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Future trends in 2012, 2015 with reference to growth of Electronics in vehicles

Frost & Sullivan talks to Dr Seubert, VP of Advanced Development at Hella about a range of R&D issues defining the European automotive industry

Sarwant Singh, Automotive & Transportation Practice Director at Frost & Sullivan talks to Dr Seubert, VP of Advanced Development at Hella about a range of R&D issues defining the European automotive industry. Dr. Seubert talks about the increasing importance of software across all vehicle domains, the growth of electronics in their ADAS, lighting and carbody product lines, how integration and modularisation is taking Hella into new areas of competency. Sharing his insights on the growth in vehicle electronics and higher costs within the industry, Dr. Seubert remarks: “I would like our industry to cooperate on really significant new developments, cooperation and standardisation being concentrated on achieving significant industry-wide progress, e.g. on hybrid vehicles or driver assistance, with focus on industry-wide business models.”

Sarwant Singh: What are some of the future trends you see in 2012, 2015 with reference to growth of Electronics in vehicles? How do you think the growth of electronics is going to impact the industry?

Dr. Seubert: We see presently the upcoming of new vehicle functions, which are mainly based on electronics, while also conventional functions are revolutionised by electronics, such as powering a vehicle and maintaining it safely on the road. There will be more electronics in powertrain; we are going to have hybrid vehicles with complete electric and electronic drivetrains in parallel to the internal combustion engine. We are going to have electronics, which are going to decide about the amount of energy that will be generated by the combustion engine or by the electric powertrain, we are going to need electronics to decide whether we brake mechanically or recuperate the kinetic energy of the vehicle and put this back into the battery by a generator. These new vehicle functions are only possible with electronics. At the same time, we are going to have some enhanced functionality in the vehicle for lighting, stability control, damping control, rolling control etc. We are going to use more mechatronic elements, whenever electronics will move to particularly challenging vehicle spaces: e.g. in the oil tanks for oil quality sensing, in the exhaust gases for turbo charger control, in the tires for pressure monitoring just to name but a few. Lighting is undergoing a significant evolution: after xenon discharge lamps, headlamp levelling and bending, after rear lamps realised by light emitting diodes (LEDs), the next decade will see the breakthrough of LED headlamps revolutionising the headlamp design, the design of the vehicle frontend and that of the front engine compartment. Furthermore we will see the full arrival of the Advanced Driver Assistance Systems (ADAS) such as Adaptive Cruise Control (ACC), Collision Mitigation, Stop & Go, Lane Departure Warning, Lane Change Assistance with increasingly complete and seamless system behaviour as well as the upcoming of lighting based functionalities such as Night Vision, High & Low Beam Assistance up to Marking Light. This year alone, three driver assistance systems from Hella will go into series production: a lane change assistant using 24 GHz radar sensor technology in the Audi Q7, an ACC on the basis of infrared sensor technology and a rear view camera system for an American OEM. [Hella is also the only supplier of ADAS to have been granted series contracts for all four technologies: lidar, 24 GHz radar, image processing and ultrasound.]

Last but not least, drivers want to do something else in the car besides driving; they want to communicate, work or be entertained. So it is clear that all the infotainment issues are going to rise.

Sarwant Singh: How is the growth of electronics impacting the industry, and in particular your company’s organisation structure?

Dr. Seubert: The change in mindset, resulting from the penetration of electronics into all vehicle domains cannot be valued high enough. Since most innovations in the automotive industry are related to electronics and software, car manufacturers and their suppliers need to shift their competences accordingly. They will outsource more and more of their classical mechanics competences and insource more and more innovation, software and electronics competence. This is not going to be easy, since the overall vehicle function clearly is mechanical – move someone or something quickly, safely and economically from A to B – but in order to remain close to the end customers, they will need to adapt to their evolution of interests. This evolution of interests is tremendous: While in developing countries, people are still eager to purchase their first vehicle, in developed countries more and more people consider their vehicle as part of their office, where working and networking is interrupted by the necessities of driving. This management of customer segments with very different expectations makes brand management and vehicle specifications more difficult then ever.

