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RICARDO QUARTERLYREVIEW

GM’sGlobalEngine

Q4

, 20

05

GM’sGlobal EngineGeneral Motors, Ricardo and the world-class V6 for Cadillac, Buick, Holden, Saab and more

Ricardo changes gearJohn Grififths of the FT interviewsoutgoing CEO Rodney Westheadand new CEO Dave Shemmans

The ¤5000 carRicardo route-map for low-cost cardevelopment and manufacture

InterviewKoichi ‘George’ Fukaya, CEO of Denso Corporation

Ricardo changes gearJohn Griffiths of the FT interviewsoutgoing CEO Rodney Westheadand new CEO Dave Shemmans

The ¤5000 carRicardo route-map for low-cost cardevelopment and manufacture

InterviewKoichi ‘George’ Fukaya, CEO of Denso Corporation

Head office:

Ricardo plc, Shoreham-by-Sea,West Sussex, BN43 5FG, United Kingdom Tel: +44 (0)1273 455611

Ricardo contacts and locations:

www.ricardo.com/contacts RQ subscriptions: www.ricardo.com/rq Sales enquiries:

[email protected]

Conceived and produced for Ricardo by:

TwoTone Media Ltd Editor:Tony Lewin Contributors: Mark Roberts, Anthony Smith, John GriffithsTwoTone Media Ltd contacts:

Anthony Smith: [email protected] Tony Lewin: [email protected]

ContentsRICARDO QUARTERLYREVIEW Q4, 2005

RICARDO QUARTERLYREVIEW

news

04 Industry newsGermany embraces hybrids at the Frankfurt show; hybridalliances form; Tokyo highlights hydrogen; Mack’s hybridheavy; VW downsizes engines; PSA-Ford’s new diesels

24 Ricardo newsFinite element software package launched; softwareconference scheduled; Ricardo opens new offices inChina and Japan; Ricardo supports new Renault NVHfacility

questions and answers

06Handing over the controlsAs Dave Shemmans takes over the Ricardo CEO’s mantlefrom Rodney Westhead, John Griffiths of the Financial

Times speaks to both men about the company’s past,present and future

18 Koichi FukayaThe president of Denso, the world’s fourth-largestautomotive supplier, tells Tony Lewin about hisambitious plans for Europe – and his ideas on safetysystems

features

10 General Motors’ Global V6To power its huge variety of nameplates into the nextdecade, GM needed an advanced but versatile base V6engine that could be developed to suit each brand’sindividual characteristics. Working with Ricardoengineers, GM developed the Global V6 in record time.Anthony Smith reports on a state-of-the-art design that iscomfortable in a Cadillac, sporty in a Saab – and just ashappy in a Holden or a Buick

20 A car for €5000The success of the Renault-Dacia Logan has reawakenedautomakers’ interest in low-cost cars for emergingmarkets. Ricardo Strategic Consulting has taken an in-depth look at every step of the design and assemblyprocess and, as Tony Lewin reports, has come up withkey strategic recommendations for companiesconsidering entering the €5000 market

10 06

2018

Industry News

New

s in

brie

f Lexus launches 2nd hybridAmid all the excitement about hybrids at the Frankfurt show, just one newproduction hybrid waslaunched: the rear-drive Lexus GS 450h

HCCI collaborationGM, Bosch and Stanforduniversity are launching athree-year research programmeinto Homogeneous ChargeCompression Ignition, tipped asa highly promising technology

Green number platesGermany is consideringintroducing three differentvehicle number plate types to indicate the level ofparticulate emissions ofindividual vehicles

Return of the two-stroke?Daihatsu’s twin-cylinder2CDDI-II two stroke dieselconcept uses turbo andsupercharging to extract 65 kWfrom 1.2 litres. NOx emissionsare low, says Daihatsu

04 RICARDO QUARTERLY REVIEW • Q4, 2005

The German auto industry has atlast embraced hybrid technology

as leading automakers and suppliersrevealed concepts and prototypesystems at September’s auto show inFrankfurt.

German companies have longinsisted that advanced diesels are amore effective fuel-saving solution,but have bowed to market pressurefrom the US where hybrids havegained a high profile thanks to thesuccess of Toyota’s Prius. Publicconcern has also been raised in thewake of air-quality alerts in severalGerman cities earlier in 2005.

Mercedes-Benz showed twoalternative hybrid versions of its new S-Class sedan, the Direct Hybrid combinedwith a 3.5 litre V6 gasoline engine andthe Bluetec Hybrid using a 3.0 litre V6diesel. The diesel is notable for its use ofselective catalytic NOx reduction,DaimlerChrysler claiming it to be thecleanest diesel car in the world.

BMW surprised many byannouncing that it was to join the GM-DaimlerChrysler alliance to build atwo-mode hybrid; it had already beenco-operating with transmission

Mack Trucks has developed a prototypehybrid electric powertrain for Class 8heavy duty trucks. Built in conjunctionwith the US Air Force Advanced PowerTechnology Office, the powertrain isinstalled in a 6x4 Mack chassis hauling a6000 gallon Air Force refuelling tanker.The 107 hp electric motor, control andbattery systems were supplied by EnovaSystems and help improve the economyof the 12 litre diesel engine powering the11 metre, 33 tonne vehicle.

Mack is part of the Volvo trucks group,which also revealed its new range of FHand FM trucks. Powered by all-newengines of 13 and 9 litres, they meetupcoming EU4 and EU5 heavy dutyregulations and, equipped with SCRcatalytic NOx-reduction technology, areclaimed to be the cleanest trucks everproduced by Volvo.

Text

supplierZF on hybridsfor rear-drive luxurycars. Some of that technology wasshown in the BMW Active Hybrid, aconcept vehicle based on the X3 SUVand designed to show theperformance-enhancing potential ofhybrid powertrains. The concept’smajor innovation is the choice of ultracapacitors – ‘Super Caps’ in BMW’spromotional material – to storecaptured braking energy.

Super Caps allow much fasterabsorption and discharge of energy,

says BMW, leading to rapidacceleration and a 20 per centimprovement in European drive cyclefuel economy. The e-motor and powerelectronics are packaged within theenvelope of a standard automatictransmission, simplifying packagingwithin the vehicle.

Separately, ZF and Siemens VDOannounced they were to form apartnership aimed at offering hybridsolutions at all levels to the world’sautomakers, while Getrag showed abroad range of transmissions withintegrated electric drive motors.

Hybrid fever grips Frankfurt

US Air Force tests diesel hybrid tanker

BMW’s active

hybrid combines new

High Precision Injection engine

with Super Cap hybrid system

Ford promises more hybridsFord chief executive Bill Fordwants to boost hybrid salestenfold by 2010, installing 250,000units of hybrid capacity in a bid tocounter the domination of Toyotaand Honda

Nissan measures gas In collaboration with Stanforduniversity and Physical ScienceInc., Nissan engineers havedeveloped the world’s firsttechnology to measure in-cylinder gas temperatures

Prius wins green surveyGerman car organisation VCD hasawarded gasoline cars the top tenplaces in its annualenvironmental impact listing,criticising the diesel Golf for notoffering a particle filter

Bush incentivises cleaner carsTax credits between $1700 and $3000 will be available forhybrid and lean-burn vehicleowners from next year undernew laws passed by the UnitedStates Congress

RICARDOQUARTERLYREVIEW

Q4, 2005 • RICARDO QUARTERLY REVIEW 05

Hydrogen, in a variety of differentpropulsion systems, was the

flavour of the Tokyo show in October.Honda, Toyota and Suzuki all

showed next-generation fuel cellconcept vehicles, the latterincorporating General Motors by-wireknow-how. Mercedes-Benz presentedperhaps the most realistic proposal inthe shape of its B-Class-sized F600Hygenius, while Mazda unveiled yet

another twist on its rotary theme – ahydrogen-fuelled rotary linked to ahybrid drivetrain in the Premacycompact SUV body.

Toyota showcased the latest in itsin-house fuel cell technology with theFine-X concept, a Camry-sized sedanwith wheel motors and independentsteering at all four corners allowing itto turn 360 degrees on the spot. Anew 70 Mpa high-pressure hydrogentank, also developed in-house, furtherimproves the vehicle’s range.

Honda, for its part, displayed the FC-X, a sleek four-seater with its fuel cellstack mounted centrally under thefloor. Honda says it has halved thesize of the stack and doubledhydrogen storage capacity to providea range of over 500 km. It is capable ofstarting at ambient temperatures aslow as –20°C, says Honda.

Presenting the F600 Hygeniusconcept, Mercedes-Benz R&D directorThomas Weber said that its fuel cellsystem was 40 per cent more compactthan previous versions, yet moreefficient and powerful. Energyconsumption was down by 16 percent, he said, thanks to regenerativebraking, while power had risen to 115hp. Consumption is the equivalent of2.9 litres of diesel per 100 km.

Tokyo on a hydrogen high

Smaller, but higher-powered engines arefast becoming a production reality.Volkswagen has launched its novel 1.4litre Twincharger (right), a direct-injectiongasoline four cylinder with both turbo-and superchargers. Installed in the Golf GT, it gives 170 hp yet returnsconsumption of 7.2 litres per 100 km.

