The Truth About Cars » R&D The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 16 Apr 2014 17:41:27 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » R&D Europe’s Role In Honda’s R&D Gains Greater Influence Wed, 05 Feb 2014 17:15:59 +0000 honda-civic-tourer-1

With the debut of the European developed and British-built Honda Civic Tourer in the middle of this month, a new era of greater influence from the contintent over the automaker’s R&D unit has begun.

Adrian Killham, the tourer’s project leader at Honda’s R&D facility in Swindon — the first non-Japanese engineer to hold the title — believes developing cars for Europe in Europe is crucial for success in the continent, from driving dynamics to luggage space, and even the type of carpeting now used throughout the automaker’s global lineup.

The European influence will also come into play when the new Civic is introduced in 2017. In the meantime, Honda aims to raise the profile of the Civic Tourer by entering it into the 2014 British Touring Car Championship season, the first estate to trade paint with the likes of BMW and Kia since Volvo’s turbocharged 850 R in the 1990s.

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Audi Powers-up Chinese R&D Fri, 01 Feb 2013 11:02:01 +0000

Audi follows a trend set by other OEMs, notably GM, and opens an R&D Center in China. Located in Beijing’s fashionable 751 D-Park , the center will be busy doing product customization for the Asian market, especially when it comes to electronics and connectivity, along with components for new-energy vehicles and efficient powertrains.

Located at the site of an old coal-fired power plant, built in the bad old days with the assistance of East Germany, the 751 D-Park has quickly made a name as China’s fashion and design hub. Audi’s R&D Center is right in the middle of the center. It also helps that the 751 D-Park is in the North-East of Beijing, halfway between downtown and airport, thereby helping to avoid the worst of Beijing’s traffic, as long as one takes a plane.

Approximately a third of Audi’s sales are in Asia, and most of those are in China. If you are somebody in China, you show that with an Audi, preferably an A6 long, and most preferably one with a white tag and a red star. Blinking lights in the front grille help you get back to the airport on time.

Ignoring stories that government officials must eschew foreign premium marques and drive Chinese, Audi increased its 2012 sales in China by 30 percent. TTAC readers, serviced by experienced writers, never had to believe the story anyway.  We wrote in February: “Just about every year, there was an announcement that the Chinese government will from now on only buy Chinese. It never happened.” And so it did not happen again.

Audi Sales 2012
2012 2011 YoY
World 1,455,100 1,302,659 11.7%
Europe 739,000 726,318 1.8%
USA 139,310 117,561 18.5%
Mexico 9,482 8,058 17.7%
Asia-Pacific 478,900 373,724 28.1%
China 405,838 313,036 29.6%
India 9,003 5,511 63.4%

In November, the New York Times sounded the all clear, and wrote that the black A6 still is “the automobile of choice for practically any party official or military officer with enough clout to secure one.”

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Volkswagen Spends Itself Through The Crisis Thu, 22 Nov 2012 15:05:22 +0000

One of the reasons for Volkswagen’s current strength dates back four years. During the carmageddon of 2008 ff, multinational carmakers such as GM and Toyota drastically cut back investments into new cars and technologies. Volkswagen did not change R&D spending. Four years later, this translates into a host of new models, and revolutionary platform architectures (MQB, MLB, MSB) that promise even more new models at lower cost.

Faced with the European edition of carmageddon, Volkswagen won’t lower spending either. Instead, it will increase investments into new cars and factories, Reuters says.

Tomorrow, Volkswagen’s supervisory board is expected to sign off on new spending targets for the 2013-17 period.

Reuters expects Volkswagen to increase spending by 12 percent to as much as 70 billion euros ($89.73 billion) for its twelve brands over the next five years, after the spending target was raised 20.9 percent to 62.4 billion euros for the 2011-15 period.

This could be another nail in the coffins of Peugeot and Fiat, which have slowed or shelved whole vehicle programs, engine technologies and platform revamps.

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General Motors To Invest In Oshawa R&D Tue, 24 Jul 2012 15:04:40 +0000

The closing of the Oshawa Consolidated Line supposedly had GM in the bailout doghouse – the company was supposed to maintain a certain level of production in Canada according to the terms of their bailout package. As far as we know, GM hasn’t replenished that yet, but they are throwing the Canadian federal and Ontario governments a bone by investing an undisclosed nine-figure sum into R&D at Oshawa.

A report in The Globe and Mail explains the funding increase

“One of the promises GM Canada made to the two governments in 2009 was that it would spend about $1-billion on research and development projects between then and 2016…The projects to be initiated or expanded between now and 2016 are expected to focus on environmental technologies, electric vehicles, vehicle weight reduction and so-called intelligent transportation systems.”