This contributes to explain why the value chain will be occupied more and more by very different players.

­ System integrators (0.5 tiers) concentrate on the mechanical integration of components into vehicle assembly modules, such as HBPO, Hella Behr Plastic Omnium, a joint venture of the three parent companies, and a world-leading supplier of entire front-end modules.

­ System providers are responsible for the development and the integration of complete customer functions, although they may not necessarily provide all system components.

­ Component suppliers (2nd tiers) supply components as commodities to several 0.5 or 1st tiers, achieving economies of scale.

­ Upcoming engineering and manufacturing companies first targeted at developing and manufacturing limited functions for specific niche vehicles; they now have all competences to develop or to manufacture complete vehicles.

­ The increasing role of software has caused the emergence of a bunch of related companies occupying very different positions in the value chain, specialising in new functions development, in tools for development, integration, test and diagnosis, providing operating systems and basic software etc.

How do we cope with this? Hella’s first answer is cooperating and networking with partners, whenever additional competences are needed. Partnering with companies like Behr, Leoni, Plastic Omnium, SL or Stanley allows us to share competences and infrastructure and more importantly, provide our customers with the fully integrated modules and systems they want. With the same line of reasoning, Hella partners with small companies, engineering or software companies in order to increase our portfolio of functions, products or competences. I would like here to enhance the fairness of our approach, since we respect the business models of our partners with regard to their position in the overall value chain, being companies from which we license new functions, advanced technologies or specific software modules. Recently, Hella has acquired the company Aglaia, which develops visual sensor systems. With this acquisition, Hella as the light and electronics specialist is specifically strengthening its know-how in the innovation field of camera-based driver assistance systems. These include active night vision systems, which are made up of camera, infrared headlamp and display, as well as systems for traffic sign, lane, object and pedestrian recognition.

The second answer is the Hella-internal permanent improvement process by which we increase our competence in model based functions development, implement software (SW) standards and development tools, improve our structure in order to be able to sell or to purchase and to integrate SW functions or SW modules with corresponding profitable business models for SW as a product.

The third answer is “globalisation”. Hella is becoming more and more global, in order to remain close to our customers, wherever they go, or to use specific locally available competences and resources, be it SW engineering or low cost skilled manufacturing.

Therefore we are currently expanding our activities mainly in Eastern Europe, USA, Korea and China. Since almost all OEMs in Europe are already on Hella’s books, the regions North America, Korea, Japan and China are at the focus of Hella’s efforts to increase sales by gaining new customers. With good reason: Almost 85% of the Lippstadt-based company’s sales are made in Europe. North America contributes about 10% and the Asia-Pacific region a mere 5.5%. But a glance at the development of our staff figures in the individual regions provides the answer. Whereas in the past fiscal year the number of employees in Germany fell by 6%, the staff level in other European countries rose by 8.5%, in Asia by 7% and in the USA by 15%. In our development center in Shanghai alone, for example, the number of employees in development will have doubled by the end of the current fiscal year.

As recently as May 2006, Hella has increased production capabilities with a new 4,800 square meters electronics production facility in Timisoara, Romania. This latest Hella plant, which required capital expenditure of ten million euros, manufactures electronic components and systems including pedal sensors, xenon ballasts, heating control units and overhead control units. As well as manufacturing, we also intend to conduct development.

This expansion has been based on our basic principle of retaining a strong central research and development department and mainly undertaking application developments in the target markets.

Having the aftermarket partners, technologies and innovations available, we are convinced we are in a position to meet our challenge of becoming a global top company (“second to none”). We are projecting sales to nearly double to € 6 billion and a quality level of 2 ppm by 2012, while still remaining a sound, profitable family owned business that has been based on the three pillars “Lighting”, “Electronics” and “Aftermarket”.

