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Do not let Brexit ruin car industry, urges chair of London Taxi Company

The chair of the company behind the first new car plant in Britain for more than a decade has urged the UK and European governments not let Brexit ruin the country’s automotive industry.

Carl-Peter Forster was speaking as the London Taxi Company (LTC), the maker of London’s trademark black cabs, officially opened a factory in Coventry to build electric taxis. The plant will create more than 1,000 jobs and is funded with investment worth £325m from the Chinese car company Geely, which owns LTC.

The Coventry plant is the first site in the UK dedicated to the production of electric vehicles. It covers the size of nearly 20 football pitches and has capacity to manufacture 20,000 vehicles a year. LTC and Geely will also make small electric vans at the factory, which the companies believe could be a new growth market. They are looking to export the electric taxi outside London, but will focus on the UK first.

Greg Clark, the business secretary, said the new factory and Toyota’s announcement last week that it will invest £240m into modernising its Derbyshire production line is “recognition of our seriousness in the industrial strategy”. He was very confident about the future of the car industry in Britain, he said.

Forster, the former boss of General Motors Europe and Jaguar Land Rover, urged the UK and EU to reach a mutually beneficial deal for the automotive industry as part of Brexit.

“I think there is a mutual interest on both sides not to disrupt … and kill this very positive collaboration” between the UK and European car industries,” he said. “We bank on all governments to keep that in mind.”

Forster said sterling’s depreciation since the referendum had already hurt LTC’s profit margins, but added: “We will somehow live with it.”

On the potential terms of Brexit, he said: “We need a stable and level playing field in terms of trading, rules and regulations. We bank on the UK government to keep that in mind.”

Automotive industry bosses have consistently said that leaving the single market and the customs union could have a damaging impact on UK plants because of the number of cars exported and the high proportion of car parts imported. Around half the parts for the new electric taxi made at the Coventry factory will come from outside the UK.

A report by PA Consulting said earlier this week that the cost of assembling a car in Britain could increase by £2,370 in the event of a hard Brexit, forcing some manufacturers to look at moving production out of the country.

The increase in costs – equivalent to more than 10% per vehicle – would hit if Britain falls back on World Trade Organisation rules after leaving the EU. Even if the UK agrees a tariff of 5% with the EU on importing and exporting cars and 2.5% on components, then £1,202 will be added to the cost of production.

The report said it would make economic sense for some manufacturers to abandon British factories if 10% WTO tariffs were introduced. The cost of exporting 200,000 cars a year from the UK would be £920m after two years, which PA Consulting said would easily cover the cost of building a new plant in the EU.

The government has provided a £16.1m grant through the regional growth fund for LTC’s new factory. Clark said the facility, which will also house research and development, demonstrated that the UK was a “world leader in the development of new automotive technologies”.

He has pledged to put support for the development of electric vehicles at the heart of the government’s industrial strategy.

“Our iconic black cabs are famous across the world. The London Taxi Company’s impressive new factory and RD facility showcases the innovation that makes the UK a world leader in the development of new automotive technologies,” he said.

“Through our ambitious industrial strategy, we are committed to building on our strengths and taking advantage of the opportunities the new low-carbon economy provides.”

The Department for Transport aims to encourage taxi drivers to buy new electric vehicles with £64m in incentives. The money will be used to offer taxi drivers a £7,500 discount on the cost of an electric vehicle and pay for more charging points across the UK.

John Hayes, the transport minister, said: “This government is committed to improving air quality and reducing pollution in towns and cities, which is essential for people’s health and the environment.”

Unions welcomed the investment, particularly in light of LTC going into administration in 2013 before being bought by Geely.

Unite’s regional officer Peter Coulson said: “This a fantastic story of a company that was on its knees in 2013. Now thanks to the commitment of Geely’s top management and accompanying large-scale investment the iconic London taxi is set for its continued renaissance.

“Tribute should also be paid to the dedicated workforce who have worked hard and diligently to contribute to the current success.”

