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Automotive Industry

Which technology first…and where? - Opinion & Analysis - roll-out by segment

Automotive Industries, Oct, 2002 by Greg Janicki

The general rule on technology rollout has been this: it starts with the luxury segment and then moves to other vehicles as component cost decreases and bugs are worked out. The luxury segment is fertile soil to plant new technologies -- generally new technologies are higher cost and need a market that will pay far them. The luxury segment presents that market, But the case more often today is even when the luxury segment is the first, the question is which is second? Or third?

The Mercedes M-Class was the first vehicle produced in North America to feature side curtain airbags. What was the next vehicle? The Saturn 5-series. Not the classic rollout of a new technology. Most of the next curtain airbag applications were in the truck segment. The reason? Rollover concerns. So while installations began in the luxury segment, the marketing direction of a brand (Saturn) took on the technology next, followed by a segment of vehicles that required the technology to present a safety advantage in the marketplace.

There are technologies that still follow the traditional fill-the-luxury-segment-first path. High-intensity discharge headlamps are one, for example. First introduced on a North American-produced vehicle with Lincoln, HID lamps then moved to GMC (a move to position the brand more closely to the luxury segment), Acura, BMW and Cadillac. The technology has been slow to move to other segments -- car buyers have yet to put a high value on the feature. One feature that has moved to non-luxury segments (after a slow start) is navigation systems. First found only on luxury vehicles (Cadillac, Mercedes, BMW), the systems have migrated to the Minivan (Honda Odyssey), Compact (Toyota Camry) and Crossover (Pontiac Vibe) segments.

The trouble, however, is that looking at segmentation is merely one piece of understanding how technology rollout will impact suppliers. Looking at "technology" as strictly features and functions, overlooks some more significant trends. Changes in supply technology for example, are just as important to suppliers as a shift in feature content. One shift the industry has been talking about for years, modularization, really takes a blind eye toward vehicle segment.

Taking cockpit modules as an example, The highest level of cockpit usage is actually in the mid-size SUV segment, followed by small SUV, then luxury. And if you think there is no link between feature content and cockpit modularity then you never did the math on the value of a simple injection molded instrument panel versus a fully built-up cockpit -- with, say, a navigation system.

While it is easy to look at technology rollout from a segment perspective, and target the segments most likely to adopt your new feature, the tricky part is looking beyond the simple feature adoption to understand the trend of how the technology will be supplied, by whom and to whom. As a supplier of new technology (navigation systems, for example) your throughput to the OEM may actually be direct to the OEM for luxury cars, but through the tier-one cockpit supplier for other segments. That puts a different spin on technology adoption, doesn't it?

Technology                 First Segment

Curtain Airbags            Luxury
Navigation Systems         Luxury & Specialty
HID Headlamps              Specialty
Stability Control Systems  Luxury
Power Adjustable Pedals    Mid-size Vans & SUVs

Technology                 Next Segment(s)

Curtain Airbags            Compact Cars & Mid-size SUVs
Navigation Systems         Large & Mid-size SUVs
HID Headlamps              Luxury & Mid-size SUVs
Stability Control Systems  Mid-size SUVs
Power Adjustable Pedals    Mid-size Cars

* Note: For Vehicles Built in North America

Source: CSM Worldwide

www.csmauto.com

GREG JANICKI is vice president of CSM Worldwide Inc.

Greg Janicki@csmauto.com

www.CSMAuto.com

Automotive Industry

Which technology first…and where? - Opinion & Analysis - roll-out by segment

Automotive Industries, Oct, 2002 by Greg Janicki

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