Prime Minister Stephen Harper and Ontario Premier Dalton McGunity are expected to be in attendance, though the recent string of gun deaths in Toronto will likely dominate the media scrum. That means that nobody will ask GM how it plans on meeting other bailout conditions, like

“As part of its 2009 commitments, GM Canada also agreed that its Canadian plants would produce 16 per cent of the vehicles General Motors Co. assembled in North America between 2009 and 2016…a fuel-efficient transmission at its St. Catharines, Ont., operation and… assembly of five new vehicles in Oshawa or Ingersoll during the same period.”

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GM Eats Its Children: Cuts Research And Development Tue, 01 May 2012 18:34:04 +0000

If you want to pretty-up the P&L of a car company, there are two quick fixes: You cut marketing expenses, or you cut R&D. A cut of R&D expenses won’t show up negatively for three to five years, when you suddenly lack new cars to sell. In the meantime, you look like a hero. General Motors plans to cut about a quarter of the workers at its R&D facility at the Warren Technical Center in suburban Detroit, Automotive News [sub] says.

According to the report, GM plans to lay off about one fourth of the roughly 400 R&D personnel at the Warren complex. 90 R&D workers at a GM research facility in India will also receive the pink slip, an Automotive News source said.

In a statement, GM confirmed a restructuring of its R&D department, but would not confirm the number of layoffs.


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Volkswagen Bets $86 Billion On Its Future Sat, 17 Sep 2011 14:55:54 +0000

One of the reasons why Volkswagen is hitting on all cylinders (don’t be U.S. myopic – always measure a car company by global success) is that they did not stop investing in the wake of the 2008 crash. They did not have to: Sales in the U.S. were low, and where you don’t have a lot, you can’t lose a lot. At the same time, VW had the big luck of being a major player in China. While  U.S. and Japanese car companies stopped or severely dialed back their investments into R&D and capacities, Volkswagen kept on spending. This has a delayed effect of 3 to 5 years, and what we are seeing now is just the beginning of this effect. It is also the beginning of an even greater spending spree.

The Volkswagen Group will invest around €62.4 billion ($86 billion) in the coming five years. This investment plan has been approved in a Volkswagen Supervisory Board meeting yesterday.

Investments in property, plant and equipment will account for €49.8 billion ($68.7 billion). On top of this will come capitalized development costs of €11.6 billion ($16 billion). All in all, Volkswagen wants to invest around six percent of sales into the future. According to the press release, Volkswagen wants to safeguard that future “by building new production facilities, introducing new models and developing alternative drives, as well as with its modular toolkits.”


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Japanese Proverb: No Money, No Action. No Action, No Satisfaction Sun, 28 Aug 2011 15:08:49 +0000

The chief reason for the recent decline of the fortunes of Japanese automakers was not, as posited by pop pundits, the recalls or the tsunami. It was something more insidious, something regularly overlooked by most outsiders and many insiders. It was a reduction in development spending – an eventually deadly bottom line therapy also popular by cash-starved American peers. Japanese automakers have realized the error of their ways and have returned to funding the finding of that insanely great next generation car.

In the wake of the “Lehman syokku” or “Lehman shock” as they usually refer to the 2008 financial crisis in Japan, Japanese automakers drastically reduced R&D spending in an attempt to shore-up their bottom line. This is a tried & true tactic in the industry: if a disaster hits, cut R&D and advertising. The cashflow-positive effect of both is as immediate as snorting cocaine. The negative effect will not be felt until years later. In many cases, the problem is shifted to the next generation of managers who now have to sell tired technology to unenthused customers. The best medicine for car sales is new cars. Old cars are slow acting, but sure poison. A car takes 3 to 5 years to develop, medicine and poison become felt after long delays.

The epicenter of the “Lehman syokku” was America, and three years after, the American market is still wobbly. Car companies most exposed to the syokku – American and Japanese – put spending into crisis mode. European companies were far less affected and mostly maintained their spending level. This explains why Volkswagen, Daimler, BMW et al are riding high, and why the friskiest Japanese car company is Nissan with its ties to European Renault. Three years after the syokku, we are beginning to feel the effect in earnest, and it will stay with us for a while until it is digested.

Japanese companies are reaching for the antidote: Increased R&D spending.

“Seven automakers plan to spend 2.09 trillion yen, up 10 percent from fiscal 2010,” reports The Nikkei [sub]. Converted to today’s dollars, that’s $38 billion, a good chunk of money. Japanese markers are “racing to develop the next-generation of environmentally friendly vehicles as well as low-priced models for emerging nations.”