At Tokyo VW showed a lightweightEco Racer sports car achieving 230km/h and 3.4 litres per 100 km from anext-generation turbo diesel of 1.5 litresand 136 hp.

PSA and Ford also claimed to be in theforefront of the downsizing trend with itslatest generation collaborative diesels.The 170 hp dual sequential turbocharged2.2 litre unit for passenger cars has theperformance normally associated with a2.5 litre, says PSA.

Downsizing becomes real

Mercedes R&D chiefThomas Weber:fuel cells now 40 per cent more compact

The task of RQ is to highlight the latestthinking in automotive engineering andtechnology worldwide – both withinRicardo and among other leadingcompanies. By presenting an up-to-datemix of news, profiles and interviews withtop business leaders we paint aninteresting and exciting picture of R&Dactivity at a world-class automotiveengineering services provider.

It is a formula that has certainly been ahit with the worldwide automotivecommunity: in the four years since RQwas launched we have had to increaseour print run to 14,000 copies to keeppace with the demand to read aboutRicardo and its activities.

Client confidentiality is of the utmostimportance to Ricardo, which means thatwe can only report on a small fraction ofthe work carried out by the company. Sowe are especially grateful to thoseRicardo customers who have kindlyagreed to co-operate with RQ and allowtheir programmes to be highlighted inprint: without such help from customers itwould not be possible to present such afascinating insight into the way vehiclesare conceived and developed.

Westhead’s retirement, after a careerwith Ricardo lasting 13 years – hearrived as finance director – comes atwhat he describes as “a point oftransformation” for the consultancygroup. “In the short term we arecoming out of a grim 2003-2004.

Results were at a low point but wenow have a recovery which iscontinuing in line with expectations.”

He does not exaggerate about thegrimness of 2003-2004; the worst yearfor a decade, in which Ricardorecorded a loss of £2.8m and, as partof cutting costs and getting back ontrack, found itself making a quarter ofits 1,000-strong UK work forceredundant. In mid-September of thisyear, Westhead was able to announcea return to profit – of £7.9m, on aturnover 9 per cent higher at £159.9m.

The recovery, driven mainly by fast-expanding business in Asia and thedevelopment of a new strategicconsulting arm, is taking Ricardorapidly away from its nightmare oforder cancellations by a faltering

In early November RodneyWesthead, chief executive of Ricardofor the past nine years, is

implementing a strategy shift – forhimself. “What do I do now? Rest a bit,take time to travel, a lot more sailingand I’m into old cars.”


RQ Interview – Rodney Westhead and Dave Shemmans

GENERATION CHANGEAfter almost a decade in the CEO’s chair, duringwhich he gave Ricardo’s automotive consultancy itsglobal footprint, Rodney Westhead is handing overthe controls to Dave Shemmans. To mark theoccasion, we invited John Griffiths of theFinancial Times to talk to both men about thelessons of the past and the challenges that lie ahead

Western auto industry two years ago,and towards what is intended to be arenewed phase of growth aimed atachieving profits of around £20mbefore the end of the decade. “Ordercancelling is one of the realities of lifeall around the world. But I have neverseen cancellations on that scale: fourin four months,....” Westhead recalls.

“Spread over time you can handle it;but that time was simply taken away.”

The speaker this time is not Westheadbut Dave Shemmans. It was toShemmans that the task fell ofimplementing the redundancies. And it isto him that the task will fall of managingtransformation and setting the strategiesfor taking Ricardo towards its earningsgoals. The 39-year-old electronicsengineer is stepping into Westhead’sshoes as CEO. He joined in 1999 asbusiness development manager forRicardo Consulting Engineers, becomingbusiness development director for thegroup as a whole and managing directorof Ricardo Consulting Engineers byDecember 2003. In February of this yearchairman Marcus Beresford handed himspecific responsibility for handling theimmediate future’s operating plans, inpreparation for Westhead giving upcontrol.

Shemmans is taking the helm of abusiness which Westhead has alreadymoved a long way from its roots as analmost entirely UK-based engineengineering consultancy dependent for80 per cent of its business on the twobig US auto makers. This dependency


has been cut sharply and both thegeographical footprint of the businessand the areas of consultancy activitygreatly extended.

“We’re now truly global,” saysWesthead. “There are few customersleft in the UK. Thirty per cent of thecustomer base is now in the Far East.We have offices in Tokyo, Shanghai,Stuttgart and Detroit as well as the UKheadquarters. And we now cover allaspects of vehicles, not just engines,and virtually all manufacturers. It’s fairto say that we’ve already become theindustry’s largest independentautomotive industry consultancy.”

Neither Westhead nor Shemmanscan talk about the business for morethan a minute or two withoutreference to Ricardo’s strategicconsultancy work, potentially thesingle most valuable legacy ofWesthead’s tenure as CEO. “Strategicconsulting gives you huge addedvalue and is sold straight to theboardroom. It is very high marginbusiness and means that we’re nolonger beholden just to services andcan advise companies at the mostsenior level,” says Westhead.

It is already accounting for 15 percent of the business and Shemmansmakes clear that its further expansionwill be right at the top of his ownpriorities list. Creating the business wasnot easy. It took Westhead six of hisnine years as CEO to bring strategicconsulting – “always a gleam in myeye” – fully into being. “But I always

“We’re now truly global: thirty per cent of thecustomer base is now in the Far East. Wehave offices in Tokyo, Shanghai, Stuttgartand Detroit as well as the UK headquarters”

time on the drawing board. But in yearthree of its existence it’s payback time.”

Shemmans sees it as a businesslying at the heart of Ricardo’s future.“The strategic consulting arm willadvise companies on strategy,purchasing, production costs,warranty reduction and businessrestructuring as part of a groupproviding a full spread of professionalengineering services. There’s no-oneelse out there doing all that.”

Adds Westhead: “We’ve got theability, for example, to compare bestpractice with worst on warranties orinvestigate specific product failures.Take electronics. In lots of caseselectronics has got ahead of manycompanies’ abilities to understand theirproblems and opportunities. Wheneverything was all mechanical it waseasy to verify everything. Now it’s a lineof computer code embedded in a chip.In a wider sense, it’s our ability tounderstand markets and predict wherethey’re going that’s important. Sure, wevery occasionally go up some blindalleys, but mostly we get it right.” That,says Shemmans, should not be toosurprising – “We have sophisticatedprocesses for technology road –mapping and forecasting based on atime horizon in excess of 20 years. Andthe results of this work arebenchmarked and validated throughdiscussion with key auto industrypartners and opinion formers.”

But why cannot the OEMs, forexample, do this type of analysis forthemselves, given their size andresources?

Simple, Shemmans and Westheadchime in together: “we’re fleet of footand can undertake something in afraction of the time and at a fraction ofthe cost. We can focus on thetechnology needs of the future withoutthe pressure to focus on the issues oftoday such as plant utilisation. We alsobenefit from being able to talk to thewhole industry. And while 2003 wasvery tough we never stoppedinvesting in technology or companydevelopment.”

The years have taught bothexecutives a lot of respect for someplayers, such as Toyota and BMW,however – as well as inspiringfrustration at the radically differentattitudes between some Western andFar Eastern legislators when it comes

to facilitating the development of newtechnologies.

“Toyota, for example, has got atechnology strategy board which worksincrementally. They work long-term,while pretty well everyone else doescatch-up,” says Westhead. “And it worksin a constructive environment. There arenine hydrogen refuelling stations inTokyo already, so that the Japaneseindustry and government can get tounderstand fuel cells and the necessaryinfrastructure. Then you get UK localauthorities turning down a planningapplication for just one in their area.”

That explains partly why bothWesthead and Shemmans have beenputting so much focus on developingAsia as a big contributor to its turnover.“There are great opportunities there;huge markets for car manufacturers andproduct supply chains leading to aperfect opportunity for strategicconsulting,” says Shemmans.

Close on a third of all Ricardo’sbusiness is now in Asia. NorthAmerica accounts for 25-33 per centand Europe the rest. It used to be 40per cent each with Ford and GM.“Getting out of that was hard work,”says Westhead – but the incentive todo so was obvious. Big Asian playerslike South Korea’s Hyundai andChina’s Shanghai Automotive IndustryCorporation had already made cleartheir intention to join the world’s topfive car manufacturers.

Westhead remains optimistic aboutthe US and Germany, however. “Theirauto economies are suffering badly.But they will get better and theircompanies will come back to Ricardofor help – even though it’s possiblethat we’ll lose one big player along theway. If we’ve been able to grow earlyin Asia it means we will be firing on allcylinders when the rest of the worldpicks up. Despite GM’s and Ford’sproblems, someone in NorthAmerica’s got to be a winner.”

The Chinese game plan

Some 13-14 per cent of Ricardo’s orderbook is now China-related– “and it’sgoing to increase,” says Shemmans.“They want good technology and willpay a sensible price. China’s alsocentrally controlled, so that’s good forstability.

