Automotive Industry | 2018 PLI Report by HARE Management

AUTOMOTIVE INDUSTRY MARKET AND PRODUCTIONINTELLIGENCELINE

2. Production Line Intelligence Page 10—21

b. Market size and coverage

Purpose of this document

This document has been divided into three parts:

c. European sales data and evolution Current and future market trends Overview of challenges Key demographics Key producers in the automotive industry

1. Industry Overview Page 4—9

3. Use of this Document Page 22—23

EPTDA was founded as the European Power Transmission Distributors Association in 1998 in Marbella, Spain, on the initiative of a group of power transmission and motion control (PT/MC) industrialists who believed in bringing together PT/MC distributors and manufacturers on one unique platform. It has since become the largest organisation of PT/MC distributors and manufacturers in EMEA and is one of the most powerful and respected B2B executive platforms for the industry worldwide.

EPTDA continually strives to develop relevant tools for its members, helping them stay competitive in a constantly evolving marketplace and business environment.

EPTDA’s mission is to strengthen its members in the industrial distribution channel to be successful, profitable and competitive in serving customers to the highest standards. The association takes great pride in its values which focus on being a premier community for qualified members through open dialogue and mutual respect; acting with integrity, honesty and fairness; and ensuring continuous growth and learning.

As part of the development of tools and resources for members, this document is designed to add value to their commercial understanding of specific markets and production line processes. This document, on the Automotive industry, follows the success of the first report in 2016 on the Soft Drinks industry, and the second in 2017 on Confectionery.

The purpose of this document is to provide distribution management and their sales forces with market and production line intelligence on the automotive industry, focussing on the vehicle assembly segment only. This document explores trends, identifies products used in manufacturing vehicles, clarifies key challenges and considers the opportunities and how they can be capitalised.

h. Major machine builders

The opportunities within the passenger automotive industry, both for MRO and OEM distribution, are significant – an estimated minimum ‘scale of opportunity value’ (SOV) of 380 million€1 has been estimated as available for distribution in the MRO aftermarket. The final section proposes how the document could be used and provides open-ended questions that can be asked to prospective customers in order to reinforce the knowledge gained in parts one and two and to maximise the available opportunities.

This first section provides an introduction and overview to the automotive industry and gives key background information, market intelligence and major players within the industry. It has been organised as follows:

This section illustrates the final assembly of the automotive production process and explains each stage in detail to provide an understanding of what is involved and where the opportunities lie. Key customer challenges, major product groups, typical maintenance and improvement projects are identified throughout the production line, as well as highlighting potential areas of commercial opportunity for the distributor.

Overview

a. Definition, segments within the industry and market share

With the rise of hybrid, electric and increasingly autonomous vehicles, the traditional landscape of petrol and diesel cars is changing. A rise in consumer concern over the impact of vehicles on the environment has led to greater interest in cars powered by alternative fuels, such as electric-powered cars and hybrid plugins. Consequently, automotive manufacturers have responded with a variety of new car models on offer, especially as governments and authorities begin to target cars fuelled by petrol and diesel.

Figures for 2017, however, have caused concern as some markets within Europe have seen car sales, particularly for diesel cars, fall for the first time since 2011. As consumers become more aware of the impact of the nitrogen oxides produced by diesel, as well as pressure from governments and other authorities for tax rises or bans, they are increasingly turning to alternatively-fuelled vehicles. 3

Definition, segments within the industry and market share

Market size and coverage

The commercial vehicle sector has plenty of opportunity, with similar production processes to passenger cars, but are produced in separate plants. With an 86% share of the European market, this document will only look at the final assembly of passenger cars.

Prior to 2017, diesel share in the European market maintained an average of just under 50%, holding the largest market share by vehicle type. Nonetheless, the fall in diesel sales were seen to be offset by an increase in petrol car sales and a slight increase in overall car sales for 2017. In addition, alternatively-powered car sales, particularly HEVs (Hybrid Electric Vehicles) have risen by 20.8%, accounting for 5.8% of total passenger car registrations in 2017. 5

As the world’s second largest producer behind China, the European automotive market held 22% of the global market in 2017, producing over 20 million units with an estimated worth of 470 billion€ – 63% of which came from the top five markets; Germany, the United Kingdom, France, Italy and Russia. Of this, nearly 4.2 million vehicles were exported from Europe, predominately to the United States, China and Japan. In 2017, the global automotive industry – including parts and aftermarket sectors – saw sales of around 1.6 trillion€6 after a record of 73 million passenger cars were produced in 2017.7 It is expected that the global car market is set to reach 114 million units by 2024 with a compound annual growth rate (CAGR) of 2.33%. 8

PART ONE

The automotive industry is often divided into two core categories – passenger and commercial cars. Passenger cars (or vehicles) are defined as those intended to carry up to nine people, including the driver. Commercial vehicles are those of the larger variety such as coaches, trucks and vans. Together, passenger and commercial vehicles are categorised as motor vehicles.

