THE HANSEN REPORT ON AUTOMOTIVE ELECTRONICS. A Business and Technology Newsletter

VOL. 18, NO. 1◆◆ PORTSMOUTH, NH USA FEBRUARY 2005 2004 Roundup of North Bluetooth in the Car a Go— American Automotive But Specs Need More Work Electronics Suppliers Many problems must be solved over Special Interest Group (SIG) completed the next two or three years before Blue- Hands-Free Profile (HFP) 1.0 in April tooth can be freely applied in automotive 2003; that is the profile applied in many Autoliv Inc. applications without glitches. Market ana- Bluetooth-enabled vehicles on the road 2004 Consolidated Net Sales: $6.1 bil- lysts are expecting impressive growth of today. In working with the standard, engi- lion; discounting currency effects and an Bluetooth-equipped cellular phones and neers have found that HFP 1.0 does not acquisition, organic sales growth was 8%. Bluetooth-equipped cars. IMS Research accommodate automakers’ desire to Change from 2003: up 16% (Wellingborough, U.K.) expects that by switch what the cell phone displays to the 2004 Net Income: $320 million or 5.2% 2009, 75% of all cellular terminals will vehicle’s display when customers bring of sales, about the same profit margin as carry Bluetooth, and 17.5% of passenger Bluetooth phones into their cars. And 2003 vehicles produced globally will have Blue- HFP 1.0 doesn’t properly handle multi- Fifty-eight percent of 2004 sales, or tooth car kits installed, mostly for hands- party calls, where a call is put on hold $3.5 billion, came from Autoliv’s Euro- free use of the phone while driving. Top while a second call is handled. Version 1.0 pean companies, reflecting growth in the electrical engineers from GM, Ford, also doesn’t provide phonebook access for region of 19%. Among the products con- DaimlerChrysler, Toyota, Nissan, Honda hands-free dialing, nor does it address tributing to growth in Europe were curtain and Volkswagen all expect to use Blue- power-mode synchronization problems. airbags and thorax side airbags. Sales in tooth in high volume production within Another problem not comprehended by North America increased by 3% to $1.7 five to seven years. In December 2004, 1.0 relates to the way calls in progress are billion, and sales in Japan grew 30% in- according to ABI Research (Oyster Bay, switched over to the vehicle as the driver cluding acquisitions and currency effects. New York), 30 car models in North approaches his vehicle while talking on Organic growth in Japan was 12%. America were available with Bluetooth, the phone. Autoliv reported increased demand for twice the level of a year ago. But probably the biggest problem with front and side airbags as well as seatbelts As real-world user experience with the Bluetooth “standard,” at least in the in Korea and China. Overall, airbag prod- Bluetooth accumulates, ambiguities and opinion of consumers, is that not all Blue- uct sales increased 12% over the prior interoperability problems not fully ad- tooth HFP 1.0 phones work in cars that year, to $4.028 billion. dressed in the first round of specifications are equipped with a Bluetooth HFP 1.0 are coming under closer scrutiny. The Car car kit. Different phones behave differ- Delphi Corp. Working Group within the Bluetooth Turn to Bluetooth, page 3 These preliminary, unaudited results may be changed pending the outcome of the Bluetooth Penetration in Cars and Cellular Handsets SEC’s current investigation. 2004 Net Sales: $28.7 billion IMS Research forecasts that by 2009, 17.5% of all cars produced worldwide will have Change from 2003: up 2% Bluetooth capability, and 75% of cellular handsets will come with Bluetooth. 2003 Net Loss: $36 million, compared with a net loss of $56 million in 2003 (Units in millions) 2003 2004 2009 Forty-six percent of 2004 revenue, or Light vehicle production 56.3 59 61.4 $13.2 billion, came from customers other Bluetooth penetration 1% 4% 17.5% than GM, compared with 39% non-GM Bluetooth equipped cars 0.7 2.6 10.7 business in 2003. Delphi felt the impact of lower production volumes at its largest Total cellular terminals* 489.6 623.1 617.5 customer, GM North America, as well as Bluetooth penetration 7.4% 12.5% 75% high material and labor-related costs, es- Bluetooth cellular terminals 36 77.9 463.1 pecially pension liability and health care *Primarily cellular handsets Data: IMS Research increases. Delphi continues to cut its workforce, citing 6,175 hourly jobs cut IMS Research produces a Bluetooth annual report which tracks Bluetooth penetration into since October 2003 and another 8,500 end market applications as well as the Bluetooth Tracking service, a quarterly report profiling Turn to Roundup, page 2 Bluetooth IC shipments by end application sector and IC type. Visit www.imsresearch.com. Roundup... Continued from page 1 positions to go in 2005. The company came from a 26% increase in unit ship- ing costs and an $84 million pension gain. shut down manufacturing operations at its ments outside North America, due to in- 2005 Sales Outlook: 8% to 10% growth Flint West plant and in Tuscaloosa, Ala- creased vehicle penetration in Europe and JCI marked fiscal 2004 as its 58th con- bama. Plants in Kansas and Anaheim, Asia. Toyota is Gentex’s second largest secutive year of sales increases. In the