“When we first went there weexpected that Chinese customers

RQ Interview – Rodney Westhead and Dave Shemmans

felt it would be good for Ricardo.”Shemmans is in full agreement. “If

you can create an opportunity by goingin and solving a problem for acustomer you can provide better valuethan the competition. Strategicconsulting helps us do this and takesus upstream. It also enables us to bringin engineers and do higher valueadded work which is frequently beyondthe skills envelope of main-streammanagement consultancies. Also, ifyou’re just talking to technologists youcan run into the not-invented-heresyndrome which means that thecustomer may miss an opportunity toget the very best solution. At CEO levelyou have a huge opportunity to takeeveryone with you.”

Payback time

In some respects, the strategicconsulting business has been set upthe hard way, by building it fromscratch with a specially-recruited staffof people “excited by the opportunityof a blank sheet of white paper,” asWesthead puts it. “We could havegone three ways: as a joint venturewith another consultancy – but Ithought there could then be a risk ofwinding up playing second fiddle. Orwe could buy a second rank company.Or we could recruit. It’s been a long


In some respects, thestrategic consultingbusiness has been setup the hard way, bybuilding it fromscratch with aspecially-recruitedstaff of people“excited by theopportunity of a blanksheet of white paper”

hands over the reins. Westhead,looking back on his time as CEO, ispleased with the global footprint heestablished for Ricardo as a firstpriority. “We would have sunk into thesea if we had stayed in the UK.

“My second priority was to bringcultural change; to become morecommercial. So I invited downcustomers and asked them what weretheir own priorities. It turned out thattheir biggest issue was on-timedeliveries. It was clear we haddelivered too many programmes late –that was terrible for us but it did bringforward the needed cultural shift.”

A people business

Westhead describes his career withRicardo now drawing to a close as“immensely satisfying.” But are theremany things personally left undone?

“There will always be things leftundone. But it’s time to move on andgive the business new direction and newimpetus – there should be no ‘if onlys’.”

Already he has accumulated threenon-executive directorships and isbecoming more deeply involved intraining programmes for the auto andother industries. “And one of thebiggest plusses – having control of myown diary.”

“Ricardo’s is a people business. To doit you have to put yourself at people’sbeck and call. When the Chinese phoneat 4.30am UK time, they are calling fora reason. As CEO you never actively goon holiday – you never stop beingresponsible. Yours is the ultimate andpersonal responsibility. So there’ll be asense of relief. But, that said, I’ll miss itimmensely.”

Shemmans acknowledges that thereare a very great many further activitiesto be developed – we are still only justscratching the surface. It will be myresponsibility to complete the culturalshift into a full professional servicescompany. There must be continuouschange to improve us in all we do.

“I have also got to pay attention toincreasing our technical capability inGermany, where we are recruiting andupgrading after acquiring a subsidiarytwo years ago, and I plan to spend alot of time looking at what’s comingnext in Asia. In Korea we’re lookingparticularly closely at Hyundai.However China has always been afocus for me and will remain so.”

Shemmans acknowledges, likeWesthead, that he is stepping into arole in which non-professionalactivities, of whatever hue, will haveto take a back seat, especially as thecomplex and frequently exasperatingtask of developing Chinese businessprogresses. The upside, he says, is that“this is the type of challenge that Irelish – and it holds the potential todeliver great things both for ourcustomers and for Ricardo.”

The faces and structure of Ricardo’smanagement is also poised for

substantial change.“I’m putting in place my own

management team; bringing on someof the very best people from withinthe organisation as well as recruitingexternally where complementary skillsare required. We can growsignificantly more, given the rightculture and the correct spread of areasand technologies.

“In terms of management style myphilosophy is to give people scaryjobs and space to do them – in myexperience good people withcommon, challenging objectives and ashared sense of mission rarely let youdown.”

would want incremental solutionsusing today’s technology. In retrospectI think that this was a commonmisconception.

What they really seek is ‘leapfrog’technologies which will enable themto compete with the best products onan international basis.” Both menpredict that the Chinese auto industryis going to compete directly withWestern car makers in an industrywhere over-capacity is rife – “andsome may not fully appreciate thethreat,” says Shemmans.

Ricardo is already well under waywith SAIC following the Chinesegroup’s acquisition of the intellectualproperty rights to the collapsed MGRover group’s Rover 75 and 25 models.

Both also concede, however, thatthe China boom for Ricardo and othertechnology suppliers may be relativelyshort lived. “My personal view is thatthe prospects for Chinese business interms of technology supply is shortterm and that when the time comes

China will turn it off and goindependent,” says Westhead.

The Chinese game plan stretchesfurther back into the past than manyrealise, says Westhead. “Twenty yearsago they were identifying their targets.And look closely and you’ll find thatthere is currently an exodus of Chineseguys from Western car plants whocame here 10 years ago. Now they’rereturning home to set up greenfield carplants. We’ve probably got five yearswhere they’ll be buying everything wecan sell them – but ten years from nowthey’ll be fully self-sufficient.”

They are challenges soon to be facedalone by Shemmans as Westhead

00 00

“There will always be things left undone. But it’s time to move on and give the business new direction and new impetus –there should be no ‘if onlys’”



GM Global V6 Engine

With the launch of the CadillacCTS, GM unveiled a radicalnew departure in vehicle

styling, described at the time as amodern interpretation of the strikinglybeautiful cars for which the Cadillacname had originally become famous.

But beneath the skin, the powertraintechnology used for the 2004 modelwas no less radical an innovation. Acompletely new 3.6 litre gasoline V6engine was announced, feature-rich innew technologies. It boasted forexample an all-aluminiumconstruction, four valves per cylinder,dual overhead camshafts for eachbank, a finger follower valve train withdual independent continuouslyvariable cam phasers, and a variablegeometry intake system.

Its performance was no lessimpressive. Compared with itssimilarly sized predecessor, the newengine was capable of delivering 20per cent more peak power, 13 per centmore peak torque and crucially interms of customer perceptions ofpowertrain performance, a massive 24per cent improvement in what GMcalls torque-integral – the amount oftorque available across the operatingspeed range.

Moreover the refinement of the newengine set unparalleled newstandards, both in terms of reducedsound levels and in qualitativeimprovements to the sound actuallytransmitted to the vehicle occupants,providing a rich and rewardingauditory experience.

Such a range of fresh innovationswould have been impressive for a

At the turn of the last decade GM embarked on an ambitious programme tocreate a truly class-leading V6 engine capable of global implementation – andat the same time create an innovative new template for powertrain productdevelopment. Anthony Smith reports on the Global V6 engine team whichswept away the old rules, delivered a truly world-class product and set newstandards in performance, quality and time to market


“it’s all about the engine”

single new engine, but this was noone-off. Instead it was just the firstvehicle in the roll-out of GM’s newGlobal V6 engine family, a high featureplatform upon which the futurepremium V6 strategy of the companyrested. In the subsequent 2005 modelyear as well as this summer’sannouncement for the 2006 line up,numerous derivatives of this sameengine platform have been announcedacross North America, Europe andAustralia, each quite different inmeeting the precise needs of therecipient vehicle but nonethelessbased on the same core enginetechnologies.

But to understand how GM came tobe in this dominant market positionfor its global range of premium V6products, we need to turn the clockback to the final year of the lastdecade, and to the start of a uniquecollaboration between GM and arange of partners and suppliers,including Ricardo.

As GM’s European premium brand, Saab has

the first turbocharged application of the

Global V6 engine.

for re-engineering of the basicstructure. It also needed to be able toaccommodate varyingimplementations of an extremelyfeature-rich technology portfolioreflecting the very different needs ofeach brand and vehicle product.

There was one fundamentalproblem however: with its existingpowertrain engineering commitmentsGM lacked sufficient internal resourceto deliver the programme; moreover,it would need the new engine in ashorter time than was usual for a


“We need a new engine – and we

need it quickly”

Towards the end of 1998 GM hadmade the strategic decision that itneeded a competitive andcontemporary gasoline V6 enginearchitecture that it could deploy acrossits global product lines. Thearchitecture would have to have aconsiderable flexibility designed infrom the outset.

It needed to be capable of deliveryin products across an extremely widerange of capacities without the need

product development taskof this scale. A conventional out-sourcing approach could haveprovided sufficient resource but thiswould have been inappropriate for astrategic ‘platform’ level product ofthis nature, which for its successneeded to be designed toaccommodate at a detailed level therequirements of the company’s globalpowertrain manufacturing facilities aswell as its numerous vehicleprogrammes. A new approach wasneeded – and it was needed fast.