Signal of China’s growing importance in car industry

The new LTC plant is not just the first new car plant in the UK for a decade and the first to focus on making electric vehicles. It also represents the single biggest investment in the British automotive industry by a Chinese company.

Geely saved the maker of London’s black cabs from the brink of collapse in 2013. The company was founded by Li Shufu, who the business secretary described as “one of China’s great business leaders and therefore one of the world’s great business leaders”.

Li set up Geely in 1986 as a fridge manufacturer, but he has gone on to build a substantial car maker in China and buy western brands such as Volvo and LTC.

Representatives from the Chinese government were at the official opening of the new factory, and the presentation translated into Chinese. Chris Gubbey, LTC’s chief executive, described the facility as a “success story for the cooperation between the UK and China”.

Article source: https://www.theguardian.com/business/2017/mar/22/london-taxi-company-coventry-electric-cabs-jobs-brexit

BlackBerry COO on the company’s dive into the automotive industry

TORONTO – You might not know it, but chances are there is some sort of BlackBerry software in your vehicle.

Beard, who held executive positions at Oracle Corp., SAP division Sybase, and cloud call centre firm LiveOps Inc. before joining BlackBerry, sat down with CDN to outline the company’s shift to software and the enterprise. BlackBerry’s focus now lies in security, software, and automotive operating systems, rather than hardware.

In part two of our Q/A with Beard, he discusses BlackBerry’s dive into the automotive industry and the success the company has had with QNX.

This is part two in a three-part interview.

Part 1: BlackBerry COO on the company’s new direction with its hardware

The following is an edited transcript. 

ITWC: We were shocked that you said that BlackBerry is inside 250 auto makers. With the Ford announcement in December, we were under the impression that BlackBerry had just entered this space. How long has BlackBerry been preparing this push and working with auto makers?

Marty Beard: Years. Approximately 50 per cent of the market for Infotainment is BlackBerry. There are a lot of systems in a car, and they are all independently out there. For example, here’s BlackBerry managing really well the infotainment, and we’re also really good with acoustics. So most people don’t realize that if you have a high end sedan, all the sounds are managed. They’re fabricated, but you don’t know that when you’re driving.


BlackBerry COO Marty Beard

As we get into autonomous and semi-autonomous you get into much more analytics about what is happening. The sensors on the outside and inside of the car and what is going on around this environment. Those need to be managed. Then when you step back, those systems need to talk to each other. So we’re in an awesome space, because we’re really good at it. It is a really stable, very well vetted software. It’s in rockets, it’s in airplanes, and the industry knows that.

It’s a big opportunity, but it takes time. The Ford deal we announced, that takes a lot of time to get there.

ITWC: How have you forged these partnerships?

Beard: We’re known in the industry and we’ve already done some work with Ford previously. This expanded that quite dramatically. The good news about that industry is that it’s not huge in the sense of the number of players, so you know where to go. We’re in a good position there.

ITWC: Do you plan on growing beyond the infotainment, acoustics, etc. Would we ever see something like the Google Car from BlackBerry?

Beard: Yes, we plan on growing our software, but no, don’t mistake that for us moving beyond the software space. We have what we think is going to hit the roads, and I think we’re very well positioned.

ITWC: What made BlackBerry want to enter the automotive industry in the first place?

Beard: Through the acquisition of QNX. QNX was already there, and they did a beautiful job of growing and becoming bigger, but it was kind of off to the side a little bit. Now you’re hearing that it’s not off to the side and it’s becoming a major part of the story of what we do. QNX is now BlackBerry QNX.

Plus, a lot of us are Silicon Valley folks and you can’t go left or right without someone talking about smart cars, and then you see the Google Car go by, so it’s the next platform. Forget PCs and mobile, it’s all about the car. It’s such a huge topic and there is so much money going into it, that obviously for us we are already in there, so let’s get a larger presence.

ITWC: How do you win in this marketplace against these giants like Microsoft? What makes BlackBerry special?