Au- California are also closing. Three other customer. Shipments to North American tomotive Group, 89% of 2004 sales came U.S. manufacturing operations have been customers were up 3%. from interior-related products and 11% placed into the Automotive Holdings from batteries. North American sales grew Group to be “fixed, closed or sold.” Harman International 12% over the prior year; in Europe, auto- In December 2004, Standard and (Fiscal year ending June 30, 2004) motive sales were up 32%. JCI’s top three Poor’s lowered Delphi’s credit rating from 2004 Sales: $2.7 billion customers, GM, Ford and DaimlerChrys- BBB– to BB+, below investment grade. Change from 2003: up 21.6% ler, together accounted for nearly half the Delphi is looking for growth in sales of 2004 Net Income: $157.9 million, or Automotive Group’s revenue in 2004. diesel products in Europe, where it is cur- 5.8% of sales, compared with 4.7% margin In January 2005 JCI agreed to sell its rently the number-two supplier of diesel in fiscal 2003 engine electronics business to Valeo for common rail systems. Another growth Harman’s infotainment business, nota- e330 million ($428 million). JCI acquired product is satellite radio: Delphi shipped bly with DaimlerChrysler, remains a the electronics business when it bought 4.5 million XM units in 2004, including 2 driver in the company’s continued growth. the French company Sagem in 2001. million units in the aftermarket. Ford will In October 2004 Harman announced it JCI acquired the remaining 51% of its make Delphi’s Sirius Satellite Radio re- was buying QNX Software Systems, which battery joint venture with Grupo IMSA ceivers a factory-installed option on four developed the operating system Harman S.A. de C.V. in July 2004. The leading au- 2006 models, including the F-150 truck. uses in its products. For more on Harman’s tomotive battery producer in Mexcio and financials and recent business activity, see South America, the JV makes automotive Gentex Corp. The Hansen Report Dec. 04/Jan. 05. batteries in plants in Mexico and Brazil. 2004 Net Sales: $505.7 million; automo- tive sales account for 96% of total sales Johnson Controls Automotive Group Lear Corp. Change from 2003: up 7.8% (Fiscal year ended September 30, 2004.) 2004 Consolidated Net Sales: $16.960 2004 Net Income: $112.7 million, or 2004 Consolidated Net Sales: $20.5 bil- billion 22.2% of sales, down only slightly from lion, 77% of JCI’s total sales Change from 2003: up 7.7% last year’s 22.8% margin Change from 2003: up 19.9% 2004 Net Income: $422.2 million, or Unit shipments of the company’s pri- 2004 Operating Income: up 15%, to $1.0 2.5% of sales, a slightly better margin mary product, auto-dimming mirrors, grew billion, or 4.9% of sales. 2004 operating than in 2003 7% during 2004. Some of that growth income excludes $69 million in restructur- continued on page 8

Domestic Japanese Shipments of Automotive THE HANSEN REPORT ON AUTOMOTIVE ELECTRONICS Consumer Electronics Equipment © 2005 Paul Hansen Associates, 150 The figures below represent shipments Radios integrated with navigation systems Pinehurst Rd., Portsmouth, NH 03801, by JEITA (Japan Electronics and Informa- are counted as navigation systems. Sales USA. Telephone: 603-431-5859. Fax: 603- tion Technology Industry Association) of CD players have declined slightly. De- 431-5791. E-mail: [email protected]. member companies to both OEM and af- mand for hard disc drive navigation is All rights reserved. Materials may not be termarket customers, for sales in Japan. gaining momentum. reproduced in any form without written per- mission. The Hansen Report on Automotive Automotive Multimedia Shipments in Thousand Units Electronics is published 10 times a year, monthly; July/August and December/Janu- ary are combined issues. The annual sub- 2000 Change 2004 Change CAGR scription rate is $717 (North America), $747 from 1999 from 2003 2000–2004 (elsewhere). Back issues are available for Navigation systems 1,699 29% 3,505 23.9% 19.9% $50 each; see our online index at DVD ROM type — — 2,471 20.8% — www.hansenreport.com. Paul Hansen Asso- Hard disc drive type — — 911 73.1% — ciates is a strategy and market research Color TVs 655 5.8% 1,180 13.6% 15.9% firm consulting to the electronics industry. Cassette stereos 3,172 –18.7% 894 –19.9% –27.1% Publisher/Editor Paul Hansen CD players 6,131 24% 6,329 –3.1% 0.8% Managing Editor/ Brianne Wolfe Mini disc players 543 3.9% 298 –16.7% –13.9% Circulation Manager Radios 1,011 4.1% 902 –11.5% –2.8% Data: JEITA ISSN 1040-1105