European motor vehicle production market share by type in 2017 4

Automotive industry overview

86.0% PassengerMediumcars& heavy commercial vehicles over 3.5t 11.3% Light vehiclescommercialupto3.5t 2.7%

Another way to segment the automotive industry is between Tier 1 and Tier 2 suppliers. Tier 1 suppliers provide original manufacturers, such as Volkswagen or Daimler, who concentrate on the final assembly, with the marriage of the body, chassis and the engine – the focus of this document. Whilst Tier 2 suppliers are key suppliers for Tier 1 companies.

As of January 2018, the Volkswagen Group maintained its position as the European market leader with 24.6% of the market share. Whilst selling around 143,000 units under the VW brand, the Volkswagen Group also sold around 165,000 cars in Europe under its other brands – Audi, Seat, Skoda and Porsche.9

There is a huge opportunity for distributors in Tier 2, for example engine assembly and manufacturers. However, this will be supplemented by an additional document.

Over the past five years, the global automotive market has seen an average increase of 3.66% each year in its sales of motor vehicles (passenger and commercial cars). 2 This is despite the 2008 financial crisis which saw a significant fall in production for 2008 and 2009, and in turn proves promising for the European automotive industry as it slowly recovers. European sales are yet to exceed pre-2008 figures, but with nearly 21 million new vehicles sold in 2017, they are close to figures recorded in 2007.

22% GroupPSA Fiat Volkswagen Group 15%17% 11% 8% 7% 6%7%4%3% Others Renault Group Ford DAIMLER Group GroupBMWToyotaNissan Global automobile production from 2007 to 2017 15 Year vehiclesMillion 100080604020 71.6 68.378.282.185.688.389.793.996.8 65.6 74.9 2007 20172015 20162014201320122011201020092008 5

The fleet or leasing market (companies that operate a fleet of 25 cars or more for leasing) can have a significant influence on car registrations and sales. The UK saw an estimated 9 million passenger car sales in 2016 – 50% fleet sales, 45.9% private (consumer) car sales and 4.1% direct sales to businesses.12

With such a large share of the UK market, the demand for the production of fleet cars can be an influencing factor on overall sales. Across Europe, the UK has the largest market share of fleet sales, followed by Germany and France with 16.5% and 14.3%, respectively.13 14

New passenger cars in Europe by fuel type, 2017 10 Largest car manufacturers in Europe 11 49.4% Petrol Electrically-chargeablevehicles(ECVs) Hybrid vehicleselectric(HEVs) 44.8% Diesel 2.9% 1.5% Other alternative fuels 1.4%

Germany

Number of assembly plants per country

Demand for larger cars continues to thrive as demonstrated by the growing market share of 4x4 cars across Europe, which has seen an average of 7% increase over the past five years. This is particularly the case for Nordic counties where nearly 40% of new passenger car sales are made up of 4x4s. The Swiss market has the highest demand for 4x4s – 42.1% of the country’s new passenger cars.18 In contrast, 60% of Italy’s new passenger cars are smaller compact vehicles such as the Fiat Panda, Volkswagen Polo and Renault Clio.19

Although Germany has the greatest number of assembly plants in Europe, the average worker in Spain produces over double the number of vehicles compared to workers in Germany. This may be due to varying factors such as production processes, worker regulations or amount of automation used across the production line.

Whilst being the greatest producer of vehicles in Europe by volume, a cycle can be seen in the annual production of vehicles in Germany – with August and December typically being the months with the least number of cars manufactured. During August, assembly plants are often closed in line with summer holidays or are closed for the retooling of new models released in September, which could explain the fluctuation.17

France United Kingdom Russia 39 33 33 30 23 16 10 9 Italy Turkey 15 12 Poland Spain SwedenNetherlands Top 10 locations for assembly plants in Europe 20 Vehicle production per direct automotive manufacturing worker 21 Country workerperproducedVehicles 20015105 16.5 7.77.67.57.1 13.5 13.4 96.8 5.55.0 10.9 Spain PortugalAustriaGermanyRepublicCzechFranceSloveniaKingdomUnitedSlovakiaBelgium 6

The labour force is an area of interest for car manufacturers to improve efficiency and reduce costs. Over the last five years, manufacturing plants have reduced the overall number of workers required to build vehicles. Self-lubrication in the production line rather than by manual labour is just one way that manufacturers have been able to cut costs.16

European sales data and evolution

An emerging feature from the automotive industry is batterypowered technology. With governments announcing plans to ban sales of petrol and diesel cars, the automotive industry is fast responding with electric solutions. Volkswagen recently shared plans to provide electric versions of all models in its range, across all brands by 2030, whilst Daimler, BMW and Renault have also made similar pledges. 25

Baby Boomers (those born between 1946 and 1964) continue to be the ideal customer as the demographic in the best position to purchase cars. With greater purchasing power than Millennials (those born between 1980 and 1999), Baby Boomers tend to perceive vehicles in both an emotive and practical manner. 22

Current and future market trends

Autonomous vehicles – cars without steering wheels and brakes or accelerator pedals – are increasingly being tested and developed by various leading automotive manufacturers. In January 2018, Hyundai announced plans to begin selling self-driving cars in 2021, whilst General Motors in the U.S., have set in motion plans to launch a fully autonomous car for ride-hailing services, such as Uber, in 2019. 28 29