Beard: With Ford, that was a win over Microsoft. It’s the solution. I don’t want to trivialize it, but it’s a great solution in terms of the actual software, but it’s also about security. Everybody saw the dramatic moment where that car was driven off the road, and it was all over YouTube, and it got a lot of attention because it was a very dramatic showing. This stuff has got to be secure.

There is great brand strength that we have around security, plus the actual technology. That’s the main reason.


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Article source: http://www.itworldcanada.com/article/blackberry-coo-on-the-companys-dive-into-the-automotive-industry/391684

Italy’s MotorK, a company that offers digital services to the automotive industry, raises $10M Series A


MotorK, an Italian company that offers a number of digital products to the automative industry, has raised $10 million in Series A funding. The round was led by 83North, with participation from Zobito, a Swedish private equity and VC firm.

Founded in 2010 and launched at Mike Butcher’s GeeknRolla conference the same year (oh, how I miss those days when nobody knew my name), MotorK was, in co-founder and CEO Marco Marlia’s own words, set up to “revolutionise the creation, management and conversion of leads in the automotive sector by the power of digital”. The company’s products and services aim to help the automotive supply chain sell more auto vehicles, from helping dealers build an online presence to offering a better car buying experience to consumers.

“Our comprehensive end-to-end approach looks after the sales cycle of a car. We’re now servicing 90 per cent of European car brands and over 100,000 dealers,” says Marlia.

Amongst its offerings are DriveK, a new European car marketplace that could be considered a competitor to something like Carwow, and a SaaS platform for car dealers called DealerK. The company also runs Internet Motors, which claims to be the largest digital automotive event network in the EMEA region.

Noteworthy, this is the first time MotorK has taken outside funding, having bootstrapped the company, and says it’s been profitable for the last six years. It also claims “triple-digit growth year on year,” (as vague as that is) and has expanded from its home turf of Italy to Spain, U.K., France, and Germany. I’m told the new capital will be used to enter other European markets.

Laurel Bowden, Partner at 83North, said in a statement: “Today’s announcement is a reflection of our commitment to supporting top talent in the European tech sector as we seek to add value to entrepreneurs with our extensive network and experience of high growth companies. We share a common operating philosophy and we look forward to collaborating with the MotorK team.”

Article source: https://techcrunch.com/2017/03/23/italys-motork-a-company-that-offers-digital-services-to-the-automotive-industry-raises-10m-series-a/

London Taxi Company opens £300m Coventry plant for electric cabs

The first new car plant in Britain for more than a decade will open in Coventry on Wednesday, creating more than 1,000 jobs and boosting the automotive industry despite concerns that uncertainty caused by Brexit could hold back new investment.

The London Taxi Company (LTC), maker of the London black cab, is officially opening a plant that will make electric taxis. The factory is being funded with £300m of investment from LTC’s owner, Chinese company Zhejiang Geely Holding Group, as well as a £16.1m grant from the government through the regional growth fund.

Greg Clark, the business secretary, said the new facility, which will also house research and development, demonstrated that the UK was a “world leader in the development of new automotive technologies”.

Clark has pledged to put support for the development of electric vehicles at the heart of the government’s industrial strategy.

However, the growth of the fledging industry risks being curtailed by the uncertainty caused by Brexit, which analysts say led to a drop in investment in the car sector last year.

The business secretary said: “Our iconic black cabs are famous across the world. The London Taxi Company’s impressive new factory and RD facility showcases the innovation that makes the UK a world leader in the development of new automotive technologies.

“Through our ambitious industrial strategy, we are committed to building on our strengths and taking advantage of the opportunities the new low-carbon economy provides.”

A report warned earlier this week that the cost of assembling a car in Britain could increase by £2,370 in the event of a hard Brexit, forcing some manufacturers to look at moving production out of the country.

The increase in costs – equivalent to more than 10% per vehicle – would hit the average UK-built car if Britain falls back on World Trade Organisation rules after leaving the EU. Even if the UK agrees a tariff of 5% with the EU on importing and exporting cars and 2.5% on components then £1,202 will be added to the cost of production.

