Siemens VDO Automotive has gone from being an unprofitable subsidiary of the Siemens AG electrical and electronics giant to a division with annual sales of $11 billion.
Siemens VDO President Wolfgang Dehen has led the turnaround of the auto electronics specialist. He says that to maintain its success, Siemens VDO will have to continue to innovate.
He talked about the high-tech solutions that Siemens VDO counts on to keep growing with Automotive News Europe's Edmund Chew and Jens Meiners at the newspaper's world congress last month in Vienna, Austria.
Are automakers paying too little for innovation and focusing too much on price reductions?
Although cost cutting seems simple, it's not the smartest approach. I faced a similar situation when Siemens VDO was in trouble four to five years ago. On the one hand, you need to clean up your house; on the other hand, you need to grow by innovation. If you miss the growing part and just concentrate on the cleanup, then you might be successful in the short term but maybe at the cost of your long-term survival.
Do you foresee a strong growth in micro hybrids or mild hybrids? Will Siemens VDO benefit from hybrids?
A full hybrid could make sense in some areas of the world. But in other areas, a micro hybrid or mild hybrid would make more sense. It depends on the end consumer's basic criteria. Siemens and Siemens VDO have a long history in electric vehicles. It is natural that we would bring this technology to market. We will have a hybrid demonstration vehicle in the market by the end of the year.
Do you need partners to develop your hybrid technology?
On the power electronics side, we have everything necessary to do a perfect job. We are not strong in batteries, but there are a few companies in the world that do a great job in this area.
Will you expand your portfolio of driver assistance products?
Our portfolio is complete. If you look into the main technologies, it's radar, lidar (a laser version of radar) and camera. We have development contracts for all three technologies.
We are not looking into lighting.
Night vision and head-up displays already are part of the Siemens VDO portfolio. We love having those in-house because it is so difficult to get the linkage achieved between those different subsystems. We have a good setup in this area.
It is important for us and will be a growth area in the future. In our prototype and the concept car, we have integrated all the different subsystems to an overall system.
How do you stop from distracting the driver with all the electronic functions in today's cars?
We do surveys with consumers to find out what they would like to see, what they need and what they are prepared to pay for it. We then share that information with our customers. The discussions are not just on engineering or technology issues. We discuss whether an idea is based on good information from the market and about how the technology will develop. Those kinds of discussions are becoming more regular.
Such discussions are part of the innovation cooperation PSA (Peugeot-Citroen) is looking for. PSA wants to synchronize their ideas with the ideas of its worldwide suppliers. The beauty is that we know customers are acting regionally, but we can also bring (global) trends together into the platform and add a regionally specific functionality to it.
Should visible electronics in today's cars be simplified?
You can question some functions, but it depends on the preference of the end customer. I drive a lot of cars and sometimes ask myself whether a navigation system needs to have a specific function or not. But when I talk to my wife or my kids about the function, they love it.
So individualization is a trend, too?
Definitely. You will find cars with steering wheels where you can operate some functions of the car with switches. You will see more blank buttons appearing that will allow you to personalize the function.
Magna International plans to enter the electrical and electronics area. How will this area of the business develop? Will there be fewer players or more players in the future?
Electronics will become a vital part of the value added to a car. Innovation is mainly driven by electronics, so the electrical and electronics architecture becomes a focus.
Magna is a competitor. But if you look into their product portfolio, they also see the electrification of their product lines, and they need to respond to this.
Do you see any evidence that leading Tier 1 suppliers and vehicle manufacturers are working more closely together?
I can only speak for Siemens VDO, but I see a lot of opportunities for all of us. We need to synchronize better, talk better and coordinate processes better.
Is Siemens VDO a core business for Siemens?
I think so.
Why didn't you buy Motorola's automotive electronics business?
We looked into it, as everybody else did. The questions were very simple: Does it add to the portfolio regionally, customerwise or technologywise, and is the price reasonable? Can we create more value by acquiring that company?
You may e-mail Edmund Chew at [email protected]
You may e-mail Jens Meiners at [email protected]