Norway dominates the electric-powered market – nearly a third of cars purchased in 2016 were electric. The next European country to come close is the Netherlands, where around 7% of all sales are electric. One reason for Norway’s success is that it gives citizens driving electric cars exemptions on toll roads, free parking and allows them to use bus lanes. 27

3D printing, plug-ins and autonomous cars are all technological advancements on the car’s performance. Whereas another growing force in the automotive industry is ‘connectivity’ –focusing more on the driver / passenger / consumer experience. With cars becoming more and more powerful in their computer processing capabilities, the experience of the driver and passengers in the car is increasingly becoming a key factor for

Nonetheless,23

Meanwhile, one of the leading market players, Volkswagen, has used 3D printing in the production line to reduce reliance on suppliers for manufacturing aids and bringing the toolmaking process in-house. 32 BMW have also been using 3D printing to produce components such as centre lock buttons since 2012. 33

Such technological advancements, however, do come at a high cost, despite the high demand for such innovative software. As a result, advanced display screens will be mostly found in the luxury-car sector which can afford to cover these higher costs.

On average, one vehicle body is produced every 85 seconds 85

In addition, innovators are looking at how 3D printing can be implemented in the automotive industry. In 2016, Honda showcased a prototype of the Honda Micro-Commuter – an electric, battery-powered car for short-range travel – where the body and majority of the panels had been 3D printed. 31

Fromconsumers.large

Especially with the rise of alternative vehicles and better transportation services in cities, these younger generations are more likely to use alternative services instead of cars. In turn, the journey experience and connectivity, rather than simply getting from A to B, will become the critical purchasing factor for those who do decide to purchase cars for the city.

As cars become more and more programmed to avoid crashes, manufacturers may benefit from simplified production lines as previously heavily regulated safety features may no longer be necessary. This could lead to vehicles that are lighter and last longer, and as they’ll be less expensive to produce, they should become cheaper for the consumer to purchase. 30

Key demographics

it’s estimated that by 2020, nearly 40% of new car sales will be purchased by Millennials. As such, they are a driving force in the evolution of cars and their capabilities, with Bluetooth connectivity, increased smart phone mirroring and MP3 and navigation systems proving strong purchasing influencers. It’s estimated that these features are worth about 20% of a car’s value.

With a 5.8% market share of all European new passenger cars, electric sales, including plug-ins, remains a small percentage of the overall automotive industry – which is still dominated by diesel and petrol. 26 Adoption of electric vehicles may improve as the technology develops to run for longer, without needing regular charging, and governments increase incentives for the electric car.

tv screens that turn cars into living room spaces, safety facial recognition features and in-car voice assistants personalised to the passenger’s voice – the full technological power found in computers, smartphones and tablets will, very soon, be fully realised in cars.

In addition, a decline in the number of 18 – 25-year olds holding driver’s licences will ultimately have an impact on the type of consumers purchasing vehicles. Instead this age-group is at the fore-front of shared car-ownership and using e-hailing services such as Uber, MyTaxi and French carpooling start-up BlaBlaCar.24

1 Toyota 10,213,486 Japan

Greater government incentives for customers, such as those rolled out by Norway, will therefore be crucial in helping car manufacturers to make the sales they need to meet environmental objectives.40

Volvo have been quick to pre-empt this move, and said that it will make only fully electric or hybrid cars from 2019 onwards. MINI also shared plans to create an electric version of their signature hardtop style, due to go into production in 2019 –with parent brand, BMW, following suit with electric BMW cars

Despite diesel cars having often been favoured by consumers, as consumers become increasingly concerned about the impact of the daily use of transport on the environment and public health, car manufacturers will need to provide alternative solutions that meet both these requirements – better fuel consumption and a reduced environmental impact.

Key producers 41

In addition, as governments press the automotive industry to produce cleaner cars with lower CO2 and NO2 levels, demand for hybrid and electric cars is still very small, with a market share of less than 4%. This leaves car manufacturers with some challenging options – to either not produce and in turn not sell many 'clean' or fuel-efficient cars, with the result of missing CO2 targets and facing financial penalties, or to push electric and hybrid cars more into the market with financial incentives for customers, but at a financial cost to the manufacturers.

This has led to a reduction in diesel sales, and conversely a rise in petrol car sales – petrol-fuelled becoming the most sold car type in 2017. 34 Consequently, preliminary figures for 2017 suggest an increase in CO2 levels is to be expected. 35

Demand for diesel cars significantly dropped in 2017 as environmental campaigners started to raise awareness of the harmful nitrogen oxides (NO2) produced by diesel and governments began to announce bans on diesel cars.

However, leading car manufacturer Toyota, expressed concern in late 2017 that electric vehicles with a long range are not ready for mass production, suggesting fully electric cars are still a way off from mass market use. 37 In the meantime, hybrid vehicles will continue to act as an intermediary between the traditional and electric-powered cars, with sales split almost 50-50 between hybrids and electrics in the plug-in market. 38 39

In an attempt to meet its targets under the Paris climate accord, France announced in July 2017 that it plans to end sales of petrol and diesel vehicles by 2040. This follows Norway, who have already set a target of only allowing sales of 100% electric or plug-in hybrid cars by 2025, and are currently the fastest adopting nation of electric cars. Car manufacturers and consumers will have to respond accordingly and accelerate the transition to producing and using electric cars.

