New cash-for-clunkers cars stop short on tech features

EL SEGUNDO, USA: While the US cash-for-clunkers incentive has been an overwhelming success in terms of spurring sales and retiring gas guzzlers, the most popular cars bought under the program are slightly below average in terms of their technology content, iSuppli Corp. reports.

According to iSuppli’s Technology Availability (TA) index, the Top-10 best-selling cash-for-clunkers cars score an average of 14.5, compared to 17.8 for all model-year 2009 autos in the United States. The TA score indicates how many infotainment and Advanced Driver Assist Systems (ADAS) are available for each model.

A range of car technologies is covered by the TA, comprising infotainment functions like navigation, iPod connections and satellite radio, to advanced ADAS features like park assist, Tire Pressure Monitoring Systems (TPMS), Electronic Stability Control (ESC) and telematics services such as General Motors’ OnStar,

“The low TA scores reflect the fact that buyers for the cash-for-clunkers cars are seeking smaller and more fuel-efficient cars, which tend to be low-end models,” said Mark Boyadjis, analyst and regional manager for North American automotive research for iSuppli.

“Despite the proliferation of more advanced technologies throughout carmakers’ lines, automakers still haven’t migrated all these features to these less-expensive vehicles.”

The table presents iSuppli’s TA index for the top-10-selling cash-for-clunkers models.Source: iSuppli, Aug. 2009

Cash for clunkers is no clunker
By August 5, the cash-for-clunkers program had sold more than 184,000 autos. General Motors accounted for 18.7 percent of those cars, followed by Toyota at 17.9 percent, Ford at 16 percent, Honda at 11.6 percent and Chrysler at 10.6 percent.

“The additional $2 billion that Congress allocated this month will bring the cash-for-clunkers sales to about 700,000 units when completed,” said Egil Juliussen, principal analyst and fellow for iSuppli’s Automotive Practice.

The attached table also presents sales for the Top-10 cash-for-clunkers cars in June and July. These 10 cars are different from the models that had the overall highest sales in July; note that the cash-for-clunkers program was only available for the last week of July. The total US auto sales increase from June to July 2009 was 16 percent.

From an environmental perspective, autos sold under the program had an average fuel efficiency of 25.3 Miles Per Gallon (MPG), a 60 percent improvement from 15.8 MPG for the traded-in models, according to U.S. Department of Transportation data through August 5.

Carbon dioxide emission reductions are proportional to MPG improvements, so the environmental impact appears very promising as well.

Infotainment features prevalent
While the top cash-for-clunkers models are far from being loaded from a technology standpoint, they do include some essential infotainment features formerly available only on higher-end vehicles.

Features such as satellite radio, Bluetooth connectivity and portable music device integration are widely available on the top-selling models under the cash-for-clunkers program.

All but one model offers Bluetooth connectivity, and three also include Bluetooth A2DP or audio streaming. All of the models offer satellite radio, either XM or Sirius, and six of the models offer USB inputs.

On the other hand, embedded telematics is largely absent from these vehicles, with only the OnStar-equipped 2009 Chevy Cobalt integrating this feature in the form on OnStar.

Ford vehicles offer mobile device telematics using the driver’s Bluetooth phone and have some telematics services, including turn-by-turn navigation, Automatic Collision Notification (ACN), and remote diagnostics programs.

“The Ford Sync option is a hit among Ford buyers and likely contributes to the overwhelming popularity of the top-selling Ford Focus,” Boyadjis observed.

HD Radio is only available on one model: the Ford Escape. This discrepancy is a result of the standardization and saturation of satellite radio in the automotive market, as well as the relative infancy of HD Radio technology in the automobile.

The safety features of the 10 models are much better than the trade-ins since every model has ESC and tire pressure monitoring system (TPMS). Few of the Top-10 models have added driver assist systems—only two models had park assist and none had any other driver assist systems.

