The document discusses opportunities for innovation in the global automotive industry given its current difficulties. It suggests that Indian "frugal engineering" could show the way forward through approaches like making cars upgradeable with replaceable fuel-efficient modules rather than requiring new cars, and downsizing cars without losing interior space like the Tata Nano. This could help address excess industry capacity and make transportation more sustainable and affordable.

1. The Hindu Business Line : Global Automotive Industry — Frugal engine... http://www.thehindubusinessline.com/2009/05/06/stories/2009050650...
Spark -Fuel Efficient Car New Hyundai i10 Kappa
Rising fuel cost Worries you? Spark Produces Now With Automatic Transmission.Get
Business Daily from THE HINDU group of publications best Mileage in its Class Maximum Power With Maximum Mileage
www.ChevySpark.in/Test-Drive Hyundaii10.co.in/ExploreNow
Wednesday, May 06, 2009
ePaper | Mobile/PDA Version | Audio | Blogs
Opinion - Automobiles
Home
News Update
Global Automotive Industry — Frugal engineering holds the
key
News
Front Page Today’s uncertainties in the auto industry provide a great window of opportunity for Indian frugal
Corporate engineering to show the way forward. ACHAL RAGHAVAN takes a look at some potential avenues
Markets for innovation.
Info-Tech
Marketing
Money & The global automotive industry is in the throes of some fundamental structural changes. GM’s CEO,
Banking Mr Rick Wagoner, has stepped aside at the US government’s request. Chrysler has filed for
Agri-Biz & bankruptcy, and is preparing for a “shotgun wedding” with Fiat. Toyota and Daimler have posted
Commodities losses. Given the importance of the automotive industry with respect to jobs, many governments —
Industry & led by the US — have rushed to provide large bailout packages . Global sourcing strategies are being
Economy re-examined.
www.Hyundaiverna.co.in Ads by Goooooogle
Logistics
Demand-capacity mismatch
Government
Opinion Car manufacturers worldwide are saddled with excess capacity. The total global capacity for light
Corporate Stories in this Section
vehicles was 87 million in 2008, with actual utilisation at 76 per cent. Excess capacity stood at a Protectionist code
Results whopping 21 million vehicles last year. This is expected to worsen to 29 million vehicles in 2009. The
Columns global automotive industry just cannot expect to reach long-term financial viability unless chunks of NGOs in agriculture
States capacity are taken out permanently. This is an extremely painful process involving huge human and
Web Extras financial costs. But the industry may not have a choice. Global Automotive Industry
Index — Frugal engineering holds
Archives Heading for global ‘Big Six’? the key
Features A large-scale consolidation of the global industry is a possible scenario, where auto companies merge Friedman vs Keynes
with each other and reduce surplus capacities, leaving a total of (say) six giant companies to meet the
Investment global demand. External sector
World
eWorld This hypothesis has been around for a while, and there has been much speculation on which among Employment issue
Brand Line the current players would survive in the long term. In the extreme condition, would GM, Ford and
Mentor Chrysler merge (or be forced to merge by the Government), to form “US Auto, Inc.”? Will Toyota,
Life Hyundai and Volkswagen (VW) turn out to be the other front-runners in this global race? Will the
Brand Quest Chinese government force the formation of a consolidated “United China Auto”? What about India?
The New Would Tata or Mahindra expand aggressively and become truly global auto giants? The possibilities
Manager are many.
BL Club
Smartbuy Short-term schemes
Books
To entice customers into buying a new car, Governments are trying out new incentives. The German
government, for example, is offering car buyers €2500 for scrapping their old cars and buying new
Stocks cars that are more fuel-efficient. This has already shown strong results, encouraging the US
government to look at a similar “cash for clunkers” scheme.
Quotes
SE Diary In such cases, the car industry is happy, and so is the new car buyer; but the economic merit of such
Scoreboard schemes is questionable, considering the waste involved in crushing cars in working condition to
Open-End Mutual lumps of scrap.