N.B. As alliances develop, this picture will change (e.g. alliance-2022.com)

Overview of challenges

Traditionally, diesel cars have been a favourite as they produce less carbon dioxide (CO2) than petrol, are more fuelefficient, and in turn help governments to meet CO2 targets to combat global climate change. However, there is now increasing consumer confusion over whether diesel cars are the more ethical choice. This was amplified by the Volkswagen emissions scandal in 2015 and the link between NO2 gas and respiratory disease.

The top ten global automotive manufacturers in 2016, in terms of world motor vehicle production are ranked as such:

2 Volkswagen Group 10,126,281 Germany Hyundai 7,889,538 South Korea General Motors 7,793,066 United States Ford 6,429,485 United States Nissan 5,556,241 Japan Honda 4,999,266 Japan Fiat Chrysler 4,681,457 Italy Renault 3,373,278 France Group PSA 3,152,787 France

RankValue Company Total ProducedCars Primary GeographyBusiness

• Danobat | www.danobatgroup.com | Spain

Below are the major machine builders of the automotive industry, with a brief profile on each.

From pressing, right through to the inspection of the completed vehicle, Daifuku provides solutions and products throughout the production line, including conveying, transport systems, storage, sorting / picking systems and material handling tools. Although their headquarters are based in Japan, they hold two of Europe’s largest distribution centres in Denmark and Sweden, supporting various other locations across Europe. In March 2017, Daifuku reported net sales of 2.4 billion€.43

• Bosch Rexroth AG | www.boschrexroth.com | Germany

Daifuku Group | www.daifuku.com

• Intralox | www.intralox.com | Netherlands

• Fanuc | www.fanuc.eu | Luxembourg

Eisenmann SE | www.eisenmann.com

• Siemens | www.siemens.com | Germany

• Habasit Holding | www.habasit.com | Switzerland

The Dürr Group is a leading global mechanical and plant engineering firm with products and systems operating across paint and final assembly systems, application technology, exhaust-air purification and energy efficiency systems, as well as assembly, testing and filling technology. In 2017, Dürr reported sales revenues of 3.7 billion€, of which 1.2 billion€ was generated from its paint and final assembly business unit, whilst it has 29 offices across Europe.44

One of the leading suppliers of surface finishing technology systems, environmental technology, material flow automation and process and high-temperature technology, Eisenmann has several bases across Europe, including headquarters in France, Germany, Czech Republik, Italy and Spain. Initially, starting out in wood-drying systems before moving onto painting systems, Eisenmann founded the first circular conveyor for paint shops, the first exhaust air treatment plant and the first powder-coating plant in the industry. From paint shops, surface inspection, solar thermal solution and body shop and conveying to factory planning, Eisenmann have solutions across the automotive production line, including robotics.42

Dürr | www.durr.com

Other significant players in the industry:

Headquartered in Aretxabaleta, Spain and part of the Mondragon Corporation, Mondragon Assembly specialises in the development of automation and assembly solutions for several sectors, including the automotive industry. They design and manufacture automatic elements throughout the production line from turnkey solutions, custom machinery and programming to installation. Other companies within the Mondragon Group that operate in the automotive industry include MB Sistemas, who offer sealant, anti-vibration, spotwelding resistance and robot-handling solutions. As well as Danobat, with individual products and turnkey lines, and Maier, who are the European leaders in plastic parts and mouldings for the automotive industry.45

Mondragon Assembly | www.mondragon-assembly.com

• SCHUNK | www.schunk.com | Germany

Major machine builders

• Comau | www.comau.com | Luxembourg

The year,producednumberaverageofcarseachperworker7.11 9

This section also highlights the key customer challenges in relation to processing phases. It describes the key product categories used in the production process and typical projects in maintenance, repair and overhaul that are often undertaken in such a plant. Key sales opportunities are identified in relation to products and maintenance projects that are supported by distributors with real technical expertise.

• Production must abide by regulations and safety policies of the country in which production takes place

• Throughout the production line, as well as non-production areas, a clean environment is critical – 90% of slips are due to wet and oily floors

Due to the size of the automotive industry, it is often thought that contracts with distributors and suppliers in the industry are exclusive to the larger suppliers, however this is often not the case. Car manufacturers tend to have multiple contracts with distributors of varying sizes and will usually last for longer than a

This production process, whilst being typical, does not represent all automotive production. This is because actual plant processes may vary according to the vehicle being produced, and in addition this schematic focuses on passenger car manufacturing. However, the key stages described here will be common to most plants and there will be similarities that can be seen across all segments of the automotive industry.

• Personal Protection Equipment (PPE) is an essential and important aspect of production. Lock out and shut off areas and protocol developments are becoming widely approved standards

of the total manufacturing process

Nearly 15% are ﬁtted into around major components assembly plant,happens in the

This schematic describes a typical automotive assembly line, detailing the five key stages: press shop, body shop, paint shop, assembly and final assembly.

