SATA in Italy, otherwise known as Melfi. The car is also built in at Goiana in the northeastern Brazilian state of Pernambuco, in China at Guangzhou and will enter production at Tata Motors and FCA’s JV Ranjangaon factory in the Indian state of Maharashtra by 2018.

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The Renegade, currently the smallest Jeep, was revealed at the Geneva motor show in March 2014 and is built by FCA Italy alongside its twin, the Fiat 500X. The latter replaced the Suzuki-based Fiat Sedici. Fiat announced the build location and a euro 1bn refit for its Melfi plant in December 2012. This would be the only factory to build this Jeep, Fiat stated at that time. The Renegade’s US market debut was at April 2014’s New York auto show. It went on sale in North America during December 2014, for the 2015-model year and it has been hugely successful. The Jeep entered production at Melfi first, followed by the Fiat 500X. Fiat’s media release of 20 Dec 2012 said that Melfi would be able to build up to 1,600 vehicles a day via three shifts. The plant can manufacture up to four different vehicles on the same line. Renegade production commenced in June 2014. Melfi is said to have 280,000 units of annual capacity for the 500X and Renegade, with the Jeep taking up roughly 150,000 units of that. The architecture is SUSW (‘Small Wide’), as introduced by the Fiat 500L. Both front-wheel drive and four-wheel drive variants are available. Meanwhile, production of the first Brazilian-made Renegade at Goiana was originally due to start in late 2014 but on 31 March 2014 Sergio Marchionne stated “Start of production at the new Pernambuco plant is expected during the first half of 2015. Initial production capacity will be 200,000 vehicles per year with models based on the Small Wide architecture that will strengthen our offering in the mid-size passenger car segment”. The site has an integrated supplier park, as well as product engineering and testing facilities.

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Up to 300,000 engines and 400,000 gearboxes per annum can be made on-site. The Renegade was the first vehicle to be built at Goiana. The model built in China is via a GAC FCA joint venture. Chrysler told the media in April 2014 that three Jeep models would be made in Guangzhou from late 2015, but did not name them. According to a curiously worded statement, “GAC Fiat is establishing a manufacturing branch in Guangzhou”. Given the short space of time between April 2014 and the end of 2015, the “manufacturing branch” was suspected to be an existing GAC facility, not a new plant. GAC FCA has one production plant but this is in the city of Changsha and it makes Fiat cars. As expected, the plant in question for Jeep production turned out to be a GAC facility which is now part of the GAC FCA joint venture. Renegade production commenced at this plant in April 2016. It is located within the manufacturing base of the GAC Group’s passenger vehicles in the Panyu District, Guangzhou. The factory has the production capacity to build 160,000 vehicles a year. After Indian build commences, the next news for the Renegade should be the announcement of a mid-cycle styling update. That should take place in 2018 with the replacement model to be launched in mid to late 2021. Renegade 2 will use SUSW Evo, an update of the current model’s platform. In the size class above the smallest existing Jeep is the new Compass. It replaces not only the outgoing model but the Patriot too. This rival for the Nissan X-Trail / Rogue had been due to go on sale in North America and Europe in early 2013 but the start of production was delayed many times. Production finally commenced in September 2016 with the first plant to build this model being Goiana. Cars for North America will be sourced from Mexico with build set to commence at Toluca during the first quarter of 2017. Production in India will commence in mid-2017. FCA spent the equivalent of US$280m to lift the capacity of the JV plant, which it operates with Tata Motors in Ranjangaon, some 50km from Pune. The Compass will be the first Jeep to be made there. Cars for RHD European markets will come from India, and LHD cars from Brazil, the head of Jeep Mike Manley told journalists at the LA auto show in November. GAC FCA, meanwhile, will manufacture the Compass in China. In June 2014, GAC Fiat Automobile broke ground in the south China city of Guangzhou for its second assembly plant. The 4.2 billion yuan factory will be where the Compass is made, with initial capacity said to be 160,000 vehicles per annum. In China, the main rival will of course be the hugely successful Haval H6. The US should be the Compass’ largest market. There, it will challenge the segment leading Toyota RAV4 and Honda CR-V as well as the Ford Escape, Chevrolet Equinox and Nissan Rogue. In Europe, where FCA said the Compass will be available from the second half of 2017, the Nissan Qashqai, VW Tiguan, Peugeot 3008, Renault Koleos and other big sellers are to be the key competitors. North America’s Compass had its premiere at the LA auto show in November, as did the 2.4-litre engine, which is standard in the region. Front-wheel drive variants will be available with a six-speed manual transmission. There will be two four-wheel drive systems and that also means both six-speed and nine-speed automatic gearboxes will be available for these.

A rugged Trailhawk variant will be part of North America’s model range. The Compass will likely have a seven-year lifecycle, so a facelift is due to appear from around March-June 2020 with the replacement model expected for release in the second half of 2023. US production of the now previous generation Compass will cease in a few days’ time and the same applies to the decade-old Patriot. The D-SUV Cherokee, which is one of the Jeep brand’s best sellers worldwide, is built mainly at Toledo North in Ohio. This replacement for the Liberty/Cherokee had its global debut at the New York auto show in March 2013. Limited production started the following month but the ramp up was delayed several times as a software glitch concerning the then-new nine-speed transmission was sorted out. Chrysler began to ramp up again from October 2013. The transmission is supplied from the ZF Transmissions Gray Court plant in South Carolina. The same nine-speed unit goes into Land Rover’s Range Rover Evoque and Discovery Sport models.The model name switched to Cherokee for all markets, with the exception of China: the previous vehicle was the Jeep Liberty in North America. The Chinese market name is Zi You Guang, with that model having been built in Changsha since October 2015. This is the same GAC FCA plant, which produces small numbers of the unsuccessful Fiat Ottimo and Viaggio models. The standard US market engine for the Cherokee is the Tiger Shark 2.4-litre MultiAir four-cylinder unit (184hp), with a 3.2-litre version of the Pentastar V6 (271hp) optional.There are three 4x4 systems: - Active Drive I with one-speed power transfer unit (PTU) - Active Drive II with two-speed PTU and low range - Active Drive Lock with two-speed PTU, low range and locking rear differential. The Cherokee is due to be facelifted for North America’s 2018 model year, with the China-built car having an equivalent update a year later. Each should be replaced in 2020 and 2021 respectively. US production of the next Cherokee will not be at Toledo North. Instead, the vehicle will switch to Belvidere in Illinois. The reason for this is the conversion of FCA’s Toledo manufacturing complex to body-on-frame vehicles: the next Wrangler series will be made there. Before then, production of the existing Cherokee will also shift out of Toledo North and into Belvidere. This is expected to take place in March 2017. Toledo North will then be converted to body-on-frame production. This should be completed by September 2017. JK72 and JK74 are the existing Wrangler and Wrangler Unlimited, two vehicles that are getting to the end of their lives after long production runs. They use the same body-on-frame platform as the 1996-2006 TJ model. North American sales started in October 2006, the model having had its debut at that year’s Detroit motor show. These old-school Jeeps were launched with a standard 205hp 3.8-litre pushrod V6 but for some markets, a 2.8-litre four-cylinder turbo diesel, supplied by VM Motori, followed. These diesel versions of the Wrangler and Unlimited debuted at the Paris show in September 2006. The Unlimited, which has four doors and a longer wheelbase, was new for North America’s 2007 model year. It has since become the best selling body style.

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For North America’s 2012 model year, Chrysler gave the Wrangler and Unlimited a far more powerful gasoline engine. This was also the first pairing of the Group’s 3.6-litre Pentastar V6 with a manual gearbox. The old four-speed automatic was also ditched for the 2012 model year. The manual is a six-speeder, while the auto has five speeds. A Wrangler powered by a then-new 3.0-litre V6 had its global debut at the Chengdu motor show in August 2013, going on sale five months later. This addition to Chrysler’s Pentastar family produces 230hp. For the moment, it is sold only as China, as the engine capacity places the vehicle below a tax threshold. Even though replacement models are due to enter production next year, FCA is said to be planning to keep building the current Wrangler and Unlimited into the first quarter of 2018. In July 2013, there were reports attributed to unnamed suppliers, which stated that the replacements had been delayed from 2015 to mid-2018. Then in March 2014, Sergio Marchionne appeared to state in a press conference that a new Wrangler could be launched in early 2015. Just one month later, Mike Manley, the head of Jeep, told an investors’ gathering at FCA in Auburn Hills that the Wrangler would be replaced in 2017. The model is now reportedly due to appear next July. A pick-up body style will be added for the Wrangler replacement, with such a model to be possibly sold as the Jeep Gladiator from the 2019 model year (August/September 2018). This would be a link to multiple pick-ups sold with that badge since the early 1960s as well as a concept from 2005.The Wrangler, Unlimited and Gladiator may well be available with a diesel engine in North America (i.e. not just in Europe and other markets which have a preference for this fuel). They should also have ZF’s eight-speed automatic and most likely a new 2.0-litre turbo engine, which will be manufactured at Trenton Powertrain in Michigan. In June 2014, Mike Manley stated in an interview that the next Wrangler would have its own platform. Speaking at the Paris motor show four months later, Sergio Marchionne told the media that this vehicle might shift plants. This would be due to the possibility of the vehicle being largely constructed with some aluminum panels on a new unibody architecture. However, just weeks later, it appeared that the JL series Wrangler’s would have a body-on-frame chassis but be fitted with smaller capacity gasoline engines plus aluminum body panels.

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All of this will be needed in order to meet future CAFE fuel economy standards. In September 2015, FCA told staff at its Toledo plants that the next Wrangler would be built there but that the replacement for the Cherokee would move elsewhere. There are two plants at Toledo Assembly. The smaller South facility builds the body-on-frame Wrangler, while the other site, Toledo North, makes the unibody Cherokee. FCA intends to convert North to ladder frame vehicle production. Suppliers have reported that their customer wishes them to prepare for annual combined production of 350,000 Wrangler series models. The current shape Wrangler is reportedly set to remain in production at Toledo South into the first quarter of 2018. Confirmation of production of the next Wrangler at Toledo North came in July 2016 and six months prior to this, FCA told the media that there would also be mild hybrid and hybrid powertrains. Alcoa is said to be supplying aluminum panels for the 2018 model year Wrangler. These vehicles will reportedly use Alcoa’s C6A1 high form alloy as well as the company’s 6022 alloy sheet for the hood/bonnet and door panels. A951, a pre-treatment aluminum sheet bonding technology, is also said to be part of the supply deal. The Wrangler and Unlimited should have facelifts in 2021 and be replaced in 2027, with the pick-up to lag those dates by around a year. WK2, the fourth generation Grand Cherokee, was new for North America’s 2011 model year. Series production of this five-seater SUV started in May 2010 and North American market sales the following month. The vehicle shares much with the Mercedes-Benz R-Class, as well as what were originally known as the GL-Class and M-Class. The Grand Cherokee was the first to use a range of Chryslerdeveloped V6 gasoline engines originally referred to as Phoenix but now known as Pentastar. The model’s base gasoline engine in all markets with the exception of China is a 290hp 3.6-litre Pentastar. The other gasoline engines are a 360hp (268kW) 5.7-litre V8 or a 6.4-litre V8. The latter is for the SRT8 variant. This debuted at the New York auto show in April 2011 and went on sale across North America from July 2011 (2012 Grand Cherokee SRT8). Its original power output was 465hp (347kW) but this rose to 475hp (354hp) for the 2015 model year.

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A 241kW 3.0-litre V6 diesel, which is supplied by VM Motori, debuted in the Grand Cherokee at the Geneva motor show in March 2011. The Grand Cherokee diesel was originally available in Europe and elsewhere, but not in the USA. The previous generation model was withdrawn from the US market in 2009 due to low sales. The 3.0-litre engine then premiered in an updated Grand Cherokee which was revealed at January 2013’s Detroit Auto show. In North America, it is branded as an ‘EcoDiesel’ and produces a claimed 240hp. The 2014MY Grand Cherokee gained a styling update and an eight-speed automatic gearbox for both V6 and V8 variants (including the high performance 6.4-litre SRT, which previously had the old five-speed auto transmission).

FCA is said to be keen to build generation five at Belvidere in Illinois. This is part of a major realignment of its North American production plants. GC V should gain a facelift in 2022 and continue in production until around 2026. There is a chance that WL might be based on an adaptation of the Giorgio architecture but if that happens, production will likely be delayed until 2019.

A Grand Cherokee powered by a then-new 3.0-litre V6 had its global debut at the Chengdu motor show in August 2013. This addition to Chrysler’s Pentastar family produces 230hp and is sold only as China, as its capacity places the vehicle below a tax threshold. The Jeep Wrangler is the only other FCA US model to offer this engine. The 2016 Grand Cherokee had some changes, most of them centered on the vehicle’s powertrains. Two additional variants premiered at the New York auto show in March 2016. These were the 2017 Summit and the 2017 Trail Hawk.

Speaking to the media in June 2016, Mike Manley appear to suggest that the Wagoneer and Grand Wagoneer could be upscale derivatives of the next Grand Cherokee. Manley then stated at the Paris motor show three months later that he could see the Jeep brand pushing up as high as US$130,000140,000 with a future luxury model, which has confused matters.

A Grand Cherokee powered by the 6.2-litre Hellcat V8 will then be added from July 2017 the head of Jeep, Mike Manley, told the media in April 2016. Four months later when he spoke at the LA auto show, Manley named this variant (‘Track Hawk’) and stated in an interview that it would be revealed at the New York auto show.WL, the fifth generation Grand Cherokee, should use an evolution of the fourth generation’s Mercedes-Benz W164 architecture. This next model should have its world premiere at the 2018 New York auto show before going on sale in the fourth quarter of CY2018 for North America’s 2019 model year. As well as updates of the current model’s V6 petrol and diesel engines, and the petrol V8, FCA’s Hellcat supercharged V8 should again be available in a special SRT Track Hawk variant. This was shown in prototype form at a dealer event in Las Vegas in August 2015. FCA told the assembled dealers that the Track Hawk would have a 0-60mph time of 3.5 seconds. This Grand Cherokee is yet another example of FCA continuing with its strategy of keeping vehicles in production far longer than its rivals do, and indeed, in contrast to what the former Chrysler Corporation did. The GC was once on a six-year lifecycle but the current model will be eight when it is replaced.

A model, or indeed even two models that would be larger than the GC are said to be under development, though there are stories, which claim both delays and potential cancellation. The latter seems unlikely, given the potential profitability of even one large SUV similar in size and style to the Cadillac Escalade.

Adding to the uncertainty, as recently as November, there was a report out of the US claiming that the Grand Wagoneer had been cancelled but it contained no quotes from suppliers or from FCA itself. In theory, such large, heavy vehicles would be likely to have an aluminum platform, so FCA may push them back to 2020 while such an architecture is developed. Yet as this company has proved time and again, it is full of surprises so something such as having Ford make one or more large Jeeps based on the next Lincoln Navigator platform shouldn’t be ruled out. Who would have thought a new, rear-wheel drive Fiat 124 Spider would be developed, and built in Hiroshima by Mazda? Summary Even without the Wagoneer and/or Grand Wagoneer, Jeep continues to be on course for global production and sales records. The Compass is predicted by Mike Manley to become the brand’s bestseller in 2018 but the genius of Jeep’s management and product planning is having such a strong spread of vehicles in multiple size classes. By the mid-2020s, and perhaps even before then, this SUV specialist brand could well be making up to two million Jeeps a year. Future model plan reports for other manufacturers can be viewed in the OEM product strategy summaries section of just-auto.com.

Original Source: Just Auto

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Faurecia CEO eyes acquisitions to help supplier to create the ‘cockpit of the future’ In an interview with Automotive News, it was reported that Faurecia is looking to grow through acquisitions following the recent sale of its exterior parts business. It is particularly interested in solutions that improve the human-machine interface because its knows that autonomous driving will dramatically change vehicle interiors. The French supplier’s answer to this challenge is the “cockpit of the future.” Patrick Koller, who became Faurecia CEO earlier this year, provided details to Automotive News Europe Correspondent Bruce Gain. What are the key challenges Faurecia faces related to meeting the forthcoming demand of autonomous driving? Autonomous driving will shape what we call the “cockpit of the future.” We are designing new architectures and interfaces for drivers to enable them to use the extra time they will have in their cars. Is Faurecia looking to add technologies through acquisitions? Since we sold our exterior parts business and will be debt free or close to debt free by the end of this year, we will be in the position to make acquisitions. We are clearly looking to add technologies to our portfolio. These include whatever is linked to HMI [human-machine interface] and how you integrate that into the cockpit of the future. How will safety and comfort factor into your cockpit of the future? There are two areas consumers will never compromise on: safety and comfort. During the initial period when autonomous cars are adopted, most other cars will not have autonomous driving capabilities. The two will exist together. Safety, of course, is absolutely critical. Drivers must always be able to take back control of the car. But with less driving to do, motorists will require, for example, larger screens that can also be removed and put away. There will be a much wider range of seat positions, such as being able to fold them back more in a reclining position as you relax or even sleep in your car as it drives itself. We are developing new interior architectures to accommodate this change. This includes the position of seat belts when you are reclining, the way the airbags are activated in case of a collision and the direction of air conditioning and heat flow. As you let the car do more of the driving, for example, you might want to read. To do that, we need to adjust the position of the armrests and lighting so that you can read more comfortably. All these things need to be taken into consideration. What role will connectivity play? Autonomous cars, of course, will be connected. Drivers and passengers will increasingly demand the same level of connectivity in their cars as they have at home as they bring their consumer devices into the car with them. For example, the HMI we are developing must become more predictive. It will need to recognize who is in the car and to instantly recognize what their preferred applications are. The idea is that people will leave their cars in better shape than when they entered. They want to relax during their trip in pleasant atmosphere.

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How high will the demand be for autonomous cars in the future? Their volumes will be significant: above 5 percent by 2030. Where else are you looking to make acquisitions? We are also looking to invest in lightweight solutions. You are starting to see premium carmakers use lightweight composites on a greater scale. Due to stricter emission regulations, all carmakers will need to consider lower car weight as a priority. We are also looking at energy recovery systems and efficient emissions control devices and fuel cells. How is Faurecia positioned in the marketplace? We have never been in a situation like this before in the car industry. There are very big changes happening. The first is alternative powertrains. The second is whatever is linked to connectivity. This includes, of course, autonomous driving. The third is new business models, which will likely create new customers for us, such as from car-sharing firms, which are certainly not threats. They represent great opportunities. In 2013, we told the market we wanted to achieve our turnaround as a company by 2016. I think we have succeeded. We already achieved the vast majority of performance metrics we outlined. These metrics include operating income, growth, cash flow, and return on capital. We have completed the company’s turnaround. We have a strong business portfolio. How has Faurecia’s sale of its exterior parts business to Plastic Omnium helped the company’s balance sheet? We sold our exterior parts business for a few reasons. First, the business was purely European and we could not expand it globally. Additionally, we couldn’t see a way to add technology to it. We have sold assets that we couldn’t grow or add technology to. We have to clearly define what our priorities are in terms of strategic moves, in such areas as the cockpit of the future and sustainable mobility. We have also told the market that we still have the potential to improve our profitability. What is possible? In 2014, we said we would achieve an operating margin in 2016 between 4.5 percent and 5.0 percent and a minimum of 300 million Euros of free cash flow. It is important because the market has decided that operating income is a key business indicator. If a supplier has a high operating income, it means that the supplier’s execution is excellent or its technology content is high. Globally, the industry is doing quite well considering the volumes, the financial markets and raw material prices. Our customers’ operating margin, on average, is between 5.0 percent and 8.0 percent. Their business models are largely based on car assembly and they have other sources of incomes such as car financing services. For suppliers, profit is largely derived from the added value of their businesses.

Original Source: Automotive News

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The Big Bang of autonomous driving

2007: The moment self-driving cars became real Autonomous cars’ eruption from the laboratory to the real world can be traced back to one event Unless you are living in an underground bunker and trying your best to ignore the auto industry, you are aware that the car business is now hurtling madly toward a future called “autonomous driving” according to Automotive News. Automakers around the world, tech companies that want to be automakers, auto parts makers, municipal planners and even operators of delivery fleets and taxi companies all are marching toward a reality of cars and trucks that will steer themselves, brake when drivers are not paying attention, change lanes by themselves and, eventually, pick you up at your house and take you to work with nobody at the steering wheel. You may have wondered: How in the world did all this start? The answer surprises many. There was a Big Bang on a Saturday in November 2007, and chances are you missed it.

“That was the moment,” agrees Red Whittaker, a leading robotics professor at Carnegie Mellon University in Pittsburgh who has spent his career exploring and patenting ways to automate mining, farming and industrial vehicles. “That day in 2007 was the moment when concepts that had been around for years suddenly came out of the laboratory and into the world. And unless you were aware of the decades of research that had been going on, the whole thing probably came as a complete surprise to you.” It was on a closed Air Force base in Southern California that day that the autonomous-driving industry was born. The U.S. Department of Defense -- as in the Pentagon -- had invited a couple hundred of the country’s most advanced transportation science and computer problem-solving thinkers to conduct a 60-mile obstacle course race -primarily to make a point. The Defense Department wanted to demonstrate that it was possible, practical, safe and maybe even financially attractive to make automobiles drive through a city with nobody behind the wheel. As the country’s “real” auto industry geared up for its annual holiday season blowout sales, the California gathering was largely overlooked.

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But in the months and years that followed, future-minded thinkers realized that the race had been an auto industry game changer. Into the light The Nov. 3, 2007, contest was not the first of its kind. The Defense Department for years had been trying to nurture research on self-guided machines at big universities, including the Massachusetts Institute of Technology, Stanford University and Carnegie Mellon. Robots were seen as the next great battlefield tool in America’s arsenal. Robotically guided vehicles might be used to approach suspicious cars in war zones. Robot devices might creep through caves or over mountain hideouts or along the seafloor looking for enemy combatants. An independent Defense Department organization launched by the Eisenhower administration, called the Defense Advanced Research Projects Agency, or DARPA, was, by the 2000s, bent on bringing advanced transportation thinkers out of their laboratories and university computer rooms to compete in the light of day. The government had even granted DARPA special power to give away prize money to sponsor public contests to do it. In 2004, DARPA offered a $1 million prize to challenge participants to get a driverless vehicle to complete a 150mile trek through the Mojave Desert. But like new Marine Corps recruits collapsing in basic training, not one of the participants finished the course, and no one claimed the prize. A year later, DARPA tried again, this time offering $2 million to challenge teams to complete a 132-mile Mojave course with driverless vehicles. And this time, five teams completed the race. A Volkswagen Touareg converted by Stanford University into a self-driving vehicle called Stanley won. Two years later, DARPA doubled down, moving the contest to a mock urbancape where driverless vehicles would have to navigate lifelike city traffic and unpredictable pedestrians. Less cheerful times At that late 2007 moment, the auto industry was not a happy place. Auto sales were falling. Pickups and SUVs, which had made the industry rich for a decade, were taking it on the chin as gasoline prices rose and the housing market teetered into trouble. The U.S. economy was looking sketchy. Americans were losing their jobs, and General Motors was losing money. Among the teams for that race, Stanford was back with its VW partners. An MIT team had partnered with Land Rover. Virginia Tech worked with Ford Motor Co. Carnegie Mellon worked with GM.

