2005 4, Q

RICARDO QUARTERLYREVIEW

Ricardo changes gear John GrififthsGriffiths of the FT interviews outgoing CEO Rodney Westhead and new CEO Dave Shemmans The ¤5000 car Ricardo route-map for low-cost car development and manufacture Interview Koichi ‘George’ Fukaya, CEO of Denso Corporation

GM’sGM’s Global Global EngineEngine General Motors, Ricardo and the world-class V6 for Cadillac, Buick, Holden, Saab and more

Contents RICARDO QUARTERLYREVIEW Q4, 2005

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news features 04 Industry news 10 General Motors’ Global V6 Germany embraces hybrids at the Frankfurt show; hybrid To power its huge variety of nameplates into the next alliances form; Tokyo highlights hydrogen; Mack’s hybrid decade, GM needed an advanced but versatile base V6 heavy; VW downsizes engines; PSA-Ford’s new diesels engine that could be developed to suit each brand’s individual characteristics. Working with Ricardo 24 Ricardo news engineers, GM developed the Global V6 in record time. Finite element software package launched; software Anthony Smith reports on a state-of-the-art design that is conference scheduled; Ricardo opens new offices in comfortable in a Cadillac, sporty in a Saab – and just as China and Japan; Ricardo supports new Renault NVH happy in a Holden or a Buick facility 20 A car for €5000 questions and answers The success of the Renault-Dacia Logan has reawakened automakers’ interest in low-cost cars for emerging 06 Handing over the controls markets. Ricardo Strategic Consulting has taken an in- As Dave Shemmans takes over the Ricardo CEO’s mantle depth look at every step of the design and assembly from Rodney Westhead, John Griffiths of the Financial process and, as Tony Lewin reports, has come up with Times speaks to both men about the company’s past, key strategic recommendations for companies present and future considering entering the €5000 market 18 Koichi Fukaya The president of Denso, the world’s fourth-largest automotive supplier, tells Tony Lewin about his ambitious plans for Europe – and his ideas on safety systems

Head office: Conceived and produced for Ricardo by: Ricardo plc, Shoreham-by-Sea, TwoTone Media Ltd West Sussex, BN43 5FG, Editor:Tony Lewin United Kingdom Contributors: Mark Roberts, Anthony Smith, Tel: +44 (0)1273 455611 John Griffiths TwoTone Media Ltd contacts: Ricardo contacts and locations: Anthony Smith: [email protected] www.ricardo.com/contacts Tony Lewin: [email protected] RQ subscriptions: www.ricardo.com/rq RICARDO QUARTERLYREVIEW Sales enquiries: [email protected] Industry News

Hybrid fever grips Frankfurt he German auto industry has at Tlast embraced hybrid technology as leading automakers and suppliers revealed concepts and prototype systems at September’s auto show in Frankfurt. German companies have long insisted that advanced diesels are a more effective fuel-saving solution, but have bowed to market pressure from the US where hybrids have gained a high profile thanks to the BMW’s active success of Toyota’s Prius. Public hybrid combines new concern has also been raised in the High Precision Injection engine wake of air-quality alerts in several with Super Cap hybrid system German cities earlier in 2005. supplier says BMW, leading to rapid Mercedes-Benz showed two ZF on hybrids acceleration and a 20 per cent alternative hybrid versions of its new S- for rear-drive luxury improvement in European drive cycle Class sedan, the Direct Hybrid combined cars. Some of that technology was fuel economy. The e-motor and power with a 3.5 litre V6 gasoline engine and shown in the BMW Active Hybrid, a electronics are packaged within the the Bluetec Hybrid using a 3.0 litre V6 concept vehicle based on the X3 SUV envelope of a standard automatic diesel. The diesel is notable for its use of and designed to show the transmission, simplifying packaging selective catalytic NOx reduction, performance-enhancing potential of within the vehicle. DaimlerChrysler claiming it to be the hybrid powertrains. The concept’s Separately, ZF and Siemens VDO cleanest diesel car in the world. major innovation is the choice of ultra announced they were to form a BMW surprised many by capacitors – ‘Super Caps’ in BMW’s partnership aimed at offering hybrid announcing that it was to join the GM- promotional material – to store solutions at all levels to the world’s DaimlerChrysler alliance to build a captured braking energy. automakers, while Getrag showed a two-mode hybrid; it had already been Super Caps allow much faster broad range of transmissions with co-operating with transmission absorption and discharge of energy, integrated electric drive motors.

US Air Force tests diesel hybrid tanker Mack Trucks has developed a prototype hybrid electric powertrain for Class 8 heavy duty trucks. Built in conjunction with the US Air Force Advanced Power Technology Office, the powertrain is Text installed in a 6x4 Mack chassis hauling a 6000 gallon Air Force refuelling tanker. The 107 hp electric motor, control and battery systems were supplied by Enova Systems and help improve the economy of the 12 litre diesel engine powering the 11 metre, 33 tonne vehicle. Mack is part of the Volvo trucks group, which also revealed its new range of FH and FM trucks. Powered by all-new engines of 13 and 9 litres, they meet upcoming EU4 and EU5 heavy duty regulations and, equipped with SCR catalytic NOx-reduction technology, are claimed to be the cleanest trucks ever produced by Volvo.

Lexus launches 2nd hybrid HCCI collaboration Green number plates Return of the two-stroke? Amid all the excitement GM, Bosch and Stanford Germany is considering Daihatsu’s twin-cylinder about hybrids at the university are launching a introducing three different 2CDDI-II two stroke diesel Frankfurt show, just one new three-year research programme vehicle number plate types concept uses turbo and production hybrid was into Homogeneous Charge to indicate the level of supercharging to extract 65 kW launched: the rear-drive Compression Ignition, tipped as particulate emissions of from 1.2 litres. NOx emissions

News in brief News Lexus GS 450h a highly promising technology individual vehicles are low, says Daihatsu

04 RICARDO QUARTERLYREVIEW • Q4, 2005 Tokyo on a hydrogen high RICARDO QUARTERLY ydrogen, in a variety of different Presenting the F600 Hygenius REVIEW Hpropulsion systems, was the concept, Mercedes-Benz R&D director flavour of the Tokyo show in October. Thomas Weber said that its fuel cell The task of RQ is to highlight the latest Honda, Toyota and Suzuki all system was 40 per cent more compact thinking in automotive engineering and showed next-generation fuel cell than previous versions, yet more technology worldwide – both within concept vehicles, the latter efficient and powerful. Energy Ricardo and among other leading incorporating General Motors by-wire consumption was down by 16 per companies. By presenting an up-to-date mix of news, profiles and interviews with know-how. Mercedes-Benz presented cent, he said, thanks to regenerative top business leaders we paint an perhaps the most realistic proposal in braking, while power had risen to 115 interesting and exciting picture of R&D the shape of its B-Class-sized F600 hp. Consumption is the equivalent of activity at a world-class automotive Hygenius, while Mazda unveiled yet 2.9 litres of diesel per 100 km. engineering services provider. It is a formula that has certainly been a hit with the worldwide automotive community: in the four years since RQ was launched we have had to increase our print run to 14,000 copies to keep pace with the demand to read about Ricardo and its activities. Client confidentiality is of the utmost importance to Ricardo, which means that we can only report on a small fraction of the work carried out by the company. So we are especially grateful to those Ricardo customers who have kindly agreed to co-operate with RQ and allow their programmes to be highlighted in print: without such help from customers it Mercedes R&D would not be possible to present such a chief Thomas Weber: fascinating insight into the way vehicles fuel cells now 40 per are conceived and developed. cent more compact

another twist on its rotary theme – a hydrogen-fuelled rotary linked to a Downsizing becomes real hybrid drivetrain in the Premacy Smaller, but higher-powered engines are compact SUV body. fast becoming a production reality. Toyota showcased the latest in its Volkswagen has launched its novel 1.4 in-house fuel cell technology with the litre Twincharger (right), a direct-injection Fine-X concept, a Camry-sized sedan gasoline four cylinder with both turbo- with wheel motors and independent and superchargers. Installed in the steering at all four corners allowing it Golf GT, it gives 170 hp yet returns to turn 360 degrees on the spot. A consumption of 7.2 litres per 100 km. new 70 Mpa high-pressure hydrogen At Tokyo VW showed a lightweight tank, also developed in-house, further Eco Racer sports car achieving 230 improves the vehicle’s range. km/h and 3.4 litres per 100 km from a next-generation turbo diesel of 1.5 litres Honda, for its part, displayed the FC- and 136 hp. X, a sleek four-seater with its fuel cell PSA and Ford also claimed to be in the stack mounted centrally under the forefront of the downsizing trend with its floor. Honda says it has halved the latest generation collaborative diesels. size of the stack and doubled The 170 hp dual sequential turbocharged hydrogen storage capacity to provide 2.2 litre unit for passenger cars has the a range of over 500 km. It is capable of performance normally associated with a starting at ambient temperatures as 2.5 litre, says PSA. low as –20°C, says Honda.