Global car industry hits bottom in Q1; auto electronics recovery commences

EL SEGUNDO, USA: The downturn in the car electronics market hit bottom in the first quarter, paving the way for a return to annual growth in 2010, according to iSuppli Corp.

“After a dismal 2008 and first quarter, auto sales recently have performed more strongly than expected in some regions, mostly due to government-sponsored incentives,” said Egil Juliussen, principal analyst and fellow, automotive, for iSuppli.

“While 2009 will still be weak, the second half of the year will bring a significant improvement in auto sales compared to the first. This will lead to an annual sales increase in 2010 for auto electronics categories including audio head units, navigation, Advanced Driver Assist Systems (ADAS), embedded telematics and Bluetooth.”

A tale of two halves
A major culprit in the global car downturn has been the US auto market, which continues to struggle. US sales of cars and light trucks suffered an 18 percent decline in 2008, and fell by an even worse 35 percent in the first half of 2009.

Despite these depressing statistics, total 2009 US auto sales are forecasted to decline by a relatively mild 17 percent.

One major factor leading to improved auto market conditions in the United States is the end of the uncertainty surrounding the bankruptcies of General Motors and Chrysler.

“Both General Motors and Chrysler emerged from their restructurings unbelievably quickly, lifting a major cloud from the US auto industry,” Juliussen said.

Furthermore, the United States government now is offering a cash-for-clunkers program that gives consumers incentives to trade in old cars for new models. This is expected to boost U.S. auto sales by 250,000 in 2009. The total could be even higher if the program’s $1 billion budget is increased.

“The cash-for-clunkers program also is serving to spur more consumer visits to car dealerships,” Juliussen noted. “This rise in consumer traffic is likely to have an even more positive impact on car sales than the incentives themselves.”

A final reason for the improved results is strictly statistical: Year-to-year comparisons with 2008 will become much more favorable in the second half, since auto sales plunged in late 2008.

The new model 2009 auto industry
Fig. 1 attached presents a forecast of the US auto electronics industry through the year 2014.Source: iSuppli, July 2009

The figure shows relative yearly sales for several electronics categories compared to 2008 auto sales, which are normalized to 100. The base figure for 2008 auto sales is 13.3 million units. By using this format, unit sales for each automotive electronics category can easily be compared to auto sales and production.

At a value of 83, 2009 US auto sales are set to decline by a total of 17 percent from 2008. Auto sales are projected to increase slowly in 2010 to reach 15.5 million units in 2014. While this represents an improvement from 2009, 2014 sales will still be below the 2007 total.

US auto production lags far behind its sales since a large portion of cars sold in the US are manufactured in Canada, Mexico, Europe and Asia.

The figure also shows relative sales of head-unit, in-vehicle navigation, ADAS, embedded telematics and Bluetooth-based Hands-Free Interface (HFI) electronics. The sales pattern is similar for each category, with a decline in 2009 and growth in the following years. Only Bluetooth HFI systems are set to enjoy a sales increase in 2009 due to the success of Ford Sync and similar systems.

A world of hurt
Fig. 2 shows the same trends on a worldwide basis. The base number of 100 again represents worldwide sales for 2008, which amounted to 66 million units.Source: iSuppli, July 2009

Worldwide auto sales are forecasted to decline by 12 percent in 2009, but will increase in 2010 and will top 73 million units in 2014, up 11 percent from 2008.

Worldwide auto production will decline by 25 percent in 2009 due to excessive inventory levels at the end of 2008 and lower 2009 sales. The production declines hit bottom in the first quarter of 2009.

The sales pattern is similar for each category with a decline in 2009 and growth in the following years. ADAS will achieve a slight sales increase in 2009.

ADAS consist of five segments: ultrasonic and camera park assist, adaptive cruise control, lane departure warning and blind-spot detection systems. Bluetooth HFI systems also will enjoy a sales increase in 2009 due to higher availability of such systems in every region.