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“There was a little more awareness this time around,” recalls Whittaker, who directed the Carnegie-GM team. “You could tell that some people were starting to watch this activity a little closer. In the previous DARPA races, it had really been an off-road competition with a lot of rugged vehicles, like a dune buggy, an old Hummer and an autonomous motorcycle. But for the 2007 race, it was really about urban driving. It was really about ordinary passenger cars for the first time.” Attracting attention Strolling through the racing grounds that Saturday were individuals who illustrated the growing awareness. Steve Wozniak, co-founder of Apple Inc., visited with the teams and introduced himself. At that time, Apple had no car venture.Also in the crowd, observing the teams, were Google founders Larry Page and Sergey Brin. Google also had not declared its interest in automobiles. Microsoft, a company that had been at least supplying software products for Ford and other automakers for nearly a decade by then, also had representatives strolling the field. Carnegie Mellon’s converted Chevy Tahoe won the race, and Whittaker’s team accepted the $2 million. But Whittaker philosophically muses that “there was the prize money -- and then there was the larger prize. We proved the technology worked out on real streets and could comply with traffic laws and compete with real cars.” “We ignited the industry’s interest,” he says. “OEMs had to start asking, “How can we not participate in this technology?’” Immediately, many companies saw it as a ground-floor opportunity. Race participants from that day became hot properties for computer tech companies and automakers that suddenly glimpsed a future of driverless cars. If a college professor knew how to make a sedan stop by itself to avoid an obstacle in the road, there were new fortunes to be made. If there were university computer science technicians who knew how to convert that behavior into computer code, they were valuable employees. “A handful of companies immediately saw amazing potential in all this, and they began hiring everybody they could from academia,” says one race participant who was recruited to help Internet giant Google get into the automated vehicle business and asks not to be identified. “ But that’s the great part of this story. An idea emerged from outside of the traditional auto industry, and companies like Google with their very fast-moving and creative culture got it. And as a result, the idea took flight far faster than it would have otherwise.”

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Google said as much itself three years later, in 2010, when the company revealed that it was planning to produce selfdriving cars. A revealing blog post connected its work directly to DARPA.

He believes that hugely important applications need to be developed outside passenger cars to automate dangerous vehicle jobs in construction, mining, farming and emergency fields.

“To develop this technology, we gathered some of the very best engineers from the DARPA Challenges, a series of autonomous vehicle races organized by the U.S. Government,” the public statement said. “Chris Urmson was the technical team leader of the [Carnegie Mellon] team that won the 2007 Urban Challenge.

Those fields will be just as revolutionized as passenger cars by the advent of driverless technologies, he says Meanwhile, the autonomous Big Bang continues to pull talent out of universities such as Carnegie Mellon.

Mike Montemerlo was the software lead for the Stanford team that won the 2005 Grand Challenge. Also on the team is Anthony Levandowski, who built the world’s first autonomous motorcycle that participated in a DARPA Grand Challenge, and who also built a modified Prius that delivered pizza without a person inside.” But the academic world knew Thrun was far more than a software engineer. A renowned researcher in computer learning, the German-born Thrun was recruited to Google soon after running Stanford’s racing team for DARPA in 2007. His team’s converted Volkswagen Passat named Junior came in second behind Whittaker’s Chevy. Thrun’s Stanford team also had developed Stanley, the DARPA 2005 winner. Thrun stepped down to an advisory role at Google in 2014. It continues But the degree to which academic talent was hired away after DARPA was a surprise, Whittaker says. He saw a number of colleagues and graduate students recruited to auto industry pursuits from Carnegie Mellon’s Robotics Institute, where he has worked for 36 years. Urmson, for instance, an assistant research professor, had served as director of technology on Carnegie’s winning DARPA 2007 car. He was recruited to direct Google’s self-driving car project in early 2009. He left that Google post in August. “I’ve spun off some 20 companies and organizations over the years from what we do here,” says Whittaker, 68. “This is how it works in academic circles. But I really didn’t see this one coming.” After the 2007 race, Whittaker, who drives home every day to a large farm where he raises some 200 head of cattle, turned his focus back to his earlier research work of automated industrial and farming vehicles. His career research has led to the development of massively large automated rock-hauling trucks, now being used in an Australian mine. His patents include the technology to let tractors plant and harvest rows of crops without a driver.

This year, the San Francisco-based ride-hailing company Uber opened an advanced technologies center in Pittsburgh, near Carnegie’s campus. Uber hired away some 40 people from Carnegie’s staff to bring driverless-car know-how to what is currently a taxi company. John Bares crossed over from Carnegie Mellon to Uber. A research scientist who came to the university as an undergraduate, stayed to receive his Ph.D. and later became director of the National Robotics Engineering Center at Carnegie, Bares left last year to become director of Uber’s new tech center. Pioneers “These people are pioneers, and this is inevitable now,” Whittaker says. “What you start just keeps spreading out in new ways. You don’t know where discoveries will take you. Do you think that when the Wright brothers first got their plane off the ground they had any idea that it would result in the technology to compare airline ticket prices online?” There was a telling moment at the conclusion of the ceremonies of that November 2007 race, some participants recall. The director of DARPA at that time, Tony Tether, was presenting the prizes and congratulating the teams. A team member asked him, “Tony, when is DARPA’s next race, and what will it be next time?” “There isn’t another race,” they recall Tether answering. “Mission accomplished. You’ve achieved what we hoped to achieved. That’s it. “Our job was to start the ball rolling,” he said. “Now all of you have to go out and make something out of it.” “The Big Bang of autonomous driving” originally appeared at Automotive News on 12/19/16

Original Source: Automotive News

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The end of the supply chain According to a recent article published by Tech Crunch, over the next 10 years, the differentiating source of supply and value in the automotive industry will not be car parts or engines. Instead, it will be a network of software developers. The autonomous car will be here before we know it. Tesla autonomous technology has already amassed 100 millionplus miles. Legacy car manufacturer General Motors joined the action by acquiring self-driving startup Cruise. Apple has plans to release its own car by 2019, while Uber is planning to launch autonomous rides in Pittsburgh. When autonomous vehicles become available at scale, the car will transform from just a mode of transportation into a new-age entertainment hub, with captive consumers surrounded by its technology for an average of at least five hours a week. The automotive industry has been building cars for more than 100 years. The next 100 years will look radically different. Consumers will care less about the physical performance of the car and more about the software and experience of the car. Ring a bell? Enter the development platform for autonomous cars. This will be the smartphone wars 2.0. The market opportunity is at least as big, if not far bigger. As we saw with the introduction of the iPhone and Google’s Android, existing dominant players BlackBerry and Nokia were laid to waste. Steven Elop, the CEO of Nokia at the time, had a famous quote, which I referenced in my book Modern Monopolies: “The battle of devices has now become a war of ecosystems.” So too with cars. Around the time the iPhone was first introduced, Nokia owned 50 percent of the smartphone market, RIM 8.3 percent and Motorola 6.6 percent. Why did none of them build a development platform to draw in millions of software developers to build apps on top of their phones and operating system? That’s the billion-dollar question. Let’s hope automobile manufacturers realize the tremendous threat and opportunity in front of them. Which one will step up and be the automobile version of the iPhone? In platforms, there’s typically room for only one or two dominant players. Who will own the next 50 years of the automotive industry? The next five years will determine the next 50 years of the automobile industry While bringing autonomous cars to consumers is an important task today, ultimately it will be table stakes, as any smart exec should expect that every new car will have autonomous capabilities to drive itself within the next five to 10 years. We’re already seeing this on a small scale with features like automatic accident-prevention breaking. Once consumers become familiar with the benefits (and relative safety) of autonomous cars, there will be no going back.

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The more exciting challenge is not in manufacturing an autonomous car, but rather in building a platform that connects software developers with consumers and passengers in these vehicles of the future. Automobile manufacturers must embrace business model innovation and diversify to become a platform companies, lest they face the same fate as Nokia and BlackBerry before them. Unfortunately, for the auto manufacturers, there will only be two winners. No one wants to be Windows Phone — but inevitably, more than a few of today’s major players will be. The auto companies that are first to successfully launch a development platform for autonomous cars will have a distinct advantage. Difficulties for traditional enterprises to embrace platform innovation Traditional enterprises usually innovate in increments. If they were to embrace true disruption, they would embrace business model innovation. Platform business models are fundamentally different than existing linear models that drive today’s auto manufacturers.Platform businesses take many years to reach a point of critical mass, and have a great deal of risk and expense associated with making them successful. However, if they are successful, platforms enjoy winner-takeall dynamics and strong network effects that create a key defensive moat to keep competitors out. A lot of C-suite executives have their hands tied by external shareholders expecting quarterly performance. Building a platform business is like starting a new company, and it takes a long time for it to reach a point of maturity that satisfies investor expectations.Amazon is a great example of a platform company that has been able to manage investor expectations to tolerate many years of losses with the hope that Amazon’s strong network effects will eventually result in market dominance and shareholder earnings. Automotive companies should take a page out of Amazon’s playbook and position themselves for the next 10 years of investment. Though they may not see it yet, this move is necessary for their survival. But it also offers enormous upside: the chance to win the platform wars that are bound to revolutionize and challenge traditional approaches in the industry. Somewhat ironically, former BlackBerry co-CEO Jim Balsillie once said that this transition from linear to platform business is “where tech companies go to die.” Unfortunately for him, in the case of BlackBerry, he was right. Apple and Google have shown that this need not be the case. But time is of the essence. Executives and shareholders should be clamoring for today’s automotive companies to embark on their platform journey as early as possible, lest they miss chance to win the battle for the future of the automobile. The future of cars is very clear. Now we’ll see who gets there first. Game on.

Original Source: Tech Crunch

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Cars are still beating public transit Justin Fox, a writer and contributor for Bloomberg gives his opinion on the current state of public transportation in the U.S. One day last fall I showed up just after 6 a.m. at the Bay Area Rapid Transit station in Lafayette, California -- the town where I grew up -- to catch a train to Bloomberg’s office in San Francisco. It was packed standing-room-only for the whole 30-minute ride into the city. I remember thinking that if BART was that crowded before 7 a.m. something really remarkable must be happening. The sprawling, car-centric Bay Area I knew was being transformed, and maybe the nation with it. OK, yeah, I can get a little delirious before I’ve eaten breakfast. Upon reflection, I determined that a major reason the train was so crowded so early was because you have to get to BART’s suburban stations that early to snag a parking spot. And when I looked into the data I saw that even in the crowded, progressive, willing-to-vote-tax-hikes-on-itselfto-fund-transit Bay Area, public transportation isn’t exactly taking over. For one thing, while transit use has been on the rise lately in the Bay Area, overall ridership is actually still below the level in 2001, due mainly to a big drop in bus use. Also, according to the Census Bureau, while the San Francisco area saw the biggest decrease among large metropolitan areas in the percentage of workers commuting by automobile from 2006 to 2013 that still left 69.8 percent driving in 2013. And that doesn’t count all the people driving to BART stations at 6 a.m., or the neighboring San Jose metropolitan area, where car use is much higher. As large U.S. metropolitan areas go, in fact, San Francisco is the second least autointensive, after New York.

Overall, 85.8 percent of Americans traveled to work by automobile in 2013, and 5.2 percent by public transportation.

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Two pieces of news I stumbled across Wednesday implied that the small transit minority might even be shrinking: “U.S. vehicle-miles traveled surged 4.3% in November 2015 compared with November 2014,” the Wall Street Journal reported, while in Los Angeles County transit use fell more than 10 percent from 2006 to 2015, despite big investments in light rail and subways, according to the Los Angeles Times. As someone who writes occasionally about the resurgence of big cities and the struggles of the suburbs, this makes me wonder: Have I -- a public-transit-reliant city dweller -- been fooling myself into thinking that there’s more of shift occurring than there really is? And more generally, is the whole narrative of the return of the city and the decline of the automotive lifestyle just a fantasy promulgated by journalists and think-tankers concentrated in a few big, transit-friendly cities? I’m pretty sure the answers to my questions are yes -- I had to some extent been fooling myself -- and no -- the narrative isn’t a total fantasy. But let me focus on the public transportation angle. Here are the national ridership numbers since 1990:

The overall trend is upward, although there hasn’t been much of an increase over the past decade. And there’s been a clear shift away from buses and toward rail.

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Now, a longer view:

As the headline on his piece reads: “Urban residents aren’t abandoning buses; buses are abandoning them.” Rail passengers tend to have higher incomes than bus riders, meaning that in recent decades the U.S. has been shifting public transit resources toward the affluent and away from the poor. The affluent appear to have responded by moving back into cities and along rail corridors in the suburbs. A recent Census Bureau working paper showed, for example, that neighborhoods near Metro stations in the Washington area have become magnets for young, high-earning, well-educated white people.

Here you can see the great collapse in public transit ridership after World War II, followed by a modest resurgence since. Resurgence may be too strong a word, given that transit ridership has only grown about as fast as population since it bottomed out in 1972.

Economists Lena Edlund, Cecilia Machado and Maria Micaela Sviatschi found, in a paper that’s already been discussed by my Bloomberg View colleague Leonid Bershidsky, that central-city real estate in the U.S. went from being much cheaper than the suburbs in 1980 to much more expensive in 2010. So the urban resurgence is real, and public transit investment appears to have played a part in it.

But something other than a decline, certainly. The fact that ridership bottomed out in 1972 is also significant because of the 1973 oil crisis. Since the 1970s, transit ridership has generally risen when gasoline was expensive (the late 1970s, the early 2000s) and fallen when it was cheap (the 1990s, now). So unless you believe low oil prices will be with us forever, there is a cyclical factor currently depressing public transportation use that will eventually reverse. Then there’s that shift away from buses and toward rail. BART opened for business in 1972 and the Washington Metro in 1976. Since then four other U.S. cities have built similar (if much less expansive) rapid-transit systems, and more than two dozen have launched light-rail lines. Amid all that investment in rail, buses have suffered.According to an analysis by City Observatory’s Daniel Hertz, bus-service expansion trailed that of rail from 2000 to 2009 and has been hit since 2009 by big cutbacks, while rail has been mostly spared.

People who could afford a couple of cars and a nice house in the suburbs are opting instead for shorter commutes and an urban lifestyle. But on the whole, cars are still the way most Americans get around even in big, crowded metropolitan areas. And people who use public transit because they can’t afford a car may actually be worse off than they were decades ago, because they’re getting priced out of neighborhoods with good rail access while bus service dwindles. Zillow economist Aaron Terrazas reported last month that low-income workers in downtown San Francisco and Seattle now face much longer commutes than they did a decade ago. The nation is being transformed (as it always is, come to think of it), just not in a way that necessarily works for everybody.

Original Source: Bloomberg

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Best cars of CES 2017: All the major automotive announcements from the show Considering CES is a consumer electronics show, you may wonder what business cars have turning up at the show. Nowadays cars can have more technology in them than your average home. Whether it is electric power, in-car entertainment or self-driving / autonomous capabilities, modern cars are packed to the brim with tech. But what innovations have the car manufacturers come up with for 2017? Pocket-Lint did the hard work for us and pulled in a rundown of some of the most interesting tech stories from 2017 CES in January…

BMW: HoloActive Touch system

German car giant BMW was in attendance at CES, but rather than bring along a new car, the company was showing off a new in-car control concept. It’s called the HoloActive Touch system, which is a free-floating display that responds to gestures from the driver. It’s a development of gesture-controlled technology that debuted in 2014. This new version relies on much simpler gestures and doesn’t require you to touch the control interface.

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Faraday Future: FF91 due 2018

New car company Faraday Future had previously tweeted it would “unveil the future” at CES. And the company delivered on that promise by introducing the FF 91 - an all-electric car that looks like it belongs on Mars. The FF91 can go from 0-60mph in a staggering 2.39 seconds, thanks to its all-electric 1,050bhp power unit. It has a maximum range of between 378 and 435 miles, and it can fully refill its depleted battery cells within an hour. We’ll have to wait until 2018 for road vehicles. If they ever materialise, that is.

Ford: Amazon Alexa voice assistant in cars

The biggest Ford announcement at CES was that it would introduce the Amazon Alexa voice control system to its cars. That’s a big deal for Amazon, which had made significant in-roads in getting its service into, well, pretty much everything. That’s not all, though. Ford is also committed to self-driving cars and brought its latest version of its Fusion Hybrid autonomous development vehicle to Las Vegas. The latest model has more processing power than before and improvements to the sensors mean it is far more aware of its surroundings.

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Hyundai: Mobility Vision concept

Hyundai went all-out in its “Mobility Vision” concept. The idea is the meeting of smart home with smart self-driving car. Think of the car like a piece of furniture that connects to your home through some kind of doorway. You’d never need to step outside again. All sounds a bit too sci-fi for us. In addition, the Hyundai Ioniq made an appearance in self-driving form.

Nissan: Cortana voice assist in cars

Hey Cortana! Yep, Nissan’s big announcement was that it would introduce Microsoft’s Cortana into its vehicles. It’s like battle of the voice-assistants, what with Alexa also making its way into Ford.

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Toyota: Concept-i

Toyota wasn’t holding back at CES by any measure, introducing the Concept-i - a from-the-ground-up concept vehicle complete with its own artificial intelligence agent, called Yui. And because Yui is an AI agent it will learn about your habits and can even communicate using in-car lighting, sound and touch. This isn’t just a question-and-answer voice assistant.

Volkswagen: ID Concept

First unveiled in Paris, the all-electric Volkswagen ID concept made its way to US shores for the first time. The big addition here is its plans to be offered as an autonomous driving option. VW also discussed how the company plans to let drivers become more integrated with their cars. VW already has an App Connect service that lets you connect virtually to any smartphone, but future service Volkswagen User-ID will take interaction “a major step further”, says the company.

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Nvidia: AI Car Platform

We’ve been following Audi for some time in its ongoing advances in autonomous driving. At CES the company announced its partnership with Nvidia to deliver the next stages of its self-driving cars, which are stepping into artificial intelligence territory. Audi’s German rival Mercedes-Benz also announced a partnership with Nvidia and its AI Car Platform. The two have a bold goal: the field an artificially intelligent car onto the roads within the next 12-months. Which might sound like a rush job, but the companies have been working together for over a year already. AI cars are coming!

Honda: NeuV

Slightly silly name, definitely silly looks, but a lot of heart: the Honda NeuV is the company’s ride-sharing concept car. Its acronym-like name (pronounced “new-vee”) stands for New Electric Urban Vehicle. The two-seater may be small, but it has huge potential. It’s designed to pick up and drop off passengers when its owner isn’t using it, meaning it can earn its owner money without impacting the environment negatively. Clever.

Original Source: Pocket-lint

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â&#x20AC;&#x153;Gamechanger: A visionary strategist bringing fresh and unique ideas to the table, an individual or business that stands out from the crowd with ideas that inventively change the way a situation develops.â&#x20AC;?

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Investing in classic cars and supercars With the financial markets still reeling from Brexit, an uncertain economic future ahead and ultra-low interest rates the new norm, now is a perfect time to look at alternative avenues of investment. Classic cars and supercars offer a potentially lucrative return for investors, and although you can view them as a tangible asset – an investment you can touch, smell, hear, sit in and even drive – what really fires the market here is passion. Cars have a very special way of getting under your skin, of making one person feel they need to pay more for a particular model than the next person; emotion is a powerful motivator for buyers accustomed to getting what they want. Some buyers are inspired by childhood memories. Others admire beauty and rarity. Celebrity and cinematic connections will always be a seductive lure; so will motorsport successes. The market loves a car with a tale to tell, an enthralling story to recount to friends and colleagues in bars and boardrooms. And, of course, if you enjoy showing off, few other forms of investment make quite such a visible statement as four-wheeled exotica. My view is that you should invest in a car because you like it. Combine pleasure with business. It takes away some of the sting of putting down the money in the first instance, then gives you enjoyment while you’re waiting for your investment to mature. There’s no magic wand to finding the right car. Do your homework, make sure the car is certified accident-free and you know its history. You should be looking to get a broad understanding of the

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car’s background and in an ideal world, speak to a previous owner and collect whatever information you can. You have to dig around, talk to manufacturers, find out who was the first owner, who serviced it. When you’re looking at a classic car, employ a reputable specialist in the marque to give it a thorough, independent inspection – fakes and bad restorations are rife, so it really pays to peer beneath the shine.

How rare is it? How many were produced in that colour combination? What is its provenance? Has it been owned by anyone famous or used in a film? An Aston Martin DB5, produced between 1963 and 1965, sells for around £800,000, almost double the price of its successor, the DB6, because it featured in Goldfinger and has since become synonymous with the Bond franchise.

The classic car and supercar markets are niche arenas and you may well find that the knowledge and contacts of a professional broker will be invaluable in helping you spend your money wisely. But if you’re determined to go it alone there are some basic rules to follow.

The global appeal of classic cars is your best security: if the market in one country stumbles, there’s always another where things are still rosy. Over a 10-year period classic cars have performed better than gold, art, wine and stocks and shares, even the housing market. Prices have increased by more than 400%. Total sales of classic cars at auctions were $144m in 2000; in 2015, they were just under $1bn. In total, the industry is worth more than £6bn.

Always buy the best you can afford. But before signing on the dotted line, have the car professionally inspected to ensure you’re buying what you think you are. Stick to cars built in small production runs, nothing too mass-produced. For example, the Ferrari 456m. This car still has lots of legs left. It’s the last production Ferrari with pop-up lights, running with a fantastic V12. This car can carry two adults and kids and some serious speeds. With 550s changing hands for up to £150,000, these cars are still great value at £60,000 - £70,000. Check the Internet forums, read the specialist magazines, find out what makes the car desirable. For example, prices for early air-cooled Porsches have gone through the roof, particularly for the 911. However, to fetch proper money these days they have to be in exceptional condition and preferably rare versions with motorsport connections; the RS, GT2, GT3 and GT3 RS derivatives are the real high flyers.

There will always be a good market for classics; in difficult times investors shift to tangible assets, which are beyond the whims of financial markets and which governments can’t touch. And you can trade them in any currency. To be termed classic, a car must be over 40 years old. Classic cars are exempt from UK capital gains tax and road tax if bought as investments. After its stellar performance over the last decade the classic car market is levelling off. Without a doubt it will bounce back, but only once some of the rubbish has been sifted out of the market and only the very best cars remain. However, the market for supercars shows no sign of abating. Look out for the ultra-rare numbered models, such as the Ferrari LaFerrari or the McLaren P1, where production was very tightly limited.

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Rarity can double the price. The LaFerrari was Ferrari’s first hybrid sports car and benefitted from lessons learned from the company’s Formula One operations. It’s a phenomenal car with probably the most desirable badge in the business. They originally sold for £1m, now they’re fetching as much as £2.8m: they’re an exceptionally rare beast and I’ve already managed to sell one of them. McLaren the road car manufacturer is a comparatively young company, but the P1, made in Woking, is a world-beater. McLaren has followed the lead of Lamborghini and is producing crazy, outlandish designs that stir the emotions. It’s something that shouldn’t make sense, but it works. Straight from the showroom the P1 cost £750,000: now you’re looking at £1.7m, if you can find one. I’ve sold four – they’re popular because they’re British, they’re hand built, and have the performance to take on any other brand in the world. But it’s not just about the very top end. Take the McLaren 675LT Spider. It’s a £300,000 car but only 500 were produced and global demand comfortably outstrips supply. That fact alone increases the value by £100,000 straight away.

Alex Prindiville, Founder, Prindiville

£150,000 gives you access to the supercar market. There are two types of buyer; those who see the car simply as an asset, and those who genuinely love cars, are buying for the enjoyment, and are happy if the car makes money on top of that. I remember an old boy coming into my showroom in Limehouse to buy a S-type Jaguar. He came in with a friend and it was obvious the car meant a lot to him. It turned out it was almost the exact model that had belonged to his father and it obviously brought back a lot of memories. He never thought he’d be able to buy one but now he could, for £22,000. He started crying and, of course, we all had tears in our eyes by the end.

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onics ny, Bosch company, has remained Bosch has the remained leading supplier the leading of technology supplier of services technology for over services a century. for overWith a century. their With their usinesses d on the road, and on it currently the road,stands it currently as thestands world’s as largest the world’s supplier largest of automotive supplier of automotive components.components. Founded in Founded in

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“SAFETY, CONVENIENCE AND RESOURCE EFFICIENCY” “Bosch has always sought to lead the market with innovative technology that makes a difference to people’s lives.”

