July 10, 2014 12:00 am JST

Motorization's next frontier

TAKASHI SUGIMOTO, Nikkei staff writer

Ford Motor's research and development team in Mexico connects to India and China through a 3-D imaging system.

NEW YORK -- A new international alliance has formed in which a U.S. carmaker is bringing Japanese technology developed elsewhere in Asia to Mexico.

     Say hello to the Attrage sedan.

     Chrysler announced July 1 that it will start bringing the compact, produced by Mitsubishi Motors, to Mexico. Mitsubishi Motors based the car on its small Mirage hatchback, which is almost the same size as Toyota Motor's Yaris, sold as the Vitz in Japan.

     Mexico is a big draw for automakers. The North American country has free trade agreements with the European Union as well as the Americas.

     Mexico's top-selling cars are subcompacts, which account for 23% of all new-car sales. Since these autos are not popular in the U.S. and Canada, Japanese automakers have come to dominate the Mexican auto market.

     Chrysler is strong in large vehicles and does not even produce subcompacts. Since its merger with Italy's Fiat to create Fiat Chrysler Automobiles earlier this year, the U.S. automaker has entered the small-car market by using Fiat platforms -- including the engine and chassis. But because even these cars remain a little bigger, Chrysler approached Mitsubishi last year for an even smaller model.

     Mitsubishi produces the compact sedan in Thailand. Chairman and CEO Osamu Masuko said he hopes Mexican consumers will welcome the car as people in Asian markets have.

Remote design

Other automakers are also learning to exploit transpacific synergies. At Ford Motor's research and development center, near the company's Dearborn headquarters in the U.S. state of Michigan, engineer Robert Barbor speaks into a futuristic-looking headset. "All right," he says, "India team, let me hear your opinions."

     With his arms raised, Barbor appears to be holding something. But he is not. He is looking at a 3-D image of a red Mustang sports car. Images projected onto a wall are exactly the same as those appearing in Barbor's headset.

     Barbor walks toward the Mustang, slips through the door and sits in the driver's seat. How will the driver reach the buttons? Where is the drink holder? Life-size 3-D images enable engineers to experience how a car will look and feel without touching it.

     Ford began developing this virtual reality technology in 2006. The automaker launched a five-member task force late last year to use the technology for vehicle development. "The U.S. team is not the only one using the system," Barbor said. "Our colleagues in India, Brazil, China and Germany can use it simultaneously. We will introduce it in Mexico, too. Consumers in different countries have different tastes and needs for interiors and exteriors, don't they? We've decided to use 3-D images, which allow us to see and feel the car, rather than plans, to reflect consumer desires to product designs immediately."

     Ford comprehensively changed the way it develops vehicles under the slogan "One Ford," introduced by former CEO Alan Mulally. The idea was to eliminate waste through a single design concept for cars that vary by region and brand. This would better enable Ford to catch up to its rivals in emerging markets, where consumer needs differ in each. Ford fell behind while developing vehicles in the U.S. and then trying to sell them around the world.

     Whether the automaker can produce globally popular models depends on coordinating varying needs through design. And that's where the 3-D system will be key. It will help Dearborn be more of an IT node for collaborative design work rather than command central.

     Ford has lagged behind its main rival, General Motors, in emerging markets. North America and Europe accounted for 75% of Ford's global sales of 5.3 million cars in 2010. Despite a decline in the European market in 2013, the two regions still accounted for 70% of Ford's 6.3 million sales. But intensive investment in China, which the automaker considers the gateway to emerging markets, has enabled Ford to overtake Toyota as the fifth-largest automaker in that country. Ford sales in the Asia-Pacific region and Africa increased 60% in volume terms over the past three years. The similar tastes of Chinese and U.S. buyers was a boon to this growth.

      But a U.S.-oriented approach won't work in other new markets. So, Ford decided to exploit the Latin America-India route -- not for exports but for product development. The regions, separated by two oceans, have a few traits in common.

  • Small cars are popular due to their maneuverability over narrow roads.
  • Their populations are sharply divided into a tiny minority of overwhelmingly rich and a large majority of low-income earners. To be successful, an automaker has to cater to each demographic.
  • Vehicles have to be made to run on biofuel.

Global productions

Ford noted these commonalities and took action. It developed the small SUV EcoSport in Brazil, which debuted in 2003 and initially sold only in South America. The second-generation model was also developed in Brazil but was unveiled in India at the Auto Expo in New Delhi in January 2012.

     "This car reflects our commitment to serve our customers with the cars they truly want and value," Mulally said while on stage at the fair.

     The main markets of the second-generation EcoSport are India and Brazil, but the car is manufactured in Thailand and China as well. Like the Attrage, it is genuinely a global car.

     Other automakers have noticed the India-South America similarities. Toyota began producing the Etios compact in Sorocaba, Sao Paulo, in August 2012. The Etios was originally developed as a strategic car for Asia and to help Toyota expand its share of the India market.

     "I'm going to make the Etios with half the production cost of the Vitz," Etios Chief Engineer Yoshinori Noritake told then-President Katsuaki Watanabe in late 2005. The latest Vitz starts at 1.07 million yen ($10,482) in Japan. To halve the cost, Noritake set up a four-member team.

     Eventually, two pairs of engineers drove prototypes across India. Their journeys were tough. The engineers got stuck in the foothills of the Himalayas. A squall-triggered flood nearly killed them. They were hit by diarrhea on several occasions. The team's three prototypes ended up thrashed, each having clocked 200,000km.

     Refinements were made, and the Etios, customized for India, is now being promoted in Brazil.

     General Motors has chosen a simpler path: It will start exporting from India to South America. What is known as the Chevrolet Spark compact in the U.S. will be sold as the Beat in Chile. The auto giant is hoping to achieve two goals -- increase factory operation rates in India, where revenue is falling due to slowing economic growth, and boost sales in South America.