Sarwant Singh: The increase in resources is impacting the price of products, especially some of the more mature products, for example lighting and consoles. How are you able to recoup the investments that you are making? Are you able to charge extra to your customers? Or are you cutting costs on mechanical systems?

Dr. Seubert: There is no single answer. It depends on the type of products. The market requires more and more functionalities but cannot afford a price increase.

­ Especially in new functions such as ADAS with high SW content, we need more development effort and resources (see Aglaia). On one hand, the OEMs are ready to integrate some of the costs on the final product in order to be the first to market vehicles with new safety features. On the other hand, the suppliers need to leverage the generic development costs on high volumes and dealing with several OEMs. In the case of radar ACC for example, some suppliers just will not recoup their development costs, before the emergence of robust, high precision and cost efficient lidar systems used for light detection and ranging.

­ SW development in low cost countries allows for reducing the average development cost, provided that effective SW development processes, adequate infrastructure and organisations allow this offshoring. Hella does this in Romania, India and China as first steps towards offshoring complete developments.

­ Reuse and standardisation, from SW modules used for headlamp components that can also be used for e.g. pedal sensors, are key to leveraging development costs on high volumes, although the final product is customer or brand specific.

­ Integration, suppression of interfaces and related components, automation are key to cost reduction of complex vehicle subsystems such as frontends. The E/E architecture and the function partitioning must lead to a cost and weight reduction, easy scalability and maintenance, safe and robust systems. This leads to the optimisation of vehicle systems on a global level.

­ It is also a simple matter of productivity and economies of scale. The productivity requires the improvement of the process, the use of the right methods and the right tools. It also comes from the standardization of those elements, which do not make a visible difference and will not be used by the OEMs for their branding.

­ Mastering the complexity is also a key element for productivity. Standardization helps to simplify interfaces and integration but also to reuse components. Combined with the scale effects, this helps to bring the costs down. But to take the full benefit of scale effects, products and their development must be managed on a global basis, around the world.

­ Flawless developments: First Past Yield must be a target in development as well as in production. So must be the reduction of development time by efficient project management and technology mastering.

Sarwant Singh: There is an indication that Hella is developing more and more modules and systems. How is the electronics capability driving this modularisation?

Dr. Seubert: First of all we must be clear when talking about modules: depending on if you are talking to a car manufacturer or to a Tier 1 or Tier 2 supplier, a module is something different. The definition of a module is the elementary part, which cannot be subdivided anymore. Therefore we are speaking of a software module. Vehicle manufacturers today often speak about a frontend module, which, for them, is the simplest part they would like to integrate without further subdivision. But each module becomes a sophisticated subsystem because it consists of many different components.

Presently HBPO is the market leader for frontend modules. This business started with pure assembly, logistics and variance management some years ago. Today it is responsible for full systems, including the design for crash safety and pedestrian protection. Variance management has not become easier with regard to

­ lighting functions and technologies,
­ engine variants impacting cooling and peripheral devices and
­ the full range of driver assistance devices: long range ACC, short range Radar, ultrasonic Park Distance, active or passive Night Vision etc.

Electronics is not driving the modularisation, but it is an additional degree of freedom for enhancing existing functions or optimising some mechatronic integration.

In other cases, the electronics capability is mandatory for systems optimisation. For example, the optimisation of the electrical vehicle architecture and the wiring harness can only be achieved with a thorough understanding of electronics and all related development and assembly technologies. This is required to provide the vehicle manufacturers with the necessary support for optimised functions partitioning, allocation of computation and communication resources in the right amount and appropriate definition and sizing of the power distribution components etc. I believe that Intedis, our joint venture with Leoni, for optimisation and design of E/E vehicle architectures and related components, in this regard is benchmarking the industry.