Daring to be different

GM Powertrain had a track record ofworking successfully with Ricardo onits gasoline programmes. In Europe ithad recently completed the 4 cylinderEcotec (L850) programme in whichRicardo engineers had worked bothon and off-site in assisting in enginedevelopment for the market. GM hadbeen impressed with Ricardo’s workon this programme but the new highfeature V6 engine required afundamentally new approach. Ratherthan have suppliers work with the in-house team using in-house processes,GM senior management decided that,subject to clear strategic developmentobjectives and budgetary control, the

GM Global V6 Engine

GM Buick Lacrosse hosts a 3.6 litre, 240hp

version of the new V6 engine

The Global V6 concept

GM’s global V6 family is intended toact as a common, technology-richengine platform from which a widerange of products can be deliveredwith performance and a feature basereflecting individual vehicle needs. Allglobal V6 engines will employ:

• All-aluminum construction

• Dual overhead camshafts

• 4-valve-per-cylinder valvetrain

• Roller-finger follower valvetrain

• Electronic throttle control

• Durable forged-steel crankshaft

• Piston-cooling oil jets

• Coolant-loss protection software

• GM’s Oil Life System

• 32 bit microprocessor

• Coil-on-plug ignition

Capacities:

2.8L, 3.2L and 3.6L already rolled out;displacement is capable of expansionto 3.8L or as large as 4.0L in parentbore configuration

Valvetrain:

Most implementations feature twincontinuously variable cam phasers

Combustion systems:

MPFI, SIDI, Turbocharged MPFI

Powertrain configurations:

FWD, RWD and AWD

Intake system:

Can be fitted with dual-stage variable intake manifold (VIM)

new team needed to have muchgreater autonomy and authority toestablish its own developmentprocesses. In this way some veryserious and stretching challengescould be set which might nototherwise be deliverable within theprevailing product developmentregime of the parent organisations.

GM senior management made itclear that it wanted both itself andRicardo to commit the best peopleavailable to the project, all of whomwould need to be co-located at aproject centre close to GM Powertrainheadquarters at Pontiac, in thenorthern suburbs of Detroit. InFebruary 1999, within two months ofthe initial approach, GM and Ricardohad assembled a team of engineers

ready to commence work. The teamwas comprised of existing GMPowertrain staff and volunteers co-opted from Ricardo operations inEurope as well as some alreadybased at the company’s US DetroitTechnical Campus. After a few briefweeks working in temporaryaccommodation (‘trailers in the carpark’, as many of the teamrecall), permanent premiseswere located and the so-called PlymouthTechnical Center wasborn.

The ARV ‘learning’

engine

Despite itsambitiousultimateobjectives, theprogramme initiallystarted as a one yeardesign study to design,develop and manufacturein prototype form aproof of conceptdemonstrator or ‘learning’engine. It was codenamed ‘ARV’ inhonour of the then GM Powertrain

executive vice president, ArvMueller.

The team knew that itneeded to be better than thebest of the competition, so itcommenced with a detailedbenchmarking study. AsGM’s Bob Jacques, base

engine design systemengineer, explains, “we

insisted on going after highperformance and high refinement at

the same time.” By purchasing and analysing every

detail of the very best competitorengines, the team could establishsome very challenging design criteria.The attitude of the team was verymuch one of “Go beat everyone”, hecontinues. “You name it – if there wasa good V6 out there we found out howand why it was good.” The teamestablished a strict priority list for thedesign, a list of statementsrepresenting yardsticks against whichall work – absolutely everything – wasto be measured: ‘Reliability, Flexibility,Package Size, Value, Pleasability,Efficiency, Precision, Serviceability,and Environmentally Friendly’. This listwas truly owned and internalised bythe team – to the extent that it evenappeared on the stationery used for all

internal presentations andcommunications.


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.

By August 1999 things wereprogressing extremely well. A highlypromising concept design had beenproduced and the team was on-trackto deliver the prototype in the earlypart of the following year. GM seniormanagement was impressed with theteam – so much so that it upgradedthe status of the design study to thatof a full scale production programme.

But it set some very challengingtargets too. It needed to have the newengine family, by this time christenedthe Global V6, ready for its firstproduction roll-out in 2003, allowing 14months less than called for in theprevailing in-house developmenttemplate. It also wanted the ‘learning’engine delivered by the end of the year.

These were no small challenges but,of the two, production of the conceptengine was perhaps the easier to dealwith. In order to buy time and resourcefor the main programme team atPlymouth, detailing and prototypeproduction of the ‘learning’ engine washanded over to a supporting team


rapidly established in Europe. In themeantime the main Global V6 team setabout the more onerous task ofplanning and delivering a highlyaudacious programme which wouldtest the mettle of all those involved.

“It’s all about the engine”

Tim Cyrus, GM chief engineer for theGlobal V6 engine family, joined theprogramme at around the time of thischange and explains how the teamwas able to focus completely upon thetask of delivering the engine:

“We effectively insulated theengineers from everything associatedwith the organisation andadministration of the programme.They needed to concentrate on thereal job of delivering the programme:they were completely focused and justkept reminding themselves: ‘it’s allabout the engine’”.

Given that at the outset the standardGM development template was 14months longer than the time availableto deliver the new engine, the team set

about defining its own developmentprocess based on first principles. Thestarting points for this were the keydeliverable dates for each prototypeengine; these were in effect set in stoneand the team then worked backwardsfrom this to establish a programme ofwork capable of delivering each phaseof the programme. Intensive math-based CAE methods were used toensure that designs were as far aspossible right first time. The effect ofthis was that while the up-frontengineering effort was more intensivein the early stages than mightotherwise have been the case, theoverall time scale and total resourceneeded was much less; so much so thatthe project even returned budgetedfunds to GM in the latter stages.

Making an event of ‘first fire’

An innovation introduced by theoriginal Ricardo chief engineer, AlanWarburton, was crucial to thedevelopment of the highly focusedand high-functioning team-working

In the 2004 and2005 modelyears, the GlobalV6 engine familyfoundapplication inboth the Cadillacand Buickbrands in NorthAmerica, as wellas Holden inAustralia.Announcementsfor the 2006model year line-up include Saabin Europe

GM Global V6 Engine

“We effectively insulated the engineers fromeverything associated with the organisation andadministration of the programme. They needed toconcentrate on the real job of delivering theprogramme: they were completely focused and justkept reminding themselves: ‘it’s all about the engine’”. Tim Cyrus, GM Chief Engineer for the Global V6 engine family

Cadillac

CTS20043.6L PFI190 kW (255hp)6200346 Nm (255lb.ft) 3200VVT, VIM

Cadillac

CTS20052.8L PFI157 kW (210hp)6500263 Nm (194lb.ft) 3300VVT, VIM

Cadillac

SRX20053.6L PFI194 kW (260hp)6500344 Nm (254lb.ft)2800VVT, VIM

Brand

Model

Model Year

Capacity

Peak Power

@rev/min

Peak Torque

@rev/min

Contentvariations

KEY:

PFI – port fuel injectionVVT – variable valvetimingVIM – variable inletmanifold

The roll-out plan so far


culture, reminiscent more of aFormula 1 or NASCAR race team thanmain-stream automotivedevelopment. Warburton institutedmilestone ‘first fire’ eventssurrounding the delivery of eachprototype level.

A celebration would be arranged atwhich senior managementrepresentatives would be invited toattend in order to start the newprototype for the very first time. Thehigh profile given to these eventsappears to have been a significantsource of motivation for the team: anatmosphere of intense excitement andanticipation would be mixed with asense of complete and total collectiveaccountability. As with a race, therewas only one chance to get it right andthe team had to pull together and relyupon each other in order to deliver.

While the team had high levelsponsorship and support from withinGM, the accountability that came withit was not to be underestimated.“When I came to this role I soonrealised that this was the first job Icould really get fired from”, says Cyrus,only half joking. “We were givenfreedom to define our own processesand procedures but if things wentwrong, there would be no-one there tostop us from pushing the

organizationalenvelope.”

The effect of thishigh level of focus,ownership andaccountabilityappeared to havemotivated the team to goto any lengths to deliver. AsRod Beazley, Warburton’ssuccessor as chief engineer forRicardo, explains, “it was notunknown for engineers to come invery early in the morning to makemore time in the day and findcolleagues still working from the nightbefore – not because anyone toldthem to; they just wanted to.”

Picking the right team and

promoting efficiency

In the early stages of the programmeRicardo needed to increase theengineering resource rapidly in orderto meet GM’s requirements, and therewas clearly a limit to what could be

delivered by the existingstaff. Membership of this

highly performing team was not foreveryone, however, and it wasimportant that any new recruits wereas capable and as motivated as themembers of the team which they wereabout to join.

For designers in particular it wasimportant that recruits were multi-skilled and able to operate as all-roundengine engineers as well as CADoperators. The solution was what BobJacques terms the ‘entrance exam’, a

Cadillac

STS 20053.6L PFI189 kW (254hp) 6500339 Nm (252lb.ft)3200VVT, VIM

Buick

Rendevous20043.6L PFI181 kW (242hp)6000315 Nm (232lb.ft)3200VVT

Buick

Lacrosse20053.6L PFI179 kW (240hp)6000305 Nm (225lb.ft)2000VVT

Holden

Commodore20053.6L PFI175 kW (235hp)6000320 Nm (236lb.ft)3200Alloytec'variant of Global V6

Saab

9-3 20062.8L PFI Turbo186 kW (250hp)5500350 Nm (258lb.ft)2000VVT,Turbocharged

Cutaway of the GM Global V6 engine, as fitted

to the Buick Lacrosse

stand-alone design and engineeringtask that each candidate would beexpected to perform in addition topassing the usual job interview: “Allthese years on and well into the roll-out phase, we still use the same basicskills test as a means of filtering newapplicants.”

