Thinking cheap: Lessons from India

ERJ staff report (AN)

Tokyo -- Engineers around the world are contorting traditional R&D methods to deliver small, cheap cars for India that can compete with low-cost offerings from locals such as Tata Motors Ltd.

And in doing so, they are learning new lessons that are spilling over into models sold globally, even in the United States, and rewriting the rule books on product development. Old practices on both standard equipment and sourcing are being revised.

India puts unique demands on automakers hoping to crack its booming market. When designing those rides, it pays to heed local needs.

Don't forget to build in those flat spaces on the dashboard. That's where drivers mount their ubiquitous Ganesha elephant-headed deity statues to ward off traffic mishaps.

And go overkill on cupholders. Indian buyers demand upwards of seven to cradle the standard 1-liter water bottles. Thirsty riders need to be kept hydrated in India's brutal heat.

Those demands hardly translate into global models. But other innovations, such as single windshield wipers and new global procurement methods, are tracing their roots to India.

Toyota Motor Corp. and Honda Motor Co. are among the pioneers in building cars specifically for India. Toyota launched its Etios small car there in 2010, and Honda offered its Brio hatchback last year. But other carmakers are climbing on the bandwagon, including Ford, with its Figo small car, and General Motors, with the Chevrolet Beat. Volkswagen sells a modified version of its Polo compact.

Toyota and Honda developed their cars from scratch to be built and sold in India. Engineers blew up the usual game plan, questioning the necessity of long-standing internal standards. Just as burgeoning demand in China forced global automakers to accommodate Chinese tastes and demands, such as more spacious rear seats, India is now spurring a rethink.

Do heaters really need to overcome temperatures below 30 degrees? Can one windshield wiper do the job? Is rustproofing necessary? How can automakers tweak specifications to source parts locally?

"Normally development is based on Honda's global requirements, but for this car we came up with newly established standards," said Takahiro Higuchi, Honda Brio chief engineer.

"We asked, 'Do we really need this?' for each and every one of Honda's global requirements," Higuchi said in an interview. "We found some engineering work, from the India project, that we can probably put into the United States or Europe."

Higuchi declined to identify the changes for competitive reasons. But Honda already is adopting them.

"It's being put into use," he said. "The Brio project was very significant because it gave us an opportunity to review that."

Foreign automakers began arriving in India in large numbers after market liberalisation in 1991. They suddenly were going head to head with Tata or Maruti Suzuki, which had been building low-cost -- and low-quality -- rides for years.

Tata raised the bar in 2009 with the no-frills Nano, which started at $2,500 and was billed as the world's cheapest car. It pushed the limits of what's really needed for a car: It had a two-cylinder engine, one wiper blade and just three lug nuts per wheel.

No foreign brand has deigned to compete at that level. But their India stickers are still low by global standards. The Brio starts at about $7,100, and the Etios hatch starts at about $7,300.

In India, they compete against such cars as the Tata Indigo Manza and Maruti Suzuki Swift. While there are no plans to bring the budget cars stateside, the development techniques could be exported.

Toyota Etios Chief Engineer Yoshinori Noritake says his team's efforts to build a low-cost car focused on simplifying design and tailoring to local needs. Engineers on other Toyota global car projects are taking the same approach.

"Some of the ideas and processes we used can be a global standard," Noritake said during a test drive event last year.

Combine and cut

Step 1: Simplify by combining several parts into one.

The Brio, for example, gets a straight, not bent, steering column that requires fewer brackets. As a result, the instrument panel has half the parts as the panel in the Fit small car.

At Toyota, the heating and air conditioning unit used four aluminum filaments for the condenser, radiator, heater and evaporator. But for the Etios, Noritake's team devised one filament that could handle all four tasks.

Toyota also combined what are normally three exhaust pipe parts into one. And it did away with the usual rubber molding between the roof and door in favor of simply stamping the roof's edge to act as a sealant by itself, Noritake says.

"These were firsts for Toyota," he says.

Both companies also took a localised approach to vehicle specifications. Engineers started with a list of locally available parts and materials and built the car around that.

Some standards taken for granted in markets such as the United States were jettisoned for a market such as India. Toyota decided, for example, that the car didn't need a heater. Honda ruled that rustproofing was superfluous.

Another lesson: Less is sometimes more. Taking a cue from the Tata Nano, the Toyota Etios gets only one windshield wiper. Toyota says it wasn't inspired by the Nano. But it repeated that adaptation on the Aygo small car for Europe and the redesigned 2012 Yaris, which is exported from Japan to North America.

Tata resorted to one wiper in part to shave costs, but Toyota did it to shave weight. By eliminating a second mount, wiper blade and internal actuators, Toyota cut about 1.1 pounds. And every ounce helps fuel efficiency.

Going global

Resisting a one-size-fits-all approach helps trim costs. Especially in procurement.

Honda has overhauled its global product development strategy to revolve around local procurement possibilities. Global nameplates, starting with the updated Fit scheduled to arrive next year, will exhibit variances according to what local suppliers can deliver. It's a strategy Honda pioneered in India.

About 90 percent of the Brio's parts are sourced locally.

"Everything is new. This is completely different from our conventional procurement approach," said Managing Officer Yoshiyuki Matsumoto, head of global small cars. "We've learned those things from Brio, and that's why we're deploying it not only in India but to China, Thailand and maybe in Mexico."

The lessons will be used at the Mexico factory Honda will open in 2014. That plant will make the Fit for the United States.

Toyota is taking similar steps with its lineup outside India. Says Noritake: "The new way is to start from zero and apply only those features that are must-haves."

The results speak for themselves: The Etios hatchback is the cheapest car in Toyota's global lineup. The same goes for the Brio in Honda's portfolio.

And those models are forming the foundation for cheap entry-level cars being rolled out in other emerging markets. Toyota began exporting the India-made Etios to South Africa in May and plans to make a derivative in Brazil this year. Honda sells the Brio in India, Nepal and Thailand.

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From Automotive News (A Crain publication)