Automotive News - January 28, 2008 - (Page 41) JANUARY 28, 2008 • 41 Bosch: Standardized parts can cut costs Robert Sherefkin rsherefkin@crain.com Bernd Bohr Title: Chairman, automotive group Company: Robert Bosch Main point: Cooperation is needed to rein in increasingly expensive r&d costs. Quote: “We believe technological innovation is the key. So is working together.” injector and 44 different heads for the ABS speed sensor. “The functionality of all of these injectors or sensors is basically identical,” he said. The overall number of variants could be greatly cut, he said. “This would yield economies of scale and potential cost reduction.” He said agreeing on common standards for parts would let suppliers offer cost reductions of 5 to 10 percent and a “savings potential of 20 percent to 30 percent” for some kinds of software. Bosch spends 10 percent of its global automotive sales revenue on innovation. In diesel systems, for exam- GLENN TRIEST Bosch’s Bernd Bohr on automakers and suppliers: “We need teamwork.” DETROIT — Bernd Bohr, head of the automotive division of Robert Bosch GmbH, wants a joint effort to get automakers to standardize parts. Bohr said Bosch is pushing for standardization because suppliers and automakers face unprecedented investment demands. Spending on technologies to boost fuel economy and cut emissions will force r&d budgets skyward. He told a dinner audience at the Automotive News World Congress last week here that Bosch makes 65 variants of its solenoid common-rail ple, Bosch plans to spend more than $4 billion in the three years ending in 2009, he said. Bohr also called for joint marketing of new technologies to consumers to enable a rapid introduction of those technologies, economies of scale and cost savings. The alternative is letting the technologies increase on a gradually rising number of vehicles. “We need teamwork” by automakers and suppliers, he said. Bosch, of Stuttgart, ranks No. 1 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $29.69 billion in fiscal 2006. c Lutz: U.S. won’t easily embrace small cars Jamie LaReau jlareau@crain.com Bob Lutz GM’s Bob Lutz: “Instead of raising fuel prices, we’ll end up having to raise new-vehicle prices.” Title: Vice chairman of global product development Company: General Motors Main point: GM sees biofuels, E85 and lithium ion batteries as better solutions than federal regulation to address fuel prices and cut dependency on foreign oil. Quote: “Ethanol and biofuels are the best near-term solution. Yes, we continue to work on electrically driven vehicles, as fast as we can. But realistically, they are going to take many years to be on the road in volumes that make much of a dent in petroleum usage.” GLENN TRIEST DETROIT — General Motors sees E85 and biofuels as the best nearterm solution to lowering U.S. use of petroleum. But new federal fuel regulations will only mean higher vehicle prices, slower new-vehicle sales and continued consumer resistance to smaller cars. “We refuse to let the price of fuel rise gradually in the United States, and therefore we fail to induce change in consumer behavior,” Bob Lutz, GM’s vice chairman of global product development, said here last week at the Automotive News World Congress. Lutz said that while GM is working on alternatives to gasoline, such as the battery-powered Chevrolet Volt, consumer behavior is difficult to change — and it takes a long time. In addition, new federal regulations requiring a 35 mpg national average by 2020 will not inspire consumers to buy more fuel-efficient vehicles. Only fuel prices at European levels will cause Americans to rethink their vehicles, Lutz said. European gasoline now cost the equivalent of about $8 a gallon, he said. “If, for the last 15 years, we’d had a slow but sure rise in federal fuel taxation of, say, 15 cents a gallon per year — that would have gradually put the customer in the equation,” he said. The markets could have naturally and gradually transitioned Americans into smaller and more dieseloriented vehicles, Lutz said. “I’m not advocating tax hikes or calling for higher fuel prices,” he said. “I’m just explaining the difference between the European fleet and our own. In America, instead of raising fuel prices, we’ll end up having to raise new-vehicle prices because of the increased use of lightweight materials and fuel-saving technology.” That will cause more people to hang on longer to vehicles they have, That, in turn, will slow the transition toward improved fuel efficiency and a cleaner environment, “which is exactly counter to the intended effect,” Lutz said. “Europeans, at their fuel prices, are willing to pay premium prices for premium small cars that deliver