Page 2, February 2005 The Hansen Report on Automotive Electronics, Portsmouth, NH USA www.hansenreport.com Bluetooth... Continued from page 1 ently. As a result, carmakers who install motive specifications. automobile,” explained Motorola ACES’ hands-free features have to test each The group will first tackle the hands- Tony Mansour, who participates in the phone model to find out which ones work free profile. HFP 1.0 will be replaced by Bluetooth Car Working Group. But Mr. in their car kits and recommend only the HFP 1.5, possibly by the start of 2006. Mansour added that ultimately the behav- ones that do. If you buy a car with Blue- The members must first agree to the spec’s ior constraints mandated by AMP could tooth, the chances are pretty good that language changes and then complete the be integrated directly into the car profiles. you’ll have to replace your Bluetooth testing phase, which could take six Johnson Controls’ Steve Raxter, who is phone with a different one. months. Next, the members will work on chairman of the Car Working Group, of- If you’re in North America, where a Bluetooth profile that comprehends fered data- and voice-link management as CDMA technology is widely used, your SIM (Subscriber Identification Module) an example of the sort of behavior AMP options are limited. Only a few CDMA card access with GSM phones. Widely would address. “Say you are in your car phones come with Bluetooth capability. used in Europe, the SIM card holds all of having a phone conversation using the Of the 77.9 million Bluetooth cellular the subscriber’s personal information and hands-free kit, and you transfer the call to terminals produced in 2004, only seven or phone settings. In essence it is the the handset for a private conversation. eight million of them were sold to Ameri- subscriber’s authorization to use the net- When you disconnect that audio link, can users, according to IMS Research. work without regard to the particular some phones today also disconnect the “Last year only six models of CDMA handset he uses. data link so things like the phone’s signal phones came with Bluetooth in the U.S.,” Other Bluetooth car profiles are in the strength and battery indicator are no observed Stuart Carlaw, lead Bluetooth works that will provide an in-vehicle de- longer visible on the car’s display.” AMP analyst at IMS Research, but the selection vice with a common mechanism for ac- would define what behavior should be ex- is improving. “By the end of 2005 there cessing the phoneooks, text messages and pected in that situation. should be 39 or 40 models,” he added. e-mail. The upcoming Phonebook Access The Car Working Group is considering Profile (PBAP) and the Message Access a rigorous testing program to make certain Help Is on the Way Profile (MAP) are seen as stepping stones that all handsets that claim to support Despite the commitment of the engi- to a full-featured SyncML implementa- HFP 1.5, for example, will work with all neers in the Car Working Group, their tion. SyncML is an open industry stan- Bluetooth car kits that are HFP 1.5-com- numbers are limited and it will likely take dard for synchronizing data and personal pliant. Phones that conform to the two or three years, at least, before auto- information across multiple networks, Hands-Free Profile would come with a motive applications of Bluetooth technol- platforms and devices. PBAP and MAP do specific HFP graphic or logo. Likewise, a ogy are no longer problematic. While not require an extensive user interface for car icon could indicate that a phone con- things are pretty fluid—a number of ap- the in-vehicle device. forms to the Automotive Meta Profile. proaches are still being debated—mem- Current plans call for these car profiles, According to Mike Foley, technical direc- bers of the Car Working Group and the including the Hands-Free Profile, to be tor of the Bluetooth SIG, phones that Bluetooth SIG were able to sketch out a integrated by an Automotive Meta Profile support AMP won’t be available at least hypothetical schedule for the publication or AMP. “AMP will describe the rules for until the end of 2007. ◆ of more comprehensive Bluetooth auto- coordinating system behaviors within the Connection to Apple iPods Will Stay Proprietary If carmakers want to make the car’s sure your iPod is always charged, which is see an iPod connection in every car. display, switches, speakers and power really what customers want,” said Greg Since the iPod first came to market in available to iPods, they’ve got to do it the Joswiak, product marketing vice president October 2001, a total of 10 million units way Apple wants it done—by using for iPod. have been shipped worldwide, 4.5 million Apple’s proprietary 30-pin connector and We asked Mr. Joswiak if Apple would units in the last quarter of 2004 alone. command protocols. Alternatively, be willing to make its connector and pro- According to Mr. Joswiak, Mercedes, carmakers could provide accessible RCA tocols openly available to carmakers who Volvo, BMW, Scion, Alpha Romeo and connections to their audio system to take want to use them for iPod as well as other Ferrari engineers have already developed advantage of the car’s amplifier and speak- digital music players. “No,” he said. “We or are developing ways to accommodate ers, but without the Apple connector and certainly wouldn’t see that in our interest. an iPod connection, either at the dealer protocols, drivers would be forced to oper- ... The iPod has become the most popular or at the factory. He noted that other un- ate the iPod using its tiny display and way people listen to music in this digital named carmakers are also making connec- switches, which would be less safe while music revolution, and the car is one of tions to the iPod: “We are working with a driving than using the vehicle’s human their favorite places to listen. ... iPod is large number of car brands on the best interface. Apple strongly favors wired the only digital music player in great de- way to bring iPod connectivity to their iPod connections over wireless. “We think mand; no other product has real traction,” automobiles in the next few years.” ◆ wired is best because it is the way to make asserted Mr. Joswiak. Apple would like to The Hansen Report on Automotive Electronics, Portsmouth, NH USA www.hansenreport.com February 2005, Page 3 The Company Profile... Hitachi Automotive Systems