Ford promises more hybrids Nissan measures gas Prius wins green survey Bush incentivises cleaner cars Ford chief executive Bill Ford In collaboration with Stanford German car organisation VCD has Tax credits between $1700 wants to boost hybrid sales university and Physical Science awarded gasoline cars the top ten and $3000 will be available for tenfold by 2010, installing 250,000 Inc., Nissan engineers have places in its annual hybrid and lean-burn vehicle units of hybrid capacity in a bid to developed the world’s first environmental impact listing, owners from next year under counter the domination of Toyota technology to measure in- criticising the diesel Golf for not new laws passed by the United and Honda cylinder gas temperatures offering a particle filter States Congress

Q4, 2005 • RICARDO QUARTERLYREVIEW 05 RQ Interview – Rodney Westhead and Dave Shemmans

GENERATION CHANGE After almost a decade in the CEO’s chair, during Results were at a low point but we now have a recovery which is which he gave Ricardo’s automotive consultancy its continuing in line with expectations.” He does not exaggerate about the global footprint, Rodney Westhead is handing over grimness of 2003-2004; the worst year for a decade, in which Ricardo the controls to Dave Shemmans. To mark the recorded a loss of £2.8m and, as part occasion, we invited John Griffiths of the of cutting costs and getting back on track, found itself making a quarter of Financial Times to talk to both men about the its 1,000-strong UK work force redundant. In mid-September of this lessons of the past and the challenges that lie ahead year, Westhead was able to announce a return to profit – of £7.9m, on a n early November Rodney Westhead’s retirement, after a career turnover 9 per cent higher at £159.9m. Westhead, chief executive of Ricardo with Ricardo lasting 13 years – he The recovery, driven mainly by fast- Ifor the past nine years, is arrived as finance director – comes at expanding business in Asia and the implementing a strategy shift – for what he describes as “a point of development of a new strategic himself. “What do I do now? Rest a bit, transformation” for the consultancy consulting arm, is taking Ricardo take time to travel, a lot more sailing group. “In the short term we are rapidly away from its nightmare of and I’m into old cars.” coming out of a grim 2003-2004. order cancellations by a faltering

06 RICARDO QUARTERLYREVIEW • Q4, 2005 “We’re now truly global: thirty per cent of the customer base is now in the Far East. We have offices in Tokyo, Shanghai, Stuttgart and Detroit as well as the UK headquarters”

Western auto industry two years ago, has been cut sharply and both the and towards what is intended to be a geographical footprint of the business renewed phase of growth aimed at and the areas of consultancy activity achieving profits of around £20m greatly extended. before the end of the decade. “Order “We’re now truly global,” says cancelling is one of the realities of life Westhead. “There are few customers all around the world. But I have never left in the UK. Thirty per cent of the seen cancellations on that scale: four customer base is now in the Far East. in four months,....” Westhead recalls. We have offices in Tokyo, Shanghai, “Spread over time you can handle it; Stuttgart and Detroit as well as the UK but that time was simply taken away.” headquarters. And we now cover all The speaker this time is not Westhead aspects of vehicles, not just engines, but Dave Shemmans. It was to and virtually all manufacturers. It’s fair Shemmans that the task fell of to say that we’ve already become the implementing the redundancies. And it is industry’s largest independent to him that the task will fall of managing automotive industry consultancy.” transformation and setting the strategies Neither Westhead nor Shemmans for taking Ricardo towards its earnings can talk about the business for more goals. The 39-year-old electronics than a minute or two without engineer is stepping into Westhead’s reference to Ricardo’s strategic shoes as CEO. He joined in 1999 as consultancy work, potentially the business development manager for single most valuable legacy of Ricardo Consulting Engineers, becoming Westhead’s tenure as CEO. “Strategic business development director for the consulting gives you huge added group as a whole and managing director value and is sold straight to the of Ricardo Consulting Engineers by boardroom. It is very high margin December 2003. In February of this year business and means that we’re no chairman Marcus Beresford handed him longer beholden just to services and specific responsibility for handling the can advise companies at the most immediate future’s operating plans, in senior level,” says Westhead. preparation for Westhead giving up It is already accounting for 15 per control. cent of the business and Shemmans Shemmans is taking the helm of a makes clear that its further expansion business which Westhead has already will be right at the top of his own moved a long way from its roots as an priorities list. Creating the business was almost entirely UK-based engine not easy. It took Westhead six of his engineering consultancy dependent for nine years as CEO to bring strategic 80 per cent of its business on the two consulting – “always a gleam in my big US auto makers. This dependency eye” – fully into being. “But I always

Q4, 2005 • RICARDO QUARTERLYREVIEW 07 RQ Interview – Rodney Westhead and Dave Shemmans

time on the drawing board. But in year to facilitating the development of new three of its existence it’s payback time.” technologies. Shemmans sees it as a business “Toyota, for example, has got a lying at the heart of Ricardo’s future. technology strategy board which works “The strategic consulting arm will incrementally. They work long-term, advise companies on strategy, while pretty well everyone else does purchasing, production costs, catch-up,” says Westhead. “And it works warranty reduction and business in a constructive environment. There are restructuring as part of a group nine hydrogen refuelling stations in providing a full spread of professional Tokyo already, so that the Japanese engineering services. There’s no-one industry and government can get to In some respects, the else out there doing all that.” understand fuel cells and the necessary Adds Westhead: “We’ve got the infrastructure. Then you get UK local strategic consulting ability, for example, to compare best authorities turning down a planning business has been set practice with worst on warranties or application for just one in their area.” up the hard way, by investigate specific product failures. That explains partly why both Take electronics. In lots of cases Westhead and Shemmans have been building it from electronics has got ahead of many putting so much focus on developing scratch with a companies’ abilities to understand their Asia as a big contributor to its turnover. specially-recruited problems and opportunities. When “There are great opportunities there; everything was all mechanical it was huge markets for car manufacturers and staff of people easy to verify everything. Now it’s a line product supply chains leading to a “excited by the of computer code embedded in a chip. perfect opportunity for strategic opportunity of a blank In a wider sense, it’s our ability to consulting,” says Shemmans. understand markets and predict where Close on a third of all Ricardo’s sheet of white paper” they’re going that’s important. Sure, we business is now in Asia. North very occasionally go up some blind America accounts for 25-33 per cent felt it would be good for Ricardo.” alleys, but mostly we get it right.” That, and Europe the rest. It used to be 40 Shemmans is in full agreement. “If says Shemmans, should not be too per cent each with Ford and GM. you can create an opportunity by going surprising – “We have sophisticated “Getting out of that was hard work,” in and solving a problem for a processes for technology road – says Westhead – but the incentive to customer you can provide better value mapping and forecasting based on a do so was obvious. Big Asian players than the competition. Strategic time horizon in excess of 20 years. And like South Korea’s Hyundai and consulting helps us do this and takes the results of this work are China’s Shanghai Automotive Industry us upstream. It also enables us to bring benchmarked and validated through Corporation had already made clear in engineers and do higher value discussion with key auto industry their intention to join the world’s top added work which is frequently beyond partners and opinion formers.” five car manufacturers. the skills envelope of main-stream But why cannot the OEMs, for Westhead remains optimistic about management consultancies. Also, if example, do this type of analysis for the US and Germany, however. “Their you’re just talking to technologists you themselves, given their size and auto economies are suffering badly. can run into the not-invented-here resources? But they will get better and their syndrome which means that the Simple, Shemmans and Westhead companies will come back to Ricardo customer may miss an opportunity to chime in together: “we’re fleet of foot for help – even though it’s possible get the very best solution. At CEO level and can undertake something in a that we’ll lose one big player along the you have a huge opportunity to take fraction of the time and at a fraction of way. If we’ve been able to grow early everyone with you.” the cost. We can focus on the in Asia it means we will be firing on all technology needs of the future without cylinders when the rest of the world Payback time the pressure to focus on the issues of picks up. Despite GM’s and Ford’s In some respects, the strategic today such as plant utilisation. We also problems, someone in North consulting business has been set up benefit from being able to talk to the America’s got to be a winner.” the hard way, by building it from whole industry. And while 2003 was scratch with a specially-recruited staff very tough we never stopped The Chinese game plan of people “excited by the opportunity investing in technology or company Some 13-14 per cent of Ricardo’s order of a blank sheet of white paper,” as development.” book is now China-related– “and it’s Westhead puts it. “We could have The years have taught both going to increase,” says Shemmans. gone three ways: as a joint venture executives a lot of respect for some “They want good technology and will with another consultancy – but I players, such as Toyota and BMW, pay a sensible price. China’s also thought there could then be a risk of however – as well as inspiring centrally controlled, so that’s good for winding up playing second fiddle. Or frustration at the radically different stability. we could buy a second rank company. attitudes between some Western and “When we first went there we Or we could recruit. It’s been a long Far Eastern legislators when it comes expected that Chinese customers