The research warned that it would make economic sense for some manufacturers to abandon British factories if 10% WTO tariffs are introduced. The cost of exporting 200,000 cars a year from the UK would be £920m after two years, which PA Consulting said would “easily” cover the cost of building a new plant in the EU.

Toyota last week announced it was investing £240m into upgrading its car plant in Derbyshire while Nissan has committed to expanding its Sunderland factory, the biggest in the UK.

However, the European boss of Toyota warned tariff-free access to Europe was vital to the future success of the Burnaston plant and concerns are growing about other factories. There are fears that General Motors’ Vauxhall plants at Ellesmere Port, Merseyside, and Luton, Bedfordshire, could be downsized or even closed after the business was bought by Peugeot. BMW has also warned it could make the new electric Mini in Germany rather than its factory in Oxford.

The new electric taxi plant in Coventry is also being supported by £64m of funding from the Department for Transport towards encouraging the use of electric taxis. This money will be used to offer taxi drivers a £7,500 discount on the cost of an electric vehicle and pay for more charging points across the UK.

John Hayes, the transport minister, said: “This government is committed to improving air quality and reducing pollution in towns and cities, which is essential for people’s health and the environment.

“This is also great news for the economy as we invest in cutting-edge technology and the next generation of transport and engineering professionals by creating thousands of new high skilled jobs.”

Unions welcomed the investment, particularly in the light of the London Taxi Company going into administration in 2013 before being bought by Geely. Unite regional officer Peter Coulson said: “This a fantastic story of a company that was on its knees in 2013; now thanks to the commitment of Geely’s top management and accompanying large-scale investment the iconic London taxi is set for its continued renaissance.

“Tribute should also be paid to the dedicated workforce who have worked hard and diligently to contribute to the current success.”

Article source: https://www.theguardian.com/business/2017/mar/22/london-taxi-company-coventry-electric-cabs-jobs-brexit

Tariff, trade balancing act plays out with Chinese automotive industry

Dive Brief:

  • An ongoing imbalance in trade and tariffs within Chinese and American auto sales and manufacturing will likely be addressed by the Trump administration during an April meeting between President Xi Jinping and President Donald Trump, Axios reported last week.  
  • Currently, the terms are as follows: U.S. automakers pay import tariffs of 25% for sales, severely limiting the number of American-made vehicles exported to China.
  • Further, U.S. automakers that manufacture in China are legally required to form joint ventures with Chinese companies, ensuring foreign ownership rates of 50% or more. By contrast, the U.S. tariff rate for Chinese cars is 2.5% while foreign car companies within the U.S. own all aspects of their manufacturing and sales.

Dive Insight:

Contrary to common perception, President Trump is unlikely to apply unilateral tariffs on countries believed to be benefiting from America’s lenient trade policies, but rather seeks to draw an end to what are believed to be “unlawful practices” that negatively impact U.S. trade, particularly in China.

The auto industry is a good place to start, as there is a heavy trade imbalance for both completed cars as well as auto parts. Trump does have leverage to influence China’s policy, creating a better reciprocity, but with regards to completed autos, his plan may be hurt by the fact that China’s auto industry is primarily comprised of a number of smaller manufacturers that produce low-cost models, making the likelihood that they would build plants within the U.S. unlikely. However, the auto parts industry holds more promise, as Chinese companies such as glassmaker Fuyao has already set up shop in Ohio to serve the domestic markets. 

The outcome of the probable confrontation with China could provide a template for future bilateral trade deals and how the Trump administration would prefer to negotiate separately with potential trade partners. Leverage is a valuable thing, but precarious too, as Trump seeks to balance competing economics while guarding his pledge to help American companies first. 

Article source: http://www.supplychaindive.com/news/tariff-trade-china-automotive-industry/438512/

Great British Women in the Car Industry – Rising Stars nominations close 3 April

Rising stars wishing to be considered for this year’s Autocar Great British Women in the Car Industry shortlist must be nominated by 3 April.