Introduction

Key challenges

Automotive final assembly process

• The air in the plant must be kept clean with minimal pollution – this helps to remove smells from the paint shop and is beneficial to the labour force

where over 10,000 parts 100

Cleanliness and health and safety

PART TWO

ﬁnal

The following are key challenges that are constant throughout the automotive assembly production line. Supporting the schematic, additional key challenges relative to specific stages of the production process are identified.

as location, speed of being able to source items, tailoring parts to specific machines and building relationships with both plant and HQ-level administrators can all be influential in generating business. Whilst it can be challenging to initially set-up business with car manufacturers, there is vast opportunity once this barrier has been broken through. Small distributors, therefore, shouldn’t be afraid to enter the automotive industry as there is plenty of business to be won.

Factorsyear.such

• This leads to increased development of wifienabled products

Industry compliance

• Air handling, skid/roller conveyors and vehicle lifts are integral. This can require specialised premium products and the plant to work closely with the supplier/manufacturer

• Car manufacturers expect good electronic ordering systems (EDIs) which are easier and more efficient for them to use and maximise uptime. It is critical that distributors and suppliers are able to meet this need

Industry 4.0

Environment

• There should be no emissions to sewers or waters from vehicle coating and operations using solvent coatings. Emerging treatment for such waste water includes chemical flocculation, followed by filtration

Working with the supplier/manufacturer

Maximising uptime

• In 2014, Ford unveilved an industry-first paint technology that both increases finish quality and reduces waste

• Increasing automation to reduce costs e.g. increasing the use of self-lubrication rather than manual labour

• Reduction of spare parts – OEMs will want to send boxes of spare parts along with the original machine, but vehicle manufacturers do not have space for these. Distributors can add value in stock management and location/access to spare parts as and when required

• Industry 4.0 will see more efficient use of materials, self-monitoring and network connectivity, and thus less downtime of machinery

• Reduction of noise for the workforce and environment

• Industry 4.0 is the practise of interconnected devices communicating with one another, providing human interfaces with real-time data

• A critical priority is to keep the plant running at all times –any failure could result in cars not being produced and prove extremely costly. Any solutions to keep the plant running is highly valued

Cost reduction and plant maintenance

• There is increasing pressure for the automotive industry to be prudent consumers of energy and natural resources

• Heavy industry regulation has seen supplier on-site locations move out of the vehicle manufacturing plant so to avoid bias

• Distributors and suppliers must be careful not to go above and beyond (or under-deliver) what has been promised as it could appear as a financial incentive to win business. Car manufacturers will expect to pay for added services

11. Applying the colour: Robots apply the colour to the undercoated and smoothed body shell. The shell is charged with current – as are the paint nozzles on the robots – to ensure an even coverage of colour. This also helps to minimise drips and reduce overspray – minimising waste.

Press shop shop

2. Forming panels: The blanks travel along a conveyor to the forming presses – that form the blanks into shaped panels. The first moulds the blank into the required shape using a die, then the panels pass through a series of presses that trim excess metal, remove corners and make required holes. Cars are made up of several thousand pressed metal panels.

Explaining the process of production

9. Undercoat application: The first stage in the paint process is to spray the car with an undercoat layer – this is often referred to as ‘filler’ as it flattens and prepares the surface of the body shell, ready for colour application.

Paint

6. Checking and degreasing: The completed shell is moved to a checking area and visually examined for defects. It’s then de-greased and cleaned in preparation for the anticorrosion treatments.

7. Anti-corrosion treatments: The cleaned and de-greased shell either travels on a conveyor through (conveying method), or is dipped in (dipping method), a Cathodic Dipping Bath (CDB) which coats the shell with an anti-corrosion layer of zinc phosphate.

Automotive assembly production line Process

8. Sealing and protecting: Next robots apply protective silicon over the welded joints on the body. This is to prevent water penetrating the joints. The underside of the shell is also treated to protect it against water and minor damage.

1. Making blanks: Huge rolls of metal (aluminium or steel) are passed between pressure rollers to straighten them, then they’re cut into flat sheets (blanks) by a blanking press.

10. Curing the undercoat: The shell then passes through an oven where it’s heated to over 450 degrees to harden the undercoat and cure it to the body shell.

13. Final cure and quality check: In the same way as the undercoat, once the paint and lacquer have been applied the shell passes through an oven to cure and harden the layers. The body shell is then allowed to cool, before being conveyed along an inspection line, under a series of lights, where the paint is inspected for defects.

5. Creating the body shell: Next the side panels are clamped into place and laser welded to the chassis, followed by the roof. Finally, the boot and bonnet panels are installed, creating a complete body shell. Creating the chassis and body shell is the most automated part of the process – robots carry out almost all of the tasks.

4. Creating the chassis: The metal panels are moved into the body shop. Firstly, robots weld smaller panels together to make supports, chassis panels and floor panels, then the chassis components are arc welded together to create the base. The floor panels and front and rear chassis elements are then spot welded into place –creating a complete vehicle chassis.

Bodyshop

12. Applying the lacquer: Once the colour is applied, it is treated with a clear protective lacquer, to give the colour shine and protects it against damage and weathering. The lacquer is usually applied in two ways; the most common way is to spray it onto the body shell using the same techniques as the application of the colour layer.