Thumbnail Sketch Hitachi Ltd. Sales Hitachi Ltd. Sales by Industry Segment, Roughly and Net Margin, by Fiscal Year Fiscal year 2003 ended March 31, 2004. Hitachi Automotive Systems (HAS) FY 2003 Total: ¥8,632 billion ($84.3 billion) 1998 to 2003 Annual Growth Rate: 1.6% Headquarters: 6, Kanda-Surugadai 4- Power & Industrial Electronic Devices, chome, Chiyoda-ku, Tokyo 101-8010, Systems, 22.4% 12.7% Japan; telephone: 81-3-3258-1111; Automotive fax: 81-3-3258-5800 Information & Systems, in ¥ billions ($ billions) Telecommunica- FY 2003 Consolidated Sales: ¥386.7 billion 3.8% 7,977 8,011 8,417 7,994 8,192 8,632 tions Systems, ($3.775 billion), including consolidated sales 22.6% Digital Media & (77.9) (78.1) (82.2) (78.0) (80.0) (84.3) of the automotive related businesses of Consumer Financial Services, Products, 12.0% Shin-Kobe Electric Machinery and Tokico 5.4% FY 2003 Operating Profit Margin: 3% Logistics, High Functional Services & 1998 1999 2000 2001 2002 2003 FY 2003 R&D: 3.0% of sales for the entire Materials & Other, 12.2% Components, 12.6% Power and Industrial segment, of which Net Margin by Fiscal Year Hitachi Automotive Systems is a part Percentages are based on subtotal of all segment 1998 –4.1% 2001 –6.1% Products: Engine management parts and revenues, which overstates outside revenues by 1999 0.2% 2002 0.3% systems, mostly ¥1,624 billion (eliminations and corporate items). 2000 1.2% 2003 0.7% FY 2004 Estimated Sales: ¥460 billion cludes 18 publicly owned subsidiary com- ($4.5 billion), a 19% increase over FY 2003 panies. Consolidated sales in fiscal 2003 Major Customer: Nissan Motor reached ¥8,632 billion ($84.3 billion). facility, Sawa Works. Responding to emis- Employees: About 11,000 following the Hitachi merged its semiconductor busi- sion regulations, in the 1970s the com- merger of Tokico with Hitachi Unisia in ness with Mitsubishi Electric’s semicon- pany developed electronic fuel injection October 2004 ductor business in 2003 to form Renesas systems. The company began overseas Sales per Employee: about ¥41.8 million Technology Corporation, a joint venture. production in the 1980s, establishing ($408,000) Hitachi owns 55% of Renesas Technol- Hitachi Automotive Products USA in ogy; Mitsubishi Electric owns 45%. Kentucky and opening a technical center Hitachi Ltd. Over the last ten years Hitachi Ltd. has in Farmington Hills, Michigan. Headquarters: Same as above shown only small profits or outright losses. About 40% of Hitachi Automotive’s FY 2003 Sales: ¥8,632 billion ($84.3 billion) As a result, Hitachi’s stock price has been FY 2003 sales came from overseas custom- FY 2003 Net Margin: 0.19% stagnant: the stock declined from ¥930 ers; China represented just 1% of sales. By Net Sales per Employee: ¥26 million ($9.08) per share at FY 1993 year end, to 2010, Hitachi expects that overseas sales ($254,000) ¥807 ($7.88) per share at year end FY will account for 50% of automotive sales, Products: Electrical and electronics 2003. At the end of FY 2003, the com- with 6% coming from China. Hitachi’s equipment pany was carrying ¥2,498 billion ($24.4 biggest automotive customer is Nissan Ownership: The Master Trust Bank of billion) of interest-bearing debt, a number Motor; combined sales to Nissan and Japan, 6.75%; Japan Trustee Services that has improved from a high of ¥3,493 Renault accounted for 55% of total FY Bank, 6.07% billion ($34.1 billion) at the end of fiscal 2003 sales. Katsukuni Hisano is the presi- Stockholders’ Equity*: ¥2,168 billion 2000. In FY 2003 free cash flow improved dent and CEO of Hitachi Automotive Market Capitalization*: ¥2,718 billion to ¥336 billion ($3.3 billion), a ten-year Systems. In April of 2003 the group name Price to Earnings Ratio*: 170 high. Over the last ten years Hitachi’s in- was changed from “Automotive Products” *As of March 31, 2004 vestment in R&D has declined from 6.5% to “Automotive Systems.” Hitachi Ltd. Corporate Background of sales in FY 1993 to just 4.3% of sales in Hitachi Ltd., Tokyo, Japan, is a pub- FY 2003. Growth Through Acquisitions licly traded company listed on the Tokyo In December 2000, Hitachi Automo- Stock Exchange (TSE: 6501) as well as Hitachi Automotive Systems tive became the sole owner of Xanavi the Osaka, Nagoya, Fukuoka and Sapporo Hitachi’s automotive history goes back Informatics, the navigation and audio exchanges. Hitachi American Depository to 1930 when the company first made joint venture it had formed with Nissan in Receipts are traded on the New York electrical components for cars, initially 1991. Hitachi’s share in Xanavi, which Stock Exchange under the symbol HIT. marketing them to both Nissan and earned 88% of its revenue from Nissan, With 326,344 employees, Hitachi serves Toyota. Between 1964 and 1968 Hitachi was 51%. Today, Xanavi vehicle informa- many markets with a wide range of prod- founded the Automotive Products divi- tion systems, including the Carwings ucts and services. The Hitachi Group in- sion and established its main production telematics systems, jointly developed with

