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Automotive: Disruptive technologies are the need of the hour!

Automotive: Disruptive technologies are the need Time!

 

SUNIL KEWALRAMANI April 28, 2009

 

Hearing of the new plan, more aggressive restructuring offered by General Motors recalls a scenario for humanity always joke by Woody Allen. "One road leads to despair and utter helplessness. The other, to total extinction. We hope to have the wisdom to choose correctly. "If – and it's a big if – the plan is accepted by debt holders, which will be a blow out of proportion to other directors. Shareholders will only be worse – Despite GM shares rose incredibly 20 percent.

Under the plan, the trust's term health of the Union is sharing half of the species to be for the shares, making it an important shareholder of a company restructuring. GM's plan also takes a different amount 11.6 billion in cash to the Treasury. In addition to the $ 15.4bn of borrowings, some of which is removed in exchange for shares half of the automaker. These two steps are given to unions and cash of approximately 89 percent of the company, even before the private sector debt holders are taken into account. GM plans to U.S. $ 27.2bn debt is converted into capital, which gives another is 10 percent of the company.

Whatever happens, shareholders will be deleted or nearly so. Even a minimal recovery depends on the holders of the debt at a broader Union commercial success. Assuming that the secured lenders to accept the restructuring plan would create much less debt, but also much less with GM 40,000, third less than American workers, and four great brands with a number a little more than half of today's dealers. This is logical, since the excretion Pontiac and Saturn and Hummer plans to ax. Someone has to pay. More government money may be needed to avoid Chapter 11. A reorganization bankruptcy can be order and less pleasant for merchants, employees and suppliers – but fairer

Detroit Three have their backs against the wall

The market capitalization of General Motors is now less than Mattel, the maker of Matchbox toy cars. Once an industry leader, GM is now the market value of Toyota, 145 billion dollars, now 25 times greater than that of GM.

Like a bad strategy, the Detroit Three focused on high-margin vehicles inefficient SUVs and trucks, which have lost oil prices have risen charm, even temporarily, into uncharted territory. Three not control labor costs and have not built flexible assembly lines. As a gesture of despair, Ford sold its Jaguar and Land Rover brands to Tata. Credit is vital to the automotive industry and now the credit crunch hit the production of weapons manufacturers such as General Motors' GMAC and Ford Credit financing disk. Detroit looking to take advantage of federal bailout funds for its finance arm, along a line of credit of $ 25 billion low-cost to redesign the old factories.

Germany 3 have also faced major challenges, develop the strategy-cons:

Volkswagen, Daimler and BMW have a reputation for offering cars with the technology. However, issuers are voracious and heavy carbon dioxide. The trio has decided to launch electric cars, to stop the destruction in demand due to high prices of the impact of oil revenues. Daimler plans to offer hybrid Mercedes-Benz S400 in 2009. However, the luxury sedan will be out of reach, but for most of the rich.

Europe catches the flu too slow:

Sales in the European Union fall 8.3% over last year. Italy has declined by 20%, Spain 31% and 49% in Ireland. The Italian group Fiat is to stop the production in most of its factories in the country in late 2008 for 3 weeks, hundreds of workers laid off temporarily. Renault has already cut 6,000 jobs across Europe, Peugeot cut production in the fourth quarter at least 20 percent in France.

 

The automotive industry in China also hit a slippery road

After rapid growth in the domestic car-stunning 34 percent in 2006 and 24 percent in 2007, sales of passenger cars of the year rose 14% anemia in six months until June 2008. Possible reasons include the decline of almost 70% in Shanghai Stock Exchange since its peak in 2007, reduced the use of income buyers car "only. tightening of monetary policy led government purchases reduction to trade up vehicles. According to JD Power Auto Council, China "could be on the verge a major break in the growth of demand. "Only 600 billion U.S. dollars of stimulus conditioning government saved the scene in 2009, and recovered a little in the Chinese auto market. With the global economic outlook remains uncertain, there may be some time before the third economy returns to stronger growth.