08 RICARDO QUARTERLYREVIEW • Q4, 2005 00 00

“There will always be things left undone. Shemmans acknowledges that there But it’s time to move on and give the are a very great many further activities to be developed – we are still only just business new direction and new impetus – scratching the surface. It will be my there should be no ‘if onlys’” responsibility to complete the cultural shift into a full professional services would want incremental solutions hands over the reins. Westhead, company. There must be continuous using today’s technology. In retrospect looking back on his time as CEO, is change to improve us in all we do. I think that this was a common pleased with the global footprint he “I have also got to pay attention to misconception. established for Ricardo as a first increasing our technical capability in What they really seek is ‘leapfrog’ priority. “We would have sunk into the Germany, where we are recruiting and technologies which will enable them sea if we had stayed in the UK. upgrading after acquiring a subsidiary to compete with the best products on “My second priority was to bring two years ago, and I plan to spend a an international basis.” Both men cultural change; to become more lot of time looking at what’s coming predict that the Chinese auto industry commercial. So I invited down next in Asia. In Korea we’re looking is going to compete directly with customers and asked them what were particularly closely at Hyundai. Western car makers in an industry their own priorities. It turned out that However China has always been a where over-capacity is rife – “and their biggest issue was on-time focus for me and will remain so.” some may not fully appreciate the deliveries. It was clear we had Shemmans acknowledges, like threat,” says Shemmans. delivered too many programmes late – Westhead, that he is stepping into a Ricardo is already well under way that was terrible for us but it did bring role in which non-professional with SAIC following the Chinese forward the needed cultural shift.” activities, of whatever hue, will have group’s acquisition of the intellectual to take a back seat, especially as the property rights to the collapsed MG A people business complex and frequently exasperating Rover group’s Rover 75 and 25 models. Westhead describes his career with task of developing Chinese business Both also concede, however, that Ricardo now drawing to a close as progresses. The upside, he says, is that the China boom for Ricardo and other “immensely satisfying.” But are there “this is the type of challenge that I technology suppliers may be relatively many things personally left undone? relish – and it holds the potential to short lived. “My personal view is that “There will always be things left deliver great things both for our the prospects for Chinese business in undone. But it’s time to move on and customers and for Ricardo.” terms of technology supply is short give the business new direction and new The faces and structure of Ricardo’s term and that when the time comes impetus – there should be no ‘if onlys’.” management is also poised for

China will turn it off and go Already he has accumulated three substantial change. independent,” says Westhead. non-executive directorships and is “I’m putting in place my own The Chinese game plan stretches becoming more deeply involved in management team; bringing on some further back into the past than many training programmes for the auto and of the very best people from within realise, says Westhead. “Twenty years other industries. “And one of the the organisation as well as recruiting ago they were identifying their targets. biggest plusses – having control of my externally where complementary skills And look closely and you’ll find that own diary.” are required. We can grow there is currently an exodus of Chinese “Ricardo’s is a people business. To do significantly more, given the right guys from Western car plants who it you have to put yourself at people’s culture and the correct spread of areas came here 10 years ago. Now they’re beck and call. When the Chinese phone and technologies. returning home to set up greenfield car at 4.30am UK time, they are calling for “In terms of management style my plants. We’ve probably got five years a reason. As CEO you never actively go philosophy is to give people scary where they’ll be buying everything we on holiday – you never stop being jobs and space to do them – in my can sell them – but ten years from now responsible. Yours is the ultimate and experience good people with they’ll be fully self-sufficient.” personal responsibility. So there’ll be a common, challenging objectives and a They are challenges soon to be faced sense of relief. But, that said, I’ll miss it shared sense of mission rarely let you alone by Shemmans as Westhead immensely.” down.”

Q4, 2005 • RICARDO QUARTERLYREVIEW 09 GM Global V6 Engine

10 RICARDO QUARTERLYREVIEW • Q4, 2005 “it’s all about the engine” At the turn of the last decade GM embarked on an ambitious programme to create a truly class-leading V6 engine capable of global implementation – and at the same time create an innovative new template for powertrain product development. Anthony Smith reports on the Global V6 engine team which swept away the old rules, delivered a truly world-class product and set new standards in performance, quality and time to market

ith the launch of the Cadillac single new engine, but this was no CTS, GM unveiled a radical one-off. Instead it was just the first W new departure in vehicle vehicle in the roll-out of GM’s new styling, described at the time as a Global V6 engine family, a high feature modern interpretation of the strikingly platform upon which the future beautiful cars for which the Cadillac premium V6 strategy of the company name had originally become famous. rested. In the subsequent 2005 model But beneath the skin, the powertrain year as well as this summer’s technology used for the 2004 model announcement for the 2006 line up, was no less radical an innovation. A numerous derivatives of this same completely new 3.6 litre gasoline V6 engine platform have been announced engine was announced, feature-rich in across North America, Europe and new technologies. It boasted for Australia, each quite different in example an all-aluminium meeting the precise needs of the construction, four valves per cylinder, recipient vehicle but nonetheless dual overhead camshafts for each based on the same core engine bank, a finger follower valve train with technologies. dual independent continuously But to understand how GM came to variable cam phasers, and a variable be in this dominant market position geometry intake system. for its global range of premium V6 Its performance was no less products, we need to turn the clock impressive. Compared with its back to the final year of the last similarly sized predecessor, the new decade, and to the start of a unique engine was capable of delivering 20 collaboration between GM and a per cent more peak power, 13 per cent range of partners and suppliers, more peak torque and crucially in including Ricardo. terms of customer perceptions of powertrain performance, a massive 24 per cent improvement in what GM calls torque-integral – the amount of torque available across the operating speed range. Moreover the refinement of the new engine set unparalleled new standards, both in terms of reduced sound levels and in qualitative improvements to the sound actually transmitted to the vehicle occupants, providing a rich and rewarding auditory experience. Such a range of fresh innovations would have been impressive for a As GM’s European premium brand, Saab has the first turbocharged application of the Global V6 engine.

Q4, 2005 • RICARDO QUARTERLYREVIEW 11 GM Global V6 Engine

The Global V6 concept

GM’s global V6 family is intended to Capacities: act as a common, technology-rich 2.8L, 3.2L and 3.6L already rolled out; engine platform from which a wide displacement is capable of expansion range of products can be delivered to 3.8L or as large as 4.0L in parent with performance and a feature base bore configuration reflecting individual vehicle needs. All global V6 engines will employ: Valvetrain: Most implementations feature twin • All-aluminum construction continuously variable cam phasers • Dual overhead camshafts • 4-valve-per-cylinder valvetrain Combustion systems: • Roller-finger follower valvetrain MPFI, SIDI, Turbocharged MPFI • Electronic throttle control • Durable forged-steel crankshaft Powertrain configurations: • Piston-cooling oil jets FWD, RWD and AWD • Coolant-loss protection software • GM’s Oil Life System Intake system: • 32 bit microprocessor Can be fitted with dual-stage • Coil-on-plug ignition variable intake manifold (VIM)

“We need a new engine – and we for re-engineering of the basic product development task need it quickly” structure. It also needed to be able to of this scale. A conventional out- Towards the end of 1998 GM had accommodate varying sourcing approach could have made the strategic decision that it implementations of an extremely provided sufficient resource but this needed a competitive and feature-rich technology portfolio would have been inappropriate for a contemporary gasoline V6 engine reflecting the very different needs of strategic ‘platform’ level product of architecture that it could deploy across each brand and vehicle product. this nature, which for its success its global product lines. The There was one fundamental needed to be designed to architecture would have to have a problem however: with its existing accommodate at a detailed level the considerable flexibility designed in powertrain engineering commitments requirements of the company’s global from the outset. GM lacked sufficient internal resource powertrain manufacturing facilities as It needed to be capable of delivery to deliver the programme; moreover, well as its numerous vehicle in products across an extremely wide it would need the new engine in a programmes. A new approach was range of capacities without the need shorter time than was usual for a needed – and it was needed fast.