As an example (existing project): the total costs of E/E architecture were reduced to roughly 90 % due to an integrated systems design. The individual savings were:

­ Body electronics: – 23%
­ Wiring: – 2%

As an example (existing project): reduction of development time with simultaneous increase of concept variants:

­ Status at OEM: 3-5 concept variants in 36 months
­ Status with Intedis support: 15 concept variants in 24 months]

Sarwant Singh: Wouldn’t this involve Hella going into new areas? For example, some of the overhead consoles integrating some of the telematics, integrating remote control garage opener and sunroof switches, etc.?

Dr. Seubert: The logic behind our strategy is the same for all product families and is not that different from other suppliers: presently we supply some products which are located in some areas of the vehicle. We need to secure these products, enhance them, and we need to secure the corresponding areas of the vehicle. This is why we are partnered with Behr and Plastic Omnium on frontends, which preferably include Hella’s headlamps.

In the case of overhead consoles, we may develop new functions ourselves or integrate functions coming from other suppliers, such as antitheft. At the same time, we evaluate the opportunity to integrate our console into a larger system, such as overhead modules that could integrate with the sun flaps, some interior lighting, some trimming, the interior mirror, front camera based functions, some loudspeakers, to name just a few.

Sarwant Singh: These are for the luxury vehicles like the Mercedes S-Class. Do you see it coming down to lower segments?

Dr. Seubert: Yes. It is going to be specific for each car manufacturer. It is going to start with pure mechanical integration of existing components and with variance management. After a while, it is going to become a fully integrated module. For lower segments, it is going to remain simple for some time, but as all functions tend to come down from luxury vehicles, the trend to integrate more and more will prevail.

In the case of ADAS we focus on low cost technologies, e.g. lidar instead of 77 GHz radar, because we achieve a cost advantage of approximately 50% compared to radar. Thanks to the superior resolution of lidar systems, we also aim to implement next generation preemptive safety and collision mitigation functionality while keeping our cost trend far below that of radar systems. At the same time, we evaluate low cost ACC or Distance Warning Systems, e.g. based on 24 GHz radar, which may be suited for countries with speed limitation, where the ultimate performance of long range lidar may not be needed. In our mind, this voluntary democratisation of convenience and safety features is Hella’s contribution to halving the number of accidents, injuries and losses, which the European and US traffic authorities are aiming for by the end of the decade.

Sarwant Singh: Are there any specific trends in lighting in terms of electronics, such as electronic control units (ECUs) becoming an integrated part of headlights, or will it always be separate component? With LED headlamps, will we see more electronics within the lamp itself?

Dr. Seubert: Normally we would not like to put electronics too close to headlamps because these are some of the first parts broken in the case of a crash. They are also hot spots, which need particular engineering and design competence. So there will always be a trend of removing costly electronics out of these areas. But on the other hand, we are going to have LED headlamps with the corresponding electronics assembly, so it is a question of balancing the optimum functional content between what should be integrated there, e.g. lighting and basic actuator control, and what should be kept more safely protected in the car body ECUs, e.g. sophisticated software on sophisticated microcontrollers.

Sarwant Singh: Are there synergies in some of the products that Hella has? For example, the ADAS products, lighting and consoles — are you going to be looking at integrating some of these systems, like integrating sensors used for ADAS to lighting or consoles?

Dr. Seubert: We use synergies whenever possible, e.g. on integrating the various front sensors when it makes sense. But if the mounting rate of some sensors is 100% while those of others are 10% or less, then the integration concept must respect this matter of fact. Since Hella is market leader for rain & light sensors with a market share of more than 40%, we already have significant integration competence in this area. For the next product generation, we are working on integrating additional camera based functions such as Lane Departure Warning, Traffic Sign Recognition, Night Vision and High Beam Assist, while we free some space at the same time by integrating a capacitive rain sensor right into the windscreen.