Although fuel prices are subsidized in China, Once China has sided with the increase in fuel prices to reflect market realities, but only had a marginal impact on sales: for the average consumer, adding that 100 RMB ($ 15) for operating expenses monthly. This, in view of RMB150, 000 Average cost of mid-size vehicles, has not been called destructive demand in China. However, the growth faltering global economic begins to hit hard as China is essentially an export-driven economy. This fact, coupled with uncertainty over whether oil prices will remain at the level that currently, could cause some buyers to defer purchases subcompacts and require consumers to research cars low fuel consumption.

 

French car market is the turbo at a price Cleaner cars less

French rival Renault and Peugeot Citroen, assisted by government incentives to produce cars cheaper cleaner, and have begun to use state aid to turbo-charge their bids. The "tax bonus-malus system established by the French government with the president has stimulated the purchase of small cars.

The four Japanese have obtained good strategy

Honda Toyota, Nissan and Hyundai routinely captured much of the compact SUV car market, known as crossover. Nissan plans to launch an electric car powered by a lithium-ion battery in Japan and the United States in 2010. Mitsubishi MiEV, its version of the electric car in Japan in 2009. Nissan believes that the batteries are NEC will develop with your car a range of 160 km and 80 one hundred batteries in 20 minutes. The range could increase to 300 km or a few years.

In his book "The End of Detroit, Micheline Maynard points out that" their methods for the efficient, focus on manufacturing and most important engineers with expertise in critical leadership positions, foreign firms have not forgotten they have been in the business of car design high range and trucks that appealed to customers, unlike models of car rental and government fleets.

Toyota Prius charges coming

The Toyota Prius, a hybrid gasoline-electric vehicle, is application beyond what it can provide. The delivery time is between 6 weeks and four months, indicating that Toyota has stuck a chord with customers. Toyota could provide consumers under long-term fossil fuels, and as the pioneer, had sold its first Prius in 1997.

All batteries in a Toyota hybrid vehicle made in a factory in Shizuoka, Japan, by Panasonic EV Energy, a joint venture between Toyota and Matsushita Electric, a company Panasonic matrix. The factory has an annual capacity of 500,000 battery packs of nickel-metal hydride year, acting as a natural boundary. Honda sold 52,000 of its hybrid model in isolation, a Civic sedan, in 2007 and intends to propose a new hybrid five-door only The first objective that annual sales of 200,000 units, scaling up to 500,000 units in 2010.

In the first automaker Honda FCX to provide Clarity hydrogen car:

Honda FCX Clarity is the first hydrogen-powered cars, whose only emission is water tube exhaust.

 

General Motors to build the largest sunroof world in Spain

Its plant in Zaragoza, Spain, which produces about 500,000 cars a year, 183,000 will be covered by square meters of solar panels.

Chevrolet Cobalt and Pontiac G5 rescue General Motor

When General Motors is cutting capacity and cutting jobs in North America, Lordstown, Ohio is set to hire 1,400 workers for a third shift. The plant should his good fortune in the construction of fuel-efficient sports Chevrolet Cobalt and Pontiac G5 cars. While demand for sport utility vehicles and pickup trucks large are in decline, Cobalt sales increased 18 percent in the first five months of 2008.

GM works with dozens Utility for Chevrolet Volt and Saturn Vue electric cars

  Both industries have a stake in the success plug-in cars that run largely on electricity, gasoline or other fuels plays a complementary role. Works with the commanders of American Electric Power Utility Co., Austin Energy, Inc. Consolidated Edison, Dominion Resources Inc., Duke Energy Corp., DTE Energy Co., Edison International Energy Authority of New York, PG & E Energy Progressive Corp., Inc., Business and Public Administration Group Inc., the Chevy Volt is designed to operate at full speed for a minimum of 40 miles only in lithium ion batteries. Automakers need the cooperation of public utilities, as they control the core technology fuel and electricity should ensure that the vehicle recharging process should be compatible with the network and not inadvertently undermine the reliability of the network. integrated intelligent software will reload in the most optimal and price.