Daring to be different GM Powertrain had a track record of working successfully with Ricardo on its gasoline programmes. In Europe it had recently completed the 4 cylinder Ecotec (L850) programme in which Ricardo engineers had worked both on and off-site in assisting in engine development for the market. GM had been impressed with Ricardo’s work on this programme but the new high feature V6 engine required a fundamentally new approach. Rather than have suppliers work with the in- house team using in-house processes, GM senior management decided that, subject to clear strategic development objectives and budgetary control, the

GM Buick Lacrosse hosts a 3.6 litre, 240hp version of the new V6 engine

12 RICARDO QUARTERLYREVIEW • Q4, 2005 executive vice president, Arv Mueller. The team knew that it needed to be better than the best of the competition, so it commenced with a detailed benchmarking study. As GM’s Bob Jacques, base engine design system engineer, explains, “we insisted on going after high performance and high refinement at the same time.” By purchasing and analysing every detail of the very best competitor engines, the team could establish some very challenging design criteria. The attitude of the team was very much one of “Go beat everyone”, he continues. “You name it – if there was a good V6 out there we found out how and why it was good.” The team established a strict priority list for the design, a list of statements representing yardsticks against which new team needed to have much ready to commence work. The team all work – absolutely everything – was greater autonomy and authority to was comprised of existing GM to be measured: ‘Reliability, Flexibility, establish its own development Powertrain staff and volunteers co- Package Size, Value, Pleasability, processes. In this way some very opted from Ricardo operations in Efficiency, Precision, Serviceability, serious and stretching challenges Europe as well as some already and Environmentally Friendly’. This list could be set which might not based at the company’s US Detroit was truly owned and internalised by otherwise be deliverable within the Technical Campus. After a few brief the team – to the extent that it even prevailing product development weeks working in temporary appeared on the stationery used for all regime of the parent organisations. accommodation (‘trailers in the car internal presentations and GM senior management made it park’, as many of the team communications. clear that it wanted both itself and recall), permanent premises Ricardo to commit the best people were located and the so- available to the project, all of whom called Plymouth would need to be co-located at a Technical Center was project centre close to GM Powertrain born. headquarters at Pontiac, in the northern suburbs of Detroit. In The ARV ‘learning’ February 1999, within two months of engine the initial approach, GM and Ricardo Despite its had assembled a team of engineers ambitious ultimate objectives, the programme initially started as a one year design study to design, develop and manufacture in prototype form a proof of concept demonstrator or ‘learning’ engine. It was codenamed ‘ARV’ in honour of the then GM Powertrain

Combined GM and Ricardo teams celebrated each iteration’s start-up (left); ARV proof-of-concept engine (right) was developed in a record 7 months.

Q4, 2005 • RICARDO QUARTERLYREVIEW 13 GM Global V6 Engine

“We effectively insulated the engineers from everything associated with the organisation and administration of the programme. They needed to concentrate on the real job of delivering the programme: they were completely focused and just kept reminding themselves: ‘it’s all about the engine’”. Tim Cyrus, GM Chief Engineer for the Global V6 engine family

By August 1999 things were rapidly established in Europe. In the about defining its own development progressing extremely well. A highly meantime the main Global V6 team set process based on first principles. The promising concept design had been about the more onerous task of starting points for this were the key produced and the team was on-track planning and delivering a highly deliverable dates for each prototype to deliver the prototype in the early audacious programme which would engine; these were in effect set in stone part of the following year. GM senior test the mettle of all those involved. and the team then worked backwards management was impressed with the from this to establish a programme of team – so much so that it upgraded “It’s all about the engine” work capable of delivering each phase the status of the design study to that Tim Cyrus, GM chief engineer for the of the programme. Intensive math- of a full scale production programme. Global V6 engine family, joined the based CAE methods were used to But it set some very challenging programme at around the time of this ensure that designs were as far as targets too. It needed to have the new change and explains how the team possible right first time. The effect of engine family, by this time christened was able to focus completely upon the this was that while the up-front the Global V6, ready for its first task of delivering the engine: engineering effort was more intensive production roll-out in 2003, allowing 14 “We effectively insulated the in the early stages than might months less than called for in the engineers from everything associated otherwise have been the case, the prevailing in-house development with the organisation and overall time scale and total resource template. It also wanted the ‘learning’ administration of the programme. needed was much less; so much so that engine delivered by the end of the year. They needed to concentrate on the the project even returned budgeted These were no small challenges but, real job of delivering the programme: funds to GM in the latter stages. of the two, production of the concept they were completely focused and just engine was perhaps the easier to deal kept reminding themselves: ‘it’s all Making an event of ‘first fire’ with. In order to buy time and resource about the engine’”. An innovation introduced by the for the main programme team at Given that at the outset the standard original Ricardo chief engineer, Alan Plymouth, detailing and prototype GM development template was 14 Warburton, was crucial to the production of the ‘learning’ engine was months longer than the time available development of the highly focused handed over to a supporting team to deliver the new engine, the team set and high-functioning team-working

The roll-out plan so far

In the 2004 and KEY: 2005 model PFI – port fuel injection years, the Global VVT – variable valve V6 engine family timing found VIM – variable inlet application in manifold both the Cadillac and Buick Brand Cadillac Cadillac Cadillac brands in North America, as well Model CTS CTS SRX as Holden in Model Year 2004 2005 2005 Australia. Capacity 3.6L PFI 2.8L PFI 3.6L PFI Announcements Peak Power 190 kW (255hp) 157 kW (210hp) 194 kW (260hp) for the 2006 @rev/min 6200 6500 6500 model year line- Peak Torque 346 Nm (255lb.ft) 263 Nm (194lb.ft) 344 Nm (254lb.ft) up include Saab @rev/min 3200 3300 2800 in Europe Content VVT, VIM VVT, VIM VVT, VIM variations

14 RICARDO QUARTERLYREVIEW • Q4, 2005 Cutaway of the GM Global V6 engine, as fitted to the Buick Lacrosse culture, reminiscent more of a Formula 1 or NASCAR race team than main-stream automotive development. Warburton instituted milestone ‘first fire’ events surrounding the delivery of each prototype level. A celebration would be arranged at which senior management organizational representatives would be invited to envelope.” attend in order to start the new The effect of this prototype for the very first time. The high level of focus, high profile given to these events ownership and appears to have been a significant accountability source of motivation for the team: an appeared to have atmosphere of intense excitement and motivated the team to go anticipation would be mixed with a to any lengths to deliver. As sense of complete and total collective Rod Beazley, Warburton’s accountability. As with a race, there successor as chief engineer for was only one chance to get it right and Ricardo, explains, “it was not the team had to pull together and rely unknown for engineers to come in delivered by the existing upon each other in order to deliver. very early in the morning to make staff. Membership of this While the team had high level more time in the day and find highly performing team was not for sponsorship and support from within colleagues still working from the night everyone, however, and it was GM, the accountability that came with before – not because anyone told important that any new recruits were it was not to be underestimated. them to; they just wanted to.” as capable and as motivated as the “When I came to this role I soon members of the team which they were realised that this was the first job I Picking the right team and about to join. could really get fired from”, says Cyrus, promoting efficiency For designers in particular it was only half joking. “We were given In the early stages of the programme important that recruits were multi- freedom to define our own processes Ricardo needed to increase the skilled and able to operate as all-round and procedures but if things went engineering resource rapidly in order engine engineers as well as CAD wrong, there would be no-one there to to meet GM’s requirements, and there operators. The solution was what Bob stop us from pushing the was clearly a limit to what could be Jacques terms the ‘entrance exam’, a

Cadillac Buick Buick Holden Saab

STS Rendevous Lacrosse Commodore 9-3 2005 2004 2005 2005 2006 3.6L PFI 3.6L PFI 3.6L PFI 3.6L PFI 2.8L PFI Turbo 189 kW (254hp) 181 kW (242hp) 179 kW (240hp) 175 kW (235hp) 186 kW (250hp) 6500 6000 6000 6000 5500 339 Nm (252lb.ft) 315 Nm (232lb.ft) 305 Nm (225lb.ft) 320 Nm (236lb.ft) 350 Nm (258lb.ft) 3200 3200 2000 3200 2000 VVT, VIM VVT VVT Alloytec' VVT, variant Turbocharged of Global V6

