Tear Down Artists

[rexmiami]

Interesting artilcle in the February issue of "Wired" Magazine. Maybe GM can save themselves by reverse engineering.

The Teardown Artists

First, buy the hottestnew car on the lot. Then rip it to pieces. Inside GM's chop shop, they take (apart) the competition very seriously.

By Carl Hoffman

A silver Lexus RX 400h hybrid SUV is suspended on a lift in a room the size of a soccer field at the General Motors Technical Center in Warren, Michigan. It was purchased off the lot just a few days ago for $49,000, loaded, which seems a waste, since it's already a carcass. Mechanic John Klucka has removed its tires and engine and doors and seats and dashboard and, well, just about everything but a few wires and the windshield. "This is a complicated vehicle," he says, unbolting the engine from its frame, "and I've got no manual, so I'm taking it apart blind."

Within a few weeks, GM engineers will unravel the Lexus' every secret - down to the weight and production cost of each nut and bolt - just as they've done with every other Toyota hybrid model. The latest Prius lies in on a table in the corner, gutted, tagged, and spread out like a frog in a high school biology lab.

Toyotas aren't the only cars being disemboweled here at GM's Vehicle Assessment and Benchmarking Activity center. A 2006 Mercedes ML350 waits to be carved up with a handheld power saw. A VW Touareg is spread helter-skelter. Chryslers and Hondas and BMWs and Fords lie dismantled, their parts reduced to labels and data points: Cap ASM F/Tank Fil, 1 @ .068 kg. Switch ASM HTR w/bezel, 1 @ .174 kg. It's all part of the biggest open secret in Detroit: Automakers reverse engineer their opponents' newest and hottest vehicles in what's called a competitive teardown.

"You wouldn't think there'd be any mysteries anymore," says auto industry analyst Lindsay Brooke. "But what used to be a closed club is now a ruthless global business. Suddenly you've got the Koreans undercutting the Japanese, and the Chinese about to undercut everyone. As much as you think you know," he says, "nothing beats picking up the parts, feeling them, weighing them, and knowing the processes that made them. Teardowns are part of a big cat-and-mouse game, and they're more important than ever."

Radios. Seat cushions. Welds. Drive trains. Bumpers. Headliners. Every company wants to know exactly how its competitors' cars are put together and how much they cost to make so it can learn how to save money on parts, shed weight, and improve its manufacturing methods. Even more important, teardowns help executives make long-term strategic decisions. A teardown of the 2004 Prius two years ago helped sour GM on hybrid technology. The company is slowly rolling out hybrid trucks and buses, but it's focusing its innovation efforts on fuel cells.

A full teardown takes about six weeks. First, mechanics measure the vehicle with a device called a 3-D vector arm, taking all of the car's inner and outer dimensions, like the bumper height and the distance from the driver's eyes to the steering wheel. They create a digital blueprint, then they disassemble the car. Each part gets named, weighed, and labeled with a number. Cost estimators gauge the price of every one, not only to determine what competitors spend but also to pressure GM's own suppliers. "We know a certain kind of plastic costs x per kilo," explains staff project engineer Craig Duncan, a round man in standard GM dress of khakis and a polo shirt. "So we know the mass of the part, what the labor rate is, and what the shipping costs are, and we start adding up all the puzzle pieces. It's a scientific way of being much more aggressive with our suppliers to push the cost down." Finally, all the information is entered into a database for GM engineers puzzling out new car designs.

Some insights are big and obvious. Toyota, for instance, installs many of the same parts, from seats to door handles, in models as diverse as the inexpensive Corolla and the luxury Lexus. But details, too, can be revealing. Most body frames have material to quiet vibrations: Chrysler uses glued pads; Ford, rows of a caulk-like substance. "Why did Ford do it that way?" Duncan asks. He points to what was recently a cherry Mustang and is now a bare-metal lower-body shell. "It looks primitive," Duncan says, pointing to the rows of caulk, "but it's not. A robot did it. That means one machine could be programmed for lots of different cars. No parts. No person babysitting the parts. No parts room. Huge savings." Duncan adds that the number and type of welds can show "how many robots they've got. Sometimes your competitors do things better than you; sometimes they don't. But you have to know."

On top of about 40 complete teardowns per year, GM subjects up to 20 vehicles - like the Mercedes ML350 SUV - to a process known as a "full trim-saw cut": 100-mm-wide cross sections are taken from the doors and roof pillars and fenders. "If you want to be competitive in the midsize luxury category, you have to look at the Mercedes," Duncan says. Flatbed scanners turn these slivers into digital blueprints. The diagrams enable the company's engineers to analyze such arcane information as the design of the A-pillar - the slender structure at the side of the windshield - which not only supports the roof but also contains sound-dampening rubber seals, an airbag, and the electrical connections between overhead lamps and dash.

