With European volume OEMs and European offshoots of multi-nationals struggling en masse to achieve some sort of balance between capacity, demand, labour relations and costs, it would be fair to assume that Tier 1 suppliers are going through the same agonies.
But for the top players, especially those in the fields of infotainment and connectivity, emissions control and efficiency or driver aids and safety, that is simply not the case.
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“The market is very dynamic,” said Michael Mauser, executive vice-president and co-president of the infotainment and lifestyle division of the Harman Group. “The fall in (new car) sales has had no impact on Harman… but our main customers are Daimler, BMW and Audi, who are enjoying the fastest growth rates.”
What has been referred to by Audi as “the flight to premium” in relation to car sales is apparently being more than reflected among Tier 1 suppliers. Drivers are also spending more and more time in their cars, not necessarily getting anywhere, so quality entertainment systems and advanced connectivity are not only desirable but often essential, said Mauser. And that is becoming a global phenomenon.
“We used to be purely a German and American company with no footprint in emerging markets, but we are now global,” said Mauser. “We manufacture all over the world. I was recently in India for the ground-breaking ceremony at our first site. We have changed a lot already.”
Is this because the buying power in the automotive market is increasingly shifting east? “No. We would have done it anyway,” said Mauser. “But the emerging markets have driven us even further in that direction.” The Harman Group has more than a dozen top audio brands in its portfolio including Harman Kardon, Mark Levinson, Infinity, JBL and AKG. Its audio is in over 25m cars around the world and the group has ties with 19 OEMs. It is currently sitting on US$13bn worth of advance orders – “enough for four or five years,” said Mauser – and has 22% of the global automotive audio market.
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By GlobalDataHowever, there is a certain irony in that, as some of the OEMs who make up Harman’s customers are scrabbling for places on that narrow ledge called premium, Harman itself is attempting to democratise its market approach, particularly when it comes to connectivity.
At the Geneva show the group is introducing Europe to its entry-level connected radio system, part of a three-tier strategy to offer future-proof connectivity at all levels of the market.
Just over two months ago Harman concluded a deal with Tata. Connected radio – which allows a smartphone linked to a budget radio to give access to full infotainment services – would seem tailor-made for markets like India (it was even engineered there and China) although Mauser merely smiles at the suggestion.
“By the end of the decade every car on the market is going to have connected solutions,” he said by way of explanation. “The reason we have introduced connected radio is that we want to be able to make connectivity a standard offer for everyone. Within two to three years there will be more phones than people.
“The younger generation do not start out with a premium car but have a requirement for connectivity. Infotainment is a major buying attribute for sales of cars. Our plan is to bring high level entertainment, navigation and connectivity in an affordable car.”
Not that Harman is abandoning the premium end of the market. If anything, it is trying to tighten its grip. Harman developed the head unit for the Connected Drive system now offered in BMW’s 5 and 7 Series on both sides of the Atlantic and the plan is that it will become available across the entire BMW range sooner rather than later.
It has also developed a new high resolution head-up display unit with more realistic graphics and full integration of safety systems like lane departure and blind spot warnings. It can even be partially controlled by hand gestures. And it is now looking for customers for what it claims to be the world’s first 3D surround-sound system – a 21-channel, 25-speaker, 2000-watt wonder based on its Quantum Logic technology.
For the middle ground, Harman has developed an app-based scaleable platform which OEMs can load with whatever content they want. “This makes up a large part of our $13bn advanced orders,” Mauser said.
It has also helped the company reduce development times. “Now we can bring a system into production using 70% of a standard platform with 30% customising within a year,” Mauser said. “It reduces costs and lead times and increases market penetration.
“Connectivity is going to further emerge,” he added. “There will be even higher-resolution and more brilliant displays. There is clearly a demand for partial system updates – how much longer are we going to send customers to dealerships for updates? By the end of 2013 at the latest we will have Blu-ray in cars. And for the future we will have car-to-car and car-to-infrastructure communication.”
