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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, more aggressive restructuring plan offered by General Motors recalls one scenario for humanity jokingly provided by Woody Allen. "One path leads to despair and utter helplessness. The other, to total extinction. Hopefully we will have the wisdom to choose correctly. "If – and it's a big if – the plan is accepted by debtholders, they will take a blow out of proportion to other directors. Only shareholders will poorer results – Although incredibly GM shares soared 20 percent.

Under the plan, the confidence of the Union-term health would exchange of half the species that are due for the shares, making it a major shareholder in a company restructuring. GM's plan also assumes a different amount 11.6 billion in cash to the Treasury. In addition to the $ 15.4bn of loans received, some of it to be retired in exchange for shares of half of the automaker. These two steps would give unions and cash of approximately 89 percent of the company, even before debtholders private sectors are taken into account. GM plans to 27.2bn dollars of the debt be converted into equity, which gives another is 10 percent of the company.

Whatever happens, shareholders will be wiped out or almost. Even a minimum recovery depends on the debt account holders a greater commercial success Union. Assuming that lenders unsecured accept the restructuring plan would create a lot less debt but also much less with GM 40,000, a third less, American workers, and four major brands with a number a little over half of dealers today. This is logical, as the excretion Pontiac and Saturn plans hatchet and Hummer. Someone must pay. More government cash may be needed to avoid Chapter 11. A reorganization bankruptcy can be ordered and less pleasant for traders, workers and suppliers – but fairer

Detroit Three have their backs against the wall

The market capitalization of General Motors is now less that of 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 GM.

Like a bad strategy, the Detroit Three focused on high-margin vehicles inefficient SUVs and pickup trucks, which have lost charm oil prices have jumped, even temporarily, into uncharted territory. Three have also failed to control labor costs and did not build flexible assembly lines. As a gesture of despair, Ford sold its brands Jaguar and Land Rover to Tata on. Credit is vital to the automotive industry and now the credit crunch hit arms producers Manufacturers such as General Motors financing GMAC and Ford Credit disk. Detroit looking to tap into federal bailout funds for their financing arm, along a credit line of $ 25 billion in low cost to retool old factories.

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

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

Europe catches the flu too slow:

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

 

The automotive industry in China also hit a road slippery

After dazzling rapid growth in domestic car-34 percent in 2006 and 24 percent in 2007, on year sales of passenger cars rose 14% anemia in six months to June 2008. Possible reasons include the decline of almost 70% in Shanghai Stock Exchange since its peak in 2007, lower income car buyers' single use. tightening of monetary policy of the government led fewer purchases of business end up vehicles. According to JD Power Auto Council, China "could be on the edge of a major break in the growth of demand. "only $ 600 billion government stimulus conditioning saved the scene in 2009, and recovered somewhat in China's auto market. With the global economic outlook still uncertain, there may be some time before the third largest economy returns to growth stronger.

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

 

French car market is turbocharged by cheaper cars Cleaner

Renault and its French rival Peugeot-Citroen, assisted by government incentives to produce cheaper, cleaner cars, have already begun to use state aid to turbo-charge their bids. The "bonus-malus tax system established by the French government under 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 car market compact SUVs, known as crossovers. Nissan plans to launch an electric car powered by a lithium-ion batteries in Japan and the United States in 2010. Mitsubishi MiEV, its version of the electric car in Japan by 2009. Nissan believes that the batteries it is developing with NEC will give his car a range of 160 km and 80 one hundred batteries in 20 minutes. The range could increase by 300 km or within a few years.

In his book "The End of Detroit, Micheline Maynard notes that "their methods for developing effective, they focus on manufacturing and more important experienced engineers in critical management jobs, foreign companies have not forgotten they have been in business for designing high-end cars and trucks that appealed to customers, as opposed to models of car rental and government fleets.

Toyota Prius charges coming

The Toyota Prius, a gasoline-electric vehicle hybrid, finds the application well beyond what it can provide. The delivery time is anywhere between six 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 Prius first time in 1997.

All battery in a Toyota hybrid vehicle is made in a factory in Shizuoka, Japan, by Panasonic EV Energy, a joint venture between Toyota and Matsushita Electric, parent company of Panasonic. The mill has an annual capacity of 500,000 batteries nickel metal hydride packs per year, acting as a natural ceiling. Honda sold 52,000 units of its hybrid model in isolation, a Civic sedan, in 2007 and plans to propose a new hybrid five-door only who first annual sales target of 200,000 units, the gradual extension up to 500,000 units by 2010.

First car-maker Honda to provide FCX Clarity hydrogen car:

Honda FCX Clarity is the first hydrogen car whose only emission exhaust pipe is water.

 

General Motors to build the world's largest solar roof in Spain

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

Chevrolet Cobalt and Pontiac G5 motor General Rescue

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 owes its good fortune in the construction of sports fuel-efficient Chevrolet Cobalt and Pontiac G5 cars. While demand for sport utility vehicles and large pickup trucks are on the decline, sales Cobalt surged 18 percent in the first five months of 2008.