Incendiary incentives?
“The automotive electronics market is seeing the light at the end of the tunnel, but there are a few caution signs,” Juliussen warned.

“The incentive-driven sales surges in some countries could mean that the light at the end of tunnel is actually the headlights of a semi-truck, one that may slam head-on into 2010 auto sales. Germany’s incentive-based sales are not sustainable. China’s sales jump is also large, but since most of the sales are to new buyers, the impact may be much milder.”

Can Europe cut road deaths in half by next year?

EL SEGUNDO, USA: The European Union (EU) and the European Commission (EC) have adopted the admirable goal of cutting the number of deaths on the region’s roads seen in 2001 in half by 2010.

But despite Europe’s aggressive initiatives that include the use of promising Advanced Driver Assist Systems (ADAS), this lofty goal is unlikely to hit its target, according to iSuppli Corp.

“The European Union in 2001 experienced 1,300,000 accidents, resulting in 1,700,000 injuries and 40,000 deaths,” observed Jeremy Carlson, researcher for ADAS and EMEA automotive at iSuppli. “Europe’s efforts up to this point have resulted in a 27 percent decrease in road deaths in 2008, which is certainly a noteworthy achievement. However, given the drawn-out EU decision process, the lengthy automotive product life cycle, and the fact that the only ADAS safety technology currently mandated is Electronic Stability Control (ESC), Europe is unlikely to reach this target.”

The EU and the EC have been active in proposing new initiatives to help accomplish its goal. Involving every entity from national governments to public authorities and private enterprises, the EC sought to bring together the individual stakeholders in order to share ideas and best practices, and to instill a sense of shared responsibility in this life-saving goal.

Many of these initiatives and discussions involve ADAS technologies, which include ultrasonic and camera park-assist, adaptive cruise control, lane departure warning and blind-spot detection systems.

European road safety charter
First among these initiatives is the European Road Safety Charter. The charter is the largest existing road safety platform, encompassing all 27 EU member states and including more than 1,100 public authorities and private entities as signatories. The charter invites public and private organizations to specifically and actively contribute to the realization of Europe’s auto safety goal.

Among the Charter’s efforts is encouraging the adoption of proven ADAS safety technologies.

Unfortunately, many safety technologies such as adaptive cruise control and blind-spot detection systems have not had the luxury of time and widespread availability to sufficiently prove they can reduce accidents or deaths.

As a result, many of these new ADAS solutions are relegated to research while the tried-and-true technologies such as seat belts and airbags find their way to the legislative front.

Currently, the European Road Safety Charter is pursuing a requirement for seat-belt reminders in passenger vehicles and now requires that all heavy goods vehicles be equipped with blind-spot mirrors on the passenger side to help protect bikers and pedestrians. The requirement of these side-object detection systems by the EC acknowledges the importance of blind-spot safety and could lead to the consideration of radar- and camera-based detection and recognition systems in the future.

The EC also has nominated driver monitoring, collision avoidance and mitigation, pedestrian protection, and visibility systems such as night vision as potential candidates for worthwhile research.

Roads, cars get smart
The Charter and other European initiatives involve the development of Intelligent Transportation Systems (ITS). The proposals could also lead to more navigation-enabled ADAS systems that benefit from mindfully-designed roadways.

Furthermore, the EC’s Intelligent Car Initiative formed in February 2006 was conceived to advance the use of intelligent technologies in automobiles to help make them smarter, safer and cleaner. Naturally, this initiative works side by side with the Charter to help achieve Europe’s goal, although it was not designed specifically for that purpose.

The Intelligent Car Initiative includes the eSafety Forum, which aims to accelerate the development and deployment of intelligent information and communication technologies by building consensus among industry stakeholders.

The latest research agenda from the eSafety Forum included insight into ADAS technologies, including collision avoidance. As a directive for future research and development, the results indicate that current collision mitigation systems should evolve into full-collision-avoidance systems with a focus on reducing costs for deployment in small- and medium-sized cars, although it provides no specific action to reach that goal.