3. Ready for the body shop: After the presses, the panels are visually checked and stacked (manually or by robots) onto frames, ready to go to the body shop (or "body in white" production area).

Process

Paint shop – Key product groups

• Paint and varnish compatible precision belts

• Seals – standard, three-lip and L4 seals

• Sub-assembly conveyors (chain driver)

Key critical projects have been highlighted in this schematic to make it easy to identify which areas of the production line have most Otheropportunity.typical product groups to look for in the production line

The opportunities and projects found in the process of production

• Wifi-enabled pneumatic valves

• Bearings

•include:Making of the engine block – there's a foundry in the engine plant where metal is melted and turned into blocks (a 24/7, 365 days operation). Like bakeries, parts break a lot and therefore there are lots of opportunities for distributors to supply parts

Robotics precision and linear bearings, drive systems, elastic, chain and replacement couplings

Silicon-free grease Spark-proof spanners & air tools

• Couplings

• Increased use of exoskeletons electronic motors, seals, silicon-free grease, pulleys and precision belts

• Self-lubricating bearings

Automotive assembly production line Process

shop Paint shop 14

• Plastic or stainless-steel and heat-resistant bearings

• Anti-corrosion chain

Body shop – Key product groups

• Self-lubricating systems

• Silicon-free lubrication/ grease

• Hanging conveyor system

• Seals

• Condition monitoring

• Ball screws

• The scrap conveyor which carries away waste scrap metal is prone to frequent breakdowns providing opportunities e.g. to repair hollow pin chain

• Sourcing products and having tools are a critical area for distributors e.g. head of ball screws specific to manufacturer machines. This requires added engineering expertise

• PNU Valves

Press

• Multi-access linear motion system

• In addition, there may be up to 10,000 bearings installed in paint shop application

Press shop – Key product groups

• sphericalbearingsCylindricalandrollers

• Induction heaters and special tools for condition monitoring bearings. SOV: 20k€ per bearing

Body shop – Critical projects

Linear guides

**Please note that all figures represent the Scale of Opportunity value (SOV).

• Refurbishing robots. SOV: up to 100k€ per Corrosion-freeline chain to minimise flipping of the chain and noise. SOV: between 150 200k€

•

Paint shop – Critical projects

Process

Bodyshop

Press shop – Critical projects

• Process requires ball screws to bend sheet metal. SOV: 5-10k€ per ball screw

• Use of low weight end of arm tooling applications to increase speed of robotic arm

• Elastic or oriented friction-free couplings to avoid backlash SOV: 500€ per arm of elastic couplings

•

Scrap conveyor

•

Motors

• Wifi-enabled pneumatic valves that can operate amongst weld spatter, noise interference and high ozone levels

Final Assembly –

16. Windscreen fitting: Next, the front and rear windscreens are fitted –usually by robots, but sometimes by hand – by applying a line of mastic around the edge of the windscreen then positioning the windscreen in place.

Assembly Assembly –

Critical projects Refilling single point lubricators with cartridges and grease. SOV: 188k€ annually per 10 points

production

15. Interior component installation: Now that the doors are removed, the interior of the vehicle can be installed. Firstly, electrical circuits, insulation and carpeting are installed, followed by the dashboard, electronic equipment and centre panels.

Key product groups Easy mount bearing units for roller conveyors • Lorry drive • Overhead chain • Gearboxes • Pneumatics – air tools • Testing – rolling road is electric motor PillowAdhesivesdrivenblocks • Flanged housing 16

19. Finishing: Once the engine and drive train are fitted, the exterior components – wheels, bumpers, badges and trims –are fitted. This is followed by the seats and the finishing touches are made to the interior. Only now can the doors be returned to the vehicle. Lifting gear is used to place them onto the car and they’re secured into place.

FInal

14. Door removal and assembly: The shell is now ready for assembly. To facilitate access to the vehicle, the doors are removed and conveyed to a separate production line, where they are assembled in sequence with their corresponding body. They re-join the vehicle later in the assembly process.

Automotive assembly production line Process

20. Finished car: The car is now complete and stands on its own wheels. It then travels either via conveyor or under its own power, to a testing area. The first quality test involves spraying the vehicle with water and checking for any water ingress. Once the car has passed the water test, it’s driven onto a rolling road to test all the systems and functions of the car. the process of and the and projects

Explaining

opportunities

Final Assembly – Cost saving opportunities

• Valves

• Process pumps

Assembly – Key product groups

require

• Gearboxes

For one single-point lubraction: Moving from 200€ per month for manual lubrication to 60€ per month per point (including one-off up-front cost of installation) in the first year, and 16€ per month per point thereafter.

• WindscreensRollers–Pneumaticsactuators pneumatic applicationsvacuum

• –Couplingsconveyor belt drives, clamping sets for robot wheels, rigid shaft couplings, lifting and standard application

21. Final testing: The tests on the rolling road are conducted whilst the vehicle is connected to a testing rig which runs test sequences on all systems – such as ignition, lighting, safety systems and engine management systems – to identify any errors. Any cars with problems are passed to a final finishing area to be fixed, re-tested and approved. Approved cars are sent to the dispatch area where they are stored or shipped to the dealership to be sold to the customer.

