FRANKFURT--Continental AG, one of the world's largest suppliers of power-train, chassis, and interior systems, predicts a dramatic increase in the adoption rate of high-tech safety features by volume manufacturers in three to five years.
Continental executives said the supplier has agreements on more than 50 projects with American, Japanese and South Korean automakers that will lead to the installation of high-tech equipment such as cameras, crash avoidance and blind-spot detection.
Continental predicts that within five years, 50 percent of cars priced less than $35,000 will be equipped with one or more of those features. The current take rate on those technologies is 10 percent, Continental executives said.
Historically, the adoption rate on high-end technology has been limited to premium vehicles because of the high cost of development and installation. But dramatically increased volumes have become the catalyst for lower pricing.
"We will be moving from premium to affordable with safety technology," Ralf Cramer, the Continental board member responsible for chassis and safety, said at an event here last week. "There are huge opportunities for growth in small-size vehicles. "Our task is to reduce the add-on price to a minimum and bring advanced safety features down to an affordable level."
In North America, Continental is expanding its business rapidly with the Detroit 3 as well as Japanese and South Korean automakers selling in the United States.
The German supplier said Detroit automakers are spending heavily on advanced technology to differentiate themselves from competitors. That technology is set to roll out by 2013.
"After bankruptcy we have seen an increased interest in technology for pure differentiation," said Samir Salman, CEO of Continental's NAFTA region. "After going through bankruptcy, they know they need to differentiate themselves if they want to be around in five, 10, or 15 years."
Andreas Brand, Continental's executive vice president for passive safety and advanced driver assistance systems, said the No. 1 option that American automakers are requesting is blind-spot detection. Forward-collision warning also is high on automakers' wish lists.
American companies have started planning the installation of lane departure systems on vehicles priced less than $35,000. In some cases, the automakers are requesting a range of traditionally high-tech safety packages on next-generation vehicles.
In one case, a Continental customer in the United States has requested a combination of radar-controlled cruise control and blind-spot detection on five future models.
"The volumes will come very quickly from the American companies," Cramer said. "It starts with 5,000 units per model of a certain car, all the way to 60,000 units per model."
Continental said it is hiring more engineers to meet increasing demand globally. Executives with the supplier predict that within five years, 20 percent of the global industry will consist of cars priced around $15,000.
Continental's automotive group--chassis and safety, power train and interior--generated revenues of 12 billion euros last year or about $14.8 billion at current exchange rates