Innovate or Crash
The Rebirth of the Auto Gospel
MEXICONOW Staff Report
Like every other industry, the automotive sector relies heavily on Research and Development (R&D) and innovation. Basically, if you don’t innovate, you are going to be left behind, consigned to the trash can of failure.
Bruno Juanes-Garate, Partner, Strategy and Operations at Deloitte, outlined that fact to Mexico Now during Mexico’s Automotive Industry Summit in Leon recently and his views were backed by another auto expert and the influential Auto Alliance group.
Taking a break from the hullaballoo of the conference floor, Mr. Juanes-Garate said: “Innovation is a way of delivering a new and viable business opportunity to the market. Innovation is not invention; it is something that is done daily from the top executives of the company to line operators. Everyone can participate but you have to structure it, you have to have a framework so you can measure your innovation rate and perhaps see what is missing within that framework.”
“At the very end, innovation is a way to achieve better financial results by helping tackle the opportunities and challenges that are present in today’s market.
“The automotive market is going to change dramatically, it is going to transform and reinvent itself with trends and tendencies like the autonomous vehicle, the connected vehicle, powertrain strategies and new start-ups entering into traditional auto markets.”
“If you want to adapt yourself to those challenges, you must be innovative. It is a must have. You must have solid and robust innovation processes in place in order to cope with the challenges arising from this new situation.”
The Mexico City-based Spaniard gave a couple of examples of innovation that he admired: “Regarding OEMs, Tesla is a great innovator and it has reshaped what is going to be the landscape of the future in the automotive industry. In fact, a Tesla is almost like a computer with wheels. It has a system that updates itself electronically week after week. It has no motor, no transmission so it has lots of space; it is powerful, luxurious and ecological. You can buy a Tesla on the Internet or in a shopping mall. You don’t have to belong to a commercial network.”
“Henry Ford was also a fantastic innovator with his introduction of the assembly line and trade union management.”
But what of today? He continued: “Innovations are usually concentrated on the product itself or the methods of production and product features. Those are the three main fields of innovation but why don’t we interact with the customer and offer him or her a platform to help co-design the vehicle?
“There are so many opportunities. Automotive companies are mainly 20th century companies playing on a 21st century field but there is, as I said before, a revolution ahead of us and we can’t handle that with traditional 20th century management.”
“We have to think innovation, innovation, innovation. That is the way forward and the way we can improve our products and make money at the same time.”
Bruce Belzowski, Managing Director Automotive Futures Group, University of Michigan’s Transportation Research Institute, couldn’t have agreed more. He told Mexico Now: “Innovation is crucial to the automotive industry and we have seen many innovations over the years.
“In terms of engineering, the introduction and improvement of modelling and simulation has been a major factor in innovations in that area and in terms of manufacturing, we have seen the introduction of mini vans, SUVs, electric vehicles and hybrid vehicles.
“And in after sale service, the thing right now, and led by Tesla, is the upgrading of vehicles remotely rather than taking it back into the dealership. So that is a big change in terms of innovation.”
“In terms of government regulations we have seen clean air fueling, fuel economy and safety and that all began in the 1970s with a determination to reduce deaths and injuries in car accidents.”
“When you look at the results of some of those regulations, it has been pretty solid with the introduction of seat belts, flexible steering columns, head restraints, airbags, advanced breaking systems and electronic stability control.”
“On clean air regulations, the US now has the strictest regulations in the world led by California which in turn was followed by the north eastern states and after the VW debacle those tests are going to become even stricter.”
“The innovations that came out of the clean air regulations were the catalytic convertor and the restrictions on sulfur in fuel which had a tremendous effect on air quality”, he said.
“Over the next 10 years we are also going to see more hybrids, different flavors of hybrids and more diesels than we are seeing now as well as a reduction in spark ignited vehicles.”
“Some companies will cheat on gas emissions, despite potential major damage to their reputations and the fines that will come with it. For instance, they can move factories to foreign countries and export back to their own country to avoid regulations.”
“Innovations in the engineering space don’t always mean success in the market place. Consumers may be unwilling to pay for the new technologies.
“So there are many opportunities and many challenges ahead.”
And a recent Auto Alliance report made the point: “The automotive industry is a major leader in driving innovation and global technological advancement. Today’s automobile represents the most sophisticated technology owned by most consumers and automakers continuously offer new high-tech content in their products. From the early stages of planning, automakers modernize new vehicles, recognizing that technology provides many solutions to meet consumer needs.”
“Virtually every aspect of today’s automobile is now high-tech, using high-tech materials and developed through high-tech processes. As a result, independent observers rank automakers among the world’s most innovative companies.
“Technological improvements in computers, smartphones, wireless communications and the cloud have converged to advance safety for connected consumers. Connectivity and the internet are changing the world of autos and more change is coming.
“Looking forward, cars may soon be ‘talking’ to each other and to the roadway. Car-to-car information sharing can alert vehicles miles behind that cars ahead have come to a halt, warning drivers to prepare to slow down. ‘Smart’ intersections will allow stop signs and traffic lights to communicate with vehicles, as sensors report if another vehicle is running a red light.”
“Traffic lights could be synchronized to improve traffic flow — and fuel efficiency — and if there is only one vehicle sitting at a traffic light late at night, the light could be programmed to turn green.”
The future, it seems, is right around the corner.