High-end IT helping automakers design small cars in India

Tech tools cut launch cycle from 10 to 4 years, allowing car manufacturers to reduce time-to-market and offer better features in small cars.
Written by Swati Prasad, Contributor

NEW DELHI--Indian automakers are using a plethora of IT tools to reduce their time-to-market, as well as offer better features in small cars that will eventually find their way into the developed markets.

When Tata Motors launched the US$2,500 Nano, global eyes turned to India as it was the first time such an affordable small car was available, and from an emerging market, too.

Small car launches

Maruti Suzuki currently is working on a five-door 660cc hatchback, called Cervo, which is expected to be launched later this year at an estimated pricetag of INR 200,000 (US$3,800).

Mahindra & Mahindra is planning to launch a 1,000cc small car, codenamed BRL. It is expected to priced between US$4,700 and US$6,600 (INR 250,000 to INR 350,000). Production is likely to start in 2013.

Ford Motor Company is developing a "global" small car in India. Codenamed B562, it is likely to be powered by a 1-litre Ecoboost petrol engine. Ford India has announced bringing eight new products by mid-decade.

German carmaker Volkswagen also wants to introduce more small cars in India, and has plans to introduce Volkswagen Up next user and Skoda Citigo.

While no other car has yet to enter a similar price range, other automakers--both Indian and multinational--have used Tata Motors' adoption of high-end IT and focused their tech research and development (R&D) efforts to launch cars for the Indian market.

Over the last few years, India has seen the launch of several small cars such as Hyundai Eon, Honda Brio, Chevrolet Spark, Toyota Etios Liva and Ritz, as well as A-Star and Estillo from Maruti Suzuki.

"The time lag between conception of a car and its launch has been considerably reduced due to the intervention of both IT and manufacturing technologies, integrated with core IT, as well as a more efficient supply chain," Dilraj Singh Gandhi, principal consultant at PricewaterhouseCoopers (PwC), said in a phone interview. Moreover, product lifecycle management (PLM) tools have eased the monitoring and management of car manufacturing.

IT has also had a huge impact on the external design of a vehicle. "It has made small cars as comfortable--in terms of in-car comforts--as a luxury sedan," Gandhi added.

In the 1990s, it used to take automakers 8 to 10 years to launch a new car. Today, the time-to-market is down to three to four years.

In a phone interview with ZDNet Asia, Sidhant Rastogi, director at Zinnov, pointed to Mahindra & Mahindra which took around four years, "from scratch to finish", to launch its luxury sports utility vehicle, XUV 500.

Sandeep Gupta, director of Protiviti Consulting, said in an e-mail: "Over the years, the auto industry has moved from mechanized operations to becoming automated."

India: A small car hub
According to Gupta, small cars are also gaining popularity in developed markets due to environmental concerns and higher costs involved in acquiring bigger cars.

For instance, as part of the U.S. Corporate Average Fuel Economy (CAFE) legislation, 13 major automakers including Ford, GM and Honda, have agreed to increase fuel economy to 54.5 miles per gallon (mpg) for cars and light-duty trucks by 2025. This move would allow automotive manufacturers to break their dependence on larger models and develop smaller, more fuel-efficient models, Gupta said. By 2016, under CAFE agreement, passenger cars must achieve a fuel-economy standard of 35.5 mpg to 39 mpg.

"There is clear indication of a shift toward smaller and smarter cars, as consumers are wary of rise in fuel prices and are looking for cheaper alternatives," Gupta said.

And manufacturers are coming to India to build them.

According to Rastogi, the competitiveness of Indian auto manufacturers lies in lower-cost design and local sourcing.


Tata Nano, priced at US$2,5000

Gupta agreed: "India offers an obvious cost-advantage and local demand in a growing market, and it has a good base of experienced auto component suppliers. This puts India at an advantage over China, Thailand and Africa, and is seen as a strategic supply center, especially for small cars."

He identified three key areas IT had brought about change in vehicle manufacturing: engineering design applications, which reduce engineering design time and accompanying costs; vehicle design applications, which reduce model design time and costs; and computer controlled assembly lines, which minimize production defects, fitting times and wastages.

Noting that IT is both an enabler and differentiator, he said matured organizations were using IT to drive innovation, planning and designing of automobiles. In fact, tech is used in almost all spheres--from designing to conducting simulation tests, to sourcing of components through e-procurement.

It is also used to plan production schedules based on the availability of machines and consumables, and manage distribution logistics from the central warehouse to the dealer as well as for dealer-customer management.

Apart from process management, Rastogi added that IT also allows automakers to deliver better customer experience, for instance, through navigation features and telematics.

Cheap, but loaded cars
Volumes today make it viable for auto makers to deploy high-end IT tools even in small cars, PwC's Gandhi said, adding there now is easy access to technology.

Moreover, Rastogi noted, consumer expectations are increasing by the day with customers looking for the latest features even in small cars.

Noting that even the Tata Nano comes fitted with ABS brakes, he said: "IT has helped car manufacturers fit more comforts in automobiles."

Gandhi expects multiple changes to take place in the Indian car industry in the future.

More small cars will be fitted with in-car entertainment gadgetry, and gadgets such as global positioning systems (GPS) and sensors that indicate which component is faulty also will become more popular, he said. In fact, cars may even be able to inform the service station about the faulty component in the car.

He added that vehicles will become lighter and, therefore, more fuel efficient. They can also be tweaked to the customer's requirements. "In future, cars will be customized. You can choose the car you want from a Web site and place your order online," Gandhi said.

Social media also will play an important role in serving as a database to help car companies forecast consumer preferences and trends via business analytics IT tools, he added.

Swati Prasad is a freelance IT writer based in India.

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