But getting the right people was onlypart of the challenge – once in the teamit was important that every second,minute and hour of the day was usedeffectively. By carrying out a series oftimed tests of CAD utilisation it wassoon realised that despite using thelatest workstations and software,engineers were spending as much asfour hours per working day simplywaiting for the CAD system to processinformation. The solution typified the‘can-do’ culture of the project: invest ina second workstation for each engineerso that they could work on twoaspects of the design inparallel. The improvementin efficiency wasconsiderable andeven today the workareas of Global V6team engineersback at GMPowertrainheadquarters areeasily identifiedby the presence ofa second CADworkstation oneach desk.

The process ofengine building,central to theplanning of the programme,was also a critical focus of thedevelopment effort. While theprototype engines needed tobe tested off-site, the teaminsisted on having its own buildand inspection facility at Plymouth,as well as its own prototypeprocurement team.

The facility was much smaller thanits equivalent at GM Powertrain

headquarters, but it enabled engineersto have much closer involvement withthe process of development testing.With the co-operation of thepowertrain test team at Pontiac led byDr Prabjot Nanua, the process ofdevelopment testing was carried outin a highly efficient manner.

“We developed extensions to thestandard testing programme to covereach of the intended enginederivatives, and we tried as far aspossible to offer a ‘testing on demand’service”, explains Nanua. “In this waywe could ensure that where failuresoccurred, the lessons learned could bereported back to the team quickly andthe design updated before the nexttest was carried out. This resulted inconsiderable savings both in


GM Global V6 Engine

The Saab experience

Just how versatile the Global V6template is has been amply

proven by the experience of Saab,perhaps the most individualisticand most clearly-defined of GM’sportfolio of marques.

Anders Svensson, vehicle linedirector for the 9-3, homes right inon the reason the programme hasbeen such a success:

“The key thing with this projectwas that we had the opportunity toparticipate from the verybeginning,” he said. “We wereinvolved right the way from thebase engine development back in1999, and we were able to includethe requirements we had for theSaab brand.”

Most of Saab’s requirementswere centred around itsturbocharged applications, saidSvensson. “We had to make surethe base engine would be capableof coping with the power of theturbo, and we also needed toensure that the final engine hadthe correct power characteristics,reflecting the feel of the turboengines we have always had atSaab.”

Svensson describes the engine’storque curve as ‘almost square’,with 90 per cent of peak torqueavailable from 1800 rpm. While thebase engine work was carried outin the US by Saab engineers onsecondment to the Global V6team, the final tuning so critical tobrand feel was carried out inSweden, said Svensson.

“I was amazed at the incredible focus thatthe team had upon the nature of their work –they questioned everything and felt that theprocesses they had developed were themost efficient means of achieving the goalsof the programme” Dr. Polly Bashore

applied in the parent organisation:“I was amazed at the incredible

focus that the team had upon thenature of their work – they questionedeverything and felt that the processesthey had developed were the mostefficient means of achieving the goalsof the programme.” In the event, whilethe simple processes developed bythe Global V6 team could not beappropriate for the wider needs ofGM, the learning exercise led byBashore resulted in a number ofstreamlining improvements to GMPowertrain processes which,aggregated over the entireorganisation, will yield significantbenefits in the years ahead.

The roll-out continues

With the Global V6 team now workinghard on what Bob Jacques terms “themother of all roll-out plans”, the engineis seeing increasing demand fromGM’s worldwide vehicle teams.

Already in production in numeroushighly successful vehicles under theCadillac and Buick brands in the USand Holden in Australia, the Global V6engine is about to make its debut inEurope. It has been announced for

application in turbocharged form forthe new Saab 9-3 including the newSportCombi derivative which theSwedish manufacturer claims is “thefastest production Saab ever.”

Highest-ever quality

If the Global V6 product range hasreceived public plaudits, the team thatdelivered it has been recognisedinternally too. In 2003 they won theChairman’s Honor Award as well as the‘People Make Quality Happen’ prize.

The high level of designed-in qualityat launch was, according to GMmetrics, the highest ever achieved bythe company – a record which at thetime of writing still stands. Back atPontiac, Tim Cyrus sums up the team’sachievements:

“When GM embarked on thisprogramme it wanted to deliver aworld-beating product, and it wantedto improve the organisation ofpowertrain product development. Ibelieve it achieved both.”

And as for his personal experienceof working with this highly focusedteam which still today includes manyRicardo as well as GM Powertrainengineers? “It’s been a lot of fun!”

development time and in the numberof prototype engines required.”

A further innovation in this respectwas the re-use by the engine buildteam of non-critical used parts fromtest engines. Not only did this ensurea more rapid supply of engines for thetest programme but it also savedconsiderable sums in the cost of newprototype components.

Reintegrating the team and

learning lessons

With the manufacturing launch of itsfirst product in the Cadillac CTS, thework of the Global V6 team hadmoved on from base engine design tothat of product roll-out. The team wasrelocated physically, too, as spacebecame available within the large newrecently opened GM Powertrain worldheadquarters building at Pontiac andthe Plymouth Technical Center wasclosed.

Efforts were made to learn lessonsfrom the Global V6 programme whilereintegrating the team back into GM.For example, the configuration ofmany of the working areas of the newPontiac engineering building drewextensively upon the close, team-working principles developed atPlymouth. But some aspects ofreintegration produced tensions, andhere too GM attempted to learnlessons and use the knowledge gainedin a manner appropriate to a muchlarger multi-national organisation.

The process of controlling andrecording engineering release iscrucial to any product developmentprogramme, and the Global V6 teamhad developed a highly streamlinedprocess. GM senior managementtasked Dr. Polly Bashore, a projectmanager with in-depth knowledge ofengineering processes and abackground in adult education andlearning, to investigate the problem.

Bashore admits a certain cynicism inadvance, but on interviewing theengineers from Plymouth she soonrealised that there were some verypositive lessons which could be

Cadillac CTS (right) was the first application of

GM’s global V6.

The GM Global V6 engine (left), as fitted to the

Buick Lacrosse.The GM-Ricardo team (right) in

a rare pause in the programme.


navigation will go up a lot more.European cities are very complicated,so for drivers it’s convenient to have alot of information. Just as in Japan, weexpect that map-type navigation willbecome more popular in Europe andwe see the opportunity for growth.

What is the navigation-systemfitment rate for cars in Japan?It’s between 30 and 40 per cent as afactory fit. Many young people want tobuy their cars without navigation tosave money: after buying their newcar they will purchase a navigationsystem as an aftermarket product at alower price. However, I believe thatthe overall market situation in Japanwill see the factory-fitment rateincreasing.

What is your target for navigationsystems in Europe?In Europe, our target is to have a 10per cent share by 2010, and we wantto be one of the top makers. One of


RQ Interview – Koichi ‘George’ Fukaya

Denso has publicly committeditself to being a European Top Fivesupplier company by 2010. You arecurrently 20th. How will youachieve this?Denso wants to grow by itself,organically. Not by acquisitions. In thepast, we have purchased one or twobusinesses, but to date we don’t haveany plans in this respect.

This will mean your businessmore than doubling. Can youexplain how you will manage this?The business areas we willconcentrate on are car airconditioning, common rail dieselsystems, navigation systems andengine management systems mainlyfor gasoline engines. We are growingsteadily in all these areas, and amongthem air conditioning and commonrail are growing rapidly.

Diesel is now just over half theEuropean car market but it is notexpected to grow much beyondthat – perhaps to 60 per cent. Thiswill mean a big increase inDenso’s penetration of diesel andmaybe taking share offcompetitors.Recently, we’ve been successful ingetting business from Nissan andFord. Now we want to extend intoother businesses. Of course we wantto capture the Japanese carmakersfirst – Toyota and the others. Secondly,we need to think how to approachEuropean carmakers including theFrench groups – Renault and PSA.

Ford is part of a diesel alliancewith PSA. Does this mean you willbe supplying the whole group?We’ll start shipping to Ford by the endof this year. But we cannot reveal

which models our equipment will begoing onto.

How much potential do you see inthe air conditioner market inEurope?The air conditioning installation rate inEurope has already passed the 50 percent mark and is now approaching 60per cent. Looking at other areas suchas Japan and North America, theyhave 95 or 97 per cent installationrates. So I expect that in Europe theinstallation rate can reach more than85 per cent by 2010. Our share [of theEuropean market] is about 21 per cent,although three or four years ago thefigure was just 16 per cent. Our nexttarget share in Europe is more than 30per cent.

Do you see a big future for CO2

air conditioning? You were thefirst to demonstrate a prototype.We haven’t got any plans for CO2 airconditioning. It’s only fitted to fuel cellvehicles in Japan and it’sstill very expensive.Because of the highpressures involved, variousareas need more designwork on them before wecan market it commercially.I don’t think any carmakershave any specific plans [touse CO2 air conditioning] atthe moment.