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Q. Will you to tell our readers about Bosch and how it got to where it is now… The Bosch Group is a leading supplier of technology and services. The company was originally set up in Stuttgart in 1886 by Robert Bosch as “Workshop for Precision Mechanics and Electrical Engineering”. 130 years later, Bosch employs roughly 375,000 associates globally and has generated sales of over 70 billion (£53billion) in 2015. The Bosch Group is made up of Robert Bosch GmbH and around 400 subsidiary companies spanning across 150 countries. In the UK, Bosch has been present since 1898, when Robert Bosch opened the company’s first office outside Germany. Every one of the Bosch Group’s business sectors has a presence in the UK: Automotive Technology, Industrial Technology, Consumer Goods, and Energy and Building Technology. Bosch UK employs around 5,100 associates across 41 sites. In 2014, Bosch generated revenues in the UK of 1.9 billion euros.

Q. Within 3 sentences, how would you describe Bosch’s presence in this fast paced world? Our product scope can be characterised by the words: Safety, Convenience and Resource Efficiency Bosch is the only global organisation that works across all three elements of the internet of things: sensors, software and services. Furthermore, because Bosch works across so many sectors implementing elements of connectivity across each of them, it is set to be a key player in the connected world.

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Q. As the world’s leading engineering and electronics supplier, Bosch technology is used in most households, businesses and on the road. What professional moves enabled this prestigious status? When Robert Bosch first started the company, he insisted on creating products that were built to the highest standards, refusing to compromise on quality. This set the foundations for a company that, 130 years after it was founded, continues to manufacture products that stand for technical perfection and reliability. What’s more, Bosch has always sought to lead the market with innovative technology that makes a difference to people’s lives. Whether it’s the Indego Connect automated lawnmower, one of its driver assistance systems or a Bosch Smart Home controller, this remains Bosch’s ethos.

Q. Looking at Bosch’s four divisions: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy & Building Technology - what are the prime areas most recently and in history for Bosch? Connectivity is the prime area for Bosch and is present across each of the four divisions. In mobility solutions, this means the automated car, intelligent driver assistance systems and, in time, the fully automated and connected vehicle. For industrial technology, this manifests itself in Industry 4.0. When talking about consumer goods, the future lies in the smart home, appliances that can be operated and monitored from anywhere at any time. Energy and Building technology incorporates all of these other areas, ensuring ultimate efficiency and minimum energy consumption in business and the home.

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Q. What are the potential growth areas? One area that is becoming increasingly significant is software expertise â&#x20AC;&#x201C; particularly for IoT (Internet of Things) connectivity. Bosch is leading connectivity trends in many sectors. The company is the global market leader for micromechanical sensors (MEMS) for both the consumer electronics and automotive markets. We have also been extending software competence for some years now. The Bosch Group now employs more than 15,000 software engineers with 3,000 experts working on the Internet of Things alone. Last year, Bosch opened a new research facility in Renningen, neat Stuttgart, which will be a hub of sensor and software development for years to come. Bosch especially sees huge business potential in the services that will arise as a result of connectivity.

Q. From automotive steering assistance to solar inverters, what are the biggest technology innovations Bosch has achieved in recent years? With over 5,400 patents filed in 2015, Bosch creates innovation on a daily basis; 22 to be exact. The development and mass production of MEMS sensors is a major development for Bosch, we currently hold more than 1,000 patents and patent applications relating to MEMS technology. 4 million sensors are produced daily and since 1995, we have produced over six billion MEMS sensors from our state-of-the-art wafer fab in Reutlingen, Germany. Todayâ&#x20AC;&#x2122;s vehicles feature more than 50 MEMS sensors alone, while three out of four smartphones have Bosch sensors in them. We also have applications in developing consumer electronics products, such as virtual reality and wearables as well as connected cars. With the advent of the internet of things, a future is in sight where almost all objects are aware of their surroundings and sensors are the main facilitator of this. At CES 2016, Bosch unveiled its next generation of sensors, which offer greater levels of precision, ease of use and efficiency. Another core development is the Smart Home System, this is essentially the glue that holds the connected homes together, controlling and connecting all smart elements from a single platform, such as heating, security, air quality and lighting. Not only does it allow Bosch systems to integrate, it is also compatible devices from other suppliers. For example you can control Phillips Hue wireless lighting and adjust them to personal preferences and moods. All connected devices in a home can be operated via smartphone or tablet with a single app.

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Q . Is there any research and developments so far this year that we’ve not seen elsewhere in the engineering or technology industries; that is unique to Bosch? The Consumer Electronics Show (CES 2016) in January saw a number of new and unique technologies launched by Bosch. Bosch won the CES Innovation Award for the introduction of its new haptic touchscreen. While looking like a conventional touchscreen, this innovation allows drivers to feel their way around the screen using haptic feedback. This means drivers no longer have to look at the screen, reducing distraction. We also released a new generation of sensors for consumer electronics including the latest new acceleration and yaw-rate sensors, an environment sensor solution, a development platform for internet of things (IoT) applications and the world’s first retrofit emergency call service adapter for cars, which is available in 16 languages and over 30 countries. More recently we launched a connected accelerator pedal, which uses haptic feedback to reduce fuel consumption and improve safety. The innovative new system gives gentle vibration alerts through the accelerator pedal, thereby notifying the driver. It is connected with the vehicle’s assistance and navigation systems to warn the driver about potential accidents and fuel consumption

Q. Earlier this year Bosch recorded that sales had risen by 6.3% in 2014, what can you tell us about 2015 as a year? We have recently released our preliminary results for 2015 and have seen sales over 70billion (£53billion) for the first time. It was a positive year for Bosch. Numerous acquisitions have left us in a stronger position and have helped us to expand our product portfolio, establishing us in the specialist technology market. In January 2015, Bosch announced the acquisition of Climatec. Climatec is an independent provider of services for the integration and automation of essential building systems including power generation, air conditioning and security. The company can offer consulting, planning, installation, and remote maintenance from a single source, and is active across widely differing sectors. Our first project in 2015, at a college in Bracknell, was very successful and we continue to build on that success. Bosch has also founded a joint venture with the Chinese technology company Midea to produce variable refrigerant flow (VRF) systems. These systems employ variable flows of refrigerant to provide commercial buildings with heating and air conditioning. Bosch Packaging Technology, a leading supplier of process and packaging technology, acquired KliklokWoodman Corporation, based in Decatur, Georgia, but with a manufacturing site in Bristol, in September 2015.

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Q. Asia Pacific also saw an incredible 17% jump in engineering sales last year, do you feel this was impacted by Indiaâ&#x20AC;&#x2122;s growing partnering with the automotive industry? Bosch is forecasting strong growth over the next few years for India. The company expects to see positive development in the country over the medium and long term. Over the past ten years, Bosch has more than tripled its sales in India, generating 1.2 billion euros in 2013. The company currently employs more than 29,000 associates at eleven manufacturing and development sites. Since 2010, the Bosch Group has invested around 680 million euros in the expansion of manufacturing and research facilities in India, including some 160 million euros in the past year alone. Presently, Bosch in India has over 14,000 research and development engineers. In 2015, the Bosch Group in India filed for more than 200 patents. However, other markets in Asia are also contributing to this considerable growth: these include South Korea, China and Japan. In Asia Pacific, Bosch recorded sales growth of 16% to 19.1 billion euros.

Q. What challenges has Bosch faced in the recent year? Bosch has a history of being a market leader of cutting edge technology, and with the world becoming increasingly connected, technology is changing at a breakneck pace. Bosch is determined to stay ahead of the game but recognises we have to make changes to the way our business operates. Last year, we opened a research campus at Renningen to encourage interdisciplinary collaboration and to enhance our strength in innovation. At the new centre for research and advanced engineering on the outskirts of Stuttgart, some 1,700 creative minds are doing applied industrial research. The Renningen campus will help Bosch deliver even more innovations that improve quality of life. The campus brings together many disciplines from science and technology.

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Q. How would you describe Bosch’s relationship with its suppliers? Bosch carefully selects all of its suppliers, to make sure they meet certain criteria. The selection process ensures that we have the highest quality throughout all of our products. We also like to nurture our relationships with our suppliers, ensuring we can continue to use the best of the best. We have longterm relationships with almost all of our suppliers.

Q. It’s clear that Bosch recognises the importance of the supply chain, can you tell us more about your Supplier Awards programme? The Bosch Global Supplier Award honours our top suppliers, who play such a key role in Bosch’s success. Our suppliers are important partners in helping us shape the connected world. We want to work with them to develop beneficial solutions for our customers. We believe that long-term partnerships and the early involvement of suppliers has been the key to our success; that is why we feel it is important to recognise our suppliers in this way. 2015 saw Bosch recognise 58 of its top suppliers at the 14th Global supplier awards. By presenting this award, we recognise the outstanding performance in the manufacture and supply of products and services, notably in the areas of quality, costs, logistics and innovations.

Q. Bosch gets a lot of buzz. What are the elements in creating its success? Are there any essential suppliers or processes that enable this? Like any business, Bosch is only as good as the people behind it. To make sure we stay at the top of our game, Bosch invests heavily in the development of its associates. For Bosch, associate development is a continuous process that requires a willingness for lifelong learning. Associates are encouraged to actively develop new skills while maintaining their current expertise. This is something that is at work across the company– regardless of job role, hierarchical levels, or locations within the Bosch Group. Bosch is also trying to address the skills gap in the UK and supports various initiatives across the business to promote engineering across different age groups.

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Q. Bosch has a crucial presence at IAA, what were the highlights this year? Mobility Solutions is one of the key sectors for Bosch accounting for 60% of our group sales. So it traditionally delivers a number of innovations in this area each year. In an industry that is increasingly working towards greener cars, Bosch launched a new 48-volt hybrid system that will see hybrid powertrains become more affordable and compatible with smaller vehicles. The intelligent system costs a fraction of those currently on the market. Battery technology will play a key role if electric cars are to become even more widespread, therefore Bosch acquired the U.S start-up company Seeo, Inc. With the purchase, Bosch now possesses essential know-how in the area of innovative solid-state cells, with this Bosch sees the potential to increase the energy capacity of lithium-ion cells even further. Bosch also launched a Traffic Jam Assist System which is based on the sensors and functionality of ACC Stop & Go and of the lane-keeping support. Up to a speed of 60km per hour the system automatically follows the vehicle ahead in heavy traffic. Not only does the traffic jam assist accelerate and brake, it also keeps the vehicle in its lane by way of steering interventions.

Q. Bosch made an incredible move in engineering history this year with the Home Zone Park Assist, what successes have you seen so far from this? As the industry moves further towards automated driving, the market for driver assistance systems is already expanding. In this market, Bosch is increasing its sales by one-third each year. Last year was the first time that the company sold more than 50 million environment sensors for driver assistance systems. Unit sales of radar and video sensors doubled in 2015, as they did in 2014. This year, a series of new systems will go into production at the company. These assistance systems help drivers in traffic jams, when taking evasive action, and when parking by remote control. The Home Zone Park assist enables drivers to have their vehicles park and exit parking spaces themselves, automatically. Remote parking assist is now being seen in a number of premium new cars and, as its popularity increases, we expect to see it filtering down through more mainstream cars.

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16. Manufacturing innovation has seen the launch of Platform Industry 4.0? Can you tell us more about this and what it will mean for future manufacturing? Bosch sees tomorrow’s production as smart, flexible, and connected. Connected, automated manufacturing increases companies’ competitiveness and also allows them to produce very small batches or even individually customised products. Industry 4.0 allows you to do this. Bosch automated production assistants that make manufacturing flexible and efficient have been designed especially for use in Industry 4.0 applications. They offer powerful support in automated production. The assistants take on strenuous and dangerous tasks but also monotonous ones. For example, they can join pieces together or unpack crates. This gives the human workforce more time for tasks that add value. Looking at the global manufacturing network for Bosch, we expect Industry 4.0 to save the company hundreds of millions of euros annually in the years leading up to 2020.

Q. How does Bosch’s relationship with the environment stand? Bosch invests heavily in developing environmentally friendly products. Half of the 6.3billion invested in R&D, in 2015, is spent on green technologies. By the time toddlers of today are in their thirties, global CO2 output will be 25% higher, and the World Health Organisation claims that global warming will cause 250,000 additional deaths by 2030. Because of Bosch’s heritage of majorityownership by a charitable foundation, we are working on a number of social and environmental initiatives to help combat this. Potential CO2 savings are highest in buildings and heating: buildings account for 40 percent of global energy demand, yet electricity accounts for only a small proportion of that energy. In industry, 75 percent of all energy used is in the form of heat. Over 84% of energy is lost before it reaches our homes and buildings. Bosch now offers an integrated, connected energy efficiency solution that enables industrial customers to achieve energy savings of up to 30 percent. Bosch has cooperated with leading thinkers at the Royal Academy of Engineering to develop an energy efficiency handbook for schools. In Worcester, Bosch has also commissioned the development of a play that aims to spark the interest of seven to eleven-year-old schoolchildren in green topics, helping to educate from a young ages what they can do to help the environment.

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Q. What is Bosch doing to take on the impacts of climate change? Are there any new advances that have been implemented to reduce its carbon footprint?

To help combat climate change, Bosch has a range of smart technologies to make businesses more energy efficient – this is where a large amount of energy wastage occurs. Bosch is already implementing energy-saving technology at its UK facilities. At the plant in Glenrothes, Scotland, Bosch uses a combined heat and power unit that produces electrical power and recycles heat energy for increased efficiency, reducing CO2 emissions by 30%. Worcester Bosch’s new recycling scheme will save 71 million litres of water annually and twelve metric tons of CO2 – this corresponds approximately to the water consumption of 650 households. Since 2007 Bosch has reduced relative CO2 emissions globally by more than 20% thanks to energy-saving measures such as eco-friendly technologies in manufacturing and installation of efficient heating technologies in their own buildings. We have also saved around £375 million in energy costs through in-house measures between 2007 and 2014.

Q. Are there any prototypes in the pipeline for 2016 that will secure your position at the top? Bosch is working on a number of projects across all sectors that will ensure its position as a world leader in technology. So far, some of the technologies launched in 2016:

Q. What does the future hold for Bosch? Bosch’s future is connected. Thanks to our innovative strength, we will continue to drive new technology across multiple sectors including automotive and consumer electronics. An increasingly connected world also opens up new business opportunities and Bosch is developing new services on this basis.

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REPORTS A PRESENTATION OF FACTS OR FINDINGS

207.

An integrated perspective on the future of mobility

How to succeed: Strategic options for European machinery

McKinsey&Company & VDMA

McKinsey&Company

CLEARWATER

McKinsey&Company & BLOOMBERG

M&A and Financial Market Statistics in the Automotive Industry.

Global Automotive Executive Survey 2016

KPMG

208.

Delivering change: The transformation of commercial transport by 2025

200.

100.

209.

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KPMGâ&#x20AC;&#x2122;s 17th consecutive

Global Automotive Executive Survey 2016 From a product-centric world to a service-driven digital universe

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KPMG’s Global Automotive Executive Survey 2016

Acknowledgements

Forewo

In its 17th consecutive year, the Global Automotive Executive Survey is KPMG International’s annual assessment of the current state and future prospects of the worldwide automotive industry. In this year’s survey, 800 senior executives from the world’s leading automotive companies were interviewed, including automakers, suppliers, dealers, financial services providers, rental companies, mobility services providers and, for the first time, companies from the information and communication technology (ICT) sector. As customer-focus and service-orientation will become ever more important for the automotive business in the age of digitalization, we have, also for the first time, additionally interviewed more than 2,100 consumers from around the world to give us their valuable perspective and compare their opinion against the opinion of the world’s leading auto executives. The responses were very insightful and we would like to thank all those who participated for giving us their valuable time. Special thanks to Moritz Pawelke, Global Executive for Automotive, KPMG International, for his commitment to lead this study and the entire KPMG automotive sector team in Germany for their efforts.

Dear readers,

To view the interactive version of this year’s survey please visit

FIND OUT MORE

kpmg.com/GAES2016

“The road to suc construction.” Th Lily Tomlin, captu automotive indu Looking at this that executives no We have structure – what kind of d – how to cope w – who´s best pr Market growth in China, has long of executives aske ten years. This ye has finally become strategic agenda u and #10 in the las With disruption connected world, the customer rela moving towards t executives are far the center of the c Why? As custo connected, relatio more service-orien model for which t rather unprepared companies from t technology sector generated by the in the car has to b is not done by aut will. Even more im almost across all r

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ccess is always under his simple sentence, from actor ures the current state of the ustry. yearâ&#x20AC;&#x2122;s survey results we recognize ow see definite disruption ahead. ed this survey into three chapters: disruption we are talking about, with the disruption and repared. in emerging markets, especially g been the number one answer ed about key trends for the next ear digitalization and connectivity me number one on the executivesâ&#x20AC;&#x2122; until 2025, sky rocketing from #9 st two years. n arising from a new digitalized and , it seems the center of gravity of ationship in a connected car is rapidly tech giants from Silicon Valley. Auto r less optimistic that they can stay in customer relationship than before. omers increasingly aim to be always onships are shifting to a much nted and new data driven business the traditional automotive industry is d compared to other industries, like the information and communication r (ICT). To be successful, data car, the driver and other passengers be informationally engineered: if this tomotive companies, someone else mportantly, the results show that regions the customers will become

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more and more aware about the value of their data. They will look for someone to trust and that offers the most interesting benefits in return for their data. The companies that will be able to convince the customer that they are a trusted data hub will be the ones that succeed. Does this new world have the same clockspeed as the world in which the existing business model of auto companies is ticking? Definitely not. The industry has to recognize different clockspeed reflected in different product development cycles in the future. The results of our survey do not yet show it as clearly as I expected, but I personally believe the era of one product development cycle for everything in the car is over. Beside all these sky rocketing new trends for the next years, executives have also recognized that regulation is still playing a major role, putting even more pressure on technological developments to achieve emission rules set. Therefore, as last yearâ&#x20AC;&#x2122;s survey stated, regulator and customer centricity will be still the two scales which have to be balanced in the future. I do believe in the positive aspects of change. Challenging but exciting times are ahead for the automotive industry. I hope you enjoy reading the study in paper or online. Please make use of the interactive version of this survey and create your own report. Enjoy the read!

Dieter Becker Global Head of Automotive KPMG International

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KPMG’s Global Automotive Executive Survey 2016

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The countdown for disruption has already started A major business model disruption is anticipated to be extremely likely for almost 10 times more survey respondents than last year. More than 80% are convinced that connectivity and digitalization will strongly disrupt the auto industry by the end of this decade.

Business models will be circling in different orbits Connectivity will pave the way for an entirely new data and service driven business model for those traditional auto companies able to retain a direct customer relationship. But by no means all survey respondents are convinced of this: already every fifth respondent believes that vehicle manufacturers could also turn in to mere contract manufacturers for ICT companies.

The race to the planet of data has not been decided Most respondents believe nobody except the driver owns the data generated in or by a car. While some executives still think that data is at their companiesâ&#x20AC;&#x2DC; free disposal, customers think differently. They will choose the party they trust the most and that offers the best benefits in return instead of just giving their valuable data away for free. 107Gamechangers

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Does using the auto-pilot mean losing sight? The majority of survey respondents see self-driving features as an absolute purchasing criteria or at least expect it to become more important by 2030. Survey results suggest that in a world of autonomous driving classical differentiating factors will diminish in favor of total cost of ownership (TCO) questioning the sustainability of the traditional automotive business model.

The industry is not living in a vacuum More than 80% of respondents see regulation as having a high or very high impact on the auto industry. The recent â&#x20AC;&#x2DC;dieselgateâ&#x20AC;&#x2122; scandal shows that the technological challenges putting pressure on the auto sector regarding more eco-friendly alternative drivetrains have not become any smaller.

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Supremacy of auto companies is not set in stone With BMW and Toyota, the surveyed executives see two traditional auto companies leading the way in technological advancements and market success. But survey results also show that they cannot rest on their laurels, with a third of respondents believing ICT companies will bring groundbreaking innovations to the sector.

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KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

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KPMG’s Global Automotive Executive Survey 2016

About the executive survey

Canada

Sweden

Germany

Switzerland

Austria

Netherlands

Belgium

France

Spain

Italy 71

Morocco

Mexico

USA 7

Ecuador

Colombia

Brazil

Argentina

Note: Map shows number of respondents from each country Source: KPMG‘s Global Automotive Executive Survey 2016

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Czech Republic

Poland

Russia

Hungary

Romania

8 8

Turkey

100

8 17

Japan

South Korea

China 7

Taiwan

India

Vietnam

Philippines

Thailand

Malaysia

Iran

Saudi Arabia

Indonesia

Australia

South Africa

Western Europe

North America

Mature Asia

India & ASEAN

Eastern Europe

South America

China

Rest of World

of the KPMG network are affiliated.

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Respondents by job title

17%

Respondents by compan Vehicle manufacturers

25%

Suppliers

25%

Dealers

10%

CEO/President/Chairman

22%

C-level Executive

Total = 800 24% 25%

Business Unit/ Functional Head

Financial services providers

Head of Department

Mobility services providers

20%

ICT companies

12%

Business Unit/ Functional Manager

13%

Respondents by regional cluster Western Europe 17% | 137

North America 13% | 100

Respondents by compan Mature Asia 12% | 94

South America 13% | 100

India & ASEAN 16% | 126

China 13% | 100

Eastern Europe 12% | 92

Rest of World 6% | 51

32%

11% 12%

Note: Percentages may not add up to 100% due to rounding Source: KPMGâ&#x20AC;&#x2DC;s Global Automotive Executive Survey 2016

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ny type

For the 2016 survey we have asked 800 executives from 38 countries

% | 200

% | 198

% | 78

% | 74

% | 158

% | 92

Upstream (product-driven)

Downstream (service-driven)

ny revenue

40%

% Over $10 billion $1-10 billion $500 million - $1 billion

For this year’s survey we have asked four times more executives than in the previous years to increase the relevance and informative value of regional aspects in our analyses. Therefore, this year 800 executives, from all parts of the world, answered our questions, of whom around 50 percent are C-level executives or CEOs, Presidents or Chairmen. Around one-third of the respondents are based in Western and Eastern Europe, while 13 percent come from China and also each 13 percent from North and South America. 16 percent of the executives are located in India & ASEAN and 12 percent in matured Asian countries of Japan and South Korea. The respondents represent companies of all parts of the automotive value chain including vehicle manufacturers, Tier 1, 2 and 3 suppliers, dealers, financial services providers, mobility service providers and for the first time also companies from the information, communication & technology sector (ICT) that increasingly claim a stake in future revenue streams around mobility. In the survey, 72 percent of all participants act in companies with annual revenues greater than US$1 billion, of whom 40 percent even have revenues of more than US$10 billion. The survey was conducted online and took place between July and November 2015.

$100-500 million Less than $100 million

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

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Disruption ahead? Connectivity and digitalization is sky rocketing Staying connected has become a basic part of everyday life. This year’s survey finally shows that auto executives have fully embraced connectivity and digitalization and ranked it as the overarching key trend disrupting the auto industry until 2025. Ranked #10 in our 2015 survey, executives have moved connectivity up to #1 this year, with half of them rating it as extremely important. For the last three years, the top concern was growth in emerging markets, which has now dropped to #4. Alternative powertrain technologies are high on the list of trends in 2016, with hybrid electric vehicles at #2, battery electric vehicles up from #9 to #3 and fuel cell electric mobility staying fairly constant at #5. The aftermath of the ‘dieselgate’ scandal of unreliable emission test results from autumn 2015, alongside the increased importance of alternative drivetrains,

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is shown in the results: the formerly high-ranked trend of downsizing internal combustion engines has dropped from #2 in 2015 to #10 in 2016. The surveyed executives also give more importance to autonomous and self-driving vehicles than one or two years before. Beyond that, the results reflect that executives recognize that vehicle or customer related data will be a crucial success factor for the coming years in the automotive industry. More than 40 percent estimate big data/user data as a very important key trend. Generally, the ranking of this year’s key trends reflects that the auto industry is moving its focus increasingly towards the customer needs, rather than traditionally product and technology-led internal concerns, as the trend of rationalization of production in Western Europe dropped from #4 in 2015 to #11 in this year’s survey.