The factor of Jatropha:

Gujarat salt and chemical plant Marine Research Institute (CSMCRI) helps Daimler Chrysler, H & M and GM engines using Jatropha as an alternative fuel futuristic. Diamler jatropha plantations in Gujarat and Orissa are now in their fourth year. GM has made a second phase investment of $ 0.5 million for biodiesel derived Jatropha tested in six of their vehicles at the plant in CSMCRI Bhavnagar in Gujarat, India.

 

BMW and Fiat to enter strategic alliance:

Both are exploring the relationship between Alfa Romeo and Mini small car brand. BMW already has an agreement with the French motor PSA Peugeot-Citroen. Fiat and 29 alliances with competitors to reduce costs R & D. After Fiat Alfa Romeo withdrew from the United States 1995, BMW could be reintroduced.

Partnerships are an important cornerstone of strategies Most car companies today. BMW and Daimler are rival co-cooperation with General Motors on Hybrids to promote their common interests.

s place "in India as the car small center "of the world

Small vehicles represent 71% of Indian car market, the corresponding figure in China is 33%. In September 2008, export sales Maruti has increased significantly to 4362 units 6318 units last year. exports increased 25% cumulative 30,235 vehicles to 24,236 vehicles from April to September 2007. Maruti Alto currently exports, M800, Omni, Wagon R and Zen Style Market outside Europe, such as Chile, UAE, Algeria and East Africa. The year-end launch of its new compact 'A-Star "should give a new impetus. Nissan plans to buy 50,000 cars Maruti compact stars and export to European markets. Bajaj Auto exports rose 43% to 68,572 units in September 2008 compared to 48,048 units in September 2007. Hyundai, helped by strong demand for its new compact i10 has remained the main export blown Kitty 9508 units in September 2007 to 23,911 units in September 2008. Hyundai exports 40% of its production of small cars in India ", Santro is sold as" Atos "in 97 countries. TVS Motor reported a 40% growth in exports to 13,036 units in September 2008, compared to 18,229 units in the same year last month.

Car penetration in China and India low compared with developed countries

The penetration rate of cars in the United States is 600 cars per 1,000 people. In Europe is 300 cars per 1,000 people (as transit infrastructure is more efficient than in the U.S.). In China and India, it is 30 cars per 1000 inhabitants. Therefore, as these economies grow quickly, there will be a demand for the cars to ensure mobility.

Hyundai i10 and the Santro are quick to meet the need of the hour:

Released to challenge other cars on the market such as Maruti Wagon R, Zen Estill, Tata Indica Chevrolet Spark, and the two models Hyundai Santro, Hyundai i10 and the clock can grow 39% in sales in the domestic passenger segment between April and June 2008. The i10 model can also affect Maruti sales and Tata and Hyundai has launched its compressed natural gas (CNG) and variations launced gas liquefied petroleum gas (LPG) in the variant of the 2008 final. Recently, in line with changing times, Hyundai has released a new version of the i10 power by a 1.2 liter engine with double overhead cam Kappa allowing the engine to operate at speeds higher. The Kappa engine is manufactured at Hyundai Motor and transmission plant and outstanding fuel efficiency Sriperumbudur the bar considerably in the segment.

 

65% of Maruti Suzuki Swift and diesel variants are Dziri:

The growing trend towards diesel Maruti to launch diesel and petrol hatchback Splash variant. Considering that over 75% of Tata Motors Indica and Indigo to sell versions diesel, over 65% of Hyundai Verna and Sonata sales comes from the diesel counterpart. Also at the track and Mahindra Logan Diesel GM Optra.

 

M & M to speed up e-vehicles, launches CNG variant of Bolero:

M & M plans to launch a range of alternatives alternative fuels such as CNG and hybrid versions of its flagship Scorpio SUV and its single ray Bolero collection.