terrific fuel economy. That is not the case here in America, land of the big truck and big horse” — and, Lutz added, “the big American.” The new federal regulations also will fail to lower the U.S. dependency on petroleum and imported oil, Lutz said. The best near-term solution to doing that is to adopt more vehicles that burn ethanol. There already are more than 6 million flexible-fuel vehicles in the United States. Those vehicles could be running on ethanol if it were more readily available, Lutz said. If all the flex-fuel vehicles that GM, Ford Motor Co. and Chrysler LLC have committed to have on the road by 2020 were to run on ethanol, that could displace 29 billion gallons of gasoline annually, Lutz said. That is roughly equivalent to 18 percent of America’s projected petroleum use in 2020, he said. Other benefits of E85, Lutz said: It’s better for the environment, doesn’t have to be imported and requires little change in consumer behavior. On the other hand, Lutz said, with diesel fuel at the same price as gasoline in the United States, there likely won’t be many Americans willing to pay a “$3,000 to $4,000 premium” for diesel vehicles. To get more people driving diesels would mean GM would eat that cost, which it can’t afford to do, Lutz said, or the price of diesel would have to be substantially lower than gasoline. Lutz also reiterated GM’s belief that vehicles powered by lithium ion batteries are the long-term future of the automobile industry. He said that naysayers don’t understand that not all lithium ion technology is created equal. “It’s like beer,” he said. “Some people say beer tastes bad, but there are many different types: U.S. beer, imported beer. You’ve got pilsner, ale, stout, wheat beer. Some beers are better than others. “Just because somebody said one particular lithium ion technology is a little bit aggressive and it’s been known to cause thermal problems does not mean they all do. The technology is advancing every day.” c Meyer: Chrysler listens to dealers Bradford Wernle bwernle@crain.com Deborah Meyer Title: Chief marketing officer Company: Chrysler Main point: Chrysler will listen to its customers and incorporate their suggestions into its products. As part of this effort, Chrysler will simplify its vehicle packages to offer customers more value. Quote: “When I made the decision to join Chrysler, a lot of people asked, ‘Why?’ Actually the way some of them put it was: ‘Are you crazy?’ I saw my decision then, and I still see it now, as an opportunity to be part of something special, something truly historic.” ius Satellite Radio, 17-inch aluminum wheels and other upgrades. Chrysler also is responding to dealers who had complained that the engine lineup of the Dodge Journey crossover was too complex, Meyer said. The automaker is simplifying the engine offerings before the sched- DETROIT — Beginning next month, Chrysler LLC will offer enhanced packages on 12 key vehicles as part of a new marketing initiative, said Deborah Meyer, the automaker’s chief marketing officer. The New Day Celebration, as the program is called, is part of Chrysler’s effort to offer more value instead of resorting to heavy incentives. The vehicles will have “56 features and value packages that respond to dealer and customer feedback,” Meyer said here last week at the Automotive News World Congress. Chrysler started building vehicles for the program this month. Meyer said the package combinations will be a permanent part of the Chrysler lineup. Some examples: The base Dodge Grand Caravan SE minivan will offer Stow ’n Go seating for the first time. The Dodge Caravan SE Plus will offer Sir- uled April launch. Meyer also said Chrysler will inaugurate a permanent customer advisory board that will give consumers a “direct line into the company” and “a voice in decisions for upcoming product decisions.” Other consumer panels also are planned, each geared to individual products, she said. One of the first will be a group of young female Dodge customers. Meyer was coy about Chrysler’s plans for Super Bowl advertising. The automaker will have no national Super Bowl commercials, but she declined to rule out regional spots. She said future Chrysler marketing will focus on “microconnecting” using a variety of traditional and nontraditional media to get its message to customers. The messages will be geared to regions and to groups of customers. Meyer joined Chrysler last year as a highprofile recruit from Toyota Motor Corp.’s Lexus unit, where she had headed the luxury brand’s marketing. c JOE WILSSENS Chrysler marketing chief Deborah Meyer says the automaker will convene a permanent consumer panel.
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