A synergy that we will use extensively in the next few years is the synergy between Driver Assistance Systems and Lighting based Driver Assistance. Here we see particularly high synergies in camera based functionalities. This is also a field of activity where our customers expect us to play a major role. The integration of Aglaia has to be seen in this context.

Sarwant Singh: How has the share of software (SW) in your products changed in the past in terms of value, and what changes do you expect for the future?

Dr. Seubert: More than 50% of our sales in the light and electronic sectors is made with products containing SW, with this trend still rapidly increasing. In general, it is said that in the year 2000, 20% of a vehicle’s value was due to the SW. By 2010, this will have increased to 40% approximately. This trend is reflected in our products, too. Since SW is subject to a dramatic drop in prices, the value-related increase actually means that the functional content has increased much more significantly.

This explains why we are working on new methods of SW development. The process of standardization is being pushed by projects such as “CASA@Hella” (Common Automotive Software Architecture). The aim is to prepare and introduce a standardized SW basic system, which is an extension to AUTOSAR and can be used in all Hella ECUs.

In terms of quality, we claim a top spot in SW development. Thus, we are the first supplier to have reached the SPICE Level 3. In the meantime we have also been assessed for Level 3 on several product families. We aim now to achieve Level 3 in all current development projects. In principle, using the European measuring criterion SPICE (Software Process Improvement Capability Determination) for software processes, both technical and organizational interfaces can safely be mastered. Level 3 stands for a standardized procedure throughout the organization in the form of an approved process description and project control on the basis of key performance indicators. This is currently the highest assessment that can be achieved in the automotive industry, and an important precondition to increasing efficiency and quality.

On Handsfree Access & Ignition Control, since our systems need to handle the electronic steering column lock, we assessed the safety of our system according to the European norm EN 61508 dealing with safety relevant electronic systems. The assessment of our Access & Ignition Control System reached the Safety Integrity Level (SIL) 3, the highest achievable in automotive. Herefore we also implemented a development process dealing with all safety issues, from architecture definition to system validation. The complete process and the results were assessed successfully in compliance with the norm.

Sarwant Singh: With reference to a previous interview, where you made a statement that in 10 years time there will be more software (SW) engineers in Hella than engineers in all other disciplines combined! How realistic is this? Are we on the road path in such a direction?

Dr. Seubert: Yes. For instance if we look at our carbody activities or our advanced driver assistance activities, then it is clear that the next generation of our products will be more centred on software. For example, what we call sensor fusion, which is the fusion of information from various sensor types. We are working much more on enhancing the information processing of those systems than on enhancing the hardware because the customer benefits are related to this functional enhancement. I already mentioned standardisation and offshoring in order to cope with this topic. On the SAE congress, the media related extensively our search for engineers, especially SW engineers.

When I started in the automotive industry, 15 years ago, a typical carbody project team consisted of a hardware, a software and a mechanics engineer. Today a typical carbody team would include a SW project leader with 10 SW engineers working in the background. As a consequence, our expenditure on SW has truly exploded in some areas. There are numerous reasons for this: The challenge of embedding new functions, as far as possible in more highly integrated control units, has led to increased validation expenditure. At the same time, functional requirements are increasing constantly, e.g. safety requirements according to EN 61508.

On top of this are the numerous product optimizations in the field of conflict between unit price, material costs and software, as well as the drastically shortened development times.

This, by the way, is also the reason why we have been cooperating in the AUTOSAR initiative as a Premium Member since January 2004. This standard will help us all progress.

On March 1, 2006, Jean-Francois Tarabbia, 41, joined the Management Board and took over management of the Business Division Electronics. In his previous post of Chief Operating Officer, he headed the division Body and Chassis Electronics of Siemens VDO Automotive AG, Regensburg, and was also responsible for European and Asian OEM customers. He has a strong background of SW engineering. Since I’ve know Jean-Francois Tarabbia for 10 years, I’m pleased that Hella has managed to hire such a distinguished person as CEO. This clearly reflects Hella’s resolution to tackle the SW challenge.