Run by Autocar, in association with the Society of Motor Manufacturers and Traders (SMMT) and backed by Direct Line Group, Ford and Jaguar Land Rover, the aim of the event is to identify and promote the sector’s most promising female rising stars and highlight the career opportunities within the industry.

The top 100 rising stars will be selected from the following areas of the car industry: vehicle development, manufacturing, purchasing, retail, marketing, communications, apprentices, motorsport, design, and executive. A winner will be selected from each industry sector, with an overall winner then chosen from that shortlist.

Candidates must be nominated by friends, colleagues or their employer. There is no age limit. The shortlisted winners will be chosen based on their influence – and potential future influence – on the automotive industry and within their company, taking into account the size and strength of the business they represent. Dedication to a career in the automotive industry will also be favoured, as well as potential to inspire others to join the industry.

In the first instance, the candidate’s name and CV, along with a short description of their achievements to date and in particular their potential for the future, should be sent to jim.holder@haymarket.com. There is no limit on the number of nominations.

The Autocar Great British Women in the Car Industry judging panel will be chaired by Haymarket Media Group’s Automotive brand director Rachael Prasher. The panel – comprising Jim Holder, Steve Cropley and Rachel Burgess from Autocar’s editorial team, plus the SMMT’s chief executive, Mike Hawes, and director of communications and international, Tamzen Isacsson – will select the industry’s top 100 rising stars at a judging day ahead of the main event.

Those 100 finalists will be announced on 21 June at a day-long event at Twickenham Stadium, with panel debates, discussions and work groups taking place for winners and invited guests.

“We’ve already had some brilliant nominations for rising talent in the automotive industry, but with the deadline fast approaching we want to make sure that everyone who should be recognised is put forward,” said Prasher. “Last year’s event was a resounding success, attracting a huge amount of coverage for our winners and highlighting the great industry in which we work.

“This year’s focus on rising stars highlights the opportunity for rewarding careers in the automotive sector and allows us to put a spotlight on its brightest upcoming stars. Our event at Twickenham Stadium is already shaping up to be an exciting and engaging one, with some industry greats primed to debate and discuss the hot topics around this subject.”

Space for the event at Twickenham Stadium is strictly limited, with priority being given to 2017 and 2016 winners. However, it is anticipated that a limited number of tickets will be available. Anyone interested in attending should contact Charlene Harry, Haymarket Automotive brand executive, at autocar.events@haymarket.com.

Read about our 2016 winners here:

Article source: http://www.autocar.co.uk/car-news/industry/great-british-women-car-industry-rising-stars-nominations-close-3-april

Hard Brexit ‘could increase cost of making a car in UK by £2400′

The cost of assembling a car in Britain could increase by £2,370 in the event of a “hard Brexit”, forcing some manufacturers to look at moving production out of the country, a report has found.

The increase in costs – equivalent to more than 10% per vehicle – would hit the average UK-built car if Britain falls back on World Trade Organisation rules after leaving the European Union. Even if the UK agrees a tariff of 5% with the EU on importing and exporting cars and 2.5% on components then £1,202 will be added to the cost of production.

The costs have been calculated by PA Consulting Group as part of research into the impact of Brexit on the automotive industry.

The report warns that it would make economic sense for some manufacturers to abandon British factories if 10% WTO tariffs are introduced. The cost of exporting 200,000 cars a year from the UK would be £920m after two years, which PA Consulting said would “easily” cover the cost of building a new plant in the EU.

However, in contrast, car manufacturers with no British operations at present could look to move some production to the country to avoid the costs of tariffs.

Tim Lawrence, global head of manufacturing at PA Consulting, said there could be “upsides and downsides” for the UK if it leaves the single market and customs union.

“The key point that has come out of it [the report] for me is the potential impact if we don’t come up with a trade deal and we don’t come up with a solution,” he said. “It all depends on the outcome of trade negotiations that will start in the next week or two.”