Incentives soften auto downturn in Western Europe

EL SEGUNDO, USA: Although the Western European auto industry has been hit hard by the worldwide recession, with first-quarter sales declining by 16.3 percent compared to a year earlier, government stimulus packages in Germany and France are mitigating the downturn in those nations, according to iSuppli Corp.

For all of 2009, Western European sales are expected to fall by 16.7 percent. However, as the economy recovers, regional auto sales are projected to increase slowly starting in 2010 and will return to nearly the 2008 sales level by 2014.

“Because automotive is among the most important of European industries—perhaps the most important—many governments have passed stimulus packages to help stabilize their auto markets during the recession,” said Egil Juliussen, principal analyst and fellow for automotive electronics at iSuppli.

“The most popular stimulus is the so-called scrappage incentive that gives buyers of new cars a discount if they trade in old cars that generate more air pollution than new, cleaner vehicles, Juliussen added. The results are encouraging—particularly in Germany.

Germany’s incentive of 2,500 euros for a new car commenced in mid January and immediately impacted sales. The nation’s auto sales increased by nearly 17 percent in February, jumped by 40 percent in March and grew by another 18 percent in April, compared to the same months in 2008.

France’s incentive, which started in December, 2008, was much smaller at 1,000 euros, so its impact was somewhat lessened compared to Germany. First-quarter auto sales in France declined by 3.9 percent compared to the same period in 2008, which is actually a relatively strong performance compared to overall double-digit decline in Western Europe.

When viewed in its totality, Western Europe is the largest auto production region in the world. Western Europe is a net exporter of autos.

This makes it auto making a critically important industry for the region, prompting some governments to take action to shore up sales.

Economy puts brakes on auto production
Auto production in Western Europe in 2009 is falling at an even faster rate than sales. This is due to lower exports, decreased sales in Europe and an overhang in inventory from 2008.

Auto production in the first quarter of 2009 compared to the same period in 2008 dropped by 46 percent in France, 33 percent in Germany, 40 percent in Italy and more than 50 percent in the United Kingdom. The result has been a terrible first quarter for automotive electronics suppliers because their sales depend on auto production.

The good news is that the first quarter of 2009 was most likely the bottom of the downturn for Europe and auto production declines will be smaller in the remaining quarters of 2009.

The figure gives more perspective on this recession and the aftermath summarizing iSuppli’s estimate of the auto electronics recovery in Western Europe.

iSuppli: Relative Yearly Unit Sales Western Europe for Autos and Major Car Electronics Categories (Numbers Normalized to 100 for 2008 Auto Sales)Source: iSuppli Corp., June 2009

The figure shows relative yearly sales for several electronics categories compared to 2008 auto sales which have been normalized to 100. The electronics categories are head-units, in-vehicle navigation, the Advanced Driver Assist System (ADAS), embedded telematics and the Bluetooth-based handsfree interface. The sales pattern is similar for most categories, with a decline in 2009 and growth returning in the following years.

The only area to rise in 2009 will be ADAS, which will manage a slight sales increase in 2009. ADAS consists of ultrasonic and camera park assist, adaptive cruise control, lane departure warning and blind spot detection systems.

Embedded telematics system sales have remained low in Europe and are waiting for the eCall mandate to be settled. eCall is a European Union Commission initiative and will need to undergo legislative processes that would take an average of 18 months for it to become an EU regulation—once it is submitted. Due to several contentious aspect of the eCall initiative, there is not yet an agreement, even after more than two years of discussions.

Hence, it looks like the eCall initiative is unlikely to become a mandate until 2011 or possibly later. The result is that the embedded telematics market will not take off for another two or three years in Europe.

Telematics services using the driver’s phone is doing better in Europe as Bluetooth-based hands-free interface systems are growing in importance. All major auto manufacturers offer such HFI systems on some or all of their models and their sales will continue to grow.