115 Gamechangers

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Ranking

What are the key trends until 2025? 2013

2014

2015

2016

#10

#11

Source: KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

Gamechangers 116

OEM captive financing and leasing

ÂŠ 2016 KPMG International Co

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KPMG’s Global Automotive Executive Survey 2016

? Percentage of executives rating a trend as extremely important

Connectivity and digitalization

50.1%

Hybrid electric vehicles

49.5%

Battery electric mobility

46.5%

Market growth in emerging markets

46.3%

Fuel cell electric vehicles

45.0%

Mobility-as-a-service

41.8%

Customer data/big data

41.1%

Platform strategies and modular production systems

38.5%

Autonomous and self-driving cars

37.6%

Downsizing and optimization of the Internal combustion engine (ICE)

36.8%

Rationalization of production in Western Europe

29.1%

KPMG Viewpoint Surprisingly, if looking at stakeholder results, the surveyed vehicle manufacturers rank connectivity only #4, while market growth in emerging markets followed by hybrid and fuel cell electric vehicles are still the key trends on their strategic agenda. This reflects that most OEMs are still focusing on challenges caused by their traditional business model (building cars) instead of fully concentrating on new challenges ahead. However, there is one interesting regional difference. Executives from OEMs in China are the only ones agreeing with the overall opinion, also ranking connectivity as #1 key trend. A possible explanation for this could be the fact that Chinese OEMs are certainly less entrenched in traditional process and might therefore be able to adapt change quicker.

“Connectivity and digitalization has finally arrived on top of the executives‘ agenda”

Innovative urban vehicle design concepts

ooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

Countdown for disruption has alread In our recent publication Metalsmith or Grid Master, we look at how business models need to change to develop their customer relationship. An OEM’s future business model will have to far more accurately reflect the lives of their customers, who are looking to optimize their time, cost and quality of life in real-time and depending on situation and application-specific needs. You will find interesting survey results on the future customer relationship on page 14 that show that the countdown for disruption has started and auto companies must react quickly in order not to lose the valuable customer interface in a connected car to competitors from outside the industry.

Influencing factors of a real-time purchase decision sir de

es sir

Gr ow

Quality of life

Connectivity and digitalization will undoubtedly have a strong impact, not only influencing the existing business model of auto companies, but eventually leading to a major business model disruption. This year’s survey results indicate that the automotive business will face an unprecedented disruption over the next five years. The value chain itself, product development cycles, sales and aftersales processes, the customer relationship, the overall business model, as well as the associated products, technologies and services, will have to transform significantly in order to keep up with the pace of digital innovations. Ubiquitous connectivity will pave the way for new service- and data driven business models around mobility and will, beyond that, enable third party players from converging industries to intervene in the customer relationship at the point of sale (PoS) as well as during the whole lifecycle of the car.

cie

ne ed s

fi De

De fic ien

y nc

Real-time purchase decision

Time

Cost Traditional purchase decision Product purchase and ownership Source: Metalsmith or Grid Master, KPMG 2015

Real-tim purchase de Trend of ‘using’ instead of ‘owning’: Importance of digital features and connected services increases

Use o produc and serv

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dy started

me ecision

of cts vices

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119 Gamechangers

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How likely is a major business model Extremely likely

28%

12% 54%

Somewhat likely

43%

Somewhat unlikely

15%

57%

18% 14%

Not likely at all

Neutral

32%

Note: Percentages may not add up to 100% due to rounding Source: KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

KPMG Viewpoint Just as in the ranking of key trends, it is executives from the OEMs who have a conservative view and were most likely to respond that major business model disruption is not likely at all or somewhat unlikely. They still appear to be underestimating the impending changes predicted in the business model caused by the key trend connectivity. OEMs clearly want to keep their traditional role as key player in the value chain,

Gamechangers 120

and might not want to move out of the p technology-led comfort zone they have b past century. These different opinions fro value chain players show the tension cu automotive value chain. Nevertheless, th differences between OEMs. As the follo show, some are already on the right trac to cope with future challenges through i

ÂŠ 2016 KPMG International Coo

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KPMG’s Global Automotive Executive Survey 2016

l disruption? 82%

2016 2015

The executives’ mindset has changed significantly year-over-year A major business model disruption is extremely likely for almost 10 times more of the executives surveyed compared to last year. An overwhelming 82% of the executives estimate a business model disruption in the next five years to be extremely likely or somewhat likely. Looking into the regional results in the interactive version of this survey, there is a distinct difference of opinion between automotive executives in different territories. Those in the emerging markets of China, India & ASEAN (Association of South East Asian Nations) and South America expect a business model disruption to be more likely. Meanwhile, executives from the Triad of Japan, Western Europe and North America are much more conservative, most often answering that a business model disruption is rather unlikely.

product- and been in for the rom different urrently in the here are huge owing pages ck regarding how innovation.

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

BMW a be on

Ubiquitous data driven

According to the and Toyota will b e-mobility and a expected to gen innovators in the Although BMW most innovative p Honda, Ford and Interestingly, t even seen as lea Tesla Motors. Th BMW has establ brand with its i8 building up a new image with the fu Consequently,

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and Toyota are expected to n the fast track of innovation

s connectivity will pave the way for new service and n business models around mobility

e surveyed executives, BMW be the leaders in the fields of autonomous driving, and are also nerally be the groundbreaking e next five years. W and Toyota are expected to be the players until 2025, other OEMs like Tesla are following in their wake. these two traditional players are ading in electromobility ahead of he results are not without merit, as lished a strong e-mobility suband i3 models. Toyota is currently w future-oriented and innovative uel cell model Mirai. the survey respondents

fundamentally link both players to the development of future technologies. On the other side, Daimler, former second leader of self-driving cars, has lost ground in autonomous driving in the eyes of the executives and is not any more positioned among the frontrunners. However, the executives credit Daimler’s efforts in innovation, placing them at #6; mature Asian respondents from Japan and South Korea even see them at #3. Being innovative is not only a necessity to improve the image of a brand and its reputation. Recent developments around the ‘dieselgate’ scandal show that a clear strategy, especially regarding electromobility, will clearly influence a company’s future position among its competitors.

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123 Gamechangers

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Who is seen as a groundbreaking in Self-driving technology leader (% of respondents rating an OEM as leading in self-driving technology)

30%

“BMW is seen as t groundbreaking in and technology le

25%

20%

15%

Ford Group

10%

Honda Hyundai Kia Automotive Group

Daimler Group

Volkswagen Group

Suzuki Group General Motors Group Mazda Motors

Renault-Nissan Group

Fiat Chrysler Automobiles

Geely Group (incl. Volvo) 0% 0%

Electri

(% of respondents rating

Note: Size of stars is based on the number of respondents ranking a company as groundbreaking innovator | Only the top 14 OEMs rate Source: KPMG’s Global Automotive Executive Survey 2016

Note: Size of stars is based on the number of respondents ranking a company as ‘groundbreaking innovator’ | Only Source: KPMG’s Global Automotive Executive Survey 2016

Gamechangers 124

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KPMG’s Global Automotive Executive Survey 2016

nnovator and technology leader?

the #1 nnovator eader” BMW Group

Toyota Group

Group

Tesla Motors

10%

15%

20%

ic mobility leader

an OEM as leading in electro mobility)

ed are shown in the graph above

y the top 14 OEMs rated are shown in the graph above

ooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

Who will retain the customer relationsh 27% 2016 33%

Vehicle manufacturers 2015

18% 2016 ICT companies

22%

2015

14% 2016 Retailers/ car dealers

16%

2015

15%

8% Mobility services providers

2016 9%

2015

Note: Percentage of respondents rating a company type as the one taking over the customer relationship Source: KPMG’s Global Automotive Executive Survey 2016

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hip?

onsumer opinion | 2016

xecutive opinion | 2016

The center of gravity of customer relationship will shift until 2025 72% OEMs and ICT companies will increasingly fight for the valuable customer interface. The survey results show that the executives are not as sure as they were in the past that the OEM will still dominate the customer relationship. According to one-fifth of all respondents, tech companies, especially from the Silicon Valley, could gradually take over the customer interface in the connected car. We’ve seen that connectivity is becoming a key trend, so it’s not surprising that 22% of executives now see the relationship prospectively in the hands of ICT companies, compared to only 4% in 2015. That leaves only 33% of executives believing ownership of the customer relationship lies with OEMs – while in 2015 almost two-thirds were still confident that OEMs will be able to defend the customer interface against third parties. Looking into the regional differences in our interactive version of the survey reveals that consumers and executives in India & ASEAN, China and South America believe most strongly that the customer relationship will shift to ICT companies. Surprisingly, retailers and mobility services providers are the two value chain players that are seen less as the owner of the customer relationship in future – which is surprising as they are actually the ones owning the customer interface today and whose current business model is completely built around the customer.

xecutive opinion | 2015

“Only 33% of executives believe OEMs to own the customer relationship”

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127 Gamechangers

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Which segment will be affected most b 37%

60%

Low cost segment 22%

48%

29%

47%

45% Volume segment 31%

Premium segment

49%

41%

54%

32% Impacted most

49% Impacted

Not impacted

1 Neutral/don’t know

The disruption triggered by connectivity and digitalizati affect automotive companies across all segments The survey results show a noticeable difference between the regions regarding the impact of disruption on the different segments. Compared to executives in North America and Western Europe, executives in China see a significantly higher impact of disruption for auto companies across all segments. This goes along with the answers of the previous questions regarding the key trend connectivity, the possibility of a business

model disruption and Just as before, exec more progressive an explanation for this c structures are comp young and therefore are not as bounded change as their coun

Note: Percentages may not add up to 100% due to rounding | 1Metalsmith or Grid Master, KPMG 2015 Source: KPMG’s Global Automotive Executive Survey 2016

Gamechangers 128

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KPMG’s Global Automotive Executive Survey 2016

by disruption? Respondents from:

18%

China

N. America and W. Europe

China

N. America and W. Europe

China

N. America and W. Europe

18%

ion will

d the position of ICT companies at the PoS. cutives from China are the ones who are nd see a big change coming. A possible could be that China’s auto industry and its pared to e.g. countries from the Triad relatively e much more flexible. Chinese executives in ‘old’ structures and are not as reluctant to nterparts from more mature countries.

KPMG Viewpoint It is clear that not all today’s automakers will develop into customer and service driven mobility services providers (grid masters1). Many will retain a focus on a production and technology-led business model, not being able to cope with the demands of their connected customers. The ones impacted the least by the disruption will be low-cost manufacturers, as their business model will most likely stay unchanged. The main business of low cost manufacturers is in less mature markets which still offer a huge potential for the traditional auto business model as we know it today. Volume and mass market manufacturers will be impacted the most as they are stuck in the middle between a costcompetitive manufacturing and an entirely new and challenging service-driven business model. Based on their brand heritage, those manufacturers cannot rely on the high trust customers have in their brands and high margins at the PoS. They are prone to lose the customer relationship to new entrants from converging industries like the ICT sector. Undoubtedly, premium manufacturers will be impacted by the disruption as well, but they will have the best prerequisites to cope with the upcoming changes. Their strong and trusted brands will allow them to fight new entrants trying to take over the customer interface at the PoS and during the whole customer life cycle.

129network Gamechangers ooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

KPMG Insight Dieter Becker Global Head of Automotive | KPMG International We all know that our clocks are running around the world in the same clockspeed, operating in different time zones, but it does not mean, that everyone has the same speed of operating on his culture, business model or process level. So, you could say we work and deliver in different clockspeeds, creating a clockspeed dilemma. First we have to elaborate the question, where this kind of difference in clockspeed is coming from and second how to tackle that situation in the automotive industry. Connectivity and digitalization will change the world. For us, there is no surprise this year: executives have changed their opinion. In comparison to 2015, executives now see connectivity and digitalization as the number one key trend until 2025. It is rising at an unimaginably fast pace and fundamentally changes the way we live our lives, interact, consume or travel – with the result that nothing will be the same as it was before. Innovative products and even more services are capturing the market in a much faster speed (clockspeed) than in the past, new players are entering the automotive ecosystem, industries are converging and the future of mobility will face a new era of accelerated innovation. What does this mean for the automotive industry? The automotive industry is experiencing big pressure from all sides and is facing an unthinkable disruption ahead – a disruption a significant amount of executives are more aware of in this year’s survey. The travel mentality is transforming towards mobility-ondemand services, consumer behavior is changing and customers will increasingly demand the car is equipped with service-oriented functionalities that enable efficient use of their driving time so they are online any time and anywhere. And finally, the customer is changing his priority of switching from a product-driven culture to a service and TCO-driven culture, where classical car product features are losing the game against technology features that customers know from other industries. How does this impact the business model? The business

model of today is o to generate sustain In a ubiquitously co for automakers to and technology-dri will be defined. To will be necessary t consumer-oriented traditional OEMs b vehicle-dependent can manage the m relationship along This way they do n players from the co new ground in the What does that different clockspee ICT industry, startcultural differences now as they opera Furthermore, dif development proc more flexible prod hardware and soft cycle and have the The era of one PD be split up into a m metalsmith-based, components-based on demand-based. Finally, the autom with different think to succeed in toda

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outdated and will not enable all traditional OEMs nable revenue streams and stay ahead tomorrow. onnected future, it becomes ever more important detach themselves from being merely product iven, and it means a new premium segment o differentiate and generate premium prices, it to develop a business model that is service and d and in which data is the fuel. Only then can become the grid master, meaning that by providing t and independent products and services, OEMs mobility grid and dominate the valuable customer the entire customer lifecycle in and around the car. not need to leave valuable market share to rising onverging ICT industry, who are all striving to break e auto industry. mean in practice? Different industries have eds. This becomes clear comparing the likes of the -ups and PE companies with the auto industry. The s between industries have to be taken into account ate in the same value chain. fferent components require different product cesses. For example, this requires decoupled and duct development cycles for vehicle-independent tware features that are faster than the traditional e ability to keep up with the speed of innovation. DC (product development cycle) is over, it has to minimum of three: long term (3-5 years) , mid term (1-2 years) software/exchangeable d, and short term (one month to one year) release . motive industry will need new human resources king and who have lived in different clockspeeds ayâ&#x20AC;&#x2122;s fast-paced global and digital environment.

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131 Gamechangers

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The era of the one product development cycle is over. To defend their position against third parties and respond to customer needs, auto companies wil need to manage completely different clockspeeds for innovation, development processes and corporate culture.

Gamechangers 132

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KPMG’s Global Automotive Executive Survey 2016

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

How to cope with the disruption?

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Establishing a service and data driven business model Service and data driven business models pave the way towards owning the customer relationship. In a ubiquitously connected age with the trends connectivity and digitalization sky rocketing, business models throughout numerous industries are swift to change disruptively. Consumers in automotive will increasingly demand digital products and services in and around the vehicle, which creates the need for OEMs to detach themselves from their merely productand technology-driven past. In order to generate additional revenue streams in future, OEMs need to transform into becoming consumer oriented service providers (Grid master). The results of this yearâ&#x20AC;&#x2122;s survey show that executives have different opinions when it comes to the business model of traditional auto companies in 2025. The core question is if traditional automakers,

or rather players from the converging ICT industry such as Google or Apple, will become the main player at the customer interface. When creating a business model that aims to manage the customer interface, data becomes the fuel. Consumers are, next to themselves, most likely to trust their data or even give data ownership to an OEM rather to an ICT player, if they can build trust to the brand behind it. Self-driving technology could become one of the biggest challenges for the traditional business model, and OEMs should aim to develop strategies to serve customers of self-driving vehicles. The results of the survey show that consumers are most attracted by a reflection in TCO â&#x20AC;&#x201C; an incentive OEMs can offer by offsetting the total cost of ownership driving a car, but ICT companies are surely not in the position to.

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135 Gamechangers

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How will the business model of an O Business models are swift to change disruptively The majority of executives (36%) see the production and sale of an automobile including technological add-ons (e.g. connected multimedia devices) as the most likely business model for traditional automakers in 2025. Ranked second by the executives of OEMs, 25% still see their business model as production and sale of an automobile alone. This leaves the impression that more executives find themselves at home in the traditional automotive business model. So they simply continue to harness their core product and technological competencies as a competitive advantage by supplying outstanding vehicles to customers and ICT companies such as Google or Apple. Although this may sound a far-fetched scenario at first, the

results of this survey reflect this observat executives, especially those coming from China and India & ASEAN, could imagine will become the contract manufacturer fo could imply them simply becoming the m avenue that could especially suit OEMs in volume segments with fewer strong bran for customer retention. Overall second and only ranked third by executives believe that automakers are d business model towards becoming the gr and selling a vehicle to a customer, and h relationship over the entire lifecycle.

Stuck in the middle

Metalsmith scenario

All executive respondents Vehicle manufacturers only

36%

25% 19%

17%

OEM is the contract manufacturer for an ICT company

20%

Production and sale of the car via dealerships

Production and sale of a car including technological add-ons

Note: Percentages may not add up to 100% due to rounding Source: KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

Gamechangers 136

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KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

OEM look in 2025?

tion: almost 20% of all m the growth markets that by 2025 the OEM or an ICT company. This metalsmith, a promising n the low cost and nds and lower potential

y OEMs (23%), developing their rid master by producing having a direct

Grid master scenario

26%

23%

Production and sale of a car and direct ustomer relationship

KPMG Viewpoint If OEMs aim to defend the customer interface and generate freely scalable revenue streams in future, it becomes ever more important to extend their previous product- and technology-focused business model to a much more service-oriented model. In order to meet the real-time reality of future customer needs in a highly digitalized age, becoming a consumer-oriented service provider is the key. For OEMs, this entails developing a business model that does not only include the mere production and sale of an automobile/mobility service. More important than ever in a new business model is to manage the direct customer relationship with a high degree of service orientation enabled by connectivity (grid master scenario). This is, according to the survey results, something consumers already expect today (35% believe this to be the most possible business model in 2025). Interestingly, a high number of executives (19%) see the most risky business model for an OEM (becoming the contract manufacturer) as the most likely. We are surprised that OEMs do not show more confidence in their own business model as we believe OEMs, especially those in the premium segment, have the ability of becoming the grid master. Next to providing outstanding vehicles, if OEMs can also provide vehicle-independent product features and services, they have the best chance to extend their business model with a direct customer relationship along the entire customer lifecycle. This means they must develop capabilities that go way beyond the traditional automotive business. It requires automakers to reinvent their business model and develop competencies that are far away from their home turf, relying on their brand strength.

ooperative (â&#x20AC;&#x153;KPMG Internationalâ&#x20AC;?). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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How is data being The potential of data has not yet been captured

The majority of executives state that the use of dat and the application of informational engineering is still at the very beginning. Already today, traditional OEMs have access to a tremendous amount of data generated in or by a car, but data ownership as such creates only little additiona value. It will rather be the collection and intelligent combination of the vehicle and environment-related data generated by the car itself (upstream data) and th customer-related (downstream data) generated by the driver that build the foundation of a future automotive business model. OEMs have two tasks: firstly, they have to elaborate on the upstream data, as today it is not easily available in one system. Secondly, they have to build on their trusted brand image and customer relationships; otherwise the access to downstream da will not be available as well. Our survey results reveal that most executives are aware of the importance of data as one-third of executives state that a high use is already executed in all fields of expertise. However, the potential of data ha not yet been captured; around 70% of the executives state that across all corporate functions, data use is at an early stage, or even desired, but its realization and application is to be defined. And some go even further stating that it is not in use at all. If OEMs focus on the collection and intelligent combination of vehicle and consumer data that they already have access to today (meaning to apply informational engineering), they sha defend their strong position by creating a competitive advantage over players from the converging ICT industry.

ÂŠ 2016 KPMG International Cooperative (â&#x20AC;&#x153;KPMG Internationalâ&#x20AC;?). KPMG International provides no client services and is a Swiss entity with which the independent member firms of th

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g used already today?

ta s

Untapped potential for informational engineering

Research and development

73%

27%

Supply chain/ logistics/ procurement

68%

32%

Production

67%

33%

he Retail and sales

72%

29%

ata

Marketing and brand management

67%

33%

n as

Aftersales and customer relationship management

67%

33%

Connectivity related services

67%

33%

Currently no usage, usage desired or in a very early stage

High usage

all

he KPMG network are affiliated.

Note: Percentages may not add up to 100% due to rounding Source: KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

139 Gamechangers

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KPMG Insight KPM GInsight Moritz Pawelke Global Executive for Automotive Moritz Pawelke Global Automotive Executive, KPMG International KPMG International

Informationalengineeringneedstobecomeacore mpetencefoengineering rmanufactuneeds ringcotombecome panies a core coInformational

competence for manufacturing companies In this highly digitalized world, a real

When driving a car in a ubiquitously connected world – be When driving a car in vehicle, a ubiquitously it the own premium the connected world – be it the own mobility service vehicle or even a premiummobile vehicle, capsule the mobility service visionary – without vehicle or even a visionary mobile doubt a tremendous amount of capsule – without doubt a tremendous data is generated in or by a car. amount of data is generated in or by Speaking in simple terms: when a car. Speaking in simple terms: when driving and with driving andinteracting interacting with people people and the environment, and the environment, the vehiclethe is vehicle is a gigantic dataa gigantic data generating engine generating engine and willso in the and will become even more future. even more so in the become It is important to differentiate between future.

data explosion is taking place and In this highlyare digitalized world, a aware of consumers increasingly real explosion taking placegenerate. and thedata value of theisdata they consumers are increasingly aware of the They will be unwilling to share their value of the data they generate. They will data with any third party without be unwilling to share their data with any receiving an attractive benefit in third party without receiving an attractive exchange. Consequently, OEMs will benefit in exchange. Consequently, OEMs need totounderstand theircustomers customers will need understand their better, sense their individual better, sense their individual preferences, preferences, unmet needs andin a their unmet needs and reward them and reward themand in customized a more personal more personal way. For many years, OEMs have focused customized way.

them. All these data such as media usage, calendar entries or navigation information enable valuable insights about the customer and his/her entire lifecycle.

take action now, aggressive competitors emerging from the ICT industry will step in and take over as the ones managing their customers’ data.

vehicle upstream and consumer It isdownstream important data. to differentiate The car generates data directly through movement vehicle upstream andand between interaction with other vehicles the car consumer downstream data.orThe infrastructure, such as location, road generates data directly through conditionsand and crash information. movement interaction with other Meanwhile, the consumers are also vehicles or the infrastructure, such as generating data, including information location, road conditions and crash from their everyday life, from personal information. the gadgets andMeanwhile, apps that are in the vehicle consumers also generating data, with them.are All these data such as media including information their usage, calendar entriesfrom or navigation everyday life,enable from valuable personal gadgets information insights about andthe apps that are the vehicle with customer and in his/her entire lifecycle.

Gamechangers 140

on technical engineering of outstanding For many years, OEMs have focused vehicles but the future demands on technical engineering of the informational engineering, meaning implementation of information outstanding vehicles but systems the future and NextGeninformational business analytics tools, as demands engineering, ameaning top priority. Manufacturing companies the implementation of need to be able to create value from information systems and NextGen the already existing data and the business analytics tools, as a top unimaginable quantity of data priority. Manufacturing companies generated in future in and around the need to be able IftoOEMs create from vehicle in real-time. do value not take the already existingcompetitors data and the action now, aggressive unimaginable quantity of data emerging from the ICT industry will step in as future in and around the ingenerated and take over the ones managing vehicle in real-time. their customers’ data. If OEMs do not

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KPMG’s Global Automotive Survey 2016 KPMG’s GlobalExecutive Automotive Executive Survey 20162121

The car is a gigantic data generating engine ------------------------------------------------------------------------------

Vehicle data High-tech start-up

Consumer data

? OEM

ICT company

“Informational Engineering“

? How to technically collect & combine all vehicle data?