Toyota last week announced it was investing £240m into upgrading its car plant in Derbyshire while Nissan has committed to expanding its Sunderland factory, the biggest in the UK.

However, the European boss of Toyota warned tariff-free access to Europe was vital to the future success of the Burnaston plant and concerns are growing about other factories. There are fears that General Motors’ Vauxhall plants at Ellesmere Port, Merseyside, and Luton, Bedfordshire, could be downsized or even closed after the business was bought by Peugeot. BMW has also warned it could make the new electric Mini in Germany rather than its factory in Oxford.

Bosses in the automotive industry have consistently warned the government that leaving the single market and the customs union could have a damaging impact on UK plants because of the number of cars that are exported and the high proportion of car parts that are imported.

On average just 41% of the parts in a car assembled in the UK are made in the country, while some factories, including Toyota’s, export as many 80% of their vehicles to the EU. Each car is made up of thousands of components. Some of these components cross the English Channel three, four or even five times during production.

The PA Consulting report identifies three possible scenarios for carmakers and car parts makers if trade restrictions, even partial ones, are enforced. It says that manufacturers with substantial operations in the UK and with good market exposure in Britain – such as Jaguar Land Rover – are likely to encourage suppliers to open new sites or expand in the UK.

“This would involve increased investment in UK parts procurement, production and supply chains to offset increased import costs, aiming to reduce the impact of tariffs imposed on component parts moving between the UK and EU,” the report said.

However, companies with substantial operations in Europe or overseas which use their UK factories as a satellite factory that focuses on exports to the EU could relocate.

The final scenario is that EU-based manufacturers who export vehicles or components to the UK – such as Ford – could move some manufacturing to the UK. This would depend on “import volumes and costs of supply”, PA Consulting found, adding: “It is likely that in this scenario, the price of imported cars will increase for UK customers, with increased prices covering the costs of any tariffs.”

Lawrence added: “Both the EU and the UK would benefit from keeping free trade and supply chains unaffected because any tariffs would be damaging for both sides based on today’s complex supply chain arrangements.

“Carmakers will have to review their manufacturing and supply chain network and investment decisions and plan for scenarios based on extra tariffs and charges/incentives on corporation tax.

“Some may consider investment options into the UK, but equally some may consider investing into the EU.”

Article source: https://www.theguardian.com/business/2017/mar/20/hard-brexit-cost-car-uk-wto-rules

Toyota donates new 4×4 to automotive industry charity’s care centre …

AUTOMOTIVE industry charity Ben has been given a new Land Cruiser by Toyota.

The 4×4 was donated to Ben’s Birch Hill Care Centre in Berwick-upon-Tweed and has proved to be a lifeline for residents and staff.

Zara Ross, chief executive at Ben, said: ‘It’s fantastic that our Birch Hill Care Centre has received a gift which has been of so much practical value to our staff and residents.

‘The 4×4 has given the centre a lifeline in the winter weather conditions we have been experiencing. It has allowed us to ensure the smooth and safe running of the centre, as we have used it to transport our staff to work as well as get our residents to their hospital appointments.

‘Without the support of our industry, we wouldn’t be able to keep providing a vital lifeline to those who need our help. We are supported by our partners in the automotive industry and we are extremely grateful for this generous donation from Toyota, which has meant so much to our care centre.’

Alan Jennings, corporate social responsibility manager at Toyota (GB) plc, said: ‘Toyota is delighted to contribute towards the great support Ben provides the industry. Helping ensure ongoing mobility in all weathers is vital, and the provision of a suitable vehicle is a practical way we can help.’

Pictured with the Toyota Land Cruiser are Birch Hill Care Centre manager Nicola Hall, left, and assistant care centre manager Joan Pitman

MORE: Final #B4B16 fund-raising total for Ben confirmed

MORE: Bangers4BEN 2016 winners revealed

MORE: All the pictures from Bangers4BEN 2016

On SuperUnleaded.com: 12 Bands And A Singer You Need To Have On Your Driving Playlist

Article source: http://cardealermagazine.co.uk/publish/toyota-donates-new-4x4-automotive-industry-charitys-care-centre/131650

Big Tech M&A Is Transforming the Auto Industry

Big technology companies are unleashing a wave of acquisitions to gain a foothold in the autonomous car market, including the quest to build driverless cars, and for good reason. The market’s expected to grow to over $70 billion by 2030, Intel Corp. CEO Brian Krzanich told the Financial Times.