Nissan for instance is seen increasing its R&D spend by 15 percent to 460 billion yen ($5.8 billion). Honda plans to spend more than 500 billion yen ($ 6.5 billion),” aggressively developing budget cars for emerging countries.”

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Toyota Moves R&D To China Wed, 17 Nov 2010 09:09:34 +0000

Establishing R&D centers in China by foreign automakers is a huge trend. Of course, the trend was led by GM, which already has an alphabet soup of tech centers (PATAC, CAERC, and CATC) in the Shanghai area. Now, Toyota follows with their own. Following prevailing fashion, it will be called TMEC.

According to a communiqué from Toyota City, ToMoCo will establish the Toyota Motor Engineering & Manufacturing (China) Co., Ltd. (TMEC) in the Southeast Economic Development Zone in Changhus. Changhus is in the sprawling outskirts of Shanghai.

The R&D Center that sounds like an engine factory will be 100 percent owned by Toyota, but will share the fruits of its labor and laboratories with its joint venture partners.  TMEC will start partial operation in April 2011.

Toyota spokesman Paul Nolasco says that they will be busy pouring concrete for a while before concrete research will be conducted: “We’ll be building a test track, and assorted other facilities. It will probably be taking into 2013 before the center is in full swing.” Soon Shanghai, one of the world’s most populous cities, will also be the city with the most test tracks.

One of the main jobs of TMEC is the Chinesefication of Made-for-China Toyota product. The center “aims to tailor vehicles to the demands of Chinese consumers.”

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Carmageddon’s Real Victim: Auto R&D Down $12b in 2009 Tue, 09 Nov 2010 19:49:52 +0000

The car business has endured a lot of bad news over the last several years, as finance-fueled sales crashed with the credit market, and automakers around the world scrambled for government aid. The so-called “Carmageddon” has touched everyone even remotely involved with the automotive industry, not to mention everyone who pays taxes, but from a strictly  consumer perspective, it hasn’t been all bad. Certainly the deals have been good, as programs like Cash For Clunkers and the wind-down of several brands have helped savvy shoppers find some of the best deals in a long time. So here’s the reality check: according to Booz & Co.’s Global Innovation 1000 study, spending on research and development by the auto sector was down $12b last year. That’s $12b that should have been spent making your car faster, smarter, safer, cleaner, better that’s no longer being spent. Still feeling untouched?

And yes, this is a problem that’s unique to the auto industry. As one of the report’s authors tells Wards

If you look at the data, (auto makers) cut R&D to sustain their business models. As a percentage of their total revenue, it’s not just the largest dollar amount cut but also the largest percentage reduction of any industry we followed.

And he’s not kidding. In 2008, Toyota was the top R&D-spending company in the world. After a billion and a half dollars in cuts, they’re number four [memo to Toyota, update the file]. In fact, Volkswagen was the only major automaker to not reduce R&D spending last year, as most of the majors shed at least a billion dollars trying to keep their heads above water. It would be premature to predict the onset of 1970s-style automotive malaise based on one year of cuts alone, but unless all those missing billions were being wasted, their absence will be felt in new cars at some point.

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Toyota Vs Ralph Nader: Get A Hearing Aid Wed, 20 Oct 2010 09:44:06 +0000

A few days ago I wrote about Ralph Nader asking Toyota to break down their somewhat suspect figure of “$1,000,000 every hour” on safety. Well, quite surprisingly, Toyota answered back.

USA Today reports that Toyota issued “a statement” which addressed these issues (but didn’t mention Ralph Nader) and they still stand by their figures. “While the yen and the dollar are constantly fluctuating, we believe that over the course of the year, Toyota’s R&D spending will average about one million U.S Dollars an hour…the amount set forth in our advertisements.” said the statement. Hang on a minute. Nader didn’t want to know your R&D budget. How much did you spend on safety? They won’t tell him.

Well, listen to the advert again: “That’s why we’re investing one million dollars every hour. To improve our technology, and your safety.” So, the figure was never exclusively for safety, which means anything can get lumped into that figure. Research on air conditioning units, more comfy seats, etc.

But hey, they said “our technology, and your safety.” It’s Nader’s problem if he’s hard of hearing.

The cited statement also mentioned a study by Booz & Co. that stated that Toyota spent more on R&D than any other company. It also mentions that next year, the figure being spent on “their technology and our safety” will come in at $8.4 billion. Just slightly lower than last year.

[ED: A press release is nowhere to be found. We called Toyota HQ in Japan, and they don’t have it either. They are digging for it. It could have been made over the phone. Once we have it, you’ll have it.]