Page 4, February 2005 The Hansen Report on Automotive Electronics, Portsmouth, NH USA www.hansenreport.com The Company Profile Continued

Hitachi Automotive Systems Hitachi Automotive Systems Hitachi Automotive Systems Consolidated Sales by Fiscal Year Consolidated Sales by Customer* Consolidated Sales by Product FY 2003 and FY 2010 2000 to 2003 Annual Growth Rate: 29.5% FY 2003 Sales: ¥386.7 billion ($3.8 billion) Others,** 15% Total Sales Ford ¥386.7 billion ¥1,000 billion in ¥ billions Group, 5% ($3.8 billion) ($9.8 billion) ($ billions) Renault/ Honda, 5% 10% 17% Nissan, 55% 15% GM Group, 15% 25% 178 184 290 386.7 460 20% (1.7) (1.8) (2.8) (3.8) (4.5) 33% 2000 2001 2002 2003 2004 (Est.) *Percentages based on prior year’s sales **Toyota Group, VW Group, DaimlerChrysler 60% 25% Group, PSA Group, Hyundai Group Nissan Global Vehicle 2003 2010 Production 2000–2004 Unisia JECS produced ¥199.4 billion in Million Units FY 2003 to FY 2010 ($1.9 billion) in sales and employed 3,852 Annual Growth 2000 to 2004 Annual Growth Rate: 5.14% people. Rate of Sales On March 26, 2004, Hitachi Ltd. an- Vehicle information systems 23.6% nounced its intention to merge Hitachi Drive control systems 25.8% Unisia Automotive with Tokico Ltd., “to Electric powertrain systems/ 28.2% make a stronger automotive products busi- Electrical equipment ness.” Together, Hitachi, Tokico and Engine management systems 1.1% Unisia would be able to emphasize com- 2.61 2.47 2.69 2.96 3.19 plete systems including drivetrain con- and emission regulations as well as more trols, braking, steering and suspension, safety regulations are expected. along with hybrid electric vehicle systems. Hitachi Automotive Systems plans to 2000 2001 2002 2003 2004 Founded in 1937, Tokico made suspension raise its consolidated sales from ¥386.7 Data: Nissan and braking systems, mainly for Japanese billion ($3.775 billion) in the fiscal year carmakers, but also for Ford Motor Com- ending March 31, 2004 to ¥1 trillion Nissan, account for about 10% of Hitachi pany and DaimlerChrysler. In the fiscal ($9.8 billion) by FY 2010, a 17.2 % an- automotive sales. Hitachi is projecting year ending March 31, 2004, Tokico pro- nual growth rate, which is considerably 23.6% annual growth in vehicle informa- duced sales of ¥124 billion ($1.2 billion). faster than the overall automotive parts tion systems between fiscal 2003 and There could be more mergers or acqui- market will rise. Raising its operating 2010. sitions. In a statement for The Hansen Re- profit margin to 7% is another strategic On April 18, 2002 Hitachi Ltd. ac- port, a Hitachi spokesman wrote: “We goal for 2010. Fiscal year 2003 operating quired 83.3% of Unisia JECS, through an explore any possibilities to strengthen our profit margin was just 3%. exchange of shares, bringing its total own- business in the three automotive areas Hitachi serves roughly half of the ¥75 ership to 100%. Hitachi had previously where we are focused, the environment, trillion ($732 billion) market for automo- held 16.7% of the company; other share- safety and information.” tive parts. The market’s largest product holders were Nissan Motor with 25.3%, segments—drivetrains, transmissions and and Robert Bosch GmbH with 10.1%. In Product Strategies for 2010 steering gears—account for about 18% of September 2002, Unisia JECS shares were Hitachi Automotive’s stature within the market. Engine-related components delisted and the company became a the corporation improved in 2003 when make up about 16% of the market, and wholly-owned Hitachi subsidiary named the business was targeted for investment electrical equipment and electronics, not Hitachi Unisia Automotive. Unisia’s along with three other global businesses including car audio systems, instrumenta- products, based on the company’s exper- that make use of high technology. Also tion and wiring harnesses, account for tise in advanced hydraulics and electronic targeted were hard-disc drives, semicon- about 8%. Within Hitachi’s served mar- controls, include variable valve control ductor production equipment and kets, Hitachi expects particularly strong systems and other engine management, lithium-ion batteries for autos, fuel cells sales growth in electric powered vehicles steering and braking control systems. In and mobile electronics devices. According and vehicle control systems. (See the the fiscal year ending March 2002, the to the company, the auto industry is wor- graph, above.) last time its sales were reported separately, thy of focus because tighter fuel economy continued on following page

The Hansen Report on Automotive Electronics, Portsmouth, NH USA www.hansenreport.com February 2005, Page 5 Hitachi Automotive Systems