Comprehensive view of: Environment Condition of the car Traffic management Infrastructure …

Comprehensive view of: Customer behavior Health of customer Media preferences …

Making profit with cooperation partners and customers

Sell vehicle data to:

$ Traffic office

Service station

GPS data collector

Sell tailored products/services

Source: KPMG Automotive Institute, 2015 Source

141 Gamechangers

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KPMG’s Global Automotive Executive Survey 2016

Who is the owner of the valuable ve and combine the data generated by the sensors in a car. In terms of consumer data automakers need to develop strategies of how to best gain information about the customer, preferable valuable data Google or Apple do not have access to today. For OEMs, it therefore becomes an absolute necessity to establish business models that contain incentive schemes that make the whole process attractive for consumers. This means to create a win-win situation for both: the consumers provide their data to an OEM and the OEM in exchange offers attractive incentives, benefits and rewards for the consumers. As the results indicate, OEMs should hereby not forget to consider individual markets and regional differences in the application of their business model. More importantly, the results also show that this does not allow an OEM to lean back and observe the situation. His position can fade away faster than he expects: already 14% of executives believe that by 2025 ICT companies will become the sole owner of the valuable consumer data. In the – not to be underestimated Chinese market – this figure rises up to nearly 32% and in general the respondents from the BRIC countries have the most promising expectations when it comes to ICT companies owning vehicle and consumer data by 2025.

Vehicle data

In order to be able to establish a sustainable service and data driven business model the key question is who actually is or even will be the owner of the up- and downstream data generated in and around a vehicle. To date, automotive and tech companies take for granted that consumers will be willing to give their data ownership away in return for comparably low benefits and rewards, but our results give a slight hint into what actually is reality. Although 39% of executives believe the owner/driver of the vehicle to be the sole owner of the generated consumer data, the confidence of OEMs is unexpected high: a significant amount of executives (35% of OEMs) believe themselves to be the owner of consumer data – does this truly reflect reality or is this only wishful thinking? Although consumers may want to be the exclusive owner of their data and perceive data security, especially in the European countries, as a very sensitive issue, consumers with the target of reducing their total cost of ownership can hardly create value from their own data alone. In comparison, when applying informational engineering, OEMs can create value for both parties, for themselves and for consumers. Therefore it is advisable for OEMs to deal with the flow of data, meaning to sense possibilities of how to best gather vehicle and consumer data. For vehicle data this entails to technically be able to collect

Consumer data

Consumers want to be the owner of their data

N S

Gamechangers 142

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ehicle/consumer data? Executive opinion

Consumer opinion

6% 39%

7% 9%

57% 12%

23%

1% 4%

14%

7% 30%

8% 12%

7% 48%

29% 12%

7% 18%

2% 9%

Owner/driver of the car Vehicle manufacturers

ICT companies Mobility services providers

Retailers/car dealers Suppliers

Government

Note: Percentages may not add up to 100% due to rounding Source: KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

the KPMG network are affiliated.

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Who will consumers most likely trus Becoming a consumer’s trusted data hub Based on the assumption that consumers will not give away their data without any reward or incentive one important question is whom consumers would trust most managing their data. The results clearly show: no one but themselves. An astonishing 32% of executives however expect most consumers to trust the OEM on first place, which indicates that OEMs today believe to have a higher trust function than consumers actually reflect. In order to gain more trust of consumers, auto companies can make usage of their strong brands they already have today. This entails to accompany their customers and focus on becoming a trusted data hub that customers will provide their personal data in real-time rather than keeping it to themselves.

Consumers already today exchange their shopping at the checkout and rew They will expect similar rewards for th manufacturer. Only if auto companies loyalty and the trust function of their b significant competitive advantage over sector such as Google or Apple. According to this year’s results, this ICT companies are ranked on third plac and consumers – will we find ourselve consumers rather trust Google instead around the corner? What is certain is t customer relationship and brand trust

54%

32% 28% 21% 14% 7%

No one except him-/her-/myself

Vehicle manufacturers

ICT companies

11% 6%

Suppliers

8% 4%

Retailers/car dealers

Note: Percentages may not add up to 100% due to rounding Source: KPMG’s Global Automotive Executive Survey 2016

Gamechangers 144

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KPMG’s Global Automotive Executive Survey 2016

st with their data? KPMG Viewpoint

loyalty points for cash off wards are personalized. heir loyalty to an auto leverage their customers’ brand, they could have a r third parties from the tech

s is not just empty talk: ce by both executives es in a world in which d of their personal retailer that it depends on the they have today.

Consumer opinion Executive opinion

Mobility services providers

A clear majority of all consumers (54%), especially those from North America, Eastern and Western Europe, as well as from South America, respond that especially consumer data should belong to the owner or driver of the vehicle. Over the coming years a mindshift will take place. Consumers are increasingly carrying reward cards and using retailer apps to collect points in return for loyalty. Tomorrow’s customers will be increasingly aware of the value of their data and will not be willing to provide it to third parties without receiving an attractive incentive or reward. If OEMs integrate attractive benefits into their strategy today, they could evolve as the preferred data hub whom consumers are most likely to trust their data. In comparison to the results for ICT companies, consumers trust ICT companies more than suppliers, retailers and other mobility providers.

4% 1%

Government

l Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

KPMG’s Global Global Automotive Automotive Executive Executive Survey Survey 20162016 24 24 KPMG’s

What makes mobility services attrac

What Whatmmka kesa esmob mobli ylti servi yt serviecsecatt s attarctiarctie?ve?v Executive Executive opinion opinion

60% 60%

30% 30%

Flexibility Flexibility

40% 40%

70% 70%

Eco-friendliness Eco-friendliness

50% 50%

No (% of respondents rating a reason for No using mobility No services with no) (% of respondents rating a reason for using mobility No services with no)

(% of respondents rating a reason for No using mobility Noservices with no) (% of respondents rating a reason for using mobility Noservices with no)

TCOTCO

80% 80%

Comfort Comfort Lifestyle Lifestyle

90% 90%

60% 60%

Image Image 100%100%

70% 70% 0%

10% 10%

20% 20%

30% 30%

40% 40%

Yes YesYes Yes

50% 50%

60% 60%

respondents of respondents ratingrating a reason a reason for using for using mobility mobility services services with yes) with yes) (% of(%

respondents of respon (% of(%

TCTCOis Oalisltha al lthatcotcou tsnu tsn

TCO is all that counts

The The share share economy economy as aas growing a growing megatrend megatrend suggests suggests that that global global to the to questio the que a simple a simple answer answer prosperity prosperity will will rise rise withwith collaborative collaborative consumption. consumption. Shared Shared mobility mobility be over be over soon. soon. Theinshare economy asand a growing megatrend that global a major role. There is no services, services, especially especially mature in mature markets markets and megacities, megacities, are becoming aresuggests becoming more more WithWith increasing increasing transparency transparenc ew prosperity will rise with collaborative consumption. Shared mobility time of car ownership attractive attractive and and show show a powerful a powerful and and especially especially increasing increasing presence presence in the in the the total the total cost cost of ownership of ownership (TC services, especially in Next mature and megacities, With increasing trans modern modern environment environment of big of cities. big cities. Next to providing to markets providing more more flexibility, flexibility,are becoming customer’s customer’s decision decision whether wheth to more attractive and show a powerful and especially increasing consideration of the tota comfort comfort and and lifestyle, lifestyle, theythey are enabling are enabling a significant a significant reduction reduction of TCO of TCO for for of both of both executives executives and and consum con presence themegatrend modern environment of that bigcontinuously cities. Next toThere providing important role in The The share economy economy as aas growing a in growing megatrend suggests suggests that role. role. There won’t won’t be abe simple a simple answer answer to the the tocus qu th the ever theshare ever more more sophisticated sophisticated and and highly highly informed informed customer customer continuously customer customer paid for traditional for traditiona ve more flexibility, comfort and lifestyle, they are enabling a time significant notpaid – and that is thesoon opi global global prosperity prosperity will rise will rise with with collaborative collaborative consumption. consumption. Shared Shared the time the of car of ownership car ownership will be will over be over soon. striving striving for an foroptimization an optimization of his of cost, his cost, timetime and and quality quality of life of in lifereal-time. in real-time. much much oftransparency the of time, the to time, future future consu co reduction ofmature TCO formarkets themarkets ever more sophisticated and highly contrast the past, wh mobility mobility services, services, especially especially in in today mature and and megacities, megacities, increasing increasing transparency enabled enabled by con by Much Much more more important important as of astoday of the application the application of using of using a cara car WithWith ownership even ifonthe c informed customer continuously striving for an optimization of his demand, demand, depending depending on the indi the are(city/country/short becoming are(city/country/short becoming more more attractive attractive and and show show a powerful a powerful and and consideration consideration of the of total the total cost cost of ownership of ownership (TC and and longlong distance) distance) will will playplay a major a major role.role. There There won’t won’t be be

TCOTCO is all is all thatthat counts counts

consumers will decision tenddeci to cost, time and quality life in environment real-time.ofThe of the carimportant (whether especially especially increasing increasing presence presence in the in modern the of modern environment big ofuse bigmost most important role role in the in customer’s the customer’s Note:Note: % of respondents % of respondents rating rating a reason a reason for using for using mobility mobility services services with yes/no with yes/no city/country/short andcomfort long distance) will grow in aimportance to play onthe the individual real-tim cities. cities. Next Next to providing to providing more more flexibility, flexibility, comfort and and lifestyle, lifestyle, car a or car not or – not and – and that that is is opinion the opinion of both of both ex Source: Source: KPMG’s KPMG’s GlobalGlobal Automotive Automotive Executive Executive SurveySurvey 2016 2016 theythey are enabling are enabling a significant a significant reduction reduction of TCO of TCO for the for ever the ever consumers. consumers. In contrast In contrast to the to past, the past, where where the more more sophisticated sophisticated and and highly highly informed informed customer customer continuously continuously traditional traditional vehicle vehicle ownership ownership eveneven if the if car the wa ca striving striving for an foroptimization an optimization of his of cost, his cost, timetime and and quality quality of life of in life in of the of time, the time, future future consumers consumers will tend will tend to pay to Note: Percentages of respondents rating a reason mobility services with real-time. real-time. Much Much more more important important as of astoday of today the application the application of offor using on demand, on demand, depending depending on‘yes/no’ the on individual the individual real-tim re Source: KPMG’s Global Automotive Executive Survey 2016 using using a cara (city/country/short car (city/country/short and and longlong distance) distance) will play will play a major a majorapplication. application.

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ctive? Consumer Consumer opinion opinion TCOTCO Eco-friendliness Eco-friendliness

Flexibility Flexibility

Comfort Comfort

Lifestyle Lifestyle

Image Image

10% 10%

20% 20%

30% 30%

Yes Yes

ndents s ratingrating a reason a reason for using for using mobility mobility services services with yes) with yes)

ons, estions, whether whether the time the time of car of ownership car ownership will will

o simple answer to the question, whether the

enabled cy enabled by connectivity by connectivity the consideration the consideration of of will be over soon. CO) pparency (TCO) will will play play the most the most important important role role in the in the enabled by connectivity the her oal own to own aofcar a or carnot or –not and – and that that isplay the is opinion opinion cost ownership (TCO) will the most mers. nsumers. In contrast In contrast to the to past, the past, where where the stomer’s decision whether to own a car the or he uestions, questions, whether whether ehicle al ownership ownership eveneven if and the if car the was car was unused unused inion of both executives consumers. In n. vehicle umers will will tend tend to pay to pay for for using mobility mobility on on here the customer paid forusing traditional vehicle yonsumers nnectivity connectivity the the car was unused of the time, future ividual situation and and application. application. CO) pindividual (TCO) willreal-time play willreal-time play themuch the situation

pay for using mobility nision whether whether to own to own on demand, depending me situation xecutives h executives andand andapplication. customer the customer paidpaid for for ar aswas unused unused much much pay for using for using mobility mobility eal-time me situation situation and and

the KPMG network are affiliated.

147 Gamechangers

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Mobility services or car ownership?

Image is seen as the least important when using a mobility serv When analyzing both charts on page 24 in detail, the axis labeling indicates that both executives and consumers judge the value of a purchasing decision differently. In nearly all categories, executives show a more positive attitude towards the attractiveness and reason for mobility services – as the results show, which is almost twice as high of the executives (e.g. 63% of executives responding TCO to be a reason consumers prefer mobility services) in comparison to the consumers (only 36% seeing TCO as a reason but still ranking it on top 1) . This observation however does not hold true for the reasons attached to lifestyle and image. Surprisingly, the ever-so-important thought of image attached to a car seems to lose significant

importance in a future dominated by sophisticate mobility services. In a world in which consumers continuously strive for an optimization of their tim cost and quality of life in real-time, TCO is all that counts and both image and lifestyle only play a m role in the heads of the consumers. This again shows that at a current stage the OEM still is in the driver seat when it comes to collecting valuable vehicle and consumer data: the main motivation for consumers to give their data to an OEM is the fact that he can enable a reduction in TCO – a capability a player such as Google does not have any power over or has to compensate from other business they do with consumers already.

Do consumers prefer owning a car instead of using mobility service North America

Western Europe

Eastern Europe

Rest of World

Yes 40%

Yes 38%

Yes 36%

North America

Yes 50%

Note: Percentages of respondents from the respective regional cluster answering to prefer owning a car instead of usi Source: KPMG’s Global Automotive Executive Survey 2016

Gamechangers 148

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KPMG’s Global Automotive Executive Survey 2016

vice

Consumer Insight

When asking the consumers for their opinion about mobility services, the results of the consumer survey demonstrate that still 32% of all consumers in total prefer owning a car instead of using mobility services – not astonishingly does this figure increase for consumers with a higher age. The results also show, that this especially holds true for consumers coming from the mature markets

me, t minor

such as from North America, Western and Eastern Europe, as well as for those coming from South America. In comparison, consumers from the dynamic and emerging markets such as China as well as India & ASEAN show significantly less emotions attached to car ownership. This observation clearly supports the general impression that the consumers from these markets notably show more openness towards new forms of innovative mobility service concepts.

es? South America

Mature Asia

China

India & ASEAN

Yes 33%

Yes 23%

Yes 20%

Yes 19%

ing mobility services

Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

What are attractive benefits in excha 88%

Individualized service & customer experience over entire lifecycle

88%

Consumer incentive schemes

Direct monetary benefits

Nothing

82%

43%

30%

Cash is king Consumers are aware of the value of their data and in future, they will undoubtedly expect attractive benefits in exchange. However, do executives actually know which benefits consumers find most attractive? In this year’s survey, we have therefore been interested in what customers are most likely to request in exchange for their data. The results show that, whereas executives think they can attract consumers with individualized services and incentive schemes, reducing their total cost of ownership with direct monetary benefits would be the most

interesting offer for customers in exchange The large majority of the executives have individualized services, incentive schemes a monetary benefits as extremely or somewha an attractive offer for customers. This shows are back on track and are making a great lea terms of understanding their customers. It is order that needs to be adjusted to the consu meaning that direct monetary benefits need the executives’ agenda in terms of attractive

Note: Percentage of respondents rating a benefit as ‘extremely or somewhat likely’ | Ranked descending by number of Source: KPMG’s Global Automotive Executive Survey 2016

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ange for data? Consumer Insight

71%

75%

82%

Consumer opinion Executive opinion

for their data. identified and direct at likely to be s that executives ap ahead in s simply the umersâ&#x20AC;&#x2122; mind, d to be on top of e benefits in a

82% of the consumers throughout all age groups and across almost all regional clusters, except for those coming from India & ASEAN, give evidence that direct monetary benefits is extremely or somewhat interesting to them. This underlines the fact that consumers are driven rather by their wallet than their consciousness. Thereby consumers see incentive schemes in terms of rewards, better service or the access to exclusive communities, on second position with almost 75% rating these benefits as extremely or somewhat interesting.

future service- and consumer-oriented business model. The survey results also clearly show that receiving nothing in exchange for data is no viable solution, although 43% of the executives have still voted for this option. In summary, both executives and consumers have shown an understanding of the value of data. The results reveal more than double the number of respondents believe in benefits rather than receiving nothing. This clearly shows that benefits in exchange for data will become an absolute necessity.

executives rating a benefit as most attractive

the KPMG network are affiliated.

151 Gamechangers

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KPMG Ins

Brigitte Romani Global Automotive

Metalsmith or Multimedia

Car manufacturers are fa Connected car technolog steadily growing demand this demand ranged at a Automotive Executive Su key trend until 2025 disru we know it today is conn Connected cars provide a for music downloads, pa of additional car equipme various challenges are tri for OEMs. If for example a custom service on his holiday trip download of a preinstalle be questionable who the German parent company subsidiary. In this regard, important issue in particu for telecommunication se supplied services to cust regulated within the EU. prices or custom obligati need to be considered. The awareness of tax connectivity and digitaliza business has risen recen

Gamechangers 152

ÂŠ 2016 KPMG International Coo

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KPMG’s Global Automotive Executive Survey 2016

sight

e Tax Leader | KPMG in Germany

a Service Provider

acing new challenges. gy and new services are a d from consumers. Whereas lower end in KPMG’s Global urvey 2015, the overarching upting the auto industry as nectivity and digitalization. among others the possibility arking assistance and activation ent. From a tax point of view iggered by these virtual services

mer obtains any virtual p in Italy, such as a software ed navigation system, it might e service provider is – the y, who sold the car, or the Italian , VAT is certainly the most ular since the place of supply ervices as well as electronically tomers have been newly Other tax issues as transfer ions are no less important and

challenges attached to ation in the automobile ntly. A few years ago most tax

departments treated the connected car and tax issues related as still up in the air. However, reality has caught up with OEMs. For instance, we recently discussed with a client how the SIM card installed by the manufacturer can be used to demonstrate the place of supply for virtual services for tax authorities. This example shows that beside their tax technical knowledge tax specialists need some technical know-how as well, in order to face the new challenges. Even if most tax topics around connected cars are new for the automobile industry it does not mean that these tax topics are new at all. Rather, tax specialists from other industries like the telecommunication industry have already been confronted with the treatment of electronically supplied services for tax purposes. Accordingly, there has already been development of a set of solutions, which could be applied in the automobile industry, as well, if the right people are brought together. However, it is necessary to implement processes that the tax department is involved in connectivity and digitalization projects right from the beginning to set up the new services and business models as tax efficient as possible. The involvement of the tax department should be supported by the management using internal guidelines in order to secure the tax compliance of the company.

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

How important are self-driving cars? Will customers prefer a self-driving vehicle and see it as an absolute purchasing criteria in the next 15 years? Autonomous driving vehicles will give passengers the chance to use their time efficiently while commuting. 62% of executives expect self-driving technology to become a more important purchasing criterion to consumers in the next 15 years. With the ability to drive autonomously, vehicles will transform to mobile data rooms, making virtual product features and services – uberfunctionalities – increasingly relevant. These have not been core competencies for auto companies until today. It will be vehicleindependent and customer behavior-oriented

services such as customized online shopping or health checks that OEMs can tailor to consumers’ needs by possessing their behavioral data (internet of behavior). Being a very new and futuristic feature, the self-driving car is still highly product and technology based. Therefore the OEM will be the one pushing this technology to a new level while the ICT sector will mainly observe, waiting for the right moment to take over the customer interface. Even though Google is building a self-driving car, the main purpose is testing and finding

ou Co OE fo or

m int int

inf re dif

Executive opinion It will be an absolute purchasing criteria

19%

BRIC

Expect it to become more important

62%

19%

With reluctance

ROW

15%

No importance

Triad 11%

Note: Percentages may not add up to 100% due to rounding | Right graph is ordered descending by ‘it will be an absol Source: KPMG’s Global Automotive Executive Survey 2016

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ut more about additional revenue streams. onsequently, Google will not compete with EMs in building or selling cars but rather or the vehicle and consumer data generated in r by a car. This presents challenges to the new business model as traditional OEMs need to increasingly tegrate ICT hardware and software components to their vehicles. As self-driving capabilities do need a certain frastructure, it is not surprising that consumer espondents around the world do have a fferent perspective.

onsumer opinion by region

48%

15%

46%

39%

18%

25%

18%

22%

27%

Consumer Insight With autonomous cars becoming present and constantly available in our daily life, the decision of choosing a car will present new priorities. Instead of being focused on brand image, total cost of ownership will become even more influential. Product features that are important to us while owning a car will be overtaken by those important when using a car. Although half of consumers say self-driving cars will become more important or even an absolute purchasing criteria in the next 15 years, consumers are more reluctant (20%) than executives (9%) actually expect. This could be due to customersâ&#x20AC;&#x2122; respect for unaccustomed technology that is not yet integrated into their daily life and regulatory system. Consumers from Triad markets (especially mature markets such as North America, Western and Eastern Europe) are less keen on self-driving cars than those in BRIC markets. 24% of consumers from China and 22% from India & ASEAN see self-driving as an absolute purchasing criteria. Does this indicate high growth potential for self-driving vehicles in emerging markets?

lute purchasing criteriaâ&#x20AC;&#x2122;

f the KPMG network are affiliated.

155 Gamechangers

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Does using the auto-pilot mean losing sight?

Gamechangers 156

ÂŠ 2016 KPMG International Coo

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KPMG’s Global Automotive Executive Survey 2016

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

157 Gamechangers

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KPMG’s Global Automotive Executive Survey 2016

Long or short development cycle? Long development cycle

Engine & transmission

Axle, steering, break, drivetrain & suspension system Chassis, body & exterior

Physical interior

IT software components

IT hardware components

Short d

20%

80%

75%

68%

48%

46%

40%

Note: Sorted descending by percentage of components that can still be developed in a longer development cycle | Percentage of respondents answering for long/short development cycle. Source: KPMG’s Global Automotive Executive Survey 2016

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development cycle

The auto industry is in a clockspeed dilemma

33%

52%

The major issue for automakers will be to solve the clockspeed dilemma. This means significantly different clockspeeds exist between the innovation and product development cycles of car hardware, ICT hardware components and ICT software. Solving the clockspeed dilemma will mean a giant leap for automakers. They are currently unequipped with the necessary organizational processes, teams and innovational culture to synchronize their own clockspeed with the faster clockspeed of innovative ICT players, such as those from Silicon Valley. In our survey, few respondents show an understanding that some components require a shorter product development cycle. More than 40% of executives from OEMs still say that IT hardware and software components can be developed in the longer product development cycle, which at the end is not solving the clockspeed dilemma.

54%

60%

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159 Gamechangers

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KPMG Insight Gary Silberg The Americas Head of Automotive KPMG in the US

The clockspeed dilemma â&#x20AC;&#x201C; what does it mean for automotive innovation? Changes in consumer behavior and in the competitive balance are accelerating the pace of innovation in the auto industry. Having a sexy, dynamic experience is not purely for smartphones. An accelerated pace of innovation is occurring at different rates in key areas of mobility-on-demand, autonomous vehicles and connectivity. Consumers expect a safe, reliable, fault-tolerant car and the new sense of good they feel when their tablets or smartphones upgrade during the ownership cycle. There are different clockspeeds for those expectations and the auto industry must work within them all. Speed of innovation in the auto industry in the last century included mass production and automatic transmissions and now we have added sensors, cameras, radar and lidar remote sensing technology. It is clear executives understand the speed of change is not slowing. Customers are increasingly demanding Six Sigma quality in their car, together with innovation, flexibility and availability. The auto industry ignores their demands and the need for varied clockspeeds within the production and service process at their peril.

