TRAVERSE CITY, Mich.—Those that fall behind, get left behind.
If there's one takeaway from this year's Center for Automotive Research Management Briefing Seminars, held recently in Traverse City, it is that change is coming to the automotive industry. Whether it is in the form of disruptive technology or regulations, the industry is faced with a number of challenges, or opportunities, depending on the perspective.
Freudenberg-NOK sees the future as an opportunity to thrive.
“Innovation is the lifeblood of your company,” Matthew Chapman, Freudenberg-NOK global director of marketing, automotive, said in an interview during the conference. “If you're not innovating, you're being left behind by the competition. I think that's true in most industries. Sometimes those innovations come in small, incremental things, sometimes they come in radical innovations. Regardless of the magnitude, the suppliers that know how to provide value to their OEMs are the ones that are going to remain profitable.
“If they're asking you to innovate, you're already too late. You have to be pushing and going from that perspective.”
One recurring topic is autonomous vehicles. With Detroit-based car makers signing co-development agreements with Silicon Valley-based tech giants, it seems as if the self-driving car is on the horizon. That's not to say there isn't still a myriad of challenges to overcome, but suppliers need to be ready for their parts to be required to do different things. Especially with a driver that isn't as engaged.
Freudenberg-NOK's bread and butter is sealing technology. Even in a self-driving car, a seal still is going to be required to do what its name so clearly states—seal.
But Chapman said seals that are already being used in electrified vehicles are being required to have additional content.
One in particular is in e-motors, which require conductivity. In some instances, seals have been asked to be able to conduct electricity from a shaft to the housing in order to make the motor function.
But as cars become more autonomous, seals also may be required to relay more information. Chapman said this could be especially true for cars that are part of a fleet, such as Uber or Lyft. If a car is sitting in a residential garage, the user will know when a seal isn't working because there's going to be oil all over the floor. Self-driving vehicles owned commercially either will need to have strict service regimens or parts that help notify the owner when it is time to make a repair.
“When seals leak, you're ultimately going to see lower performance,” Chapman said. “You're going to see environmental issues, but also total cost of ownership. When you don't have enough fluid left in the vehicle, you're going to see the repair and service costs increase.
“The first thing to me that is important is to have inside of the company a structure in place to understand and analyze what are the trends and the potential for content that can be added.
“These systems become smarter and more integrated, so data becomes a real value. Our parts are in the middle of a lot of that stuff.”
CAFE standards also will play a big role in shaping the automotive industry's future. And right now there is a tension—auto makers have the technology to meet the very high goal of 54.5 miles per gallon by the 2025 model year, but with gas prices expected to remain low for the foreseeable future, consumers are flocking toward bigger, less-efficient, vehicles.
Sean McAlinden, CAR Group's chief economist and vice president for strategic studies, said in a presentation that sales of hybrid vehicles are declining. Prius sales were off by 25 percent despite being three times as many models in the market.
And in July, the Environmental Protection Agency, National Highway Traffic Safety Administration and California Air Resources Board said in their draft Technical Assessment Report that the 54.5 mpg goal is off the table because lower gas prices have kept demand for light trucks such as SUVs and cross-overs high.
But Freudenberg-NOK is still driving forward to add value, especially through its low emission sealing solutions program. Chapman said the 2025 fuel standards are tough, but attainable. In this world of low oil prices and larger vehicles, OEMs have to still find a way to meet those regulations even if regulators are bending on 54.5 mpg.
“When it comes to lightweighting, everyone plays a part,” Chapman said. “It's not just the steel, aluminum or plastics suppliers; everybody plays a part. When you look at the overall vehicle, there are thousands of parts. If everyone is saving a little bit, it all adds up.
“That's where suppliers really have to come in with innovations, understanding and looking at all of the products that they make and how they can provide value to their customers.”
Automotive News, sister publication to Rubber & Plastics News, contributed to this report.