Driving innovation

There’s an old saying that there’s two things drive innovation in the automotive industry: war and competition. Consumer demand pushes the strongest vehicles, the best innovations down the supply chain until they become standard.
 
But particularly in light of the new tone in Washington D.C., auto manufacturers also have to consider legislation. Just as all new vehicles were mandated to include a tire pressure monitoring system by 2008, it might not be long before other safety features become standard.
 
The National Highway Traffic Safety Administration is considering mandating systems that automatically slow your vehicle down when an impending collision is detected and sensors that watch for other vehicles during a lane change. These options are already available in some luxury models, but the sensors equipment and supporting hardware could add another $2,000-$3,000 to the price of a new car.
 
“The aftermarket can accelerate the deployment of new technology much faster,” sys Waraniak. “We need to work together, to collaborate on the development of this technology. It will take until 2030 to have a critical mass of vehicles talking to each other to prevent crashes.
 
“With the aftermarket, and basically the 220 million vehicles in the U.S. today, if you had an aftermarket device you can add to those vehicles, you can get to that critical mass by 2018 or so, 10-12 years earlier than relying on the OEs.”
 
The Obama administration’s decision to push CAFÉ standards up to 35 miles per gallon by 2016 is also certainly changing the way manufacturers are looking at new technology.
 
Haas mentioned four years ago, Cadillac introduced its XV16 concept car. It had It had titanium valves.  A few of its features were 16 cylinders, variable camshaft timing and displacement on demand. It was huge. But it will never be built because it could only achieve 16 miles per gallon.
 
“Do you know what averaging 35 miles per gallon means to this country? It's estimated that will be a savings of 1.2 billion barrels of oil a day,” Haas says. “That's why technology has become so important. And that’s why we have automakers committing resources to meet those standards.”
 
Because of the economy and the legislation being pushed, OEs are being forced to push out more vehicles with fewer platforms. Waraniak says this offers the aftermarket an opportunity to offer customization features, and to work with OEMs to develop better technology to blend green with performance.
 
“Fewer models, smaller engines and more power: that’s going to be the model for the automotive industry,” says Jack Rosebro, founder of Perfect Sky, a company that offers technical training for hybrid, electric, and other innovative vehicle technologies.
 
“It’s very common for a Prius with city driving to get 100,000 miles before having a brake job. There goes your brake market,” Rosebro continues. “No matter how good you build a hybrid, you are still adding an electric drive to the car, so it’s going to be hard to make small, cheap hybrids. But with the CAFÉ regulations, there’s going to be a big market for light hybrid drives that are basically just an idle-stop feature that helps push the car off from a dead stop and improve mileage at least a little bit.”

Hype cycle

Waraniak explains that emerging technologies follow what he calls a “hype cycle of development” with five phases:
 
1.     Technology Trigger Point — a breakthrough, product launch or concept vehicle that generates significant press and interest.
2.     Peak of Inflated Expectations — publicity generates over-enthusiasm and unrealistic expectations.
3.     Trough of Disillusionment — technology fails to meet the over-hyped expectations and quickly becomes unfashionable.
4.     Slope of Enlightenment — innovative companies continue to experiment and understand the practical applications of the technology.
5.     Plateau of Productivity — technology reaches a point of maturity, commercialization, deployment and acceptance.
 
The hybrid is an easy example. The technology certainly triggered a lot of media and public attention, but at first the cost associated with the new technology did not meet consumer’s expectations. Haas says even now sales of hybrids are driven by the price of gas. It isn’t until consumer’s find a true cost savings will they get out of their car comfort zone to try something new.
 
Waraniak says that stage 4, “enlightenment,” is where the aftermarket really shines. Keeping with the hybrid example, this would include hybrid system retrofits, such as the 80 mpg electric Hummer that starred at the SEMA Show last year. But even that is still quite costly, and hasn’t quite reached stage 5, “productivity.” Judge for yourself where plug-ins and hydrogen-powered cars fall on this cycle.
 
Because of the advances in new vehicle technologies, in some areas the industry is going to see this hype cycle speed up, as cars take on a life-cycle similar to that of consumer electronics.
 
The electronics content of today’s vehicles has increased by 50 percent in the past five years. Over half of all new vehicles offer iPod connectivity and more than 80 percent offer Bluetooth. Consumers want to get their hands on this technology, and with the tech-savvy youth, they aren’t willing to wait.
 
This is where the aftermarket stands to benefit.
 
A typical product development cycle for OEMs is somewhere around 36 months, Waraniak says. The aftermarket can typically get a new product on shelves in 6-18 months.
 
“The aftermarket is much closer to consumers.” Waraniak says. “The challenges and opportunities for the aftermarket lie in how effectively these features, devices and accessories can be integrated into the vehicle by OEMs, suppliers and specialty-equipment manufacturers, retailers and installers.”

Implementing change

Before technology changes the industry, there must be a new way of thinking, because it is not about who develops technology first, but who implements it successfully and efficiently.
 
“You have to know how to apply the technology to ensure profitability,” Waraniak says.
 
Haas stresses the need for parts distributors and particularly independent repair shops to keep up with all this new technology, or risk ending up on the proverbial scrap heap.
 
“Warehouse distributors are going to need to understand what vehicles are being sold and really understand their marketplace and bring the right product mix to match the market,” he says.
 
Haas also says that some new technology gives an initial advantage to dealers, as they push their expertise in understanding the new systems. But smart shops will take advantage of the technology, invest in the training and technology necessary to service those vehicles, and use it as a way to differentiate themselves from their competitors.
 
“If we’re going to be satisfied with doing what we did yesterday, then we’ll have to be satisfied with a business model for yesterday as well,” Haas says. “But we’ve got to start to look at what’s the business model for tomorrow and what are these technologies driving us to consider in changes to that business model so that we’re able to have profits to sustain and drive our business.”