Source: The clockspeed dilemma, KPMG 2015

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ÂŠ 2016 KPMG International Coo

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KPMG’s Global Automotive Executive Survey 2016

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

How disr

Advan

Although is the ove factor tra business does not challenge put on th regulatio A high players ac and stake and regul high impa automotiv Consid mobility s manufact regulation

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w to cope with the ruption?

ncing innovation in eco-friendly technologies and products

h connectivity and digitalization erarching and most disruptive ansforming the automotive s over the coming years, this t mean that the technological es resulting from the pressure he auto sector by legislation and on has reduced. proportion (80%) of automotive cross all regional segments eholder clusters see legislation lation as having a high or very act on the development of the ve industry in their home country. dering stakeholder segmentation, services providers and vehicle turers feel the highest impact of n.

the KPMG network are affiliated.

2% 17% 29%

51% 80%

Very high influence High influence Average influence Low influence or no influence

Note: Percentages may not add up to 100% due to rounding Source: KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

163 Gamechangers

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What powertrain technology to inve Ranking

Executive opinion 7%

33%

60%

Hybrid veh

10%

36%

55%

Pure b electric

10%

36%

54%

Battery elec with range

53%

Plug-in hyb veh

Downsize combustio

No investment

39%

42%

51%

45%

46%

Low investment

Fuel cell ele

High investment

Legislation has a significant impact on the future of the automotive business. In particular, the strict enforcement of the introduction of more eco-friendly and sustainable alternative powertrains to lower the environmental impact of cars will need heavy investment. Recent events have shown that regulating the worldwide automotive industry is also a necessity. The ‘dieselgate’ scandal has revealed that downsizing the internal combustion engine may not be sufficient to meet the strict environmental regulations in the key auto markets. In the face of these strict efficiency and emission standards, ICE downsizing has significantly decreased in importance from first to fifth priority since the

corresponding 2015 survey. Although fully electric vehicles like th received a lot of attention in the past ye electric vehicles and their application fo mainstream needs of today’s customers In fact, pure battery electric vehicles when asked which powertrain technolo were to buy a car in the next five years. industry sees future innovation in pure b priority. This shows that many consume towards the concept of pure battery ele be low distance ranges, fragmented cha

Note: Sorted descending by percentage of ‘high investment’ in powertrain technology | Percentages may not add up to Source: KPMG‘s Global Automotive Executive Survey 2016

Gamechangers 164

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KPMG’s Global Automotive Executive Survey 2016

est in? Consumer preference

Ranking

electric hicle

battery c vehicle

ctric vehicle e extender

brid electric hicle

ed internal on engine

ectric vehicle

he Tesla Model S/X have ear, the total number of fully or daily use is still far from the s. rank last for consumers ogy they would choose if they . Meanwhile, the automotive battery e-mobility as #2 ers seem to be reserved ectric vehicles. Reasons could arging infrastructure, long

34%

14%

24%

15%

charging times and high total cost of ownership. Hybrids, in contrast, offer the benefits of electrification while still being appropriate for daily use. Emphasizing the hybrid powertrain technologies as #1 investment priority, OEMs correspond well to consumers’ demand. They rank hybrid electric vehicles #1 as the next purchasing choice, combining alternative powertrain with a common internal combustion engine (ICE). Moreover, consumers prefer hybrids over downsized ICE cars, probably because they cater to their needs for fuel efficiency and environmental friendliness. In particular, their rating of vehicles with a downsized ICE can change in the future, if regulation affects consumers.

100% due to rounding

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KPMG’s Global Automotive Executive Survey 2016

KPMG I

Stephanie Gör EMA Executive

In last year’s survey, w the regulator and the in the middle. Until th the framework of diffe overriding necessity fo regulations had been The main reason fo never questioned cert treated a car the same They wanted to under was classified (for exa efficiency levels) and consequence reflecte At the same time, c from seeking a techno demanding a much m model. How should we res now in the era after ‘d understand how a tes has been set up and r only be valid for the au other consumer good cannot be involved in are no consequences Consumers must re transparent and secur test cycles will never sole reality. Rather, co day, driving behavior i Therefore, to ask for a lead us to better and m accepted that test cyc

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Insight

ring e for Automotive | KPMG in Germany

we identified the gap between consumer vision, with the OEM his year, consumers relied on erent regulators. There was no or them to understand how these set or met. or this attitude was that customers tification processes, they just e as other consumer products. rstand in which category it ample, classifications in energy whether there was a financial ed in the vehicle tax. customers are constantly moving ology focused perspective to more service oriented business

spond? Which focus has to be set dieselgateâ&#x20AC;&#x2122;? Do customers have to st cycle or a certification process rolled out? If so, why would this utomotive industry and not for ds? It is crystal clear that customers the certification process if there s to bear. ely on a regulatory process that is re. For the regulator, this means reflect reality. There is not one onditions are different from day to is different, people are different. adoptions in test cycles will not more reliable results. It has to be cles have their limits.

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The more interesting question is now the impact we see on the technology roadmap of OEMs: downsizing to three or fewer cylinders, double and triple charged, will limit technological solutions as the bandwidth of technical adoptions and less cost intensive solutions will be limited. Consequently, the pressure on OEMs is increasing. Currently, downsizing is the only choice OEMs have to achieve the set goals on CO2 emissions in the short term. In the long run, consumers will have to pay for it. OEMs will prefer to offer CO2 neutral technical solutions and accelerating the path to hybrids, BEVs and fuel cell driven vehicles. This matches the ranking of key trends at the very beginning of this survey. Downsizing the internal combustion engine has been ranked only as #10 key trend compared to #2 last year. As only developed markets will be able to pay for CO2 neutral latest technologies, we will again generate a two class system. On the one hand, high regulations with strict CO2 rules will be reflected in mature and developed markets. On the other hand, we will find low price segments in big growth markets where the ratio between technology built in the car and total sales price needs to fit earnings and income models. This leads us to the final question, whether the diesel era is over? Latest test cycles already have shown that in combination with high mileages, the diesel engine still wins the game. The matrix on the next page presents a more detailed insight into how far manufacturers will really focus on the production of vehicles equipped with diesel engines.

167 Gamechangers

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VW has the highest diesel volume, but o

VW has the highest diesel volume, but othe

Diesel sh

TheThe impact of diesel impact of Diesel The following graph analyses the

General Motors clearly focus their production on gasoline vehicles as their diesel share is comparably low. Same picture can be seen for the Asian manufacturers: When talking about Hyundai, Honda, Suzuki and Mazda, all of them having a comparably low diesel share.

30m

Produced vehicles equipped with diesel engines (running total 2010-2020)

The following graph analyses the accumulated cumulated production of diesel and production of diesel and gasoline engines of gasoline engines of various manufacturers various manufacturers between 2010 and 2020. between 2010 and 2020, meaning that it It considers the previous five years as well as a considers the previous forecast for the next five years.5 years as well as contains a forecast of additional 5 the years. In terms of volume, Volkswagen Group has highest number of diesel engines in its portfolio Thereby it is notable that all presented among all manufacturers worldwide. Looking at German manufacturers such as Volkswagen, the overall diesel share, Volkswagen actually has a Daimler and BMW to have comparably significant lower share thanshow the Indian TataaGroup amount of65%, diesel share whichJLR. is way with ahigh diesel share of which includes above the average 31%.highest Certainly, the by The Daimler Group has theofsecond diesel Scandalwill strongly impacted sharethe andDieselgate 41% of its vehicles be equipped with dieselVolkswagen engines overGroup the course of this the decade. produces highest In contrast, well-known volume amount other of diesel engineshigh from all manufacturers such as Toyota and General Motorsshare manufacturers worldwide. With a diesel clearly on gasoline engines and have a Group offocus almost 40% also the French PSA comparably low diesel share. enrolls itself into this picture. The same is true for the Asian manufacturers with Hyundai, Honda, Suzuki and Mazda all having a In contrast, other well-known high volume comparably low diesel share. manufacturers such as Toyota as well as

20m PSA Group (Diesel share: 39%)

Tata Group (Diesel share: 65%)

Da (Dies

10m

BMW Group (Diesel share: 35%) Geely Group (Diesel share: 24%)

M (D 0m 0m

20m

Note: Size of bubbles represents the share of vehicles equipped with diesel engines in the period between 2010 and 2020 | 2015-2020 num Source: KPMG Automotive Institute, LMC Automotive 2015

Note: Size of bubbles represents the share of vehicles equipped with diesel engines in the period between 2010 and 20 Source: KPMG Automotive Institute, LMC Automotive 2015

Gamechangers 168

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KPMG’s Global Automotive Executive Survey 2016

others have a far higher diesel share

ers have a far higher diesel share

hare:

<10%

11-20%

21-30%

31-40%

>40%

Volkswagen Group (Diesel share: 26%)

Renault-Nissan Group (Diesel share: 22%)

Hyundai Group (Diesel share: 19%)

Ford Group (Diesel share: 23%)

imler Group sel share: 41%) Fiat Chrysler Automobiles (Diesel share: 18%)

Toyota Group (Diesel share: 12%) General Motors Group (Diesel share: 10%)

Suzuki Group (Diesel share: 17%)

Honda Group (Diesel share: 3%)

Mazda Motors Diesel share: 12%)

40m

60m

80m

100m

Produced vehicles equipped with gasoline engines (running total 2010-2020)

mbers are estimates

020 | 2015-2020 numbers are estimates

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

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How to cope with the disruption? Conquering new spheres remains a focus Business models, technologies and products are changing. So, too, are strategies and potential in foreign markets. Market growth in emerging markets has been ranked #1 trend in our last three surveys and has only marginally dropped in importance with the growing trend of connectivity. Even if digitalization is conquering the industry, the pressure put on automotive companies by the regulator has not vanished at all and the presence in emerging markets is also still fundamental to the success of auto companies. For most manufacturers, China has been important for volume, but that is no longer the only reason and driver. China has become the biggest market for most global automakers and the primary place to pilot

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new innovations, launch new products and invest in the future. However, even if China remains the most attractive country for future investments, it can no longer be regarded as emerging. A second wave of growth will therefore take place in new emerging countries as the global automotive market is still far from being saturated. Millions of potential costumers are waiting in what are no longer ‘underdeveloped’ countries. According to this year’s respondents, Southeast Asia – especially Thailand and Indonesia – seem of high interest. Other regions, like South Africa, will also become more important for the automotive industry due to increasing political and social stability and sales potential.

171 Gamechangers

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Where to launch new products and p Chinese whispers – the Triad in its new definition The Triad is dead – but this does not mean that those countries will disappear from the automotive world. Rather, the results show the Triad needs to be newly defined as there will not be just three regions – North America, Western Europe and Mature Asia – dominating the market. They will be joined by China. More precisely, China has not only become the hugest market for most global manufacturers, it has even become the number one place to pilot new innovations or launch new products according to 16% of this year’s executives – easily overhauling Triad countries like Germany (#2), the US (#3) and Japan (#5). Those results show that the Triad in its old definition as the major driver of the auto business has become obsolete.

16%

11%

China

Germa

#31 Bulgaria

#20 Czech Republic

#11 Argentina #31 South Africa #38 Morocco

#27 Turkey

#17 Belarus

#10 Austria #38 Israel

#6 Australia #13 UK #13 Finland #21 Mexico #36 Spain

#38 Uruguay

#23 Saudi Arabia

#16 Ecuador #17 Hungary

#2 Germany

#1 China #4 India

#36 Sweden

#23 Italy

#38 Slovakia

#38 Ukraine

#38 Malaysia

#22 Russia

#7 Canada #27 Iran #3 USA #23 Algeria #5 Japan #15 Belgium #8 France #11 Colombia #9 Brazil #23 Taiwan #29 Thailand

#31 Kazakhstan

China clearly nee of four – some ca be considered as developed to a hi outperforming th is still unclear, bu five list in anticipa is realised. On the other s like Russia – curr economic downtu

#31 South Korea

#31 Philippines

#19 Indonesia

Gamechangers 172

#29 Vietnam

#38 Poland

#38 Nigeria

Note: Percentage o descending order | Source: KPMG‘s G

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KPMG’s Global Automotive Executive Survey 2016

pilot new innovations? “China is the # 1 place to launch innovations”

any

9% 8%

USA

India

Japan

Australia

Canada

France

eds to be included, forming a group all it quadriga. It can no longer s an emerging country as it has ighly dynamic market, which is he whole industry. The bet on India ut executives keep it in their top ation that the country’s potential

side, former high potential states rently on a downward slope due to urn and sanctions – seem to have

Brazil

Austria

lost in attractiveness for launching new products, being ranked by the executives far behind on 22nd place. Countries like Austria, however, which have never played an important role in the automotive industry, can be found within the top ten. Eastern European respondents especially tend to see Austria as an ‘automotive hub’ and as the ‘entry country’ to the European market, by rating it as third most attractive country for launching a product or an innovation, as well as for future investments (please also see page 38).

of respondents rating a country as Top 1 country for piloting a product or an innovation in | Some ranks are assigned several times due to an equal number of respondents Global Automotive Executive Survey 2016

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KPMG’s Global Automotive Executive Survey 2016

Where will automotive companies invest in the future? China and Germany are the most attractive countries Globally, executives surveyed this year plan to increase their investments – in terms of production – in China (16%) and Germany (11%). India is just following right away with 9%. Nevertheless, the less stable markets of Australia, Argentina and Colombia also appear in the top 15 of most interesting countries for investment. But opinions differ from a regional perspective. Most executives also see high investment potential in countries from their own wider region due to their geographical proximity. Almost a third of the respondents from India & ASEAN, for example, rate India as #1. Most executives from South America, on the other hand,

are planning to invest in Brazil (21%), and also ranked Argentina in third place. By taking a closer look at the opinions of the different stakeholder groups participating in this year’s survey, only ICT companies (#1 Brazil), financial and mobility services providers (#1 Germany) see countries other than China on top. However, the Chinese market also seems to be very promising, especially for mobility services providers (#2). Even if the Chinese population still prefers owning a car, ideally one from the premium segment, the need for alternative mobility solutions is obvious, due to massive traffic problems in their numerous megacities.

Western Europe

Eastern Europe

20%

14%

10%

15%

13%

17%

16%

12%

21%

Germany

China

France

Germany

China

Austria

China

USA

Germany

Brazil

Mature Asia

China

North America

South America

India & ASEAN

11%

Germany Argentina

All regions

27%

30%

10%

29%

14%

16%

11%

China

India

Japan

China

Germany

Australia

India

China

Australia

China

Germany

India

Note: Percentage of respondents per region rating a country as ‘most attractive for investment’ Source: KPMG‘s Global Automotive Executive Survey 2016

the KPMG network are affiliated.

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KPMG Insight Huu-Hoi Tran Head of Automotive China KPMG in China China can no longer be regarded as emerging. It’s one of the world’s most dynamic markets and in the next two years will experience rapid changes. China’s government is keen to modernize the auto industry and create flexible opportunities for consumers. Regulation is traditionally strict in China and today’s government is helping foster new technologies and innovations that can leapfrog the traditional technological path that has taken years in the rest of the world. Connected cars and New Energy Vehicles will be a focus in the coming decades and consumers buying electric cars or those with lower car emissions will benefit from savings direct from the government. Despite alternative mobility options helping reduce traffic issues in this increasingly urbanized society, car ownership remains a priority and a status symbol for Chinese consumers. The control of license plates – and hence car ownership – is challenging, especially in Tier 1 and 2 cities. Whereas another Asian city, Bangkok, runs a lottery, Shanghai has a fiercely competitive bidding system. But new mobility will enrich the mobility landscape in urbanizing China. Chinese OEMs are finding their place in the local market and across Southeast Asia. German, Japanese, Korean and American auto manufacturers have their own priority regions. The future is wide open, but Chinese OEMs may focus on the increasing demand for electric cars, especially in large cities. They are becoming more aware of the need for ICT and financial services, developing their business models to benefit China’s connected consumers.

175 Gamechangers

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Where are the next emerging marke 40 Turkey

Morocco Algeria

Iran

26 Colombia

Nigeria

Saudi Arabia 28 Egypt

Botswana Chile

Namibia 46 South Africa 39 Argentina

of respondents expecting c as next emerging market: 48%

Top 5 next emerging markets

Thailand 48%

South Africa 46%

Indonesia 43%

Turke 40%

Note: Percentage of respondents rating country as next emerging market Source: KPMGâ&#x20AC;&#x2DC;s Global Automotive Executive Survey 2016

Gamechangers 176

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KPMG’s Global Automotive Executive Survey 2016

ets? Conquering new spheres

48 Thailand

Malaysia Indonesia

country

ey %

#5 Argentina 39%

The auto industry has witnessed enormous growth within the last few years – predominantly in the BRIC economies. However, with the global automotive market still far away from being saturated, a new wave of growth will take place in new emerging countries in the coming years. Executives view those countries as being mainly located in Southeast Asia – with Thailand (48%) and Indonesia (43%) of particular. However, other regions will also become more important for the automotive industry. South Africa, for example, has been ranked #2 due to increasing political and social stability as well as sales potential in this highly-populated country. But also countries from South Eastern Europe, like Turkey (40%), the Middle East, like Saudi Arabia (36%), and also South America, like Argentina (39%), have regained the attention of the experts. Despite this, fewer than 20% of executives believe that other Sub-Saharan countries, like Namibia, Botswana, and very surprisingly Nigeria, will become high potential countries. The Nigerian automotive industry has witnessed serious interest from global and local automotive brands in setting up and doing business there since the National Automotive Industry Development Plan (NAIDP) was announced by the Federal Government. Also, Iran does not seem to yet be of interest for the executives, with only 23% expecting it to be one of the next emerging markets. But this might change soon as the embargo which was imposed over Iran has been set aside. As the country has been completely closed in recent times, a considerable backlog – and therefore an enormous potential of high sales – can be expected.

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KPMG’s Global Automotive Executive Survey 2016

Which macroeconomic changes wil Financial and economic crises are the main threats One could assume that the low interest in the Nigerian market of the executives is a reflection of the terrorism and riots in the country. But despite unrest around the world, more than 56% of executives rated the most influencing macroeconomic change to a company’s strategy – for example, when considering moving or expanding to another country – to be financial or economic crises. This shows that the last crisis that had enormous impact on the automotive industry is still present and in the minds of the executives. However, as this survey took place before recent terrorist acts, a higher evaluation of the influence of war and terrorism could be expected now. Generally, most concerns seem to be caused by changes that might affect production, like instability in raw material costs (44%) and oil price volatility (40%). Fluctuating oil prices are especially able to disrupt the whole production and development plan of an OEM who might have been forced by the regulator to increasingly focus on alternative powertrain production. The customer’s purchasing decision, however, is mostly driven by the total cost of ownership that comes with driving a car and not by the CO2 emission of the vehicle. Changes related to the customer, on the other hand, are fairly underestimated by the executives, with only 30% rating demographic developments as highly influential on a company’s strategy. This shows that, although the customer clearly should become the center of interest in a successful business model in the future, focusing on the customer has still not become an overall motto for the executives.

27% War & terrorism

Note: Percentage of respondents rating ‘high influence’ of a macroeconomic change Source: KPMG’s Global Automotive Executive Survey 2016

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ll affect strategies most? 28% Political changes

56%

inancial/economic crisis

44% Raw material costs

40% Oil price volatility

30% Demographical developments

26% Natural disasters

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Macroeconomic mar

M acro eco om cm ark M acro eco nonm icim ark e

Market attractiveness & growth potential (weighted score income/capita, GDP/capita and driving population/km2) Market attractiveness & growth potential (weighted score income/capita, GDP/capita and driving population/km2)

1.0

0.8

0.6

0.4

0.2

20152015 20202020

M BrazilBrazil

Indonesia Indonesia Indonesia Indonesia IndiaIndia China IndiaIndia China

0.0

BrazilBrazil

Mexico Mexico

China China

0.0 0%

10% 10%

20% 20%

30% 30%

Source: Automotive Institute, LMC Automotive, Economic Intellige Source: KPMGKPMG Automotive Institute, LMC Automotive, Economic Intelligence U

Source: KPMG Automotive Institute, LMC Automotive, Econom

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rket maturity assessment

KPMG’s Global Automotive Executive Survey KPMG’s Global Automotive Executive Survey 20162016 41

tm atu yass sm krk etem atu ritriytass esessm enetnt Norway Norway

USAUSA USAUSA

Norway Norway

UK UK

Canada Canada

UK France UK France Germany Germany Canada Canada

France France

Germany Germany Japan Japan Japan Japan

Italy Italy

Mexico Mexico Malaysia Russia Malaysia Russia

Russia Russia

40% 40%

Malaysia Malaysia

50% 50%

60% 60%

70% 70%

80% 80%

90% 90%

100%100%

Vehicle ownership Vehicle ownership raterate

of driving population owning (% of(% driving population owning a car)a car)

ence OECD, Unit, OECD, Unit, WorldWorld Bank Bank

mic Intelligence Unit, OECD, World Bank

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KPMG’s Global Automotive Executive Survey 2016

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Who is best prepared? Will the highest market share still be the key to success? One thing is clear now: the auto industry is changing and the countdown for disruption has already started. In order to keep the control of the customer touchpoints, and not to lose them to new industry entrants, manufacturers need to change their business models at the very core. Premium manufacturers might be able to cope best with the upcoming changes due to their strong and trusted premium brands. They might also have the most power to seek innovations and cope with the regulators’ vision of future mobility in terms of e-mobility and autonomous driving. But will they also be the companies with the highest increase in market share? Independent of whether they are or not, the question that arises is: Will the highest market share still be the key to success for auto manufacturers, as data and revenues generated by the customer while driving in fully connected vehicles will become more important than just selling cars on a high volume basis?

However, as former results show, BMW and Toyota are in good shape for the future, according to the executives, and they also expect both of them to be the biggest risers in market share, led by Toyota. In general, they are very optimistic and only a few expect a decrease in market dominance of the top 20 OEMs – for most of them it might just remain as it currently is. Anyway, even if their market share might remain stable, that doesn’t mean they are immune from competition for future groundbreaking innovations. OEMs seem to be aware of that fact, as even if they are basically expected to be the innovators in the next years, they do not see themselves as having the leading position, nor best prepared to hold that position. The industry will be increasingly penetrated by a new and fresh culture dominated by startup companies, which will not focus on just building a car, and are – just because of that – until now not seen as big entrants or threats in the market.

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183 Gamechangers

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Who will succeed in the market plac #1

36%

#2 3% #3

58%

40%

57%

38%

56%

41%

50%

10%

41%

49%

10%

44%

12%

#10

13%

#11

10%

49%

46%

45%

48%

42%

48%

40%

48%

39%

52%

37%

#12

12%

51%

37%

#13

11%

53%

36%

#14

57%

35%

#15

15%

51%

34%

#16

13%

53%

34%

#17

15%

51%

34%

#18

15%

#19

15%

55%

30%

#20

15%

56%

30%

53%

32%

Note: Percentages may not add up to 100% due to rounding | Sorted descending by percentage of ‘increase in market s Source: KPMG’s Global Automotive Executive Survey 2016

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KPMG’s Global Automotive Executive Survey 2016

ce? Toyota and BMW in leading positions

Toyota Group BMW Group Volkswagen Group Hyundai Group Ford Group Honda Group General Motors Group Renault-Nissan Group Mitsubishi Motors Suzuki Group Tesla Motors Fiat Chrysler Automobiles Mazda Motors BAIC Group Geely Group (incl. Volvo) Daimler Group Tata Group (incl. JLR) Chery Group FAW Group Changan Automobile Group

Our survey responses make it clear that market share is a constantly changing factor in the auto industry. That’s not going to change, but is market share based on volume still the best measure of success? In times of digitalization and connected vehicles, the customer, their data and revenues generated while driving a connected vehicle and using personal gadgets and apps are likely to be more significant than market share based on sold units. That means that in the future, 5,000 connected cars could be more valuable than 50,000 traditional, unconnected vehicles due to valuable revenue streams that can be generated in a connected car by customers providing information about their entire lifecycle. Nevertheless, considering traditional business models, Toyota has made the biggest leap ahead and the executives of this year’s survey expect the company to be the big riser in market share in the next five years, after being ranked #9 in 2015. Toyota’s innovative new models and increasing sales in Europe seem to have convinced the executives of its future success. BMW and Volkswagen just follow on second and third place. Last year’s winner Hyundai is falling on fourth place in this year’s survey, with 50% of respondents expecting an increase in market share, followed by Ford on #5 with 49%. In general, most executives are optimistic and only a few expect a decrease of market share of the listed companies. Most of them expect them to either increase or remain at least stable, like, for example, Daimler with 53%. Also the new player Tesla (#11) is expected by 52% of the respondents to remain fairly static.

share’ Decrease

Remain stable

Increase

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KPMG’s Global Automotive Executive Survey 2016

Have v lost co

The suprem

In the big picture that traditional m groundbreaking i as they are facing connected age w seem to be aware not (yet) sufficien models. Or why a to be the big inno entrants in the fu More than one-t however, expect tr the groundbreakin in the next five yea by ICT companies respondents, pred Apple in this conte payment providers and start-ups, are o overall future innov

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vehicle manufacturers onfidence?

macy of auto companies is not set in stone

e, the executives are optimistic manufacturers will be the innovators in the future. However, g a new highly digitalized and with numerous new players, OEMs e that these developments are ntly reflected in their business are they expecting ICT companies ovators among new market uture â&#x20AC;&#x201C; and not themselves? third (35%) of all respondents, traditional auto companies to be ng innovators within the industry ars. They are followed directly on second place with 30% of dominantly naming Google and ext. Other players, including mobile s, new financial services providers only seen by few executives as the ovators.