Do you have plans toenter any other marketsegments in Europe inorder to boost yourshare?Our third area is navigationsystems. The turn-by-turnnavigation market is flat orgoing down: map-type

MAN OFMANYPARTSDenso, spun off from Toyota 50 years ago, isamong the world’s most successful suppliers.Tony Lewin spoke to its CEO, Koichi ‘George’Fukaya, about the group’s ambitious plans forexpansion in Europe – and globally

keeping assist system is useful too. Many traffic accidents are caused by

the driver’s lack of attention, often dueto sleepiness. For example, whentrucks are running on the highway,

often as late as midnight, some ofthe drivers become drowsy in the

dark and can fall asleep. So we canprevent accidents by monitoring thedriver’s condition. To monitor thedriver’s condition, various biologicaldata can be utilised, including hiseyelids, the blood pulsation in hisfingers and the heart rate. We want tointroduce these technologies in theglobal markets including Europe.

What about pedestrian protection,which is very much an issue inEurope right now?We are now developing varioustechnologies for pedestrian protection.The vehicle body itself is designed andproduced by carmakers. But toimprove potential pedestrianprotection it is effective to increase thecrushable zone in the vehicle’s front.And we can develop thinner, smallerheat exchangers including radiatorsand condensers, giving car designersmore room to improve the pedestrian

impact absorbing performance of thefront end. Another example is apedestrian sensing system. If thesystem correctly detects anddistinguishes the pedestrian, forexample, a man standing on one sideof the road, or on the other side somechildren running after a ball, thesystem would warn the driver.

Are these systems on sale in Japan?Not yet – they are under development.We’re developing some of thesetechnologies jointly with carmakers.

Are you happy with thegeographical distribution of yoursales, being so heavily weightedtowards Asia?In each region we simply want to beseen as the most excellent supplier.The ratio of one region to another is

our strengths is the navigation coreLSI (large scale integrated). Thisautumn we launched our new LSI,jointly developed with Toshiba, thatprovides 600 MHz high-speedprocessing: the highest frequency inthe world for automobile use. Thisproject required so much effort thatDenso and Robert Bosch created ajoint venture, ADIT. This company hasalready been successful in developingthe next-generation LSI for newnavigation systems. Using this [core]technology, Robert Bosch and Densoare each developing their ownnavigation systems separately byadding software such as map data.

Are there any other productgroups that interest you?The next business area we want tofocus on is safety. In Japan over 7000people are killed in traffic accidentsevery year. This is a huge number.We’d like to halve the total, or ideallyreduce it to zero – so safety isextremely important. Denso isdeveloping a variety of safetytechnologies which would also beapplicable in Europe. We want to sellmore safety systems in Europe.

What particular systems wouldyou like to bring to Europe?Last year, we introduced a pre-crashsafety system and adaptive frontlighting (AFS) system in Europe. Thepre-crash safety system senses anobstacle prior to a collision,automatically tightens passengerseatbelts, and helps activate the brakesystem to reduce vehicle speed. TheAFS can improve visibility duringnight-time cornering and contribute tosafer driving.

Another example is the adaptivecruise control. This has already beendeveloped and introduced forpassenger cars, but we feel it should beapplied to heavy duty trucks so that wecan avoid rear-end collisions. Our lane-


Koichi Fukaya

2003 President and CEO of Denso Corporation

2002 Senior managing director in charge of the Production Promotion Centre, responsible for strategic planning and implementation of production technologies for Denso

1995 Appointed to the board of directors and named president of Denso Manufacturing Michigan Inc.

1967 Graduated from Kobe University with a Bachelor of Science degree in Electrical Engineering

1966 joined Denso Corporation (formerly Nippondenso Co. Ltd.) after graduating with a degree in Mechanical Engineering from the Tokyo Institute of Technology

1944 Born in Hyogo Prefecture, Japan

only a second priority. In Europe, ourpresence is still low, so we want toexpand our business in Europe.

What differences do you find indoing business with Japanesecarmakers, European carmakersand North American carmakers?The relationship between the supplierand the carmaker is very different ineach area. In the US Visteon andDelphi used to be divisions of Fordand GM, so they’re already like ateam. European suppliers are totallyindependent – Robert Bosch, Siemens,Valeo and so on. In Japan it’s midwaybetween these two extremes. We werespun off from Toyota more than 50years ago: we are officiallyindependent, though mentally there isstill some relationship. I think the basicrelationship between the supplier andthe carmaker is co-existence or co-prosperity, and this has been a verysuccessful relationship for us.Carmakers’ requirements are verysevere, but we do our best to meetthem – and this helps Denso tostrengthen its competitiveness andincrease its business with othercarmakers outside Japan.

What will be the biggest growthareas for Denso in Europe in thenext ten years? Car air conditioners, or common raildiesel systems – they’re the biggestbusiness areas for us. But after 2010the safety business area will becomebigger.

Denso has developed

LSI core navigation technology

jointly with Toshiba (above):

Range Rover navigation system (below right)

is a Denso product.


Strategic Consulting – The ¤5000 car

There were many scepticalcomments when Renaultannounced in 1998 that it was

considering developing a car to sell at€6000 in emerging markets. Somedoubted whether a car could possiblybe built for such a low price; othersopenly questioned whether therewould be sufficient demand for such avehicle. Still more commentatorsscratched their heads when Renaultrevised the price target to €5000 – atthe then-prevailing exchange rate aneven more challenging objective.

But now, the remarkable success ofthe Logan under both its Dacia andRenault brand names has quicklysilenced those critics. Upwards of115,000 units were sold in the twelvemonths since production began inSeptember 2004, most of them ineastern and central Europe. Thebiggest surprise, however, was howeagerly western European buyers tookto the model following its introductionin France, Germany and Spain in June2005; almost 6000 took delivery in justthree months.

The signs were so encouraging, infact, that Renault managers soonraised their forecast for 2010 Loganproduction levels from 700,000 to 1million units a year; at the same time,plans were advanced to bring otherplants on stream to complement the

WWoorrlldd oonn WWhheeeellss

markets, the middle east or Africa. In arriving at these conclusions the

researchers took into account the verydifferent car purchase priorities inemerging markets: lower incomes andharsher conditions in these marketsmean owners keep their cars for up toeight years, rather than swappingthem after two or three, as is the casein the west. Thus purchase price,durability and ease of servicing are

200,000 unit Dacia facility inRomania. Already,production is underway inRussia, Morocco andColumbia, with India, Iran andBrazil set to join the list in2006.

It seems, then, that Renault hashit upon the magic formula to enableit to offset the stagnation of westernterritories with profitable penetrationin emerging – and thus growing –markets. And, inevitably, all the otherautomakers are looking closely at theRenault template to see how they, too,can get in on the low-cost car act.

Market potential

The study conducted by RicardoStrategic Consulting in conjunctionwith the Aachen-based ifk and fkainstitutes does much more thanexamine the €5000 Logan’s valuechain, fascinating though this is.Crucially, the report delves muchdeeper into the market fundamentalsto assess the likely demand for low-cost cars and their derivatives – andthe results show significant potentialfor large sales volumes.Most remarkably, the study’s authorssay that their estimate of a potentialdemand of 8.9 million €5000 cars by2025 is a “very conservative” onewhich does not include western

Ever since the first car turned a wheel, automakershave dreamt of producing low-cost cars to mobilise themasses. The recent success of the €5000 RenaultLogan has forced rival companies to rethink theirattitudes to emerging markets and to question theirown processes in the search for truly cost-competitiveproducts. In a landmark study Ricardo StrategicConsulting has analysed every fundamental of low-cost car design, production and distribution. Here,Tony Lewin looks at the strategicrecommendations for a market that analystssay could grow to 9 million units by 2025

Renault’s Logan achieves low cost despite its

large size. Key ingredients are simple design,

carry-over mechanical elements, and low-cost

country sourcing.


costing less thanthat figure. The

conclusion: these marketsare highly price sensitive and a

low entry price is critical toreaching the growing numbers of

middle-class people that are thetarget customers.As for the vehicle itself, it will be the

only vehicle in the household. Havingto do double duty for both passenger-carrying and business work, it has tobe large, rugged and simple,according to the authors, with plentyof passenger space and a large trunk.

The low-cost business model

Many different approaches have beentried in the quest to produce amedium-sized, low-cost car suitablefor world markets. Fiat’s Palio familywas developed from scratch, thoughusing many proven components;Ford’s Ikon for India is a de-specifiedwestern Fiesta, while Tata – also ofIndia – has sought to up-spec itsdomestic Indica small car forinternational sale. A fourth tactic is torevitalise an old design and build itunder licence – an old-fashioned

top priorities: fuel consumption,performance and standard equipmenthardly figure at all.

Important, too, is the cost ofownership. Affordability goes beyondpurchase price, say the authors;running costs are a key part of theequation.

Incomes in the target countries arebetween a quarter and one-tenth ofthose in western nations, according tothe report: whereas prices of westernsmall cars tend to begin at around€10,000, in Russia 90 per cent of allnew car sales in 2003 were of vehicles

approach made famous by Lada’scontinuation with decades-old Fiatcast-offs or Daewoo’s use of old Opeldesigns.