Q4, 2005 • RICARDO QUARTERLYREVIEW 15 GM Global V6 Engine

“I was amazed at the incredible focus that The Saab experience the team had upon the nature of their work – they questioned everything and felt that the processes they had developed were the most efficient means of achieving the goals of the programme” Dr. Polly Bashore

stand-alone design and engineering headquarters, but it enabled engineers task that each candidate would be to have much closer involvement with expected to perform in addition to the process of development testing. passing the usual job interview: “All With the co-operation of the these years on and well into the roll- powertrain test team at Pontiac led by out phase, we still use the same basic Dr Prabjot Nanua, the process of skills test as a means of filtering new development testing was carried out applicants.” in a highly efficient manner. But getting the right people was only “We developed extensions to the part of the challenge – once in the team standard testing programme to cover ust how versatile the Global V6 it was important that every second, each of the intended engine Jtemplate is has been amply minute and hour of the day was used derivatives, and we tried as far as proven by the experience of Saab, effectively. By carrying out a series of possible to offer a ‘testing on demand’ perhaps the most individualistic timed tests of CAD utilisation it was service”, explains Nanua. “In this way and most clearly-defined of GM’s soon realised that despite using the we could ensure that where failures portfolio of marques. latest workstations and software, occurred, the lessons learned could be Anders Svensson, vehicle line engineers were spending as much as reported back to the team quickly and director for the 9-3, homes right in four hours per working day simply the design updated before the next on the reason the programme has waiting for the CAD system to process test was carried out. This resulted in been such a success: information. The solution typified the considerable savings both in “The key thing with this project ‘can-do’ culture of the project: invest in was that we had the opportunity to a second workstation for each engineer participate from the very so that they could work on two beginning,” he said. “We were aspects of the design in involved right the way from the parallel. The improvement base engine development back in in efficiency was 1999, and we were able to include considerable and the requirements we had for the even today the work Saab brand.” areas of Global V6 Most of Saab’s requirements team engineers were centred around its back at GM turbocharged applications, said Powertrain Svensson. “We had to make sure headquarters are the base engine would be capable easily identified of coping with the power of the by the presence of turbo, and we also needed to a second CAD ensure that the final engine had workstation on the correct power characteristics, each desk. reflecting the feel of the turbo The process of engines we have always had at engine building, Saab.” central to the Svensson describes the engine’s planning of the programme, torque curve as ‘almost square’, was also a critical focus of the with 90 per cent of peak torque development effort. While the available from 1800 rpm. While the prototype engines needed to base engine work was carried out be tested off-site, the team in the US by Saab engineers on insisted on having its own build secondment to the Global V6 and inspection facility at Plymouth, team, the final tuning so critical to as well as its own prototype brand feel was carried out in procurement team. Sweden, said Svensson. The facility was much smaller than its equivalent at GM Powertrain

16 RICARDO QUARTERLYREVIEW • Q4, 2005 Cadillac CTS (right) was the first application of GM’s global V6. development time and in the number of prototype engines required.” A further innovation in this respect was the re-use by the engine build team of non-critical used parts from test engines. Not only did this ensure a more rapid supply of engines for the test programme but it also saved considerable sums in the cost of new prototype components.

Reintegrating the team and learning lessons With the manufacturing launch of its first product in the Cadillac CTS, the work of the Global V6 team had applied in the parent organisation: application in turbocharged form for moved on from base engine design to “I was amazed at the incredible the new Saab 9-3 including the new that of product roll-out. The team was focus that the team had upon the SportCombi derivative which the relocated physically, too, as space nature of their work – they questioned Swedish manufacturer claims is “the became available within the large new everything and felt that the processes fastest production Saab ever.” recently opened GM Powertrain world they had developed were the most headquarters building at Pontiac and efficient means of achieving the goals Highest-ever quality the Plymouth Technical Center was of the programme.” In the event, while If the Global V6 product range has closed. the simple processes developed by received public plaudits, the team that Efforts were made to learn lessons the Global V6 team could not be delivered it has been recognised from the Global V6 programme while appropriate for the wider needs of internally too. In 2003 they won the reintegrating the team back into GM. GM, the learning exercise led by Chairman’s Honor Award as well as the For example, the configuration of Bashore resulted in a number of ‘People Make Quality Happen’ prize. many of the working areas of the new streamlining improvements to GM The high level of designed-in quality Pontiac engineering building drew Powertrain processes which, at launch was, according to GM extensively upon the close, team- aggregated over the entire metrics, the highest ever achieved by working principles developed at organisation, will yield significant the company – a record which at the Plymouth. But some aspects of benefits in the years ahead. time of writing still stands. Back at reintegration produced tensions, and Pontiac, Tim Cyrus sums up the team’s here too GM attempted to learn The roll-out continues achievements: lessons and use the knowledge gained With the Global V6 team now working “When GM embarked on this in a manner appropriate to a much hard on what Bob Jacques terms “the programme it wanted to deliver a larger multi-national organisation. mother of all roll-out plans”, the engine world-beating product, and it wanted The process of controlling and is seeing increasing demand from to improve the organisation of recording engineering release is GM’s worldwide vehicle teams. powertrain product development. I crucial to any product development Already in production in numerous believe it achieved both.” programme, and the Global V6 team highly successful vehicles under the And as for his personal experience had developed a highly streamlined Cadillac and Buick brands in the US of working with this highly focused process. GM senior management and Holden in Australia, the Global V6 team which still today includes many tasked Dr. Polly Bashore, a project engine is about to make its debut in Ricardo as well as GM Powertrain manager with in-depth knowledge of Europe. It has been announced for engineers? “It’s been a lot of fun!” engineering processes and a background in adult education and learning, to investigate the problem. Bashore admits a certain cynicism in advance, but on interviewing the engineers from Plymouth she soon realised that there were some very positive lessons which could be

The GM Global V6 engine (left), as fitted to the Buick Lacrosse.The GM-Ricardo team (right) in a rare pause in the programme.

Q4, 2005 • RICARDO QUARTERLYREVIEW 17 RQ Interview – Koichi ‘George’ Fukaya

MAN OF MANYPARTS Denso, spun off from Toyota 50 years ago, is among the world’s most successful suppliers. Tony Lewin spoke to its CEO, Koichi ‘George’ Fukaya, about the group’s ambitious plans for expansion in Europe – and globally

Denso has publicly committed which models our equipment will be navigation will go up a lot more. itself to being a European Top Five going onto. European cities are very complicated, supplier company by 2010. You are so for drivers it’s convenient to have a currently 20th. How will you How much potential do you see in lot of information. Just as in Japan, we achieve this? the air conditioner market in expect that map-type navigation will Denso wants to grow by itself, Europe? become more popular in Europe and organically. Not by acquisitions. In the The air conditioning installation rate in we see the opportunity for growth. past, we have purchased one or two Europe has already passed the 50 per businesses, but to date we don’t have cent mark and is now approaching 60 What is the navigation-system any plans in this respect. per cent. Looking at other areas such fitment rate for cars in Japan? as Japan and North America, they It’s between 30 and 40 per cent as a This will mean your business have 95 or 97 per cent installation factory fit. Many young people want to more than doubling. Can you rates. So I expect that in Europe the buy their cars without navigation to explain how you will manage this? installation rate can reach more than save money: after buying their new The business areas we will 85 per cent by 2010. Our share [of the car they will purchase a navigation concentrate on are car air European market] is about 21 per cent, system as an aftermarket product at a conditioning, common rail diesel although three or four years ago the lower price. However, I believe that systems, navigation systems and figure was just 16 per cent. Our next the overall market situation in Japan engine management systems mainly target share in Europe is more than 30 will see the factory-fitment rate for gasoline engines. We are growing per cent. increasing. steadily in all these areas, and among them air conditioning and common Do you see a big future for CO2 What is your target for navigation rail are growing rapidly. air conditioning? You were the systems in Europe? first to demonstrate a prototype. In Europe, our target is to have a 10 Diesel is now just over half the We haven’t got any plans for CO2 air per cent share by 2010, and we want European car market but it is not conditioning. It’s only fitted to fuel cell to be one of the top makers. One of expected to grow much beyond vehicles in Japan and it’s that – perhaps to 60 per cent. This still very expensive. will mean a big increase in Because of the high Denso’s penetration of diesel and pressures involved, various maybe taking share off areas need more design competitors. work on them before we Recently, we’ve been successful in can market it commercially. getting business from Nissan and I don’t think any carmakers Ford. Now we want to extend into have any specific plans [to other businesses. Of course we want use CO2 air conditioning] at to capture the Japanese carmakers the moment. first – Toyota and the others. Secondly, we need to think how to approach Do you have plans to European carmakers including the enter any other market French groups – Renault and PSA. segments in Europe in order to boost your Ford is part of a diesel alliance share? with PSA. Does this mean you will Our third area is navigation be supplying the whole group? systems. The turn-by-turn We’ll start shipping to Ford by the end navigation market is flat or of this year. But we cannot reveal going down: map-type

