The gloomy forebodings in the automotive industry have gotten a name. It is a study by Alix Partners on the industry outlook for 2009 and the coming years. Already its headline "Even though I walk through the Valley of Darkness" is a portent of depression.
Since past Friday, the gloomy forebodings in the automotive industry have a name. It is a study by Alix Partners on the industry outlook for 2009 and the coming years. Already its headline "Even though I walk through the Valley of Darkness" is a portent of depression.
Its content is not very encouraging indeed. In a nutshell, it states that the global automotive industry has huge overcapacities which over the years to come will inevitably lead to a hefty shakeout. And that the suppliers are affected even worse than the OEMs. Actually, not all suppliers are affected equally, but the study does not say much about which ones have better chances than others. In Europe, 30 to 50 percent of all suppliers are in danger to fail, the study says, and the share of 'healthy' suppliers has melted off from its long-time average of 30 percent to only 10 percent currently. Against the background of adverse macroeconomic factors, no fast recovery can be expected, the experts say.
Nevertheless, bible experts won't be scared by these predictions. They know that the continuation of the abovementioned psalm 23 is "I feel no evil for you are at my side".
For this reason, let's look which factors in the current constellation could convey a quantum of solace. Indeed, there is something. While the crisis won't completely spend semiconductor manufacturers and electronic system vendors, there are clear hints that electronic solutions will provide the silver bullet for the automotive industry.
For the future, the industry finally has understood that electric drive concepts which span the entire spectrum of hybrid approaches to all-electrical drives will help the industry to survive even in markets that are at the verge of entering the age of individual mobility. (Unfortunately, these are the only markets where one can expect significant growth in the mid- and long-term). In engineering terms, it is clear where R&D has to focus on: A generation of engineers will be dedicated to battery-related research; governments have opened their wallets to fund the research until market maturity.
While it is yet unclear if the European industry will be able to eventually catch up with leading countries such as Japan, Korea and, in the near future, China, it is an encouraging hint that the monetary flow has started. And for electric drives, power electronics will be indispensible. Thus, vendors of power MOSFETs, IGBTs and the like have reasons to survive the purgatory.
In the meantime, the industry will go on an optimization spree for conventional engines, and again, they will have to ask electronics to help out. Fancy tricks that help to improve efficiency and emission characteristics such as performance map ignition control and valve adjusting or individual valve control ask are only possible if engineers throw lots of sensors, processing power and algorithms at them. Automatic transmission optimization, exhaust gas treatment, double turbo charging none of these features does in without sophisticated electronics, let alone the telematics and assistant systems to be expected that help to optimize traffic flow. The electronics content of future car generations, this has become clear at a high-level automotive conference last week, will increase even more than predicted hitherto.
In a Harry Potter movie, Ron Weasly asks "is it allowed to be afraid now?" after they both catch glimpse of some terrible monster. With the monster being the current market situation, the answer could be "yes, and seriously."
But if you are an electronics engineer, don't give you the creeps for too long. The mechanics will need your help soon.