Fund
These cars are typically nine-10 years old, with many years of useful life left in a majority of the
Cross Currency components. The term “clunker”, therefore, is more a mindset than physical reality. The
fuel-efficiency argument is also not tenable, since it takes large amounts of energy and fuel to
Rates manufacture a new car in the first place.
If we take the US, Europe and Japan, their approach to car-making has so far been the opposite of
“frugal”. More than 40 per cent of the cost of today’s typical car is accounted for by electronic
Shipping hardware and software. In 1996, the typical car had six electronic control units (ECUs). By 2008, this
had grown to 70.
Ports
The typical modern car has more lines of software code written into it than the F-22 Raptor, the most
advanced jet fighter in the US Air Force today.
Simultaneously, the role of the driver has been downgraded. More and more of the control of the car
Archives has been handed over to onboard computers, under the pretext of ensuring safety.
Yesterday Cars are being made more and more “intelligent”, with the ability to “see” what is ahead and behind;
Datewise recognise objects such as pedestrians; know when the car is drifting across lanes, and correct the
Resources drift; “read” speed limit and other warning signages; and so on. The driver is now increasingly being
In Focus driven by the car.
In Depth
Events 2007 Future of frugal engineering
Today’s uncertainties in the auto industry provide a great window of opportunity for Indian frugal
engineering to show the way forward. Here are some potential avenues for innovation:
Design ‘upgradeable’ green cars in which the engine and drive train can be unplugged and replaced
at the dealership with newer and more fuel-efficient modules (including alternatives such as hybrids).
This is somewhat like upgrading your faithful home PC with a faster processor, leaving everything
else intact. The cost of this “upgrade” will be a fraction of the cost of a new car.
Group Sites This will be bad news for the auto industry, but great for the owner and society as a whole. The
energy spent in manufacturing this “upgrade pack” and the corresponding global warming impact will
The Hindu be far less than that for making a new car. If the car manufacturers won’t play ball, independent
The Hindu engine and drive train manufacturers can step in. This solution is far superior to the short-term “cash
ePaper for clunkers” approach.
Business Line
Business Line Downsize the cars without losing out on interior space. The Nano has already shown the way. Build
ePaper impact (crash) strength into the car through clever structural engineering, thus countering the “small
Sportstar cars are unsafe” argument. Concurrently, replace large US-style engines, which have been designed
Frontline for power and speed, with smaller engines. Lower cost, less fuel consumption, less material usage,
The Hindu less pollution, and reduced global warming — how can you lose?
eBooks
1 of 2 7/29/2009 2:12 PM

2. The Hindu Business Line : Global Automotive Industry — Frugal engine... http://www.thehindubusinessline.com/2009/05/06/stories/2009050650...
The Hindu
Images Ruthlessly strip out all the unnecessary hi-tech electronics from the car, and give control of the car
back to the driver. Less software will lead to more alert and engaged driving, less warranty claims,
and a 20-30 per cent lower initial purchase cost. Expecting the driver to keep his eyes on the road,
and drive safely at reasonable speed, is not asking for much.
Engage the customer in active and collaborative dialogue while designing the car — ask what he (or
she) really wants from the car. Do not unilaterally stuff the car with features which cost lots of money.
“Unbundle” the package, and let the customer choose the additional features, based on clear cost
data. Co-create value with the customer, and get off the “we engineers know best” syndrome.
The timing is right for Indian creativity and innovation to make a mark. The future of the global
automotive industry might well pivot on it. The Italians are known for their design flair (Fiat,
Lamborghini, Vespa); the Germans for engineering excellence (Mercedes, BMW); and the Japanese
for foolproof reliability (Toyota, Honda). It is time Indians created and occupied a new position —
“best value” — before they lose their frugal skills to increasing personal affluence.
(The author is a Bangalore-based strategy and business excellence consultant in industry.
blfeedback@thehindu.co.in)
Related Stories:
Auto makers enter new fiscal on a positive note
Auto sector weathers slowdown blues in 2008-09
More Stories on : Automobiles
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business
Line
2 of 2 7/29/2009 2:12 PM