DETROIT -- ZF Friedrichshafen AG's acquisition of TRW Automotive will make it a key player in collision avoidance and driverless cars. ZF wants to combine TRW's sensing and software expertise -- cameras, radar and controllers -- with ZF's chassis systems.
ZF CEO Stefan Sommer, 52, spelled out his strategy for the two companies during a Jan. 13 interview with Staff Correspondent David Sedgwick.
Q: What key technology does TRW offer for collision avoidance?
A: We want to have access to software expertise from TRW for brake controls and other areas of autonomous driving. Because the brake controller is the brain of the chassis. And that was our main strategic motivation, to gain access to the brain of the chassis, for the deal with TRW.
So TRW's stability control is a key technology?
All functions like collision avoidance and active cruise control -- everything starts from stability control. To get access to that technology was one of our main rationales for the acquisition. Rear-wheel steering [a product introduced by ZF at the Detroit auto show] is something that you can use with stability control. This will be the story of the future.
ZF had its own chassis control hardware that would be useful for driverless cars. Why does ZF need TRW?
We have things like active body control systems and sophisticated shock absorbers. All this is useful for ride and handling. But we would have been mainly a Tier 2 supplier.
What's wrong with that?
The suppliers [of collision-avoidance systems] would specify what the axle would look like and the type of shock absorber. We felt we wouldn't be competitive as a Tier 2 company. So we needed to [acquire] key technologies like electric steering, brake controls, assist systems and sensors.
Do automakers want suppliers to develop complete collision-avoidance systems?
Some automakers need it because they don't have the expertise. Others will not buy a [complete] system from us -- they just want components. In the end, we need the [systems] competence to design the right components for the next generation of vehicles.
How long will it take to develop collision-avoidance systems that combine TRW's technology with ZF components?
To integrate our rear-axle steering into TRW's vehicle stability system, it would typically be two or three years. But if you want to integrate electric [powertrains] or torque vectoring, it might take another two, three or five years.
How long will TRW CEO John Plant remain with the company?
For a certain time after the merger, John will support the integration. With all his experience and support, he will give TRW management confidence during the transition.
Will it be difficult to harmonize the two companies' corporate cultures?
There isn't a single ZF culture and a single TRW culture. If you look at TRW's management teams, they also have people from France, Belgium and Germany. Your markets really form your culture. If you look at the chassis area of ZF, they are competing in the same business environment as TRW.
Daimler had trouble absorbing Chrysler's culture after the acquisition in 1998.
I think we can deal with this much better. DaimlerChrysler was under pressure. Everybody expected them to create common vehicle platforms. We don't have a task like this.
Will ZF maintain TRW as a standalone operation?
We will keep TRW as a company, as a legal entity, as it is today. There will be a TRW with its own board, and they will be responsible for their own business in the world markets.
What activities will the two companies share?
We will collaborate on projects. It's a technology story. We will look into electronics, for example. TRW has huge and very efficient electronics plants, and we have big demand within ZF for electronic-control units for transmissions.
Will ZF make additional acquisitions?
On the passenger-car side, we are prepared for the future. We've looked at the megatrends, and we have all the technologies. But in the market for trucks, agricultural machinery and industrial products, we have some blank spots.
Do you have a dollar figure in mind for these acquisitions?
Maybe in the realm of [less than $100 million].
ZF has introduced eight- and nine-speed automatic transmissions, but you've said there's no need for 10-speed gearboxes. Why?
We have analyzed it intensively. [A 10-speed gearbox] adds weight, friction and space, and you get very little benefit. The extra weight and friction increases fuel consumption.
But Hyundai and others are developing 10-speed transmissions.
You can't expect the normal driver to understand an engineer's analysis. If one dealership offers 10-speed cars, and one only offers eight-speed cars, there may be pressure to do something that doesn't make sense from an engineering standpoint.
Ten gears is more than eight. So it's got to be better, right?
We can add a 10th gear, but in the end it will not contribute to fuel economy.
ZF has been displaying its new rear-axle steering system. What are the advantages?
You can turn within a smaller radius, and that makes it much more convenient in cities. It also helps with automatic parking. And then in high-speed situations, if you have to change lanes, the car is very stable. Unskilled drivers will be able to change lanes at high speeds because the car won't be yawing.
Would this be useful for driverless cars?
If your vehicle's camera and radar detects a traffic jam up ahead, and the computer says you have to change lanes, it can do that. So it's a safety system.
Honda offered rear-wheel steering 20 years ago, and it wasn't very popular. Why will the ZF system succeed?
We have better dynamics, and we have better software and sensors. We are in production, and we are supplying it to Porsche. And we have other customers for [future] high-volume models.
How much revenue will collision-avoidance technology generate?
The fastest growing segment is vehicle safety and collision avoidance. They will outperform the market with growth of 20 to 30 percent every year.
So you won't have to wait until 2020 to get good sales volume?
Starting in 2015, Europe will require collision avoidance for a four-star crash rating. We expect safety regulations will become tougher and tougher.