• Cam follower

For 10 units of single-point lubrication: A cost saving of 16k€ in the first year and 22k€ per year following

• Flat belts

17. Engine and drive train assembly: The drive train is the transmission, wheel hubs, steering and suspension elements of the vehicle, and they’re assembled on a separate production line. Along with the engine, it’s conveyed from their assembly area, ready for the ‘wedding’.

Final assembly

• –hangingSub-assemblyconveyorsencodercouplings

• Cost saving of up to 70% in the first year per point by switching from manual to single-point lubration, and a 92% cost saving in subsequent years

18. The wedding: Now that the interior is almost complete, it’s moved to the ‘marriage’ area (also referred to as the ‘mating’ area), where the ‘wedding’ between the body and drive train and engine takes place. They’re lifted into the underside of the vehicle and bolted in place. The engine, drive train and electronics are then connected and tested. The vehicle is now considered a complete car.

e.g. cost of relubrication

Process

• Overhead conveyors

Automotive assembly line – ‘Putting it all together’ Process The approximate value of aftermarket sales in the automotive industry380m€ A view from the factory floor Pressshop Bodyshop Paint shop 18

Process ranging from 900k€ – 1.9m€ per plant FluidBearingsPower Seals CouplingsBelts Mechanical/ TransmissionPowerLinear Chain 26%18% 15% 9%13% 9% 6% Proportion of replacement products in the assembly line Assembly Final assembly 19

• What is their role or speciality (plant maintenance/repair/mechatronics/purchasing)?manager/

• What type of car manufacturing plant are you about to visit?

General

a. Detail of the company itself

b. The people to be seen and which department

The people to meet

The Producing Company – makers of the ‘car’ or 'vehicle' itself

There are three parts that deal with:

• What do you already know about the size of the plant?

3. The follow up – questions to ask or to reflect on, at the end of the meeting or afterwards

• What should the agenda be?

• Who is to be seen?

• What are the primary objectives for the meeting – what is ideally wanted to be achieved (keeping in mind that this meeting might be about preparing for a further meeting not simply to get an order this time)?

• How many other plants does this manufacturer have in your region/territory?

• What is the plan for follow ups to this meeting (further meeting/proposal/meeting with other people)?

• What can be summarised as the main challenges they face in relation to purchasing the types of products you can supply?

The following provides the reader of this document, either General Management or Sales Team, with some template questions to help to generate revenue from this Production Line Intelligence overview and so develop business in the automotive industry, primarily in the vehicle assembly segment.

1. Preparing (before any visit takes place) – this provides questions to think about and address before attending the company’s site. This further breaks down into two sections being:

• How many maintenance engineers do they have?

• What do you already know about its production in terms of capacity, number of lines, output etc.?

Using this document to develop business

• What kind of questions should be prepared (in relation specifically to who will be seen)?

• How big is their purchasing team?

PART THREE

• What is known about them already? (hint: search LinkedIn)

• What do you already know about the lines it has (complete assembly, partial assembly, single or multiple platforms)?

• How many people do they employ?

For many of these questions you may already know the answers. Others might be used on a regular basis when you visit customers and prospects in other industry sectors. It is meant as a resource to act as a prompt and reminder allowing your business to fully capitalise on this market intelligence and production information.

• What kind of support material do you need to take with you?

• How old is the plant?

• What are the fall-back objectives if the primary objectives are unachievable?

2. The meeting – questions to ask during the meeting to understand the needs, requirements and potential sales opportunities in the prospective customer

Preparing – before the visit

• How will you ensure that these follow ups are completed?

How can these be replicated?

What key plans, changes or adaptions are there in production that you are able to share with us?

• How will you complete these?

• What parts do you particularly utilise most on an annual basis?What are the issues/challenges you have with getting those parts?

• What were the main points you learned from the visit?

Are you using partners – suppliers or distributors – to assist you in this process?

Are existing partners – suppliers or distributors –assisting?

• What are the key maintenance/industrial supplies objectives for the plant?

What are they caused by?

• Who in your business do you need to share this information with?

• How many production lines are there?

• What is the estimated annual spend on that maintenance?

• How are you going to use this information?

• What sort of regular maintenance does the plant undergo?

• What is your biggest current problem with your parts suppliers?

Are there on-going projects to deal with this?

• What are your main issues in relation to maintenance?

• What sort of plant is this (complete or partial assembly)?

• Where is the line most prone to failure or maintenance problems?

When does your seasonal production start (if applicable) and how do you respond to the change in model production?

• What are the ‘bottlenecks’ in the production process that affect speed or reliability?

• What are your main concerns in relation to type of production parts that you need to maintain and improve the line (e.g. bearings, mechanical power transmission, pneumatics, seals etc.)?

(If not already known, any of the preparation questions above can be asked during the meeting to establish plant type, size, capacity, age, type, as noted).

How do you want your supplier partners to assist?

What have been the success stories?

• How much of the production process is reliant on manual input or automation?

• How are you going to store this information?

• In what way can we help you with any of this?

The follow up

• What are the main challenges faced in your production line?