Sarwant Singh: Which other areas within SW do you think there will be more demand for in the future? Would you explain in particular reference to advanced communication protocols?

Dr. Seubert: Communication protocols will develop according to the communication needs. With the upcoming of infotainment we saw the upcoming of MOST. The upcoming of real time drivetrain and chassis control calls for the development of a real time protocol such as FlexRay. Hella is member of the FlexRay consortium and our gateways will ensure the proper functional translation of the informations needed on each bus.

Sarwant Singh: In order to reduce costs for both the development as well as the manufacturing of electronics, more companies are outsourcing some of this development work to companies in India and China. Does Hella have software development centres based in India or are you using other companies?

Dr. Seubert: Yes. Presently we are using Indian companies and Chinese subsidiaries. It also depends on the amount of strategic knowledge and on the quality of home processes. When some basic software modules need to be standardised, for example in accordance to AUTOSAR, this can be subcontracted fairly easily. But when there is really key knowledge inside, then we would develop preferably within joint ventures or own companies.

Sarwant Singh: What is the value of electronics components today in your products and are there any specific trends towards any families of electronics, for example more and more circuit boards being integrated as part of the LED circuit board, and more and more mechatronics coming in? Could you give us an idea of what sort of changes you have seen in the past few years, and what you expect in the future?

Dr. Seubert: Each product family has its specific development logic. Overall, we purchase approximately 60% of our turnover. This includes housings, PCBs, connectors, motors, switches as well as pure electronics. The trends are as said:

­ mechatronics, that is application or topology specific integration of electronics wherever needed to enhance functionality, decrease costs and enhance quality. This leads to intelligent sensors and actuators, but will always be balanced by cost effective E/E architectures.
­ new functions
­ integration into OEM modules.

Sarwant Singh: Do you see that in the future there will be communication bus nodes in the overhead module used for communication?

Dr. Seubert: We see some trends today having so called gateways as central nodes in vehicle architectures. But I am convinced that this is not going to last. In the long run, existing electronic units, especially body controllers, will share gateway functionalities. This will be part of the race for architectures and cost competition in the industry. In the overhead consoles, we already have a communication node thanks to its CAN interface. With the increasing functionality in this area, we may also see the upcoming of a local interface network (LIN) or specific sensor protocols (SENT). FlexRay will come later, promoted by ADAS sensor fusion.

One of the trends is that vehicle platforms are becoming increasingly global and we need to have architectures able to deal with the platforms all over the world. A node with a huge amount of communication will typically be found in European cars but may not necessarily be needed in countries where the automotive industry is just rising. Our joint venture Intedis has knowledge, methods and tools allowing us to optimise the vehicle architecture for market-specific as well as for global vehicle platforms.

Sarwant Singh: For certain products like consoles and lighting, are you seeing the penetration of advanced communication protocols like Flexray?

Dr. Seubert: We see Flexray coming, especially in advanced drivetrain and chassis applications. This includes ADAS (Advance Driver Assistance Systems). We still are going to have dominantly CAN especially in the carbody domain. Flexray is more expensive than CAN today. Some driver assistance systems from Hella will appear as FlexRay nodes on the first vehicles with FlexRay networks.

Sarwant Singh: With all of these new components coming in, what has been Hella’s strategy? Are you manufacturing most of these products in-house or buying it from companies? What is the value add that Hella contributes?

Dr. Seubert: In the electronics division we purchase for approximately 60% of our turnover, mainly components and services. When some packaging assembling and interconnection technology is not available in house at the best cost/benefit ratio, we will subcontract it from outside. Our value-add is achieving the best overall system cost/benefit ratio for our customers, striving at providing full-service and uncompromising quality. We strive at becoming a single digit ppm company before the end of this decade.

Sarwant Singh: As a result of growth of electronics, new entrants like Motorola, Infineon are growing their automotive business? Do you see the growth of these companies as a threat to your business?