18 RICARDO QUARTERLYREVIEW • Q4, 2005 keeping assist system is useful too. only a second priority. In Europe, our Many traffic accidents are caused by presence is still low, so we want to the driver’s lack of attention, often due expand our business in Europe. to sleepiness. For example, when trucks are running on the highway, What differences do you find in often as late as midnight, some of doing business with Japanese the drivers become drowsy in the carmakers, European carmakers dark and can fall asleep. So we can and North American carmakers? prevent accidents by monitoring the The relationship between the supplier Denso has developed driver’s condition. To monitor the and the carmaker is very different in LSI core navigation technology driver’s condition, various biological each area. In the US Visteon and jointly with Toshiba (above): data can be utilised, including his Delphi used to be divisions of Ford Range Rover navigation system (below right) eyelids, the blood pulsation in his and GM, so they’re already like a is a Denso product. fingers and the heart rate. We want to team. European suppliers are totally introduce these technologies in the independent – Robert Bosch, Siemens, our strengths is the navigation core global markets including Europe. Valeo and so on. In Japan it’s midway LSI (large scale integrated). This between these two extremes. We were autumn we launched our new LSI, What about pedestrian protection, spun off from Toyota more than 50 jointly developed with Toshiba, that which is very much an issue in years ago: we are officially provides 600 MHz high-speed Europe right now? independent, though mentally there is processing: the highest frequency in We are now developing various still some relationship. I think the basic the world for automobile use. This technologies for pedestrian protection. relationship between the supplier and project required so much effort that The vehicle body itself is designed and the carmaker is co-existence or co- Denso and Robert Bosch created a produced by carmakers. But to prosperity, and this has been a very joint venture, ADIT. This company has improve potential pedestrian successful relationship for us. already been successful in developing protection it is effective to increase the Carmakers’ requirements are very the next-generation LSI for new crushable zone in the vehicle’s front. severe, but we do our best to meet navigation systems. Using this [core] And we can develop thinner, smaller them – and this helps Denso to technology, Robert Bosch and Denso heat exchangers including radiators strengthen its competitiveness and are each developing their own and condensers, giving car designers increase its business with other navigation systems separately by more room to improve the pedestrian carmakers outside Japan. adding software such as map data. What will be the biggest growth Are there any other product areas for Denso in Europe in the groups that interest you? next ten years? The next business area we want to Car air conditioners, or common rail focus on is safety. In Japan over 7000 diesel systems – they’re the biggest people are killed in traffic accidents business areas for us. But after 2010 every year. This is a huge number. the safety business area will become We’d like to halve the total, or ideally bigger. reduce it to zero – so safety is extremely important. Denso is developing a variety of safety Koichi Fukaya technologies which would also be 2003 President and CEO of Denso applicable in Europe. We want to sell impact absorbing performance of the Corporation more safety systems in Europe. front end. Another example is a 2002 Senior managing director in pedestrian sensing system. If the charge of the Production What particular systems would system correctly detects and Promotion Centre, responsible you like to bring to Europe? distinguishes the pedestrian, for for strategic planning and Last year, we introduced a pre-crash example, a man standing on one side implementation of production safety system and adaptive front of the road, or on the other side some technologies for Denso lighting (AFS) system in Europe. The children running after a ball, the 1995 Appointed to the board of pre-crash safety system senses an system would warn the driver. directors and named president of Denso Manufacturing obstacle prior to a collision, Michigan Inc. automatically tightens passenger Are these systems on sale in Japan? 1967 Graduated from Kobe seatbelts, and helps activate the brake Not yet – they are under development. University with a Bachelor of system to reduce vehicle speed. The We’re developing some of these Science degree in Electrical AFS can improve visibility during technologies jointly with carmakers. Engineering night-time cornering and contribute to 1966 joined Denso Corporation safer driving. Are you happy with the (formerly Nippondenso Co. Another example is the adaptive geographical distribution of your Ltd.) after graduating with a cruise control. This has already been sales, being so heavily weighted degree in Mechanical developed and introduced for towards Asia? Engineering from the Tokyo passenger cars, but we feel it should be In each region we simply want to be Institute of Technology applied to heavy duty trucks so that we seen as the most excellent supplier. 1944 Born in Hyogo Prefecture, Japan can avoid rear-end collisions. Our lane- The ratio of one region to another is

Q4, 2005 • RICARDO QUARTERLYREVIEW 19 Strategic Consulting – The ¤5000 car

World on Wheels Ever since the first car turned a wheel, automakers have dreamt of producing low-cost cars to mobilise the masses. The recent success of the €5000 Renault Logan has forced rival companies to rethink their attitudes to emerging markets and to question their own processes in the search for truly cost-competitive products. In a landmark study Ricardo Strategic Consulting has analysed every fundamental of low- cost car design, production and distribution. Here, Tony Lewin looks at the strategic recommendations for a market that analysts say could grow to 9 million units by 2025

here were many sceptical 200,000 unit Dacia facility in comments when Renault Romania. Already, T announced in 1998 that it was production is underway in considering developing a car to sell at Russia, Morocco and €6000 in emerging markets. Some Columbia, with India, Iran and doubted whether a car could possibly Brazil set to join the list in be built for such a low price; others 2006. openly questioned whether there It seems, then, that Renault has would be sufficient demand for such a hit upon the magic formula to enable vehicle. Still more commentators it to offset the stagnation of western scratched their heads when Renault territories with profitable penetration revised the price target to €5000 – at in emerging – and thus growing – the then-prevailing exchange rate an markets. And, inevitably, all the other even more challenging objective. automakers are looking closely at the But now, the remarkable success of Renault template to see how they, too, the Logan under both its Dacia and can get in on the low-cost car act. Renault brand names has quickly silenced those critics. Upwards of Market potential 115,000 units were sold in the twelve The study conducted by Ricardo months since production began in Strategic Consulting in conjunction September 2004, most of them in with the Aachen-based ifk and fka Renault’s Logan achieves low cost despite its eastern and central Europe. The institutes does much more than large size. Key ingredients are simple design, carry-over mechanical elements, and low-cost biggest surprise, however, was how examine the €5000 Logan’s value country sourcing. eagerly western European buyers took chain, fascinating though this is. to the model following its introduction Crucially, the report delves much markets, the middle east or Africa. in France, Germany and Spain in June deeper into the market fundamentals In arriving at these conclusions the 2005; almost 6000 took delivery in just to assess the likely demand for low- researchers took into account the very three months. cost cars and their derivatives – and different car purchase priorities in The signs were so encouraging, in the results show significant potential emerging markets: lower incomes and fact, that Renault managers soon for large sales volumes. harsher conditions in these markets raised their forecast for 2010 Logan Most remarkably, the study’s authors mean owners keep their cars for up to production levels from 700,000 to 1 say that their estimate of a potential eight years, rather than swapping million units a year; at the same time, demand of 8.9 million €5000 cars by them after two or three, as is the case plans were advanced to bring other 2025 is a “very conservative” one in the west. Thus purchase price, plants on stream to complement the which does not include western durability and ease of servicing are

20 RICARDO QUARTERLYREVIEW • Q4, 2005 approach made famous by Lada’s continuation with decades-old Fiat cast-offs or Daewoo’s use of old Opel designs. Whichever route is chosen, however, costing less than the task is the same: to sell a car at that figure. The €5000 requires a cost reduction of conclusion: these markets more than 50 per cent across the whole are highly price sensitive and a of the value chain – from the very first low entry price is critical to touches of the designer’s pen to the reaching the growing numbers of final handover to the customer. As the middle-class people that are the Ricardo report puts it, “this requires target customers. pulling all the cost levers, forcefully.” As for the vehicle itself, it will be the The target demands much more only vehicle in the household. Having than careful sourcing of components to do double duty for both passenger- and efficient manufacturing: carrying and business work, it has to absolutely everything must be looked be large, rugged and simple, at with a fresh eye. according to the authors, with plenty Take design, for instance. Not only of passenger space and a large trunk. must the design process be top priorities: fuel consumption, economical and effective in itself, it performance and standard equipment The low-cost business model must result in a vehicle which is hardly figure at all. Many different approaches have been economical in materials and simple to Important, too, is the cost of tried in the quest to produce a build and repair. Manufacturing, ownership. Affordability goes beyond medium-sized, low-cost car suitable likewise, clearly needs to be situated purchase price, say the authors; for world markets. Fiat’s Palio family in regions of low labour cost and with running costs are a key part of the was developed from scratch, though low levels of automation to keep equation. using many proven components; overheads to a minimum. Incomes in the target countries are Ford’s Ikon for India is a de-specified These, however, are only a few of between a quarter and one-tenth of western Fiesta, while Tata – also of the most obvious factors influencing those in western nations, according to India – has sought to up-spec its the final cost of the vehicle. Taken in the report: whereas prices of western domestic Indica small car for isolation, they would shave only a few small cars tend to begin at around international sale. A fourth tactic is to per cent off the car’s asking price. To €10,000, in Russia 90 per cent of all revitalise an old design and build it halve the cost of the car requires a far new car sales in 2003 were of vehicles under licence – an old-fashioned more fundamental investigation of

