Automotive Electronics - Opportunities and challenges for Nigeria ’ s Auto Sector

The origins of the ongoing automotive – electronics components convergence can perhaps be traced back to the late 1980s, when Mercedes and its supplier Robert Bosch GmbH developed the electronic stability control, a system designed to help prevent accidents by monitoring a car's trajectory and correcting this when it strays from the direction in which the driver is steering. The enormous benefits of the automotive – electronics convergence is typified by the electronic stability control system which has been shown in several studies to substantially reduce accidents. With around 60 million new vehicles produced globally every year and the increasing electronic content in automobiles, the automotive sector is set to be the most attractive application market for the electronics industry in the short to medium term. The market for electronics applications in vehicles is estimated to reach £80 billion by the end of 2008 as new technologies and standards continue to push the adoption of electronics in vehicles to provide further driver assistance, safety, passenger comfort, information and entertainment. The electronics manufacturing sector is often described as the most important industry as it is the main driver for science, technology and manufacturing and hence the driver for the overall wealth creation economy of a nation. The paper presents an overview of automotive electronics, including current and future design and manufacturing trends, and the technological challenges facing the automotive electronics manufacturing sector. As the automotive sector becomes more and more globalised, the two key drivers for the development and adoption of new automotive electronic features will continue to be technology and costs. The last five years has seen a massive increase in the electronic content of vehicles, increasing from some 10% to the current 25%, and according to analysts – this is set to exceed 40% by the year 2010. For the major stakeholders in the global electronics industry the key questions are: what are the business opportunities in this emerging application market and what are the possible challenges in deploying applications in vehicles? The paper reviews the status of Nigeria’s automotive manufacturing sector, and the impact of used car importation. It also examines the opportunities and challenges for Nigeria’s automotive sector in this emerging application area of automotive electronics. After more than 30 years since its inception, the Nigerian Automotive sector is still in the nascent stage of development – analysts have reported widely on the lessons that can be learnt from the success stories from around the developing world, including the Asian tiger countries, Latin America and South Africa. The outstanding question is really one of how Nigeria can begin to build sustainable capacity in the automotive manufacturing sector. The National Automotive Council of Nigeria, the organ charged with the execution of the Automotive Policy of the Federal Government are working on a number of schemes to ensure the survival, growth and development of Nigeria’s automotive industry using local human and material resources. In terms of the automotive electronics components sub-sector, the paper also explores some of the urgent questions for the NAC and its partners; amongst others these include the following:  As electronics migrate from the aerospace and consumer sectors into the automotive sector, what automotive electronic features are now available as standard in premium/prestige cars?  As globalization and the associated international competition force automotive manufacturers into the outsourcing arena, what are the current and future design and manufacturing trends?  What are the challenges and opportunities for Nigeria’s automotive manufacturing industry in this important and fast expanding electronics sector? 1.0 Introduction Anyone sitting in a new car can easily notice that compared to new cars launched some five years ago, car manufacturers are continuing to add more and more electronic features. The GPS/Satellite Radio, DVD/Video/CD Player and Radio, automatic climate control, fuel-mileage monitoring features, electronic windows are only a small part of the electronic content in a vehicle. There are now much more electronic components under the bonnet and in the body of the vehicle – with the vehicle engine and gearbox no longer directly controlled by the driver through mechanical means, but rather via computer which receives instructions from the driver as inputs and then delivers the desired effects by means of electronic throttle control and other drive-by-wire elements. Indeed, electronics is now essential for controlling the movement of the car, to monitor and control the chemical and electrical processes taking place in the engine and elsewhere, to entertain the passengers, to establish connectivity with the rest of the world and more importantly, to ensure safety. The need for higher level of safety has led to the development of sophisticated safety features, such as electronic stability control, collision avoidance systems and tire pressure monitoring systems. As customers continue to demand for more features such as those for driver assistance, improved fuel efficiency, passenger comfort, convenience and safety, automotive manufacturers are incorporating more electronic features in their vehicles while continually striving to develop environmentally friendly and improved fuel economy vehicles. Some of the current trends in new/enhanced electronic features are directed to incorporating more complex electronics to help improve brand reputation and competitive differentiation rather than just improving driver/passenger comfort and safety. The ability to connect an iPod® to an in-dash entertainment system, Bluetooth connectivity between handsets and integrated hands-free units are now considered standard features. The key challenge however, is that although both the customer and the vehicle manufacturer now perceive these cabin equipment and systems as the defining characteristic, or rather as the unique selling proposition of any new vehicle, they both recognise that the need to install yet more complex electronics must not add to the cost or weight of the vehicle. 1.1 Telematics and Intelligent Transportation Telematics is a word which has its origins in the blending of the root words telecommunications and informatics. Broadly speaking, telematics represents the convergence of four familiar technologies: the automobile, computing, wireless communications and the Global Positioning System, but it is the massive developments in semiconductor and electronics packaging and interconnection technology that has made the difference. The main benefits of the telematics revolution can be realized within the commercial environment, as these technologies can be valuable tools for improving the efficiency of organizations when used for applications such as the following:  Vehicle Tracking: This is the monitoring of the location, movements, status and behaviour of a vehicle or fleet of vehicles, achieved through a combination of a GPS receiver and an electronic device (usually comprising a GSM, GPRS modem or even an SMS sender) installed in each vehicle, communicating with the user and PC or web-based software. For transport organizations, security and emergency services, the data can then be turned into information by management reporting tools in conjunction with a visual display on computerized mapping software and used for real time decision making.  Satellite navigation: This is essentially for forward planning of journeys and in the context of vehicle telematics it involves the use of a GPS and electronic mapping tool to enable the driver of a vehicle to locate his destination, and then prepare a route plan and to navigate the journey.  Automotive Insurance: This is an area of growing interest for the insurance industry in which there has been pilot studies in which the basic idea is to monitor the behaviour of drivers directly over a period of time in terms of factors such as distance traveled and speed; and then transmitting this information to their insurance companies. Their insurance companies can then use the actual driver statistics for assessing the risk of a driver in terms of the probability of having an accident. This information is then used to estimate fairer levels for the insurance premiums for each driver. A driver who drives long distance at high speed, for example, will be charged a higher rate than a driver who drives short distances at slower speeds. The Insurance firm, Norwich Union is currently offering a type of telematic auto insurance in the UK called Pay As You Drive (PAYD), which employs a combination GPS and Car cell phone to monitor driving performance and communicate risk factors to the insurance company. Drivers are offered a discount if they exhibit safe driving [1]. 1.2 World Electronics Component Market The electronics manufacturing industry can be sub-divided into seven major application areas, as follows:  Aerospace and defence  Automotive  Consumer Electronics  Energy and power  Healthcare and medical  Oil, gas, refining and petrochemicals  Telecoms, radio communications and broadcasting But as electronics becomes more pervasive, new applications are emerging in other sectors of the economy, such as those shown in Figure 1 below.