Leveraging its corporate technology nator that requires no additional batteries. strengths in motor and inverter controls, Distinctions Claimed by The system helps to maintain a flat floor, semiconductors (through Renesas), infor- Hitachi Automotive Systems is 15% to 30% lighter than mechanical mation technology, hard-disc drives and ◆ Number-two domestic Japanese supplier 4WD, is more fuel efficient than me- new materials, Hitachi Automotive Sys- of electronic fuel injection systems, chanical systems in the 2WD mode and tems is targeting these four businesses for variable valve timing units, pistons, costs less than mechanical 4WD systems. strategic investment: engine management collision warning systems The Hitachi system is installed on systems, electric powertrain systems, drive ◆ Number-three domestic Japanese supplier Nissan’s March, Cube, Note and Tiida control systems and vehicle information of starters, alternators, hydraulic power models and on the Demio and Verisa systems. steering systems and OEM navigation models from Mazda. Hitachi Automotive ◆ Electric Powertrain Systems systems Systems also manufactures a belted Perhaps its most important strategic ◆ Part of Carwings, Hitachi’s Drive Route starter-alternator with integrated power objective is Hitachi Automotive’s plan to Assist service is the world’s first naviga- inverter. globally expand its business making tion product that maintains map data and ◆ Drive Control Systems powertrain parts and systems for hybrid creates directions from a central location. Hitachi sees the global market for drive electric vehicles. By 2010, the company ◆ Produced world’s first alternator with built control systems, including the control of expects the global market for hybrid elec- in IC regulator in 1970 braking, suspension, steering and fail-safe tric vehicles will reach 5 million units, ◆ Produced Japan’s first electronically systems, growing at the rate of 12.3% per accounting for nearly 8% of the total mar- controlled carburetor in 1978 year from ¥710 billion ($6.9 billion) in ket for passenger vehicles. Hitachi’s big- ◆ Produced world’s first centralized engine 2002 to ¥1.79 trillion ($17.5 billion) in gest automotive customer, Nissan, has not control unit in 1979 2010. As a result, Hitachi Automotive joined Toyota and Honda in adopting hy- ◆ Produced world’s first semiconductor Systems has been and will continue to brid vehicle technology in a big way. pressure sensor in 1980 invest in the development of technology Nissan has said it will bring a hybrid ◆ Produced world’s first hot-wire airflow to support X-by-wire and other vehicle Altima to the U.S. in late 2006, but li- sensor in 1980 control systems. Such developments in- censed hybrid technology from Toyota for ◆ Commercialized the world’s first map and clude the fusion of millimeter-wave radar that model. Nissan CEO Carlos Ghosn route delivery service for embedded sensor data with video camera pattern rec- recently expressed his doubts about the information terminals using mobile ognition data, millimeter-wave integrated business case for hybrids in a speech to the phones circuits, communications software for X- National Automobile Dealers Associa- ◆ Began mass production of the world’s first by-wire, and drive control and actuation tion. J.D. Power and Associates in Febru- electric powered 4-wheel drive system in technology to realize brake- and steer-by- ary 2005 forecast that the market share for 2001 wire systems. Hitachi Automotive Sys- hybrid vehicles in the U.S. will reach just tems is developing a 76 GHz short-range 3% by 2010. Market research firm The well qualified to combine engine and mo- radar sensor for pre-crash warning. And Freedonia Group predicts the global mar- tor control to hybrid electric vehicle ap- together with Hitachi Cable, Hitachi Au- ket for hybrids won’t reach 4.5 million plications. The company can provide the tomotive is developing electromechanical units until 2013. Even then, the market complete system including motor, inverter brakes. for fuel-cell powered vehicles will still be and lithium-ion battery. The company has Hitachi Automotive is presently ship- years away from mainstream. been mass-producing lithium-ion batteries ping an image processing camera, adaptive Hitachi has developed a drive system since 2002 for the Yamaha Motor Passol cruise control unit and electronic brake for a next-generation hybrid vehicle. The motorized scooter. booster, all of which are used on the system includes a small and compact mo- Hitachi motors, inverters and batteries Nissan Cima. It is also producing 76 GHz tor using high-density windings, a small are installed on the Tino hybrid electric radar sensors for the Subaru Legacy and and compact inverter and a lithium-ion vehicle, Hypermini HEV and the Altra for a truck made by Isuzu. Other major battery. The inverter makes use of electric vehicle, all of which are made by drive control system products in produc- Renesas-developed IGBTs (insulated gate Nissan for the Japanese market. tion include ABS, semi-active suspension bipolar transistors) and other semiconduc- A major electrical system powertrain systems and electric power steering sys- tor power devices. The battery was devel- product already in production by Hitachi tems. oped in a collaboration between Hitachi Automotive Systems is a battery-less elec- ◆ Engine Management Systems Research Laboratory and Shin-Kobe Elec- tric drive system that can be added to a The engine management systems prod- tric Machinery, which is part of Hitachi front-wheel drive platform to make it a 4- uct line is strategically important to Automotive Systems. wheel drive system. Less expensive than Hitachi, given the fact that it is by far the The company believes that Hitachi all-mechanical 4WD systems, the electric largest of the segment’s four product lines, Ltd.’s experience developing power sys- traction motor is powered by a high-out- accounting for 60% of FY 2003 sales. De- tems for bullet trains makes the company put, variable voltage, water-cooled alter- spite its importance, that product line will