Whichever route is chosen, however,the task is the same: to sell a car at€5000 requires a cost reduction ofmore than 50 per cent across the wholeof the value chain – from the very firsttouches of the designer’s pen to thefinal handover to the customer. As theRicardo report puts it, “this requirespulling all the cost levers, forcefully.”

The target demands much morethan careful sourcing of componentsand efficient manufacturing:absolutely everything must be lookedat with a fresh eye.

Take design, for instance. Not onlymust the design process beeconomical and effective in itself, itmust result in a vehicle which iseconomical in materials and simple tobuild and repair. Manufacturing,likewise, clearly needs to be situatedin regions of low labour cost and withlow levels of automation to keepoverheads to a minimum.

These, however, are only a few ofthe most obvious factors influencingthe final cost of the vehicle. Taken inisolation, they would shave only a fewper cent off the car’s asking price. Tohalve the cost of the car requires a farmore fundamental investigation of

everything that goes into the vehicle’smake-up: accordingly, the Ricardo-ifa/ika study goes into the detail ofevery process, every policy and everynut, bolt and washer in search ofpotential savings. In some areas thesavings are impressive – over €400can be saved by specifying a simplerpowertrain, for instance, and simplerplastics can halve the cost of aninterior – but most of the costreduction is achieved by painstakingrethinking of materials and a hugenumber of small details. No saving istoo small to be ignored. Choosing a

plain, flattish backlight instead of acomplex, curved rear screen can cutthe glass bill by eight euros, forinstance, and eliminating high-strength steel from the body designsaves a further three. Euro by euro,the component-cost savings made atthe design stage add up, leading to atotal potential saving of almost €1400compared with the typical German-sourced B-segment car.

Sometimes the savings have avirtuous circle effect, too. Eliminating

Strategic Consulting – The ¤5000 car

with only gasoline engines (a dieselcomes next year) and by not aimingfor the full five stars in the EuroNCAPcrash test. Major savings were made,according to senior Renaultexecutives, by not pursuing theultimate in NVH sophistication:eliminating every last trace of windnoise, for instance, is adisproportionately costly and time-consuming task.

Having designed the car for easymanufacture, Ricardo estimates €640per unit as a realistic build cost. Thistakes into account major bodypressings, body-in-white, paintshop,trim and final assembly. Powertrainbuild is not included. Themanufacturing figure assumesproduction in a low cost country(labour in Romania is 5 per cent of thatin Germany), low levels of automationand overheads, lean productionprinciples and a three-shift workpattern to make the most of the fixedinvestment. These measures, says thereport, can reduce manufacturingcosts by up to 70 per cent.

With design changes already havingreduced the material costs from the€5200 of the reference B-sector car to€3805, an estimated further 25 percent saving can be achieved bysourcing the items from low-costcountries. This brings the total materialcost saving to 45 per cent comparedwith the reference vehicle.

Again, Renault’s strategy providesthe model: there is only one robot atthe Romanian Pitesti plant building theLogan, and of the 143 Tier-1 suppliersto the programme, 43 are local inRomania, nine are from Turkey andfive from eastern and central Europe.

Marketing and distribution

The final piece of the puzzle is thedownstream activity of getting the

some of the electronic equipmentfound on upscale cars saves not onlythe cost of the devices themselves butalso allows an estimated €66 savingbecause the wiring harness is nowsimpler; the power generation systemcan be de-specified, too, as the currentdemand is lower, there are fewersensors and the ECUs can be lesssophisticated as they have fewerfunctions to carry out.(see table below)

Manufacturing

Renault’s Logan provides a textbookexample of how design priorities can

be realigned from the very first stage.Having decided to use as many carry-over parts as possible and to carry outas much as possible of the processdigitally, rather than with costlyprototypes, the development budgetamounted to just €360 million, aroundone third of that expended on a typicalall-new model.

Renault would contend that nocorners were cut, though clear savingsmust have been made by engineeringthe model with just one body type,


System-by-system savings:The study’s authors identified the following potential system-by-system savings:-

Cost on typical Action for

System B-sector car €5000 car Saving

Body €1150 Steel only; carry-over €260

parts; non-metallic paint

Chassis €710 Rear drum brakes, no ABS; steel suspension, torsion beam axle €180

Powertrain €1480 Conventional injection and exhaust aftertreatment; previous-generation catalyst €420

Interior €1270 Simple dash and plastics, only two airbags; less sound proofing €400

Basic €590 Conventional and fewer €134

electronics electronics; conventional lamps

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 pricePaint. Trim and Chassis Body freight Dealer margin Engineering Margin Excludesfinal assembly Electronics Distribution Prototyping transport

Key levers Lower labour cost Low cost country Low dealer margin Carry-overLow automation sourcing Low incentives componentsLow complexity De-specifying Below the line Low complexity

High volumes marketing

Cost (reference €2040 €5200 €320 €2440 €600 €200 €500 €11,300German-built car)

Cost (€5000 car) €640 €2840 €320 €700 €300 €100 €100 €5000

Possible 70% 45% _ 80% 50% 50% 80% 56% cost reduction

per year by 2025. This is a slice ofbusiness many volume carmakerscannot afford to ignore, and with theaddition of other emerging marketsnot included in the study the potentialcould be greater still.

But while the demand for vehicles atthe €5000 level is clearly there, it willtake considerable ingenuity on the partof designers, planners, strategists andmanufacturing experts to deliver such avehicle and earn a sensible profitmargin too. Being profitable, says theRicardo study, requires an holistic


vehicle from the factory gates and intothe hands of the customer. Here,though the policy imperatives areclear, the savings are harder toquantify with accuracy.

Ricardo Strategic Consulting andika/ifa estimate that by trimmingmargins at the dealers, confiningpromotional spend to below-the-lineadvertising and keeping incentives toa minimum, savings of 80 per centcould be made from habitual westernEuropean sales and marketingbudgets.

The biggest potential gains could,however, be offered by a move to ahub-and-spoke dealer network. In thismodel, the principal dealer central to aregion handles both sales and service,while satellite franchises in thesurrounding areas undertake serviceactivity only. The advantages areseveral: the dealer hub can afford tomaintain a full customer-facingshowroom, while the satellite serviceagents are close enough to provideregular customer contact.

Strategic recommendations

The evidence assembled by the studyis compelling: there is clear potentialin the low-cost car segment, with aglobal total of over eight million units

approach to the entire value chain. To reach an affordable cost

structure, original thinking will have tobe pursued at every stage – fromdesign for low cost, to low-costcountry manufacture and sourcing, tolean distribution and effective,targeted promotion.

Renault has already shown one wayin which it can be done, though somecommentators continue to questionthe real returns the company isachieving on its investment.

Yet Renault’s task is nothingcompared with that of Indianindustrialist Ratan Tata. Tata has madeit his mission to develop a car costingjust €2000 to bring the four-wheeledmessage to a still broader slice of theworld’s population. Even Volkswagenis tipped to be interested in the low-

end market, with a programme codenamed 3-K for a roomy, simple sedancosting just €3000 to make.

Yet, whichever strategy the competingcarmakers opt for, each needs to be wellorganised, well resourced and welladvised. The cars’ costs may be low, butthe stakes are high.

Cars for the masses

Model Dates Production Target price Notes

Ford Model T 1908-1936 15m $950 Fell to $290

Austin 7 1922-1939 300,000 £165 Fell to £100

Fiat 500 and 1936-1975 4m 5000 lire Launched Nuova 500 at 8900 lire

in 1938

Citroen 2CV 1938-1990 5.1m 185,000 –Francs

VW Beetle 1938-2004 21.5m 1000 _Reichsmarks

Suzuki-Maruti 1980-present 5m 114,000 RPR _Alto (India, to date) ($6,200)

Renault Logan example

shows how cost can be

saved by careful design

of interiors. Major

savings can be made in

electronics, leading

to further savings in

wiring on the power

supply system.

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


processors. However,the widespread natureof FE applications

required for engine design, togetherwith the complexity of interactionsbetween them, mean that there is aneed to manage the process of FEanalysis in an efficient and quality -assured manner,tailored tosupport theautomotiveanalyst.

For manyyears Ricardohas developedits own in-housetechnology tointegrate its

powertrain FE activityunder a singleanalysisenvironment. Eachapplication (both in-house andcommercial software

packages) is linked through a commondata exchange protocol andcomprehensive external interfaces areprovided with other CAE applicationssuch as performance simulation andCFD. This system is the cornerstone ofthe company’s internal FE activity andthe efficiency and quality assurance

The Asia-Pacific region is highlydiverse, comprising both the

globally exporting, high quality andtechnology-driven brands of theJapanese automakers as well as the

unprecedented growth potential ofboth the indigenous and joint-venture manufacturers in rapidlyexpanding markets such as China.

Ricardo has positioned itself tobenefit from the opportunitiesrepresented by the national marketsthroughout this rapidly developingregion. The company has long ledthe way in adapting its product andservice offering to meet the needs ofits customers, wherever they arelocated. This year has seen theopening of two new Ricardo facilitiesin both China and Japan.