[Ed2: We tracked down Mike Michels at Toyota USA. He confirmed that they did not issue a press release regarding Nader, because he did not issue any public statement. He provided a letter directly  to USA Today, so Toyota responded directly to USA Today. USA Today has the letter, and you have it now, too:]

Regarding recent questions about Research & Development investment, Toyota spent  725.3 billion yen, or approximately $8.9 billion, in fiscal year 2010 on technology and safety development.  This is outlined in Toyota Motor Corporation’s public financial reports, which can be found at this web site:

In May 2010, Toyota Motor Corporation projected spending 760 billion yen on R&D during the fiscal year ending March 31, 2011.  The exchange rate used for those projections was 90 Japanese yen to the dollar.  As a result, Toyota is expecting to spend approximately $8.44 billion on R&D in the current fiscal year.  With the yen and dollar currencies constantly moving up and down against each other, we thus believe that, over the course of the year, Toyota’s R&D spending will average around one million U.S. dollars per hour – the number set forth in our ads.

Further, in a recent study, the consulting firm Booz & Company identified Toyota as spending more on Research and Development than any other corporation in 2009, the third straight year Toyota has held that distinction.  That study can be found here:

In fact, the auto industry is typically a leader in R&D spending. According to that same Booz & Company study, the auto industry spends $86 billion per year on research and development, more than any other manufacturing industry.  According to the study, for 2009, three out of the world’s top 10 R&D companies were automakers.

In our effort to develop the cars and technologies of the future, Toyota’s Research & Development commitment has generated numerous advancements in the interrelated areas of vehicle safety, quality, durability and sustainability.

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GM Moves Advanced R&D To China Mon, 19 Jul 2010 13:50:00 +0000

Today, GM broke ground for another R&D Center in China, called the GM China Advanced Technical Center. The new facility is in addition to existing R&D centers in China, including the Pan Asia Technical Automotive Center (PATAC) in Shanghai and the China Automotive Energy Research Center (CAERC) in Beijing.

The new facility is adjacent to the GM International Operations and GM China Headquarters in Shanghai. With 300 engineers in 62 test labs and nine research labs, it will develop advanced vehicle designs and technology solutions for GM on a domestic and global basis, said GM in a press release. The center will be part of GM’s global engineering and design network, and provide input to GM affiliates the world over.

The CATC will focus mostly on new propulsion systems, gasoline alternatives, electrification systems and new engines and battery cells.

Construction of the GM China Advanced Technical Center will be completed by the end of 2011.

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Multinationals Move R&D To China Fri, 20 Nov 2009 08:55:28 +0000 Picture courtesy TedHobgood at

On Wednesday, German German tire and car parts maker Continental AG joined the long line of multinationals who opened a R&D facility in China. The multinationals are way ahead of popular wisdom that technology is developed in the West and ripped off in the East. In reality, development has long left the building and has taken up shop in China.

Continental’s R&D center in northeast Shanghai will have 900 engineers working away by early next year. They will focus on the design and development of vehicle electronics. Shanghai Daily reports that Continental plans another technical center in the Jiading District if Shanghai which will do vehicle development and system testing. Not the stuff you do with a sledgehammer.

Automakers such as GM, Toyota, or (gasp) Mercedes have moved or are in the process of moving R&D and even design centers to the Middle Kingdom.

Actually, they are late. Other multinationals, such as Microsoft, Motorola, GE, Honeywell and a host of others have long moved large parts of their R&D to China. In 2003, the city of Suzhou already hosted 67 transnational R&D centers. The mouse you use to click this story, the screen it appears on, and the mainboard that processes the info most likely has not just been made, but developed in China.

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Toyota Plants Big R&D Center in Shanghai Mon, 09 Nov 2009 21:43:20 +0000

Intellectual property warriors, get your guns: Following GM, its arch nemesis Toyota will plant a brand new R & D center smack into the alleged intellectual property jungle called China. Toyota plans to spend between $330 and $440 million for the center. Building will commence next year. Compared to Toyota, the one GM built in 2008 was the lite version at a price of only $250 million.

The Toyota R&D center, complete with a full-scale test course, will be located not far from the GM center, in the outskirts of Shanghai, Gasgoo reports.

Toyota has four joint ventures in China and holds about 6 percent of the world’s largest auto market. Officially, Toyota’s center is being moved to China to better meet local demand. Unofficially, it is most likely there to save on R&D costs. Shanghai University’s highly regarded Automotive College in Anting is cranking out very capable engineers by the boatload, ready and willing to work at much lower wages than an engineer in Aichi, Detroit, or Wolfsburg.

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