Page 6, February 2005 The Hansen Report on Automotive Electronics, Portsmouth, NH USA www.hansenreport.com The Company Profile Continued

Products Suspension Systems High-pressure fuel pumps Hall-effect revolution Fan coupling VICS traffic information Electric pinion assist Shock absorbers High voltage Di-G sensors receivers power steering gear Suspension struts injectors Magnetic revolution Electric Powertrain Xanavi HDD navigation Electric power steering Suspension units Atomization MPI injectors sensors Systems systems control units Mono tube shock Fuel pumps Throttle sensors Electrical system Video disc recorders**

absorbers Evaporative purge control O2 sensors equipment: Automotive HDDs** Drive Control Systems Adjustable shock valves Ignition system equipment: Alternators Outside recognition driving Brake components: absorbers Pressure regulators Ignition coils Planetary gear reduction systems: Disc brake calipers Hydraulic height Intake and exhaust system Chip injectors starters Millimeter-wave radar Master cylinders adjustment systems equipment: Motor actuators for 2/4WD Starter generator for golf Wide-angle short-range Vacuum boosters Air suspension shock Throttle bodies transfer shift carts MMW radar Brake control systems: absorbers Electronics throttle bodies Engine equipment: Blowers Image processing ABS Semi-active systems Integrated ETBs with Pistons HEV/EV equipment: cameras Acceleration sensor for Self leveler control module Variable valve lift Hybrid control units Adaptive cruise control 4WD Air compressor for height Idle speed control valves mechanisms Driving and regenerating units Vehicle dynamics adjustment Stepper motor actuators Roller finger follower motors Steering systems: controls for SCVs Rocker arms Starting and generating Power steering pumps Yaw rate & acceleration Engine Management EGR valves Valve lifters motors Reservoir tanks sensors Systems DeNOx catalysts Valve timing control Inverters Rack & pinion speed Electric 4WD control Engine control units: Turbochargers systems Lithium ion batteries sensitive power steering units Compact, Di-G and MPI Sensors: VTC solenoids Integrated motor inverters gear Transmission control Airflow sensors Balancers Telematics: Integral power steering *Developed with Nissan units Pressure sensors Oil pumps CARWINGS telematics gear **Hitachi Global Storage Fuel systems equipment: Vehicle speed sensors Water pumps platform* Technologies see the slowest growth between now and telematics services and onboard equip- 2005 to ¥3,103 billion ($30.3billion) in 2010. By 2010 engine management sys- ment businesses. The company expects 2010, a 21.1% annual increase. Hitachi tems will account for just 25% of sales. the global market for telematics services subsidiary Xanavi manufactures naviga- Between FY 2003 and FY 2010, sales for and related onboard equipment to grow tion equipment in high volume. ◆ the product line will increase at the an- from ¥1,190 billion ($11.6 billion) in nual rate of just 1.1%, which keeps pace with the slowly growing market, according Production Facilities Involved with E/E Parts to Hitachi. Between 2002 and 2010, Japan Hitachi expects the market for gasoline Facility Main Products engine systems to grow at the annual rate Sawa works Engine control systems, HEV systems, outside recognition of just 0.4%, from about ¥1.6 trillion drive systems ($15.6 billion) to ¥1.65 trillion ($16.1 Atsugi Works No. 2 ABS billion). Within that market, Hitachi is Gunma Works No. 1 Engine control systems especially focusing on the demand for di- Gunma Works No. 2 Fuel injectors, printed circuit boards rect injection systems, which is growing at the rate of 24.6% per year at the expense Europe of multi-port fuel injection systems, a de- In Europe as environmental regulations are promulgated, Hitachi Automotive is expecting clining market. The company will propose growth in its engine-control and electric drive train products, for example high-pressure fuel optimized combustion systems, an exper- pumps for direct gasoline injection systems. tise that derives from Hitachi Ltd. core Company Locations Products strengths in simulation and combustion Hitachi Automotive Bolton, U.K. ECUs, etc. analysis of nuclear power generation and Products Europe gas turbines. HAS Europe GmbH Bayern, Germany Mechatronics Hitachi Automotive’s principal engine Sachen, Germany management products include engine HR Automotive-Poland Swidnica, Poland control units, fuel injectors, high-pressure fuel pumps, electronic throttle bodies, air- North America flow sensors, valve timing control compo- Company Location Products nents, pistons and NOx exhaust catalysts. Unisia Steering Systems Oakwood, Georgia Power steering systems ◆ Vehicle information Systems Unisia of Georgia Monroe, Georgia Revolution sensors, evaporative The company sees strategic advantage purge valves in being able to apply its experience in Hitachi Automotive Products Harrodsburg, Kentucky Engine control systems high-speed data communications and stor- Unisia Mexicana Mexico Oil and water pumps age technology (including HDDs) to