On July 12, Mr Philip Mani, DeputyConsul General of the BritishConsulate General in Shanghai,formally opened the Ricardo office inthis important and rapidly emerging

international automotive hub.Staffed by both Chinese and English-speaking Ricardo employees, thenew office is located in theprestigious Maxdo Centre in theHongqaio area in the west of the city.

A particular driver for Chineseautomakers and suppliers is theneed to develop future in-houseengineering capabilities. Technologytransfer is thus a major part of theRicardo offering in China, providingboth state-of-the-art engineeringservices as well as professionallymanaged technology transfer in amanner respectful of backgroundintellectual property rights. Thesuccess of the Ricardo approachhas been demonstrated by anumber of significant programmescurrently underway by jointdevelopment teams of Ricardo and

Ricardo News

Ricardo has long led the way in theapplication of advanced computer

aided engineering (CAE) methods inpowertrain design and makes a largepart of its associated know-how andtechnology available through its suiteof commerciallyavailable softwareproducts. Theserange from themarket leadingWAVE-engineperformancesimulation andVECTIScomputational fluiddynamics (CFD)packages tomechanical systemsimulation codesVALDYN andENGDYN, all of whichare used widely throughout theautomotive, motorsports and relatedindustries in the creation of the latestpowertrain designs.

Until recently, however, no suchproduct was offered in the area ofFinite Element (FE) analysis. Therationale for this was simple: there arenumerous highly respectedcommercial packages for specialist FEapplications, from mesh generatorsand solvers to specialist post-

New FE Software

The FEARCE FE environment (right) automates

many of the more complex loading and results

post-processing functions such as bore

distortion analysis (top) and NVH (opposite).

Expansion in China and Japan


Europeansoftware userconference andtraining day

customer engineers both in the UKand in China.

Ricardo has also enjoyedconsiderable growth in the Japanesemarket, with business expandingnine-fold in the past five years alone.This expansion was marked by theformal opening on 20th October atthe company’s new Tokyo office byBritish Ambassador to Japan,Graham Fry.

Both the Shanghai and Tokyooffices will be shared by locallybased staff as well as visitingengineers from Ricardo’sinternational network of technicalcentres. These two solid investmentsin new facilities will enable Ricardoto improve the quality,responsiveness and competitivenessof service delivered to its customersin the Asia-Pacific region.

Ricardo Software hasannounced that it will hold its

European Users’ Conference atthe Mercure Hotel, Frankfurt, on5th December 2005. Theconference will include papersand presentations on theapplication of the complete rangeof Ricardo Software products andthere will be opportunities todiscuss recent product releasesand future plans with members ofthe development and supportteams. An informal reception fordelegates will also be hosted atthe conference hotel on theevening of 4th Decembercommencing at 7pm.

On the two days following theconference (December 6th-7th)Ricardo Software will host usertraining sessions at the samevenue. This follow-up event willprovide delegates with theopportunity to receive hands-ontraining using the very latestproduct releases. Four separateagendas are offered:

Acoustic masterclass

(two day course – Dec 6-7)Turbocharger masterclass

(two day course – Dec 6-7)Advanced WAVE

simulation workshop

(Dec 6 only)Engine analysis workshop

(Dec 7 only)

Registration for the conference isfree but delegate places arestrictly limited and earlyregistration is advised. Places may be reserved atwww.ricardo.com/softwareeuc.

Each training course isindividually priced and may alsobe reserved via the conferenceweb page.

advantagesthat it delivers are of direct

benefit to customers ofRicardo’s powertrain designservices.

Following a number of requests bycustomers both of this service and ofits existing range of powertrainsimulation products, Ricardo Softwarehas recently started marketing acommercial version of the Ricardo FEenvironment known as FEARCE. Thisnew product provides acomprehensive package of interfacesand application modules which linkand automate many of the more time-consuming tasks and intricateprocesses of powertrain FE.

FE meshes to be used with FEARCEcan be obtained from HyperMesh,Patran, I-DEAS, Pro/Engineer or anyother supported source. Theapplication of realistic load data andthe preparation of analyses is typicallyextremely complex and time-consuming in powertrain FE analysis.Thermal boundary condition data willoften need to be applied based onoutput from CFD codes or derivedfrom complex formulae, for example.

Component sub-meshes will alsofrequently need to be linked

together in an appropriatemanner using, for example the

correct interference fitsfor bearings and boltpre-tensions. In many

cases models willrequire joining or

interpolation ofboundaryconditions

acrossgeometrically

coincident butdissimilar mesh

structures. In addition tobeing labour intensive, all of theseprocesses are potentially sources oferror. FEARCE provides anenvironment in which all of theseindividual processes can be carriedout automatically and in a mannersupporting accuracy, repeatability andtraceability.

Having prepared the analysis in aneutral data format, a wide range ofcommercial FE packages can then beused for the solution includingABAQUS, ANSYS and NASTRAN.Alternatively FEARCE has its own in-built solver which can offer a highlycost-effective solution, particularly formore simple analyses.

Post-processing is however perhapsthe area in which the extensive featurebase of FEARCE comes into its own,offering a range of automotive specificpost-processing operations whichenable rapid and meaningfulinterpretation of vehicle as well aspowertrain related design issues.These include bore, bearing and valvedistortion assessment, linear and non-linear fatigue algorithms, as well as anumber of sophisticated vibratoryresponse tools. In the last category forexample, FEARCE includes its ownradiated noise analysis capability. A‘mesh wrapper’ tool can be used tocapture vibratory results from surfaceelements which can be used in thesoftware’s own Rayleigh or boundaryelement method (BEM) analysissolvers.

While FEARCE has only recentlybeen made available to customers,further features are already underdevelopment for future releases. Mostsignificant of these is thecomprehensive results viewer packagecurrently on beta test and due fordelivery early in 2006 in FEARCE 7.

Further information about FEARCE or otherRicardo Software products may be obtained [email protected].


Ricardo News

On September 26 Renault formallyopened its new Noise Vibration

and Harshness (NVH) unit devoted tothe acoustic treatment of powertrains,located at the site of its TechnicalCentre in Lardy, approximately 45kmto the south of Paris.

One of the most state-of-the-artfacilities of its kind in Europe, the unitdraws together in a single centre NVHtesting and development technologiesand processes for all of theautomaker’s powertrain and vehicleengineering teams. The unit isequipped with both powertrain andvehicle semi-anechoic cells togetherwith advanced testing and analyticalequipment and software. It is intendedto enable Renault to improve the noisequality of powertrains across its entirerange.

Ricardo has supported Renault astechnology partner from the inceptionof the project to develop the new NVHunit, assisting from the early stages inthe specification of the test facilities. Adetailed example of this was in thedesign of the standard powertrain testpallets to be used at the facility. For

Ricardo helps with new Renault NVH facilitygeneral performance and durabilitytesting, pallet design is acomparatively straightforward processof ensuring that a generic mountingpackage is provided which is capableof accepting each powertrain and itsancillary components, together withthe requisite actuators and testequipment. For NVH testing however,the pallet system needs to beengineered in such a manner that it issufficiently stiff so as not to influencethe vibratory and auditorymeasurements, while at the same timeproviding sufficiently clear access tothe engine for instrumentation.

Meeting dynamic vibration targets

Starting from an initial design the teamdeveloped the structure to meet itsdynamic vibration targets usingdynamic finite element analysis. Thestructure was manufactured and testedin prototype form and a dampingstrategy developed to fine-tune itsoperational performance.Subsequently the first production palletwas manufactured and the design washanded over to Renault’s in-housemanufacturing team.

During the development andcommissioning phase of the newfacility, Ricardo has also providedtechnology transfer in testingprocesses and procedures. Theprimary objective of Ricardo’sinvolvement at this stage was to

ensure that Renault engineers were ina position to utilise the advancedsemi-anechoic powertrain and vehicletest cells and associated NVHtechnologies as soon ascommissioning was complete. Testingprocesses were documented in detailby Ricardo based on the company’sown best practices, and training intheir implementation was provided toRenault engineers and technicians bya Ricardo team initially at Ricardo UKfacilities and subsequently based on-site at Lardy. The Renault and Ricardoengineers worked in partnership forthe initial NVH test and developmentprogrammes run at the new unit inorder to develop and refine theseengineering processes for maximumoperational effectiveness.

With the Ricardo on-site teamcontinuing to support Renault’s ownengineers and technicians in thecommissioning and operation of thefacility, Renault is firmly on a path tofurther improve its already wellrespected positioning as anautomotive brand synonymous withhigh standards of NVH. Thesignificance of the new NVH facilitywas underscored at the inaugurationceremony by Kazumasa Katoh,Renault senior vice president ofpowertrain engineering: “With theNVH unit, Renault breaks new groundin the control of vibro-acousticphenomena. It will allow us to define a‘sound identity’ for Renaultpowertrains, the objective being, at avery early stage, to fully work noisequality into the powertrains' geneticmake-up.”

Renault’s new NVH unit at Lardy (above andleft) is equipped with both powertrain andvehicle semi-anechoic cells together withadvanced testing and analytical equipment and software.

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