Q4, 2005 • RICARDO QUARTERLYREVIEW 21 Strategic Consulting – The ¤5000 car

Cost cutting analysis

Sales & R & D Warranty Profit Process Manufacturing Material Logistics Marketing overheads & policy Margin Total

Includes Body in white Powertrain Inbound Marketing Design Target Net retail price Paint. Trim and Chassis Body freight Dealer margin Engineering Margin Excludes final assembly Electronics Distribution Prototyping transport Key levers Lower labour cost Low cost country Low dealer margin Carry-over Low automation sourcing Low incentives components Low complexity De-specifying Below the line Low complexity High volumes marketing

Cost (reference €2040 €5200 €320 €2440 €600 €200 €500 €11,300 German- built car) Cost (€5000 car) €640 €2840 €320 €700 €300 €100 €100 €5000 Possible 70% 45% _ 80% 50% 50% 80% 56% cost reduction

everything that goes into the vehicle’s some of the electronic equipment with only gasoline engines (a diesel make-up: accordingly, the Ricardo- found on upscale cars saves not only comes next year) and by not aiming ifa/ika study goes into the detail of the cost of the devices themselves but for the full five stars in the EuroNCAP every process, every policy and every also allows an estimated €66 saving crash test. Major savings were made, nut, bolt and washer in search of because the wiring harness is now according to senior Renault potential savings. In some areas the simpler; the power generation system executives, by not pursuing the savings are impressive – over €400 can be de-specified, too, as the current ultimate in NVH sophistication: can be saved by specifying a simpler demand is lower, there are fewer eliminating every last trace of wind powertrain, for instance, and simpler sensors and the ECUs can be less noise, for instance, is a plastics can halve the cost of an sophisticated as they have fewer disproportionately costly and time- interior – but most of the cost functions to carry out.(see table below) consuming task. reduction is achieved by painstaking Having designed the car for easy rethinking of materials and a huge Manufacturing manufacture, Ricardo estimates €640 number of small details. No saving is Renault’s Logan provides a textbook per unit as a realistic build cost. This too small to be ignored. Choosing a example of how design priorities can takes into account major body pressings, body-in-white, paintshop, trim and final assembly. Powertrain System-by-system savings: The study’s authors identified the following potential system-by-system savings:- build is not included. The manufacturing figure assumes Cost on typical Action for production in a low cost country System B-sector car €5000 car Saving (labour in Romania is 5 per cent of that Body €1150 Steel only; carry-over €260 in Germany), low levels of automation parts; non-metallic paint and overheads, lean production principles and a three-shift work € Chassis 710 Rear drum brakes, no ABS; steel pattern to make the most of the fixed suspension, torsion beam axle €180 investment. These measures, says the Powertrain €1480 Conventional injection and report, can reduce manufacturing exhaust aftertreatment; costs by up to 70 per cent. € previous-generation catalyst 420 With design changes already having Interior €1270 Simple dash and plastics, only reduced the material costs from the two airbags; less sound proofing €400 €5200 of the reference B-sector car to € Basic €590 Conventional and fewer €134 3805, an estimated further 25 per electronics electronics; conventional lamps cent saving can be achieved by sourcing the items from low-cost countries. This brings the total material plain, flattish backlight instead of a be realigned from the very first stage. cost saving to 45 per cent compared complex, curved rear screen can cut Having decided to use as many carry- with the reference vehicle. the glass bill by eight euros, for over parts as possible and to carry out Again, Renault’s strategy provides instance, and eliminating high- as much as possible of the process the model: there is only one robot at strength steel from the body design digitally, rather than with costly the Romanian Pitesti plant building the saves a further three. Euro by euro, prototypes, the development budget Logan, and of the 143 Tier-1 suppliers the component-cost savings made at amounted to just €360 million, around to the programme, 43 are local in the design stage add up, leading to a one third of that expended on a typical Romania, nine are from Turkey and total potential saving of almost €1400 all-new model. five from eastern and central Europe. compared with the typical German- Renault would contend that no sourced B-segment car. corners were cut, though clear savings Marketing and distribution Sometimes the savings have a must have been made by engineering The final piece of the puzzle is the virtuous circle effect, too. Eliminating the model with just one body type, downstream activity of getting the

22 RICARDO QUARTERLYREVIEW • Q4, 2005 Renault Logan example approach to the entire value chain. shows how cost can be To reach an affordable cost saved by careful design structure, original thinking will have to of interiors. Major be pursued at every stage – from savings can be made in design for low cost, to low-cost electronics, leading country manufacture and sourcing, to to further savings in lean distribution and effective, wiring on the power supply system. targeted promotion. Renault has already shown one way in which it can be done, though some commentators continue to question the real returns the company is achieving on its investment. Yet Renault’s task is nothing compared with that of Indian vehicle from the factory gates and into per year by 2025. This is a slice of industrialist Ratan Tata. Tata has made the hands of the customer. Here, business many volume carmakers it his mission to develop a car costing though the policy imperatives are cannot afford to ignore, and with the just €2000 to bring the four-wheeled clear, the savings are harder to addition of other emerging markets message to a still broader slice of the quantify with accuracy. not included in the study the potential world’s population. Even Volkswagen Ricardo Strategic Consulting and could be greater still. is tipped to be interested in the low- ika/ifa estimate that by trimming margins at the dealers, confining Cars for the masses promotional spend to below-the-line advertising and keeping incentives to Model Dates Production Target price Notes a minimum, savings of 80 per cent could be made from habitual western Ford Model T 1908-1936 15m $950 Fell to $290 European sales and marketing budgets. Austin 7 1922-1939 300,000 £165 Fell to £100 The biggest potential gains could, Fiat 500 and 1936-1975 4m 5000 lire Launched however, be offered by a move to a Nuova 500 at 8900 lire hub-and-spoke dealer network. In this in 1938 model, the principal dealer central to a Citroen 2CV 1938-1990 5.1m 185,000 – region handles both sales and service, Francs while satellite franchises in the VW Beetle 1938-2004 21.5m 1000 _ surrounding areas undertake service Reichsmarks activity only. The advantages are several: the dealer hub can afford to Suzuki-Maruti 1980-present 5m 114,000 RPR_ maintain a full customer-facing Alto (India, to date) ($6,200) showroom, while the satellite service agents are close enough to provide But while the demand for vehicles at end market, with a programme code regular customer contact. the €5000 level is clearly there, it will named 3-K for a roomy, simple sedan take considerable ingenuity on the part costing just €3000 to make. Strategic recommendations of designers, planners, strategists and Yet, whichever strategy the competing The evidence assembled by the study manufacturing experts to deliver such a carmakers opt for, each needs to be well is compelling: there is clear potential vehicle and earn a sensible profit organised, well resourced and well in the low-cost car segment, with a margin too. Being profitable, says the advised. The cars’ costs may be low, but global total of over eight million units Ricardo study, requires an holistic the stakes are high.