Dr. Seubert: No comment on Freescale / Motorola. Component manufacturers are players amongst others in the industry. They have direct contact to the OEMs and can therefore evaluate the trends and develop their components accordingly. They have their place in the value chain and so have we. Their part in the automotive added value is increasing, but so is ours. The logic in our industry is consistent: development of new functions, integration, cost decrease and quality enhancement, providing to the OEMs full service from the first idea until the end of life of the vehicle. All holistic and sustainable solutions are welcome. Our role as supplier is to promote the best solutions, jointly with the OEMs.

Sarwant Singh: More and more loads on board and the end of the dream of a 42V vehicle electric system regularly provoke a question about the safety of the energy supply. What can Hella contribute to energy management both now and in the future?

Dr. Seubert: We all know about the challenges to the energy supply both in current and future vehicles. Not least because a safe and reliable power supply is of crucial importance for many of our products, such as driver assistance or access control systems.

On the basis of this knowledge, power management concepts are created from the combination of electronics and vehicle electric system know-how. These include a power module for charging and diagnosing batteries, for example, which can also arrange for the temporary switch-off of individual loads or complete branches of the vehicle electric system. Another key element, I would like to mention is the intelligent battery sensor, which Hella has developed in cooperation with BMW as the world’s first sensor for use in the terminal niche of the battery. The sensor controls the charging and discharging cycles and also monitors the permanent quiescent current.

Sarwant Singh: Which other major concern do you see in the industry?

Dr. Seubert: Quality. With the increase of the number of electronic functions on board, the interlink of all engineering domains (electronics, software engineering, control theory including complex decision making, mechanics…), the variance of functions available with increasing market segmentation, the various vehicle architectures, reduced development time and reduced time for validation with reduced number of prototype vehicles available for integration and validation, mastering the development process for ultimate quality has become the main challenge of today. Here are some elements of Hella’s solution:

Mastering the number of variants and versions through standardization and reuse, but also modelling and simulation.
Early involvement of the suppliers as well as OEMs and clear role description.
Distribution of tasks and responsibilities according to the competences, encapsulated in well-defined systems with clear interfaces.
Platform approach for product families.
Global standards like OSEK and AUTOSAR.
Better risk management and change management as part of project management.
Seamless project management along the complete supply chain.
Efficient management of all integration phases, as part of project management.
Apply the development process to the letter with respect to all constraints on timing and needed resources.
Consistent advanced development, because shorter series development cycles call for mature technologies and seamless introduction of new technologies to support the innovative functions.
Basically we improve the maturity level of the products introduced into the market.

Sarwant Singh: What are your suggestions and recommendations to the industry on how they should cope with the growth in electronics and higher costs?

Dr. Seubert: It is worth discussing this “higher cost” issue. It is due to the fact that new functions are coming up, which did not exist on previous cars. It is also due to fact that mechanical functions are enhanced or partly substituted by electronics. Take a today’s car generation with ESP: its stability is better than that of the previous car generation; switch off the ESP and its stability may become worse. In fact, functional enhancement by electronics and cost saving on the mechanics go hand in hand and you cannot separate their respective influence.

The highest productivity and the highest cost decreases are on electronics. Nevertheless the increase of electronic functionality compensates for this productivity. Do the end consumers want this increase of the electronic functionality? We see simultaneously the market success of brands striving for ultimate performance and technology, which is only achievable thanks to electronics, as well as “no frills” brands with minimum electronics. We address these segments specifically. But… how do you think, such a “no frills” brand will try to increase its attractiveness? I bet with features like electronic climate control!

Nevertheless, there is room for improvement in our industry processes. I would like our industry to cooperate more on really significant new developments, cooperation and standardisation being concentrated on achieving significant industry-wide progress, e.g. on driver assistance or hybrid vehicles, with focus on industry wide business models. This could help to concentrate resources on essentials.

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