Mass-market brands race to add high-tech gadgetry
Infotainment and safety features once reserved for luxury cars are now showing up in compact and subcompact models as mass-market automakers increasingly use high-tech features as key selling tools.
"Automakers are forced to add high-end infotainment and safety systems in compact and subcompact models to stay competitive," said Anna Buettner, an analyst for IHS Auto-motive. "Merely offering a dumb radio will no longer work."
The problem is that automakers cannot charge extra for these features. With a price war raging throughout Europe, a lot is at stake.
Volume automakers are desperate to maintain their share of European subcompact sales, which totaled 1.6 million units in the first six months, according to market researchers JATO Dynamics. The region's compact segment — which totaled 1.5 million units in the first half — also is up for grabs.
So automakers are adding technology in a bid to create a cutting-edge brand image.
Consider the new Renault Clio, which debuted in October. Ali Kassai, program vice president of Renault's minicar and subcompact car sector, said the automaker decided to add high-tech features without charging extra. In theory, a better-equipped Clio would not need the steep discounts that its rivals were offering. "Instead of rebates, we offer more value," Kassai said.
The Clio's extras include variable-rate electric power steering, a rearview camera and high-end airbags. The most important feature will be Renault's R-Link infotainment system, which will debut in the Clio and in the upcoming Zoe subcompact EV. With R-Link, Clio owners will be able to pay for and download apps directly to a tablet-style computer screen embedded in the console. In the past, this type of technology was only available in premium cars.
In addition to the standard navigation and music apps, R-Link will send and receive e-mails and Tweets.
Not to be outdone, PSA/Peugeot-Citroen will offer its own menu of infotainment apps this year in the Peugeot 208 subcompact. The system, dubbed Peugeot Connect Apps, requires a connection key that plugs into the 208's USB port to run apps on the navigation screen.
Volkswagen has installed collision avoidance — once the exclusive province of luxury cars — in its new Golf. The Golf brakes automatically if sensors detect an imminent collision. Its onboard computer also tightens seat belts and raises the windows for improved airbag deployment. And if the car does collide with another vehicle and keeps moving, the car automatically brakes to avoid a secondary crash.
The Golf also has adaptive cruise control, plus sensors that issue alarms to prevent unintended lane changes. And if a fatigued driver steers erratically, the cockpit sounds an alarm.
In addition, the car has a touchscreen infotainment system that features a WiFi hot spot that permits in-car Internet access for smartphones, tablets and laptops.
Opel/Vauxhall also is adding sophisticated equipment on its smaller models. Its new Adam minicar has a blind-spot alert system plus a feature that parallel parks the car while the driver brakes and adjusts the vehicle's speed.
Who will pay?
While all this new technology seems fine, how will automakers recoup the cost of these high-tech features in a modestly priced car?
First, suppliers and automakers can count on high production volumes to create economies of scale. This eases tight profit margins if suppliers can count on global contracts, IHS Automotive's Buettner said.
Second, suppliers can offer safety and infotainment systems that allow automakers to add new features simply by adding software. For example, cameras used for lane departure warning also can be used to read road signs. Likewise, they can be integrated into a collision warning system.
Automakers can add new safety or infotainment functions simply by upgrading the software, thus minimizing added costs.
For infotainment systems, suppliers that cater to this approach include Harman, Continental, Visteon, Denso and Robert Bosch. For safety technologies, Valeo, Continental, Bosch and Autoliv are among the leading component suppliers, according to IHS Automotive.
Continental sees rapid growth in the development of advanced driver safety systems that use camera, radar and lasers to detect hazardous driving situations. "One billion euros is the market size in our business but that will rise to 2-4 billion in 2017 and to 8-10 billion in 2020,'' said Friedrich Angerbauer, head of Continental's advanced driver assistance systems.
Angerbauer expects cheaper laser- and radar-based systems to be standard features on most mass-market vehicles as automakers prepare for the introduction of new EuroNCAP tests covering anti-collision measures for vehicles and pedestrians in 2014.
Guillaume Devauchelle, director of r&d for Valeo, which supplies the VW Golf's park assist system, said price pressures pose challenges. Valeo must make advanced technologies affordable for small, mainstream cars, he said.
Jean-Marc Gales, CEO of the European suppliers association CLEPA, believes EU regulators should require collision avoidance braking systems such as the one offered on the VW Golf to be standard in cars. "These kinds of systems are ready and they do save lives," Gales said.
Such equipment costs automakers several hundred euros to add on a per-unit basis, but the price should decrease to about 100 euros once it becomes widely adopted, Gales said. "Standardization will drive costs down," he said. "Effective safety systems such as airbags and ABS became affordable when the industry adopted them on a wide scale," Gales added.
The democratization of technology has created a dilemma for the luxury brands, which justify their high prices by offering technology not available in mass-market cars. "Luxury carmakers do have problems differentiating themselves today," Buettner said.
The question is: How will luxury brands maintain their aura of exclusivity? One thing is for sure: The auto industry can't turn back the clock. High-tech is quickly spreading throughout the industry.
David Jolley contributed
You can reach Bruce Gain at email@example.com.