• What kind of support do you look for from your distributor in relation to planned maintenance?

• What other types of follow up will you undertake and why?

What type of production line are you (passenger, commercial or both)?

• What non-production related maintenance issues do you have to manage/deal with e.g. in relation to HVAC?

• What do you value most in relation to a supplier like us?

• What projects are being currently carried out in relation to maintenance or energy management etc?

• What are the next steps?

• What are the next steps you need to take and when?

Do you expect this to change in the near future?

The actual meeting

Authored by:

Sources: 1. Calculation based on MRO in Germany at 85 million€ per year with a European passenger market share of 22% 2. OICA, 'Provisional Registrations or Sales of New Vehicles, 2017' 3. AutoExpress, 'UK Car Sales Fall 5.7% in 2017' 4. ACEA, 'Motor Vehicle Production in the EU' 5. ACEA, 'Share of Diesel in New Passenger Cars' 6. Figures for 2017 European and Global Automotive Market Estimated from 4.2 million cars worth 94.5 billion€ statistic from ACEA 7. OICA, 'World Motor Vehicle Production by Country and Type, 2017' 8. AlixPartners, ‘Automotive Electrification Starts to Bite’ 9. Statista, ‘Top Selling Car Brands in Europe by Number of New Registrations’ 10. ACEA, ‘Economic and Market Report: EU Automotive Industry, Quarter 4, 2017’ 11. PWC, ‘Autofacts: European Market Review, January 2016’ 12. ACEA, ‘Consolidated Registrations – By Manufacturer’ 13. Fleet Europe¸ ‘Leasing Accounts for 22% of the French Car Market’ 14. Lease Europe, ‘2016 Leasing Facts and Figures 15. Statista, ‘Worldwide Automobile Production from 2000 to 2017 (in Million Vehicles) 16. AlixPartners, ‘Automotive Electrification Starts to Bite’ 17. Verband der Automobilindustrie, ‘Facts and Figures’ 18. ACEA, ‘4x4 Penetration’ 19. ACEA¸ ‘Segments by Body, Country’ 20. ACEA, ‘Automobile Assembly and Engine Production Plants in Europe’ 21. ACEA, ‘Top 20: Motor Vehicles Produced Per Worker by Country’ 22. Brandwatch¸ ‘Consumer Trends in the Auto Industry: Disruption, Millennials and Changing Buying Behaviour’ 23. PWC, ‘2017 Automotive Industry Trends’ 24. McKinsey, ‘Disruptive Trends that Will Transform the Auto Industry’ 25. BBC, ‘Why Switching to Fully Electric Cars Will Take Time’ 26. ACEA, ‘Trends in Fuel Type of New Cars Between 2015 and 2016, by Country’ 27. Telegraph, ‘The Long and Winding Road of Electric Car Adoption’ 28. Yahoo News, ‘Hyundai, Aurora to Release Autonomous Cars by 2021’ 29. Reuters, ‘No Pedal to the Metal in GM’s Planned Self-Driving Cruise AV Car’ 30. McKinsey, ‘A Road Map to the Future for the Auto Industry’ 31. Machine Design, ‘How 3D Printing is Changing Auto Manufacturing’ 32. Engineering.com, ‘Volkswagen Autoeuropa 3D Prints Manufacturing Tools to Save Thousands of Euros’ 33. BMW, ‘Series Components Made by 3D Printers’ 34. ACEA¸ ‘CO2 Emissions From Cars Down 1.2% in 2016; Market Trends Likely to Pose Extra Challenges’ 35. Guardian, ‘First Fall in Car Sales in Five Years Blamed on Fears Over Diesel Ban’ 36. The Guardian, ‘France to Ban Sales of Petrol and Diesel Cars by 2040’ 37. Reuters, ‘Electric Cars Not Ready for Mass Production Yet’ 38. EX Volumes, ‘Europe Plug-in Sales for H1 of 2017 and Updates for July and August’ 39. The Guardian, ‘Driving Force: Are Electric Cars Crowding Out Traditional Engines’ 40. Euractiv, ‘Diesel to Petrol Shift Poses ‘Serious Challenge’ to CO2 Reduction’ 41. OICA, ‘World Motor Vehicle Production: World Ranking of Manufacturers’ 42. Eisenmann, ‘Core Competencies’ 43. Daifuku reported net sales of 320 million yen 44. Dürr, ‘Company’ 45. Mondragon Assembly, ‘Automotive’ Disclaimer: The costed examples contained in this document are illustrations taken from real practice. They are, however, not predictions of future value achievable from various projects that can be undertaken in this sector. The authors, contributors and EPTDA do not accept any liability for any commercial decisions that may be taken as a result of these examples.

Also to a number of technical experts from distributor members of EPTDA operating in this sector, who have provided the concrete examples included in the text and without whose contribution the document would lack its operational and commercial relevance and power for distributors.

Acknowledgements

Acknowledgements and a sincere thank you to the following manufacturer members of EPTDA for the generosity of the technical and commercial information and advice that they have supplied and which has given real authority to the document.

Finally to the individual members of the EPTDA Know Your Market Committee and particularly to its Task Group, who have freely given their advice, guidance and inputs throughout the process of producing this document.