Aunt Nano to handle 30% more fuel efficient diesel CRDi:

Tata Nano world's first sport 800 cc CRDi turbo diesel engine. Little diesel engine is equipped with fuel injection systems developed by Bosch. Rest of the diesel engine platform will be developed by Tata Motors and the German manufacturer of powertrain February Tata Nano will be the first 800 cc, turbo diesel CRDi. While Bosch is working on the CRDi system for the Nano, Honeywell Turbo India is working on the turbocharger, providing a single proposal for the purchase of fuel. The 1.3 liter Fiat multijet CRDi engine has used his Suzuki Swift is the smallest diesel engine in India and beyond.

Tata Nano is strengthening the frameworks cheap car as air bags, better designed interiors and engine options for Nano export quality. Tata Nano single-engine fuel and "the low price of the pyramids" of $ 2,200 for a single proposal focusing on the customer and technology that, when played on the types of engines, has the capacity to transform the way in which we move, how to get to work, and basically the way we live our lives. After making his mark on the national scene, Tata Nano has its eyes on the world market for small cars. Tata Motors, which plans to deliver its first electric car later this year, tested Indica platform for the vehicle. The company is working on five prototypes of electric vehicles.

In September 2008, Tata Motors launched three new fully loaded variants on its popular line of Tata Indigo CS. The new model variants are the petrol model and two diesel LX-GLX in turbocharged diesel intercooled common rail direct injection engine options. Bajaj has launched the new Platina 125cc with the induction of Digital Twin Spark distribution or DTS-Si engine in September 2008. TVS Motor expanded the horizons of its TVS Scooty with the launch of Balancing Wheels, a unique and innovative product that can actually be mounted on the Scooty. This shows that automakers are resorting to disruptive innovations to keep their source of income derived.

 

The automotive industry is leanly managed with high fixed costs and relatively less fat. This is the sign of the competitiveness of industry and manufacturers cars have continuously improved the quality of its vehicles in recent years while raising their prices only. For example, despite significant improvements performance, the flagship 911 model has been virtually the same price in real terms since 1992, according to EurotaxGlass, editor of Glass's Guide, UK Car Buyers Guide.

 

Breakthrough Technologies possible in China and India

Most developed countries have a legacy of the past. They have their own interests and resources to protect themselves. For example, most of the lines and rigid labor contracts that can not end unless a high cost. So keep defending their greedy, and not focus on the client.

Moreover, China and India have the advantage of being a virgin territory, not much of the legacy of the past to pursue. They the advantage of being able to experiment with advanced technologies, especially in an era of high oil prices.

Surprisingly, unlike developed countries, most of the attention in China and India is the cost of high inputs, the interest rates higher and lower demand. commodity prices and interest rates have begun to withdraw from the final. However, there is little appreciation of how disruptive technologies can bring a revolution in the way they to work and doing things.

The disturbing real innovations are more likely to take place in Silicon Valley, Bangalore and Chennai, instead of Detroit, where automakers have their heritage and their interest in growing and defend. High oil prices, though temporarily acted as a buffer for the automotive industry, has come as a blessing for India in its efforts to become the "world center of small cars." While the rest of the automotive world is the low capacity review, Hyundai, for example, has begun operations in India the third shift in mid-September 2008 compared with initially expected in October 2008 to meet the growing demand for i10 in domestic and foreign markets. The rest of the world has benefited by providing innovations energy efficiency to transform the landscape of global auto industry.

Therefore, Disruptive technologies seems to be the need time. Supply management instead of focusing too much on the demand side seem to be the key factors that reverses the darkness that has crippled the global auto industry and usher in an era of growth and prosperity in the world of travel.

Sunil Kewalramani is a Wharton Business School MBA and Executive Delegate, World Capital Consultants.

About the Author

Mr Sunil Kewalramani is a Wharton Business School MBA, a CPA, CA and a leading consultant for multinational companies on global asset management, strategic planning and cross-border mergers and acquisitions

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