However, by having a closer look at the view of the different stakeholder groups participating in the survey, it is most surprising that OEMs expect ICT companies (35%) to be the most groundbreaking innovators in the future, rather than traditional automotive companies, and therefore not themselves. Are they losing confidence in not being able to compete with those new market entrants? The executives from the ICT companies, on the other hand, are convinced that they themselves will be the leaders in fields of innovation over the next five years (53%) â&#x20AC;&#x201C; far ahead of all other players or market entrants. An interesting fact is: When it comes to regional differences, Triad respondents most often think that only traditional automotive companies will be leading innovators, while the executives from the BRICs and from the rest of the world see innovations coming mainly from ICT companies.

he KPMG network are affiliated.

187 Gamechangers

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Which players will be the groundbre 35%

30%

13% 11%

3% 1%

Traditional automotive companies

ICT companies

Insurance companies

Mobility services providers

Mobile payment providers

New financial services providers

Start-ups

Note: Percentages may not add up to 100% due to rounding Source: KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

Gamechangers 188

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KPMGâ&#x20AC;&#x2122;s Global Automotive Executive Survey 2016

eaking innovators? Stakeholder view

35% 31%

OEM

15% 9%

7% 3%

Traditional ICT Insurance automotive companies companies companies

Mobility services providers

Mobile payment providers

53%

New financial services providers

Start-ups

26%

ICT 7%

Traditional ICT Insurance automotive companies companies companies

Mobility services providers

Mobile payment providers

New financial services providers

Start-ups

39%

23%

Other

16% 10%

7% 3%

Traditional ICT Insurance automotive companies companies companies

Mobility services providers

Mobile payment providers

New financial services providers

Start-ups

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KPMG’s Global Automotive Executive Survey 2016

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the KPMG network are affiliated.

191 Gamechangers

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... There is no doubt: exc ahead. We believe these help to convert the indu development cycle and these changes as a hug as a risk. We hope you e this survey and we look interesting discussions in the years beforeâ&#x20AC;Ś Dieter Becker, Global Head of Automotive,

Gamechangers 192

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KPMG’s Global Automotive Executive Survey 2016

citing times are e changes will ustry into the next d we should see ge chance and not enjoyed reading k forward to the s it will generate like KPMG International

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

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KPMG’s Global Automotive Executive Survey 2016

Respondents by age and

Respondents by education level

383 354

2% 15% 25%

56% 73%

Total = 2,123 13%

44%

45%

27%

PhD

Apprenticeship

Master’s degree

High school graduate (or equivalent)

18–24

Yes, I

Bachelor’s degree

Respondents by living cir

Respondents by regional cluster Western Europe 17% | 360

China 12% | 261

Mature Asia 12% | 261

North America 13% | 281

In a city with > 1,000,000 inhabitants In a city with 500,000 – 1,000,000 inhabitants In a city with < 500,000 inhabitants

India & ASEAN 16% | 340

25–30

South America 12% | 260

Rest of World 6% | 120

Eastern Europe 11% | 240

In a town/village/suburb close to a city In an independent town/ village In the countryside

Note: Percentages may not add up to 100% due to rounding Source: KPMG’s Automotive Executive Survey 2016

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About the consumer survey

car ownership 383

383

380

Consumer demographics

240 84%

83%

81%

As customer-focus and service-orientation becomes ever more important for the automotive business in the age of digitalization, we have for the first time additionally interviewed 2,123 consumers from around the world to give us their valuable perspective and compare their opinion against the opinion of the world’s leading auto executives. We have asked consumers with various educational backgrounds, throughout all age groups, living circumstances and regional clusters.

78%

16%

17%

19%

31–40

41–50

51–65

own a car

22% >65

No, I do not own a car

rcumstances

39% | 820 19% | 403 20% | 416 13% | 278 6% | 129 4% | 77

the KPMG network are affiliated.

For the 2016 survey we have asked more than 2,100 consumers from 35 countries around the globe 195 Gamechangers

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KPMG Global Automotive Thought Le Connected and Autonomous Vehicles – The UK Economic Opportunity This report examines how these innovative vehicles will transform the UK economy – expanding our industrial base, improving safety and congestion, driving up productivity and freeing up space usually devoted to vehicles in our urban areas. (March 2015)

The Future of the Car The future of the car offers a series of opinions from KPMG industry professionals, addressing what is arguably the greatest change to the automobile sector since Ford’s first Model T was delivered. We ask how this next generation of vehicles will benefit drivers and wider society. We look at who will win and who will lose the race to build the car of the future, and examine the obstacles that must be overcome to make the promise of a driverless future a reality. Articles feature thoughts and opinions from experts within the Automotive, Cyber, Insurance, Strategy, Telecommunication and Transport sectors. (November 2015)

Gamechangers 196

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KPMG’s Global Automotive Executive Survey 2016

eadership The Clockspeed Dilemma Last year’s groundbreaking paper Me, My Car, My Life described a convergence of consumer and automotive technologies. This year, we examine how the automotive industry must innovate in response to these transformations. We’re riding a wave of fantastic innovation that is moving faster and faster. Who will be among the next generation of leading companies? (November 2015)

Metalsmith or Grid Master This report explores how the industry can adapt in an age where the car itself will no longer be the sole focus. The focus is shifting increasingly to the customer data that can be harnessed to generate entirely new and scalable revenue streams. After all, the ubiquitously connected car is a gigantic data generating machine. (November 2015)

operative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

197 Gamechangers

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Americas

Dieter Becker Global Head of Automotive KPMG International dieterbecker@kpmg.com

Gary Silberg The Americas Head of Automotive KPMG in the US gsilberg@kpmg.com

Moritz Pawelke Global Executive for Automotive KPMG International mpawelke@kpmg.com Doug Gates Global Head of Industrial Manufacturing KPMG in the US dkgates@kpmg.com

Americas country leaders: Charles Krieck KPMG in Brazil ckrieck@kpmg.com.br

Additional contact

Functional leaders

Stephanie Göring EMA Executive for Automotive KPMG in Germany sgoering@kpmg.com

Roger Bayly Global Automotive Advisory Leader KPMG in the UK roger.bayly@kpmg.co.uk

Alana Mohan Global Marketing Manager for Automotive KPMG in Canada aamohan@kpmg.ca

Ulrich Bergmann Global Automotive Financial Services Leader KPMG in Germany ubergmann@kpmg.com

kpmg.com/automotive kpmg.com/socialmedia To view the interactive version of this year’s survey please visit kpmg.com/GAES2016

The information contained herein is of a general nature and is not intended to address the circumstances of any particular indivi accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2016 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of indepe KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Gamechangers 198

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Asia Pacific

EMA

Seung Hoon Wi Asia Pacific Head of Automotive KPMG in Korea swi@kr.kpmg.com

Dieter Becker EMA and German Head of Automotive KPMG in Germany dieterbecker@kpmg.com

Asia Pacific country leaders:

EMA country leaders:

Megumu Komikado KPMG in Japan megumu.komikado@jp.kpmg.com

Ulrik Andersen KPMG in Russia uandersen1@kpmg.ru

Huu-Hoi Tran KPMG in China huuhoi.tran@kpmg.com

Laurent Des Places KPMG in France ldesplaces@kpmg.fr Ergün Kis KPMG in Turkey ergunkis@kpmg.com

Brigitte Romani Global Automotive Tax Leader KPMG in Germany bromani@kpmg.com Axel Thümler Global Automotive Audit Leader KPMG in Germany athuemler@kpmg.com

John D. Leech KPMG in the UK john.leech@kpmg.co.uk Gavin Maile KPMG in South Africa gmaile@kpmg.com Fabrizio Ricci KPMG in Italy fabrizioricci@kpmg.it

kpmg.com/app

idual or entity. Although we endeavor to provide t it will continue to be accurate in the future. No one

endent firms are affiliated with KPMG International. y other member firm vis-à-vis third parties, nor does

Francisco Roger Rull KPMG in Spain froger@kpmg.es Rajeev Singh KPMG in India rpsingh@kpmg.com

Designed by: AB Publishing Ltd Publication name: KPMG’s Global Automotive Executive Survey 2016 Publication number: 133059-G Publication date: January 2016 Images and Illustrations: Getty Images

199 Gamechangers

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NEWS

LETTER

Automotive

M&A AND FINANCIAL MARKET STATISTICS IN THE AUTOMOTIVE INDUSTRY

M&A Activity – Quarterly Comparison Q2 2015 – Q2 2016

Summary In Q2 2016, aggregate deal count and deal value in the global automotive sector increased by 32% and 61%, respectively, compared to the previous quarter.

88 60

16,699

In comparison to the previous quarter, the average automotive sector valuation levels declined moderately: EV/Sales: (minus 14.3%), EV/EBITDA: (minus 7.4%), EV/EBIT: (minus 7.3%). This development was, among others, driven by the mainly European-related decrease in valuation levels. The highest valuation levels can be observed in the Engineering and Controls / Electronics subsegments, in particular driven by the macro-trends of autonomous driving, connectivity and electrification.

4,665

Q2'15

Q3'15

5,356

6,503

Q4'15

Q1'16

Aggregate Deal Value in €m

10,485

Q2'16

Number of Deals

Top M&A Deals Q2 2016

Freudenberg SE has reached an agreement with its joint venture partner Trelleborg AB to acquire its 50% shareholding in the joint venture company Vibracoustic GmbH, a company engaged in automotive antivibration activities, to become a global and market technology leader in vibration control components and modules in the automotive industry (EV: € 1,800m)

Valeo SA has agreed to acquire FTE automotive GmbH, a manufacturer and developer of drive train and brake system applications for the automotive industry, to expand its customer and product portfolio as well as strengthen Valeo’s aftermarket business (EV: € 819m)

Plastic Omnium has agreed to acquire the automotive exteriors business of Faurecia SA, a company engaged in the manufacturing of bumpers and front-end modules, to accelerate its ongoing globalisation and thereby enable it to better serve customers around the world (EV: €665m) Selected Recent Global Automotive Bond Issuances Q2 2016

Company

Amount (in €m) 700.0

Coupon

Faurecia

Date of Issuance 01/04/2016

3.625%

Yield (Latest) 3.380%

Price (Latest) 101.500

Maturity Date 15/06/2023

Daimler

07/04/2016

370.9

2.125%

1.563%

103.144

07/06/2022

Kia Motors

14/04/2016

355.4

2.625%

1.913%

103.247

21/04/2021

Peugeot

15/04/2016

500.0

2.375%

1.925%

102.820

14/04/2023

Goodyear

10/05/2016

790.2

5.000%

4.654%

102.250

31/05/2026

Daimler

11/05/2016

1,250.0

0.250%

(0.031%)

101.079

11/05/2020

CLEARWATER INTERNATIONAL Source: Capital IQ, Mergermarket, Clearwater Research

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AUTOMOTIVE SUPPLIER COMPOSITE â&#x20AC;&#x201C; EQUITY MARKET PERFORMANCE METRICS BY SEGMENT Company

EV/Sales 2016

EV/EBITDA

2017

2016

2017

EV/EBIT 2016

2017

Gross Margin

EBITDA Margin

2016

2017

2016

2017

EBIT Margin 2016

2017

Net Debt/ EBITDA

Chassis/Underbody Aisin Seiki American Axle Dana Georg Fischer GKN NHK Spring NSK Showa Median

10,770.7 2,009.1 2,097.7 3,154.9 6,446.3 1,474.9 4,375.4 198.4

0.4x 0.6x 0.4x 0.9x 0.6x 0.3x 0.5x 0.1x 0.5x

0.4x 0.5x 0.4x 0.9x 0.6x 0.3x 0.5x 0.1x 0.5x

3.2x 3.7x 3.7x 7.8x 5.7x 2.9x 4.3x 1.2x 3.7x

3.0x 3.7x 3.5x 7.4x 5.4x 2.9x 4.1x 1.0x 3.6x

6.7x 5.9x 5.3x 11.0x 7.3x 5.0x 6.7x 2.2x 6.3x

6.1x 5.8x 5.0x 10.5x 6.8x 4.8x 6.5x 1.7x 6.0x

13.9% 17.0% 14.3% 52.6% 48.2% n/a 22.1% 17.9% 17.9%

14.1% 16.3% 14.1% 52.7% 48.2% n/a 22.2% 17.8% 17.8%

11.3% 15.0% 10.9% 11.6% 11.2% 9.1% 12.4% 7.9% 11.3%

11.8% 14.3% 11.5% 11.8% 11.5% 9.1% 12.6% 9.2% 11.7%

5.4% 9.6% 7.7% 8.2% 8.8% 5.3% 7.9% 4.1% 7.8%

5.8% 9.1% 7.9% 8.3% 9.1% 5.4% 8.0% 5.3% 8.0%

0.1x 2.0x 1.2x 0.6x 1.0x (0.6x) 0.8x (1.3x) 0.7x

1,090.1 6,944.0 5,528.8 456.1 1,192.7 3,334.9 2,180.2 2,579.7 751.8 439.9 11,616.4

1.3x 0.8x 0.8x 0.4x 0.3x 0.4x 4.9x 0.7x 0.2x 0.7x 0.5x 0.7x

1.2x 0.7x 0.7x 0.4x 0.3x 0.4x 4.5x 0.7x 0.2x 0.6x 0.4x 0.6x

7.2x 5.9x 5.4x 4.4x 4.6x 4.4x 15.3x 4.1x 1.7x 6.9x 4.6x 4.6x

6.5x 5.5x 5.0x 4.1x 3.7x 4.2x 14.2x 3.8x 1.7x 6.3x 4.3x 4.3x

9.2x 8.2x 7.6x 7.9x 11.2x 5.9x 19.2x 7.3x 2.8x 10.6x 8.7x 8.2x

8.0x 7.6x 7.1x 7.0x 7.2x 5.5x 17.5x 6.6x 2.8x 9.1x 8.0x 7.2x

31.6% 20.4% 16.8% 34.3% 16.0% 17.5% 47.8% 20.0% 14.7% 27.6% 18.5% 20.0%

32.0% 20.5% 16.9% 34.9% 16.6% 17.5% 47.3% 20.6% 14.9% 27.6% 18.6% 20.5%

17.8% 12.8% 14.5% 10.1% 5.9% 9.8% 32.4% 17.6% 11.1% 9.8% 9.9% 11.1%

18.0% 12.9% 14.7% 10.5% 7.1% 9.8% 32.1% 18.3% 11.1% 10.2% 10.4% 11.1%

13.8% 9.1% 10.2% 5.6% 2.4% 7.3% 25.8% 9.8% 6.6% 6.3% 5.2% 7.3%

14.5% 9.3% 10.4% 6.2% 3.6% 7.4% 25.9% 10.5% 6.6% 7.1% 5.5% 7.4%

(0.2x) 0.3x (1.1x) 2.2x 1.3x 1.3x (0.6x) (1.0x) (1.0x) 1.4x 1.0x 0.3x

2,485.7 36,881.2 23,147.6 31,850.5 14,686.6 511.7 482.8 1,944.6 1,638.1 9,466.1

0.9x 0.9x 0.6x 0.9x 0.5x 0.1x 0.3x 0.3x 0.6x 0.6x 0.6x

0.8x 0.9x 0.6x 0.9x 0.4x 0.1x 0.3x 0.3x 0.5x 0.5x 0.5x

6.0x 5.7x 4.7x 8.6x 4.3x 0.9x 3.3x 2.7x 5.6x 4.6x 4.7x

5.3x 5.3x 4.4x 7.9x 4.1x 1.0x 3.1x 2.6x 5.1x 4.1x 4.2x

8.6x 7.9x 8.3x 11.1x 6.3x 1.4x 6.1x 5.5x 7.8x 7.8x 7.8x

7.5x 7.5x 7.8x 10.1x 5.8x 1.6x 5.5x 5.3x 6.8x 7.1x 7.0x

n/a 26.0% 16.5% 19.0% 14.3% 17.3% 28.0% 12.9% 14.3% 18.1% 17.3%

n/a 26.2% 16.6% 19.4% 14.5% n/a n/a 13.1% 14.5% 18.4% 16.6%

14.2% 15.9% 12.5% 10.9% 10.4% 8.8% 9.5% 11.2% 10.0% 12.8% 11.0%

14.8% 16.1% 13.0% 11.5% 10.5% 8.4% 9.7% 11.3% 10.4% 13.1% 11.4%

9.9% 11.3% 7.0% 8.4% 7.2% 5.7% 5.0% 5.4% 7.2% 7.6% 7.2%

10.3% 11.4% 7.3% 9.0% 7.4% 5.2% 5.4% 5.5% 7.8% 7.6% 7.5%

1.4x 0.5x (0.4x) 2.0x 0.8x 0.4x 2.5x (0.1x) (1.6x) 0.0x 0.4x

7,771.1 1,611.8 974.1 3,842.9 4,560.8 3,047.3 981.0 457.2

0.9x 1.0x 0.4x 0.6x 0.4x 0.7x 0.4x 0.4x 0.5x

0.9x 1.0x 0.4x 0.5x 0.4x 0.7x 0.3x 0.4x 0.5x

5.8x 6.3x 3.0x 5.7x 4.0x 4.2x 4.1x 4.3x 4.3x

5.5x 5.6x 2.8x 5.4x 4.0x 3.9x 3.7x 3.9x 4.0x

7.8x 9.8x 5.6x 12.7x 7.5x 6.4x 6.7x 7.6x 7.6x

7.3x 8.5x 5.3x 11.2x 7.7x 5.9x 5.9x 6.3x 6.8x

20.7% 26.0% 20.7% 15.4% 15.2% 16.6% 11.3% 17.7% 17.2%

21.0% 26.6% 20.5% 15.8% 15.0% 16.5% 11.6% 19.4% 17.9%

16.3% 16.2% 14.3% 9.9% 9.5% 17.0% 8.6% 8.7% 12.1%

16.4% 17.2% 14.7% 10.2% 9.6% 16.8% 9.2% 9.5% 12.4%

12.2% 10.4% 7.6% 4.4% 5.1% 11.0% 5.2% 4.9% 6.4%

12.4% 11.3% 7.7% 4.9% 5.0% 11.2% 5.8% 5.8% 6.8%

1.6x 2.3x 0.2x 5.0x 0.9x 1.6x 2.4x n/a 1.6x

1,594.8 4,914.0 447.5 4,071.1 277.5 634.4 700.7

0.2x 0.3x 0.3x 0.8x 0.4x 0.7x 0.2x 0.3x

0.2x 0.2x 0.3x 0.5x 0.4x n/a 0.2x 0.3x

2.8x 3.2x 4.3x 5.5x 4.5x 4.9x 1.7x 4.3x

2.7x 2.9x 3.7x 4.3x 4.2x n/a 1.6x 3.3x

4.6x 5.3x 7.4x 8.2x 7.6x 6.5x 2.1x 6.5x

4.3x 4.8x 5.8x 6.6x 7.2x 8.2x 2.0x 5.8x

8.7% 9.6% 11.6% 15.5% 50.9% 54.0% 16.7% 15.5%

9.0% 9.5% 12.3% 14.6% 51.1% n/a 16.9% 13.5%

6.3% 8.1% 6.4% 13.7% 9.5% 14.0% 10.8% 9.5%

6.4% 8.3% 7.2% 12.1% 9.7% n/a 11.1% 9.0%

3.8% 4.8% 3.7% 9.2% 5.7% 10.6% 8.6% 5.7%

4.0% 5.0% 4.5% 7.9% 5.8% n/a 8.8% 5.4%

(0.4x) 0.8x 0.4x 0.6x 2.0x (1.8x) (1.9x) 0.4x

641.2 2,215.2 918.7 487.7 506.1

0.6x 1.1x 0.9x 0.6x 1.2x 0.9x

0.5x 1.0x 0.8x 0.6x 1.2x 0.8x

6.7x 9.3x 6.9x 5.2x 9.2x 6.9x

5.9x 8.6x 6.2x 4.8x 8.6x 6.2x

8.4x 10.6x 9.3x 7.3x 12.0x 9.3x

7.2x 9.7x 8.2x 6.6x 11.3x 8.2x

n/a 9.6% 90.7% 86.0% n/a 86.0%

n/a 10.6% 90.9% 86.4% n/a 86.4%

8.7% 11.4% 12.9% 12.1% 13.5% 12.1%

9.4% 11.6% 13.3% 12.5% 13.7% 12.5%

6.9% 9.9% 9.6% 8.7% 10.4% 9.6%

7.7% 10.3% 10.0% 9.1% 10.4% 10.0%

1.2x 0.7x 0.3x 1.3x 0.8x 0.8x

0.6x 0.7x

0.5x 0.6x

4.6x 5.0x

4.1x 4.6x

7.6x 7.6x

6.8x 6.9x

17.7% 24.8%

17.6% 24.3%

11.2% 11.9%

11.5% 12.2%

7.6% 7.9%

7.7% 8.1%

Controls/Electronics Gentherm Autoliv Koito Manufacturing Kongsberg Automotive Leoni Tenneco Melexis Stanley Electric Tokai Rika Stoneridge Sumitomo Electric Median

Diversified Suppliers CIE Automotive Continental Denso Johnson Controls Magna Takata Sogefi Toyoda Gosei Visteon Valeo Median

Engine/Under-the-Hood BorgWarner ElringKlinger Exedy Federal Mogul JTEKT Linamar Martinrea Modine Median

Interior/Exteriors Calsonic Kansei Faurecia Grammer Plastic Omnium Polytec Rieter TS Tech Median

Engineering Akka Altran Bertrandt EDAG Ricardo Median Median Mean

Source: Capital IQ as of 30/06/2016 Note: All financials calendarised to December year end EV= Enterprise Value (i.e., market capitalisation + net debt); Net debt= Interest-bearing liabilities - cash

CLEARWATER INTERNATIONAL Source: Capital IQ, Mergermarket, Clearwater Research

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AUTOMOTIVE SUPPLIER COMPOSITE â&#x20AC;&#x201C; EQUITY MARKET PERFORMANCE METRICS BY REGION Company

EV/Sales 2016

EV/EBITDA

2017

2016

2017

EV/EBIT 2016

2017

Gross Margin

EBITDA Margin

2016

2017

2016

2017

2016

EBIT Margin 2017

n/a 9.6% 20.4% 90.7% n/a 26.0% 86.0% 26.0% 9.6% 52.6% 48.2% 11.6% 34.3% 16.0% 47.8% 15.5% 50.9% n/a 54.0% 28.0% 18.1%

n/a 10.6% 20.5% 90.9% n/a 26.2% 86.4% 26.6% 9.5% 52.7% 48.2% 12.3% 34.9% 16.6% 47.3% 14.6% 51.1% n/a n/a n/a 18.4%