Big Buyout Premiums

In recent months: Samsung Electronics paid $8 billion to buy Harman International Industries Inc., an audio and telematics supplier; Siemens AG spent $4.5 billion for Mentor Graphics Corp., a producer of automotive design software; and Qualcomm Inc. executed the $39 billion takeover of automotive chip supplier NXP Semiconductors NV. Not to be outdone, Intel Corp. last week announced plans to purchase Mobileye NV, a lead supplier of automotive sensor systems, at a price tag of about $15.3 billion, according to The Wall Street Journal. (To read more, see: Tech Firms Eyeing Autos as Next Big Profit Wave.)

The big buyout premium that Intel paid for Mobileye is just one example of the rich price these tech companies are willing to pay to expand their presence in the budding market for driverless vehicles, a market that is changing the very dynamics of competition within the automotive industry by pitting traditional automakers against technology companies, the Journal said in its March 14 story.

Source: Wall Street Journal

As autonomous driving becomes less hypothetical and more of a concrete reality, the automobile supply chain is undergoing a significant transformation. The interesting question in that transformation revolves around whether it will be tech companies or automakers that will have greater dominance in the way in which the `smartification’ of the automobile develops. There is a possibility for intense competition and also partnerships between big technology and big auto companies.

Building From Scratch

Features like infotainment and connectivity are no longer just add-ons but are becoming differentiating factors guiding consumer behavior in their automobile-buying decisions, according to a report by McKinsey Co. Tech companies have proven to have greater expertise in these areas, yet they are also realizing just how challenging it can be “to build a car from scratch,” the Journal says. (To read more, see: Self-Driving Cars: Shifting Gears in Key Sectors.).

Considering the market’s fast pace of development, tech and auto companies have already begun forming partnerships. In the past year and a half, Intel has signed partnership deals with automaker, BMW, and auto parts supplier, Delphi Automotive. Also, Fiat Chrysler Automobiles NV is outsourcing its driverless car program to Alphabet Inc.’s Waymo.

Article source: http://www.investopedia.com/news/big-tech-ma-transforming-auto-industry/

Suppliers to car industry thrive

Certain car brands driving on the roads in America, China or India may contain components manufactured in Slovakia. This is possible due to extensive supply chains, parts of which are in Slovakia, which has become home to many international automotive contractors in recent years. Yet firms of Slovak origin are not lagging behind, though currently, their number is not so high.

The suppliers situated in Slovakia export about 60 percent of their total production abroad.

“If they did not produce quality products, foreign customers would not buy them,” Jaroslav Holeček, vice-president of the Slovak Automotive Industry Association (ZAP), told The Slovak Spectator.

Not only subsidiaries of multinational companies, but also local suppliers have a strong position on foreign markets, adds Martin Jesný, analyst of the Slovak Automotive and Technology Forecast Institute.

“Their number, however, is relatively low,” he told The Slovak Spectator, adding that the private industrial sector started developing in the country only after the change of the political regime in 1989. “But these Slovak firms have good results and a really good reputation in the field.”

Though suppliers export to the American and Asian markets, most of the manufactured components end up in Europe. Holeček suspects that up to 80 percent of products are supplied to European automotive companies.

The suppliers have a strong position especially in neighbouring countries, such as the Czech Republic, where the Slovakia-based carmakers have their twin factories, and Hungary, but also Germany which has a traditionally strong automotive sector, Jesný added.

Components sent across the world

ZF Slovakia, whose plants are situated in Trnava and Levice (Nitra Region), exports about 99 percent of its production, which includes clutches and dual-mass flywheels, torque converters, conventional shock absorbers, and suspension components, such as ball joints and stabilisers, for various types of vehicles.