GDP per capita (2003) in € for selected countries Average labour cost in manufacturing industries in selected countries, 2002

Source: UScensus, Eurostat, Ricardo Source: ILO, Eurostat, OECD

Q4, 2005 • RICARDO QUARTERLYREVIEW 23 Ricardo News

New FE Software

icardo has long led the way in the Rapplication of advanced computer aided engineering (CAE) methods in powertrain design and makes a large part of its associated know-how and technology available through its suite of commercially available software products. These range from the market leading WAVE-engine performance powertrain FE activity simulation and under a single VECTIS analysis computational fluid environment. Each dynamics (CFD) application (both in- packages to house and mechanical system commercial software simulation codes processors. However, packages) is linked through a common VALDYN and the widespread nature data exchange protocol and ENGDYN, all of which of FE applications comprehensive external interfaces are are used widely throughout the required for engine design, together provided with other CAE applications automotive, motorsports and related with the complexity of interactions such as performance simulation and industries in the creation of the latest between them, mean that there is a CFD. This system is the cornerstone of powertrain designs. need to manage the process of FE the company’s internal FE activity and Until recently, however, no such analysis in an efficient and quality - the efficiency and quality assurance product was offered in the area of assured manner, Finite Element (FE) analysis. The tailored to rationale for this was simple: there are support the numerous highly respected automotive commercial packages for specialist FE analyst. applications, from mesh generators For many and solvers to specialist post- years Ricardo The FEARCE FE environment (right) automates has developed many of the more complex loading and results its own in-house post-processing functions such as bore technology to distortion analysis (top) and NVH (opposite). integrate its

Expansion in China and Japan international automotive hub. Staffed by both Chinese and English- unprecedented growth potential of speaking Ricardo employees, the both the indigenous and joint- new office is located in the venture manufacturers in rapidly prestigious Maxdo Centre in the expanding markets such as China. Hongqaio area in the west of the city. Ricardo has positioned itself to A particular driver for Chinese benefit from the opportunities automakers and suppliers is the represented by the national markets need to develop future in-house throughout this rapidly developing engineering capabilities. Technology region. The company has long led transfer is thus a major part of the the way in adapting its product and Ricardo offering in China, providing service offering to meet the needs of both state-of-the-art engineering its customers, wherever they are services as well as professionally located. This year has seen the managed technology transfer in a opening of two new Ricardo facilities manner respectful of background in both China and Japan. intellectual property rights. The he Asia-Pacific region is highly On July 12, Mr Philip Mani, Deputy success of the Ricardo approach Tdiverse, comprising both the Consul General of the British has been demonstrated by a globally exporting, high quality and Consulate General in Shanghai, number of significant programmes technology-driven brands of the formally opened the Ricardo office in currently underway by joint Japanese automakers as well as the this important and rapidly emerging development teams of Ricardo and

24 RICARDO QUARTERLYREVIEW • Q4, 2005 Component sub-meshes will also frequently need to be linked European together in an appropriate manner using, for example the software user correct interference fits for bearings and bolt conference and pre-tensions. In many training day cases models will require joining or interpolation of boundary advantages conditions that it delivers are of direct across icardo Software has benefit to customers of geometrically Rannounced that it will hold its Ricardo’s powertrain design coincident but European Users’ Conference at services. dissimilar mesh the Mercure Hotel, Frankfurt, on Following a number of requests by structures. In addition to 5th December 2005. The customers both of this service and of being labour intensive, all of these conference will include papers its existing range of powertrain processes are potentially sources of and presentations on the simulation products, Ricardo Software error. FEARCE provides an application of the complete range has recently started marketing a environment in which all of these of Ricardo Software products and commercial version of the Ricardo FE individual processes can be carried there will be opportunities to environment known as FEARCE. This out automatically and in a manner discuss recent product releases new product provides a supporting accuracy, repeatability and and future plans with members of comprehensive package of interfaces traceability. the development and support and application modules which link Having prepared the analysis in a teams. An informal reception for and automate many of the more time- neutral data format, a wide range of delegates will also be hosted at consuming tasks and intricate commercial FE packages can then be the conference hotel on the processes of powertrain FE. used for the solution including evening of 4th December FE meshes to be used with FEARCE ABAQUS, ANSYS and NASTRAN. commencing at 7pm. can be obtained from HyperMesh, Alternatively FEARCE has its own in- Patran, I-DEAS, Pro/Engineer or any built solver which can offer a highly On the two days following the other supported source. The cost-effective solution, particularly for conference (December 6th-7th) application of realistic load data and more simple analyses. Ricardo Software will host user the preparation of analyses is typically Post-processing is however perhaps training sessions at the same extremely complex and time- the area in which the extensive feature venue. This follow-up event will consuming in powertrain FE analysis. base of FEARCE comes into its own, provide delegates with the Thermal boundary condition data will offering a range of automotive specific opportunity to receive hands-on often need to be applied based on post-processing operations which training using the very latest output from CFD codes or derived enable rapid and meaningful product releases. Four separate from complex formulae, for example. interpretation of vehicle as well as agendas are offered: powertrain related design issues. These include bore, bearing and valve Acoustic masterclass customer engineers both in the UK distortion assessment, linear and non- (two day course – Dec 6-7) and in China. linear fatigue algorithms, as well as a Turbocharger masterclass Ricardo has also enjoyed number of sophisticated vibratory (two day course – Dec 6-7) considerable growth in the Japanese response tools. In the last category for Advanced WAVE market, with business expanding example, FEARCE includes its own simulation workshop nine-fold in the past five years alone. radiated noise analysis capability. A (Dec 6 only) This expansion was marked by the ‘mesh wrapper’ tool can be used to Engine analysis workshop formal opening on 20th October at capture vibratory results from surface (Dec 7 only) the company’s new Tokyo office by elements which can be used in the British Ambassador to Japan, software’s own Rayleigh or boundary Registration for the conference is Graham Fry. element method (BEM) analysis free but delegate places are Both the Shanghai and Tokyo solvers. strictly limited and early offices will be shared by locally While FEARCE has only recently registration is advised. based staff as well as visiting been made available to customers, Places may be reserved at engineers from Ricardo’s further features are already under www.ricardo.com/softwareeuc. international network of technical development for future releases. Most centres. These two solid investments significant of these is the Each training course is in new facilities will enable Ricardo comprehensive results viewer package individually priced and may also to improve the quality, currently on beta test and due for be reserved via the conference responsiveness and competitiveness delivery early in 2006 in FEARCE 7. web page. of service delivered to its customers Further information about FEARCE or other in the Asia-Pacific region. Ricardo Software products may be obtained from [email protected].

Q4, 2005 • RICARDO QUARTERLYREVIEW 25 Ricardo News

Ricardo helps with new Renault NVH facility n September 26 Renault formally general performance and durability ensure that Renault engineers were in Oopened its new Noise Vibration testing, pallet design is a a position to utilise the advanced and Harshness (NVH) unit devoted to comparatively straightforward process semi-anechoic powertrain and vehicle the acoustic treatment of powertrains, of ensuring that a generic mounting test cells and associated NVH located at the site of its Technical package is provided which is capable technologies as soon as Centre in Lardy, approximately 45km of accepting each powertrain and its commissioning was complete. Testing to the south of Paris. ancillary components, together with processes were documented in detail One of the most state-of-the-art the requisite actuators and test by Ricardo based on the company’s facilities of its kind in Europe, the unit equipment. For NVH testing however, own best practices, and training in draws together in a single centre NVH the pallet system needs to be their implementation was provided to testing and development technologies engineered in such a manner that it is Renault engineers and technicians by and processes for all of the sufficiently stiff so as not to influence a Ricardo team initially at Ricardo UK automaker’s powertrain and vehicle the vibratory and auditory facilities and subsequently based on- engineering teams. The unit is measurements, while at the same time site at Lardy. The Renault and Ricardo equipped with both powertrain and providing sufficiently clear access to engineers worked in partnership for vehicle semi-anechoic cells together the engine for instrumentation. the initial NVH test and development with advanced testing and analytical programmes run at the new unit in equipment and software. It is intended Meeting dynamic vibration targets order to develop and refine these to enable Renault to improve the noise Starting from an initial design the team engineering processes for maximum quality of powertrains across its entire developed the structure to meet its operational effectiveness. range. dynamic vibration targets using With the Ricardo on-site team Ricardo has supported Renault as dynamic finite element analysis. The continuing to support Renault’s own technology partner from the inception structure was manufactured and tested engineers and technicians in the of the project to develop the new NVH in prototype form and a damping commissioning and operation of the unit, assisting from the early stages in strategy developed to fine-tune its facility, Renault is firmly on a path to the specification of the test facilities. A operational performance. further improve its already well detailed example of this was in the Subsequently the first production pallet respected positioning as an design of the standard powertrain test was manufactured and the design was automotive brand synonymous with pallets to be used at the facility. For handed over to Renault’s in-house high standards of NVH. The manufacturing team. significance of the new NVH facility During the development and was underscored at the inauguration commissioning phase of the new ceremony by Kazumasa Katoh, facility, Ricardo has also provided Renault senior vice president of technology transfer in testing powertrain engineering: “With the processes and procedures. The NVH unit, Renault breaks new ground primary objective of Ricardo’s in the control of vibro-acoustic involvement at this stage was to phenomena. It will allow us to define a ‘sound identity’ for Renault Renault’s new NVH unit at Lardy (above and powertrains, the objective being, at a left) is equipped with both powertrain and very early stage, to fully work noise vehicle semi-anechoic cells together with advanced testing and analytical equipment quality into the powertrains' genetic and software. make-up.”

26 RICARDO QUARTERLYREVIEW • Q4, 2005