The Hansen Report on Automotive Electronics, Portsmouth, NH USA www.hansenreport.com February 2005, Page 7 Roundup... Continued from page 2

2005 Outlook: $17.6 to $18.0 billion, Visteon tal sales. Revenue from Ford declined based on new business globally, and pro- Results are preliminary and unaudited. $460 million. According to the company, duction volumes in line with Lear’s expec- Pending an internal review of accounting “2004 results highlight the need to imple- tations. Lear currently reports a three-year errors, Visteon may restate its financial ment strategic and structural changes to sales backlog of $3.8 billion. statements for 2002, 2003 and the first our U.S. business,” and discussions with Lear’s top three customers are GM, three quarters of 2004. Ford to that end are ongoing. Visteon Ford and DaimlerChrysler. Electrical and 2004 Consolidated Sales: $18.7 billion continues to struggle with high labor and electronics sales account for about 14% of Change from 2003: up 5.8% pension expenses associated with its spin- total sales and come primarily from wiring 2004 Net Loss: $1.489 billion, compared off from Ford, and high material costs harnesses. In July 2004, Lear acquired the with a loss of $1.190 billion in 2003 (re- contributed to the poor year-end results. German company Grote & Hartman, stated). Visteon’s losses have increased in Visteon targeted interiors, climate con- maker of junction boxes, terminals and each of the last four years. trols and electronics as key product areas connectors, for $160 million. Non-Ford sales grew 36% in 2004, to and noted that 90% of its 2004 non-Ford $5.7 billion, which represents 30% of to- new business wins were in those areas. ◆

2005 Frankfurt Motor Show and Baden-Baden Conference on Auto Electronics Every other year Germany hosts two of movers and shakers and to learn about the planned with plenty of international sup- the most important events on the auto- latest developments. The German auto port, Baden-Baden is controlled entirely motive electronics calendar: the Frankfurt industry is known for pioneering automo- by German companies. International Motor Show (IAA), which tive electronics technologies that eventu- For updated information on the will run from September 15–30, 2005, and ally are adopted globally, for example LIN Baden-Baden conference please visit the Electronics Systems for Vehicles Con- and CAN networking and vehicle stabil- www.vdi.de/autoelectronics2005. ference and Exhibition in Baden-Baden ity control systems. All the technical ses- IAA, however, has great international scheduled for October 6–7, 2005. sions are either presented in English or participation, not only by most of the What’s especially appealing about the simultaneously translated to English. world’s carmakers, who exhibit new mod- Baden-Baden event is the active partici- Baden-Baden used to be held the same els and concept cars, but by as many as pation by top electrical engineers from the year as the Convergence Conference on 500 parts and accessory suppliers. Cover- German carmakers as well as top execu- Transportation Electronics in Detroit, but ing 215,000 square meters, IAA claims to tives from major German automotive conference planners are now scheduling be the world’s largest motor show. For electronics suppliers. The conference is an Baden-Baden on the odd years so it more on IAA please visit www.iaa.de. ◆ excellent opportunity to get to know the doesn’t conflict. While Convergence is Pew Center Studies Fuel Economy and Greenhouse Gas Emissions In December 2004 the Pew Center on Comparison of Fuel Economy and Greenhouse Gas Emission Standards Global Climate Change released a new Normalized by CAFE-Converted MPG (miles per gallon) report, Comparison of Passenger Vehicle 55 Fuel Economy and Greenhouse Gas Emis- EU: 51.5 by 2012 (proposed) sion Standards Around the World. The pa- 50 per describes a new methodology Japan: 48.0 by 2010 developed to compare standards in nine 45 major regions of the world (South Korea and Taiwan are not included in the re- 40 sults, right) and their relative stringency. China: 36.7 by 2008 California: 35.6 by Australia: 34.4 by 2010 The study found that in fuel economy 35 2016 (proposed) and greenhouse gas (GHG) emissions MPG - Converted to CAFE Test Cycle Canada: 32.0 by 2010 (proposed) standards for cars and light trucks—both 30 historically and projected, based on cur- rent government policies—the U.S. lags 25 far behind all other nations. Adoption of United States: 24.9 by 2007 the proposed California GHG standards 20 2002 2004 2006 2008 2010 2012 2014 2016 would help close the gap, but Japan and Dotted lines denote proposed standards. Source: Pew Center on Global Climate Change the European Union would still lead the ◆ world in reducing CO2 emissions. For more information or to download the report, visit www.pewclimate.org. Page 8, February 2005 The Hansen Report on Automotive Electronics, Portsmouth, NH USA www.hansenreport.com