Its most important customers are in Germany, France, Hungary and Great Britain, Marián Dičér, senior manager of Shared Services Slovakia and senior finance manager at the company, told The Slovak Spectator. Its components can be found at several global car producers, like Volkswagen, General Motors, PSA, Ford, Renault, Daimler, Jaguar Land Rover, Volvo, Fiat or Mazda.

Additionally, the company Brose Slovakia, which has plants in Lozorno (close to Bratislava) and Prievidza (Trenčín Region), sends about 85 percent of its production abroad, mostly to markets in Germany, Great Britain, Sweden, Poland, but also to China as well as to other Brose locations in Mexico, South Korea and Belgium, the company’s authorised representative Axel Mallener told The Slovak Spectator.

Brose Slovakia manufactures window regulators, door modules and power liftgate systems, which can be found mostly in the brands produced within the Volkswagen group, but also Opel, BMW and Ford.

“We do not develop any products in Slovakia yet, although we will do so in Prievidza soon,” Mallener said.

The Ilava-based Hanon Systems Slovakia supplies more than half of its products to Slovak carmakers, with the rest being exported abroad. It focuses on climate control products, such as heating, ventilation and air conditioning units (HVAC), cooling modules and various types of heat exchangers for leading global vehicle manufacturers, said the company’s spokesperson Veronika Prudilová.

An ideal location for our business in terms of its proximity to our customers, suppliers and business partners,” she told The Slovak Spectator.

Modernisation is a challenge

Back in 2014, suppliers, similarly to carmakers, had to slightly change their focus after the EU and the US imposed sanctions on Russia for annexing Crimea. They, however, managed the situation and replaced the market with others in Europe and across the world.

“So the decline was not so significant to impact them,” Holeček said.

Jesný agrees, saying that currently suppliers in the central European region have sufficient orders from carmakers.

There are, however, other challenges the companies may face in the future. One of them is the demand for highly competitive production.

“This means they should keep the high technical quality of the components and also produce them more effectively,” Jesný said, explaining that this requires the modernisation of production and use of up-to-date technologies and automated processes within the Industry 4.0 project.

This will be very important especially due to the fact that the call for new and more innovative products will intensify in the future and there will be pressure on firms to produce them quickly, Jesný added.

Suppliers addressed by The Slovak Spectator, however, say that they are ready to tackle the potential problems, pointing to their position in the global markets. Brose also points to its technically reliable supply base and a well-developed infrastructure; while ZF claims it offers intelligent solutions to the current challenges facing the sector, including the efficiency, safety and use of electric and hybrid drive. Brose says that to be able to produce for foreign markets on a large scale in Slovakia, two conditions have to be met here first: a technically reliable supply base and a well-developed infrastructure.

Another important factor will be the availability of the labour force that will be impacted by the access of people to the Slovak labour market. Jesný predicts it will be necessary to hire people from abroad to make up for the lack of qualified workers. Currently, companies hire workers from Serbia and Bulgaria, but it is possible that also the number of Ukrainians will increase in the future, he adds.

Trump not to have an impact

Holeček says it is hard to say how external factors, like Brexit or the election of Donald Trump who wants to lure back US companies with lower taxes and less red tape, will impact suppliers.

“The promises differ from concrete actions,” he added.

Jesný opines that Trump’s victory in the US presidential race will not have any direct impact on the suppliers established in Slovakia as the suppliers are often situated close to the place where the cars are finalised.

“If these companies are expected to be competitive and supply products to carmakers in the region, they should produce in the region,” he explained.

There is, however, a question whether the US will not create any obstacles for exports of European carmakers to its market. For example, luxurious SUV cars produced by Volkswagen are quite popular in the US. If their sale is somehow disadvantaged, not only the carmaker, but also its suppliers will be affected, Jesný explained.

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Article source: https://spectator.sme.sk/c/20484731/suppliers-to-car-industry-thrive.html