GM works with dozens of utilities for its Chevrolet Volt and Saturn Vue electric cars

  Both industries have a lot riding on the success of plug-in cars that run largely on electricity, gasoline or other fuels fulfills a complementary role. It works with the majors utility American Electric Power 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 Corp. Progress, Inc., and Public Service Enterprise Group Inc., the Chevy Volt is designed to operate at full speed for at least 40 miles solely on lithium-ion batteries. Automakers need the cooperation of utilities public since they control the primary technology of fuel and electricity must ensure that the process of recharging vehicles must consistent with the grid and not inadvertently undermine the reliability of the network. intelligent embedded software will recharge at the most optimal and price.

The "Factor of Jatropha:

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

 

BMW and Fiat to enter into strategic alliance:

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

Alliances 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 interests common.

s place "of India as the" small car hub "of the world

Small cars represent 71% of Indian car market, the corresponding figure in China is 33%. In September 2008, the export sales has risen Maruti significantly to 6318 units 4362 units last year. Cumulative exports rose 25% to 30,235 vehicles from 24,236 vehicles for the period April to September 2007. Maruti Alto currently exports, M800, Omni, Wagon R and Zen Estilo to non-European markets such as Chile, UAE, Algeria and East Africa. The year-end launch of its new compact 'A-Star "should provide additional impetus. Nissan plans to buy 50,000 A-Star compact cars from Maruti and export to European markets. The 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 continued to be the leading export Kitty blowing 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 month last year.

Car penetration in China and India low compared to developed countries

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

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

Launched to challenge other cars on the market, as Maruti Wagon R, Zen Estillo, Tata Indica and Chevrolet Spark, the two models of Hyundai Santro, i10 and Hyundai have enabled the clock 39% growth in sales in the segment of domestic passenger cars the period April to June 2008. The i10 model may also affect sales of Maruti and Tata and Hyundai has launched its compressed natural gas (CNG) and variant launced gas liquefied petroleum gas (LPG) in the variant of the end of 2008. Recently, in line with changing times, Hyundai has launched a new version of the i10 powered by a 1.2 liter engine with a dual overhead cam Kappa allowing the engine to run at higher speeds. The Kappa engine is manufactured at Hyundai Motor and the plant in Sriperumbudur transmission and outstanding fuel efficiency significantly raise the bar in the segment.

 

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

The increasing tendency to require diesel Maruti to launch the diesel and petrol variant hatchback Splash. Whereas more than 75% of Tata Motors Indica and Indigo to sell diesel versions, over 65% of Hyundai Verna and Sonata sales comes from the diesel counterpart. Also on the track and Mahindra Logan Diesel Optra GM.

 

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

M & M plans to launch a range of alternative alternative fuels, including CNG and hybrid versions of its flagship Scorpio SUV and the thunder of its single pickup Bolero.

Auntie Nano to handle 30% more fuel-efficient diesel CRDi:

Tata Nano world's first sport 800 cc, turbo charged CRDi diesel engine. Little diesel engine will be equipped with fuel injection systems developed by Bosch. Rest of the platform of the diesel engine will be developed by Tata Motors and the German manufacturer of powertrain February Tata Nano will be the world's 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 unique proposal to purchase fuel. The 1.3 liter CRDi Multijet engine Fiat has used on his Suzuki Swift is the most small diesel engine in India and beyond.

Tata Nano is beefing car cheap frames as air bags, better designed interiors and engine options to make the export Nano-quality. Tata Nano unique motor fuel and "low price of the pyramid" of $ 2,200 makes it a unique proposition centered on the customer and a disruptive technology that, when replicated on the classes of engines, has the capacity to transform the way which we move, how we 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 by the end of 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 GLX model and two diesel LX-in turbocharged diesel with intercooler and common rail direct injection engine options. Bajaj has launched the new Platina 125cc with the induction 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 be actually mounted on the Scooty. This shows how automakers are resorting to disruptive innovations to keep their source of income arising.

 

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

 

possible breakthrough technologies in China and India

Most developed countries have their legacy of past. They also have their interests and resources to protect. For example, most assembly lines and rigid labor contracts they can not terminate unless a steep cost. Thus, they keep defending their gas guzzlers, and do not focus on the client.

On the other hand, China and India have the advantage of being virgin territory not much of the legacy of the past to haunt. They have the advantage of being able to experiment with disruptive technologies, especially in an era of high crude prices.

Surprisingly, unlike developed countries, most of the attention in China and India is on high input costs, interest rates higher and lower demand. commodity prices and interest rates have begun to withdraw from the end. Yet there is little appreciation of how disruptive technologies can bring a revolution in how we travel to work and do things.

The disruptive real innovations are more likely to take place in Silicon Valley, Bangalore and Chennai, rather than Detroit, where automakers have their heritage and their interest to nurture and defend. High oil prices, although temporarily acted as a cushion for the automotive industry, has come as a blessing in disguise for India in its efforts to become the hub "small car world." While the rest of the automotive world is downward revision capabilities, Hyundai, for example, has begun operations in India third shift in mid-September 2008 compared to originally scheduled in October 2008 to meet soaring demand for i10 in domestic markets and overseas. The rest of the world has already benefited by providing energy efficiency innovation to transform the landscape of the global automotive industry.

Thus, Disruptive technologies seems to be the need of the hour. Supply management rather than focusing too on the demand side, seem be the key factors that reverses the gloom 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 CEO, Global 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