8.7% 11.4% 12.8% 12.9% 14.2% 15.9% 12.1% 16.2% 8.1% 11.6% 11.2% 6.4% 10.1% 5.9% 32.4% 13.7% 9.5% 13.5% 14.0% 9.5% 12.8%

9.4% 11.6% 12.9% 13.3% 14.8% 16.1% 12.5% 17.2% 8.3% 11.8% 11.5% 7.2% 10.5% 7.1% 32.1% 12.1% 9.7% 13.7% n/a 9.7% 13.1%

6.9% 9.9% 9.1% 9.6% 9.9% 11.3% 8.7% 10.4% 4.8% 8.2% 8.8% 3.7% 5.6% 2.4% 25.8% 9.2% 5.7% 10.4% 10.6% 5.0% 7.6%

7.7% 10.3% 9.3% 10.0% 10.3% 11.4% 9.1% 11.3% 5.0% 8.3% 9.1% 4.5% 6.2% 3.6% 25.9% 7.9% 5.8% 10.4% n/a 5.4% 7.6%

Net Debt/ EBITDA

Europe Akka Altran Autoliv Bertrandt CIE Automotive Continental EDAG ElringKlinger Faurecia Georg Fischer GKN Grammer Kongsberg Automotive Leoni Melexis Plastic Omnium Polytec Ricardo Rieter Sogefi Valeo

641.2 2,215.2 6,944.0 918.7 2,485.7 36,881.2 487.7 1,611.8 4,914.0 3,154.9 6,446.3 447.5 456.1 1,192.7 2,180.2 4,071.1 277.5 506.1 634.4 482.8 9,466.1

0.6x 1.1x 0.8x 0.9x 0.9x 0.9x 0.6x 1.0x 0.3x 0.9x 0.6x 0.3x 0.4x 0.3x 4.9x 0.8x 0.4x 1.2x 0.7x 0.3x 0.6x

0.5x 1.0x 0.7x 0.8x 0.8x 0.9x 0.6x 1.0x 0.2x 0.9x 0.6x 0.3x 0.4x 0.3x 4.5x 0.5x 0.4x 1.2x n/a 0.3x 0.5x

6.7x 9.3x 5.9x 6.9x 6.0x 5.7x 5.2x 6.3x 3.2x 7.8x 5.7x 4.3x 4.4x 4.6x 15.3x 5.5x 4.5x 9.2x 4.9x 3.3x 4.6x

5.9x 8.6x 5.5x 6.2x 5.3x 5.3x 4.8x 5.6x 2.9x 7.4x 5.4x 3.7x 4.1x 3.7x 14.2x 4.3x 4.2x 8.6x n/a 3.1x 4.1x

8.4x 10.6x 8.2x 9.3x 8.6x 7.9x 7.3x 9.8x 5.3x 11.0x 7.3x 7.4x 7.9x 11.2x 19.2x 8.2x 7.6x 12.0x 6.5x 6.1x 7.8x

7.2x 9.7x 7.6x 8.2x 7.5x 7.5x 6.6x 8.5x 4.8x 10.5x 6.8x 5.8x 7.0x 7.2x 17.5x 6.6x 7.2x 11.3x 8.2x 5.5x 7.1x

0.7x

0.6x

5.7x

5.3x

8.2x

7.2x

0.6x 1.3x 0.9x 0.4x 0.6x 0.9x 0.7x 0.5x 0.4x 0.4x 0.7x 0.4x 0.6x

0.5x 1.2x 0.9x 0.4x 0.5x 0.9x 0.7x 0.4x 0.3x 0.4x 0.6x 0.4x 0.5x

3.7x 7.2x 5.8x 3.7x 5.7x 8.6x 4.2x 4.3x 4.1x 4.3x 6.9x 4.4x 5.6x

3.7x 6.5x 5.5x 3.5x 5.4x 7.9x 3.9x 4.1x 3.7x 3.9x 6.3x 4.2x 5.1x

5.9x 9.2x 7.8x 5.3x 12.7x 11.1x 6.4x 6.3x 6.7x 7.6x 10.6x 5.9x 7.8x

5.8x 8.0x 7.3x 5.0x 11.2x 10.1x 5.9x 5.8x 5.9x 6.3x 9.1x 5.5x 6.8x

0.6x

0.5x

4.4x

4.2x

7.6x

6.3x

0.4x 0.2x 0.6x 0.4x 0.4x 0.8x 0.3x 0.5x 0.1x 0.7x 0.5x 0.1x 0.2x 0.3x 0.2x

0.4x 0.2x 0.6x 0.4x 0.4x 0.7x 0.3x 0.5x 0.1x 0.7x 0.4x 0.1x 0.2x 0.3x 0.2x

3.2x 2.8x 4.7x 3.0x 4.0x 5.4x 2.9x 4.3x 1.2x 4.1x 4.6x 0.9x 1.7x 2.7x 1.7x

3.0x 2.7x 4.4x 2.8x 4.0x 5.0x 2.9x 4.1x 1.0x 3.8x 4.3x 1.0x 1.7x 2.6x 1.6x

6.7x 4.6x 8.3x 5.6x 7.5x 7.6x 5.0x 6.7x 2.2x 7.3x 8.7x 1.4x 2.8x 5.5x 2.1x

6.1x 4.3x 7.8x 5.3x 7.7x 7.1x 4.8x 6.5x 1.7x 6.6x 8.0x 1.6x 2.8x 5.3x 2.0x

Median

0.4x

3.0x

2.9x

5.6x

5.3x

16.8%

16.9%

11.1%

5.7%

5.8%

Median Mean

0.6x 0.7x

0.5x 0.6x

4.6x 5.0x

4.1x 4.6x

7.6x 7.6x

6.8x 6.9x

17.7% 24.8%

17.6% 24.3%

11.2% 11.9%

11.5% 12.2%

7.6% 7.9%

7.7% 8.1%

Median

27.0%

26.4%

12.1%

11.9%

8.8%

8.7%

1.2x 0.7x 0.3x 0.3x 1.4x 0.5x 1.3x 2.3x 0.8x 0.6x 1.0x 0.4x 2.2x 1.3x (0.6x) 0.6x 2.0x 0.8x (1.8x) 2.5x 0.0x 0.8x

North America American Axle Gentherm BorgWarner Dana Federal Mogul Johnson Controls Linamar Magna Martinrea Modine Stoneridge Tenneco Visteon

2,009.1 1,090.1 7,771.1 2,097.7 3,842.9 31,850.5 3,047.3 14,686.6 981.0 457.2 439.9 3,334.9 1,638.1

Median

17.0% 31.6% 20.7% 14.3% 15.4% 19.0% 16.6% 14.3% 11.3% 17.7% 27.6% 17.5% 14.3% 17.0%

16.3% 32.0% 21.0% 14.1% 15.8% 19.4% 16.5% 14.5% 11.6% 19.4% 27.6% 17.5% 14.5% 16.5%

15.0% 17.8% 16.3% 10.9% 9.9% 10.9% 17.0% 10.4% 8.6% 8.7% 9.8% 9.8% 10.0% 10.4%

14.3% 18.0% 16.4% 11.5% 10.2% 11.5% 16.8% 10.5% 9.2% 9.5% 10.2% 9.8% 10.4% 10.5%

9.6% 13.8% 12.2% 7.7% 4.4% 8.4% 11.0% 7.2% 5.2% 4.9% 6.3% 7.3% 7.2% 7.3%

9.1% 14.5% 12.4% 7.9% 4.9% 9.0% 11.2% 7.4% 5.8% 5.8% 7.1% 7.4% 7.8% 7.8%

2.0x (0.2x) 1.6x 1.2x 5.0x 2.0x 1.6x 0.8x 2.4x n/a 1.4x 1.3x (1.6x) 1.5x

Asia Aisin Seiki Calsonic Kansei Denso Exedy JTEKT Koito Manufacturing NHK Spring NSK Showa Stanley Electric Sumitomo Electric Takata Tokai Rika Toyoda Gosei TS Tech

10,770.7 1,594.8 23,147.6 974.1 4,560.8 5,528.8 1,474.9 4,375.4 198.4 2,579.7 11,616.4 511.7 751.8 1,944.6 700.7

13.9% 8.7% 16.5% 20.7% 15.2% 16.8% n/a 22.1% 17.9% 20.0% 18.5% 17.3% 14.7% 12.9% 16.7%

14.1% 9.0% 16.6% 20.5% 15.0% 16.9% n/a 22.2% 17.8% 20.6% 18.6% n/a 14.9% 13.1% 16.9%

Source: Capital IQ as of 30/06/2016 Note: All financials calendarised to December year end EV= Enterprise Value (i.e., market capitalisation + net debt); Net debt= Interest-bearing liabilities - cash

CLEARWATER INTERNATIONAL Source: Capital IQ, Mergermarket, Clearwater Research

11.3% 6.3% 12.5% 14.3% 9.5% 14.5% 9.1% 12.4% 7.9% 17.6% 9.9% 8.8% 11.1% 11.2% 10.8%

11.8% 6.4% 13.0% 14.7% 9.6% 14.7% 9.1% 12.6% 9.2% 18.3% 10.4% 8.4% 11.1% 11.3% 11.1%

5.4% 3.8% 7.0% 7.6% 5.1% 10.2% 5.3% 7.9% 4.1% 9.8% 5.2% 5.7% 6.6% 5.4% 8.6%

5.8% 4.0% 7.3% 7.7% 5.0% 10.4% 5.4% 8.0% 5.3% 10.5% 5.5% 5.2% 6.6% 5.5% 8.8%

0.1x (0.4x) (0.4x) 0.2x 0.9x (1.1x) (0.6x) 0.8x (1.3x) (1.0x) 1.0x 0.4x (1.0x) (0.1x) (1.9x) (0.4x)

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GLOBAL AUTOMOTIVE SUPPLIER INDUSTRY â&#x20AC;&#x201C; SELECTED M&A TRANSACTIONS IN Q2 2016 Date

Target

Country

Target Description

Buyer

Seller

EV (â&#x201A;Źm )

05/04/2016

A FX Industries L.L.C.

M anufacturer and supplier o f leather and leather- Exco Techno lo gies like interio r co mpo nents Limited

05/04/2016

A ustria Druckguss GmbH & Co . KG

A ustria

M anufacturer o f die-casting auto mo tive co mpo nents

A nhui Zho ngding Ho lding (Gro up) Co .,Ltd.

B avaria Industriekapital A G

n/a

12/04/2016

Classic Stripes P rivate India Limited

Co mpany engaged in auto mo bile-decal and graphics-designing

M anagement Vehicle

Navis A sia Fund VI, L.P .

n/a

18/04/2016

Valeo SA (High Vo ltage E-B usiness); Siemens A G (E-Car P o wertrain)

Germany France

P o wer electro nics divisio n o f Valeo SA ; Germany-based E-Car po wertrain systems business divisio n o f Siemens A G

Valeo SA / Siemens A G (High Vo ltage P o wertrains Jo intVenture)

Valeo SA ; Siemens A G

n/a

19/04/2016

Vibraco ustic GmbH (50% Stake)

Germany

Co mpany engaged in auto mo tive antivibratio n activities

Freudenberg SE

Trellebo rg A B

19/04/2016

Faurecia SA (A uto mo tive Exterio rs B usiness)

France

Co mpany engaged in the manufacturing o f bumpers and fro nt/end mo dules

P lastic Omnium

Faurecia SA

19/04/2016

Spectra P remium Industries, Inc.

Canada

Co mpany engaged in the design, manufacture, and distributio n o f auto mo tive parts

Caisse de Depo t et P lacement du Quebec; Family / M anagement Fo ndactio n CSN

19/04/2016

M achinery & Industrial Gro up N.V.

Netherlands Russia

Co mpany engaged in manufacturing facilities, spare parts fo r light and heavy machinery and o ff- B rendo ra Ltd ro ad machinery

Vnesheco no mbank

n/a

26/04/2016

SKF (Kaydo n velo city co ntro l business)

Sweden

Kaydo n velo city co ntro l business o f SKF, which includes the A CE, Hahn Gasfedern, Fabreeka and TechP ro ducts brands

Stabilus S.A .

SKF A B

301

28/04/2016

Jaeger A uto mo bilTechnik GmbH

Germany

M anufacturer o f rubber, plastic and multico mpo nent parts fo r the auto mo tive co mpo nents industry

P arker Hannifin Co rpo ratio n

A rno ld Jaeger Ho lding GmbH

05/05/2016

KLT A uto mo tive & Tubular P ro ducts Limited

India

M anufacturer o f auto mo tive pro ducts, precisio n Ko hlberg Kravis tubes, chassis frames, chassis co mpo nents and Ro berts & Co . L.P . bo dy co mpo nents/assemblies

Family / M anagement

n/a

08/05/2016

Uzel Trakto r Fabrikasi

Turkey

Co mpany engaged in manufacturing, marketing, and distributio n o f agricultural tracto rs

Vera Varlik Yo netim A .S.

Family / M anagement

09/05/2016

Hay Ho lding GmbH

Germany

Co mpany engaged in manufacturing and supplying fo rged and machined co mpo nents

M usashi Seimitsu Industry Co ., Ltd.

The Go res Gro up LLC

361

09/05/2016

Grupo A maya Telleria

Spain

Co mpany engaged in D & D, validatio n and serial manufacturing o f co mpo nents and subco mpo nents fo r the auto mo tive industry.

CIE A uto mo tive SA

Family / M anagement

186

18/05/2016

STA RCO A /S (A ftermarket o peratio ns)

Eastern Euro pe, No rdics, Germany

Tyre and wheel so lutio ns pro vider fo r range o f applicatio ns wo rldwide to manufacturers and aftermarket custo mers

B o hnenkamp A G

STA RCO A /S

n/a

CLEARWATER INTERNATIONAL Source: Capital IQ, Mergermarket, Clearwater Research

Family / M anagement

1,800

665

n/a

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GLOBAL AUTOMOTIVE SUPPLIER INDUSTRY â&#x20AC;&#x201C; SELECTED M&A TRANSACTIONS IN Q2 2016 21/05/2016

LeSEE

China

Electric vehicle co mpany

Undisclo sed bidder

Family / M anagement

23/05/2016

General Cable Co rpo ratio n

Co mpany engaged in manufacturing o f ignitio n wires fo r the auto mo tive industry

Standard M o to r P ro ducts, Inc.

General Cable Co rpo ratio n

24/05/2016

pierre.dk A uto lakering A /S

Intelligent Repair So lutio ns Ho lding GmbH

M aj Invest Equity A /S; P ierre Legarth (P rivate Investo r)

24/05/2016

Cho ngqing Jingyixin A uto mo bile Parts Co ., China Ltd

Excel Develo pment (Ho ldings) Limited

Zhang Yo ng (P rivate Investo r)

30/05/2016

Speedy France SA S

France

P ro vider o f car repair services

B ridgesto ne Euro pe NV

M CB Capital P artners Ltd; Jacques Le Fo ll (P rivate Investo r)

n/a

01/06/2016

tedrive Steering Systems GmbH

Germany

Co mpany enagaged in the manufacture o f steering systems

Kno rr-B remse A G

Family / M anagement

n/a

02/06/2016

FTE auto mo tive GmbH

Germany

Co mpany engaged in the develo pment and pro ductio n o f drive train and brake system applicatio ns fo r the auto mo tive industry

Valeo SA

B ain Capital LLC

819

07/06/2016

A eo lus Tyre (Jiao zuo ) Co ., Ltd. (80% Stake)

China

Co mpany engaged in the manufacturing o f tyres

P irelli Tyre S.p.A

A eo lus Tyre Co ., Ltd.

n/a

13/06/2016

A M K Ho lding GmbH & Germany Co . KG

Co mpany engaged in electric drive and co ntro l, industrial auto matio n engineering, and auto mo tive supplier

A nhui Zho ngding Sealing P arts Co Ltd

Family / M anagement

n/a

21/06/2016

Tubo s Reunido s, SA (Auto mo tive business)

Co mpany, engaged in manufacturing fo r the auto mo tive industry

M ubea M o to rko mpo nenten GmbH

Tubo s Reunido s, SA ; Gestio n de Capital Riesgo del P ais Vasco SGECR SA

24/06/2016

A uto Fo rm Engineering Switzerland GmbH

So ftware develo per fo r the auto mo tive industry

A sto rg VI Special Limited P artnership

Family / M anagement

644

27/06/2016

Retlan M anufacturing Ltd

United Kingdo m

Ho lding co mpany engaged in manufacture and sale o f co mmercial trailers as well as the sale o f co mmercial vehicle and trailer parts

CIM C Vehicle (Gro up) Co Ltd

Jo hn and Darren Do nnelly (private investo rs)

111

28/06/2016

UQM Techno lo gies Inc. (57.91% Stake)

M anufacturer o f electrical mo to rs, generato rs and hybrid systems fo r passenger and co mmercial vehicles

A merican Co mpass, Inc.

Family / M anagement

30/06/2016

P erisco pe GmbH

Germany

Germany-based co mpany engaged in the manufacturing o f electro nics fo r the auto mo tive Cemtrex Inc. industry

Family / M anagement

n/a

30/06/2016

A to Z Tire & B attery, Inc.

US-based co mpany engaged in supplying light, passenger, and medium truck radials; and industrial and agricultural tires

Family / M anagement

n/a

Denmark

Spain

Co mpany engaged in o ffering lacquering services, such as lacquer co nservatio n, po lishing, sand blasting and metal spraying services Co mpany that is engaged in the assembly o f auto mo bile wheels and tyres and supply o f assembled wheels and tyres to auto mo bile manufacturers

Omni United (S) P te Ltd.

CLEARWATER INTERNATIONAL Source: Capital IQ, Mergermarket, Clearwater Research

n/a

r epo rt

RECENT AUTOMOTIVE TRANSACTIONS ADVISED

PHILLIPS SERVICE INDUSTRIES

STARCO

REVERSE LOGISTICS

Industrial equipment manufacturer

Supplier of tires and wheels

Reverse logistics services

Clearwater International advised Phillips Service industries on the sale of Evana Automation

Clearwater International advised Starco A/S on the sale of their aftermarket operations in Eastern Europe, Scandinavia, Benelux and Germany to Bohnenkamp AG

Clearwater International advised Reverse Logistics on a €27m Debt Financing provided by Proventus Capital Partners

WEBASTO

Brose International

NINGBO JOYSON ELECTRONIC

Temperature management systems manufacturer

Automobile parts manufacturer

Clearwater International advised Webasto AG on the acquisition of Hebei Nanfeng Automobile Equipment Group

Clearwater International advised Brose International on the joint venture agreement with Dongfeng Motor Parts and Components

Clearwater International advised Ningbo Joyson Electronic Corporation on the acquisition of Key Safety Systems

With 236 completed transactions, our global automotive sector team ranks among the worldwide leading M&A advisors in the automotive industry ABOUT CLEARWATER INTERNATIONAL

NOTTINGHAM MANCHESTER

AARHUS

COPENHAGEN DUBLINLONDON

WIESBADEN

BIRMINGHAM

DETROIT CHICAGO

PARIS VIENNA

BOSTON

SAN FRANCISCO NEW YORK TAMPA

MADRID

BARCELONA

MILAN

BEIJING

PORTO LISBON

TOKYO

SHANGHAI MUMBAI

SÃO PAULO

Clearwater International Offices Partner Office

Coordinating as a single team, our 200 experienced professionals have been responsible for the successful completion of over 1,200 deals worth in excess of € 45bn. Working alongside directors, shareholders and investors we advise on all aspects of corporate finance from mergers and acquisitions (M&A) through to management buy-outs (MBOs) and financing transactions (debt advisory).

Our independence from any larger financial institution or consulting firm ensures that we can give truly objective advice. All projects are partner-led, offering high levels of personal service, and laying the groundwork for lasting relationships. Many of our clients, including highly renowned international Tier 1 suppliers, return to us for advice on multiple occasions.

With 15 offices in 9 countries around the world and deals completed in 31 countries, our team makes us a natural choice for transactions requiring knowledge of, and access to, global markets. We have longstanding relationships around the globe, all over Europe, in the US, China, India and Japan, helping us to provide clients with a unique insight into international opportunities.

CLEARWATER INTERNATIONAL 6

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OUR GLOBAL AUTOMOTIVE SECTOR TEAM GERMANY, AUSTRIA & SWITZERLAND

UNITED KINGDOM

FRANCE

Tobias Schätzmüller

Jon Hustler

Philippe Croppi

DD: +49 611 360 39 26

DD: +44 845 052 0364

DD: +33 661 642 369

SPAIN

NORDICS

PORTUGAL

Francisco Gómez

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DD: +34 699 446 314

DD: +45 25 39 45 71

DD: +351 917 529 764

IRELAND

NORTH AMERICA

CHINA

John Sheridan

Clifton H. Roesler

Raymond Su

DD: +353 1 517 58 41

DD: +1 124 860 595 02

DD: +86 6341 0699 x 815

Partner Head of Automotive

Partner

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Director

automotive@cwicf.com WWW.CLEARWATERINTERNATIONAL.COM CHINA • DENMARK • FRANCE • GERMANY • IRELAND • PORTUGAL • SPAIN • UNITED KINGDOM • US

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Gamechangers 206

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An integrated perspective on the future of mobility AN INTEG RA ON THE F TED PERSPECTI VE UTURE O F MOBILI TY

October 2016

A number of social, economic, and technological trends will work together to disrupt mobility, potentially creating three new urban models by 2030. To view a city from above is to observe a world in motion. Trains carry people to and from work; taxis circulate in abstract patterns; trucks deliver goods and carry away garbage; pedestrians hustle down city blocks; cyclists zip through traffic. Mobility is the lifeblood of our cities and essential for urban life. Full Report: View - https://goo.gl/ZigNDe 207 Gamechangers

r epo rt

Delivering change: The transformation of commercial transport by 2025 e chang of g in r e Deliv mation rt r o f s n The tra rcial transpo e comm 5 by 202 Advanc

ed Indu

stries

Septem

ber 20

A new report finds that the industry will experience many far-reaching shifts in the next ten years, which will pose genuine challenges but could also bring large rewards. The global market for trucks weighing six tons or more, which totaled €150 billion last year, will reach to up to €240 billion in 2025 - an increase of nearly 50 percent. At the same time, total profits for truck manufacturers will grow from €9 billion to approximately €15 million. Some of these additional sales will be generated by volume growth alone; the bulk of the remainder will be due to new technologies such as automation. These are the most important findings of Delivering change: The transformation of commercial transport by 2025, a new study of the global truck industry drawing on interviews with more than 250 decision makers in the commercial transport and logistics industries as well as a survey of over 3,000 end consumers in China, Germany, and the United States. Full Report: View - https://goo.gl/Bw4fv0 Gamechangers 208

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How to succeed: Strategic options for European machinery How t for Eu o succeed: ropea S Shifti n mac trategic o n and o g growth p ption hiner rganiz a s ation tterns, incr y al cha easi nge

ng pa

ce of

digitiz ation

How companies can adjust to shifting growth patterns, the increasing pace of digitization, and organizational change. Europeâ&#x20AC;&#x2122;s mechanical engineering sector employs 2.9 million people and generates revenue of â&#x201A;Ź644 billion in 2015. Yet its future success cannot be taken for granted: some regions have seen creeping deindustrialization in recent years, China is increasingly tapping export markets, and the United States has managed to halt the erosion of its industrial sector. This second joint study between McKinsey and VDMA, the German Engineering Federation, focuses on European mechanical engineering and its future strategic alignment, examining shifting growth patterns, the increasing pace of digitization, and organizational change (learn more about this work here). Full Report: View - https://goo.gl/J0hlcf 209 Gamechangers

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