A dissected hybrid lies on display in the back of the VABA, next to the remains of a Chevy Malibu. The Prius demystified comes down to this: It has 1,432 propulsion parts (the Malibu has 822). It has two electric motors, plus lots of software and finely machined gears to transport power to the wheels. That makes the Prius very expensive to design and build. And for all the publicity, Toyota is likely to sell a mere 105,000 Priuses this year in a US market of 16 million vehicles. "Prius owners love it, but are the other 16 million-plus people beating down the doors of Toyota dealerships to buy a hybrid?" Lindsay Brooke asks. "Not yet, and Toyota will have to figure out how to drive the hybrid vehicle segment into the meat of the North American market."

To do that, Toyota is introducing hybrid engines into cars like the luxury Lexus SUV. The 400h is remarkably similar to the nonhybrid Lexus RX 330 except for its braking system and a hybrid engine that produces 268 horsepower (as opposed to 230 from the regular SUV). It's marketed as a performance luxury car with a hybrid's typical fuel parsimony. Yet the 400h gets just three more miles per gallon on the highway than the RX 330 - and it costs nearly $10,000 more. GM engineers say that this price tag at last accurately reflects the real cost of hybrid tech. Which means that consumers who buy a Lexus hybrid are paying thousands for a technology that will never pay for itself in fuel savings.

That's typical of Toyota, say critics. With the Prius, says electrical engineer Michael Cutajar, "Toyota took a Corolla and added huge amounts of cost and complexity. They don't make any money on it." Toyota scoffs at the idea. "We're making money on the Prius," says Nancy Hubbell, a spokesperson for the company, "especially with the economy of scale we're getting by introducing two new models this year and two next year. The additional cost of a system is more like $3,500 per auto." And in any event, Hubbell says, consumers buy hybrids not only for fuel savings but also for intangibles like lower emissions and cleaner air.

The teardowns tell GM a different story. "They're all about validating our insights into what competitors are doing and extrapolating where we think they're going," says Clay Phillips, GM's director of intelligence, in charge of scoping out other automakers. Phillips, a former Navy intel officer, is tall and thin, with a gray mustache and a serious, almost scholarly demeanor. "We think the Prius was originally less about fuel economy and more about a technical and assembly experiment," he says. "In Japan, the hybrid drive was sold as a cool electronic feature. Fuel economy was hardly mentioned, and I have a hunch that fuel efficiency was a marketing strategy that they just stumbled onto."

Tearing apart the Prius convinced GM that Toyota was using the car as a "tip of the spear" to change its image from a maker of good, utilitarian cars to a high tech company, Phillips says. "And that's how Toyota will market its vehicles in the future. The Lexus hybrid is performance without guilt. It's a premium product. Nine-tenths of the people who buy it will never do the math; it's one big high tech image statement."

GM thinks it has a better idea. In the back of the teardown building, alongside the dissected Prius and Malibu, lie the parts of a GM demonstration vehicle powered by hydrogen fuel cells. Although the vehicle has more total parts than the Prius, almost none of them move, eliminating many of the finely machined gears and engine components of the traditional auto. The tables bearing the drive trains of the Prius and Malibu are laden with parts; those for the fuel cell car are nearly empty. The three teardowns tell the story of GM's plans: Go directly from gasoline to fuel cells with a mere nod to hybrid tech. At the Tokyo auto show in October, GM unveiled its fuel cell-powered Sequel. Larry Burns, GM's vice president for R&D and planning, announced that the company would be able to "design and validate a competitive fuel cell propulsion system by 2010."

It seems like a brilliant move - a classic example of a carmaker using teardown-based research to leapfrog a competitor. But GM's critics aren't so sure, calling the company's fuel cell talk "defensive PR" because it's so far behind Toyota on hybrids. Auto industry consultant Maryann Keller points out that fuel cells are every bit as complicated as hybrids, if not more. "You're talking about a completely different propulsion system!" she says. "No one can even repair or drive one!" She argues that, instead, GM needs to follow intermediate steps. "What technology doesn't become cheaper and easier to build over time? The personal computer weighed 50 pounds in the early 1980s. Hybrids are complex and expensive, but you'll never figure out how to make them better and cheaper until you put the technology in real-world cars. I say, 'Why wait? What do you have to sell me today?'"

Whether GM has made an inspired bet or will fall hopelessly behind Toyota depends, in part, on whether the price of oil stays relatively low over the next few years. If fuel costs spike, consumers will demand highly efficient vehicles, putting Toyota out front. Meanwhile at GM, a Mercedes is about to be sawed into pieces, and a couple of bays over, John Klucka has his arms deep inside a Lexus hybrid. Klucka, 58, has been working on cars his whole life. "They sure don't build 'em like they used to," he says, puzzling over the wiring harness. "Gas. Electric. Hydrogen," he mutters. "I'm sure glad I don't have to service them. Any of them."

Contributing editor Carl Hoffman (carlhoffmn@earthlink.net) wrote about Soviet fighter jet collector Don Kirlin in issue 13.10.

[Rx330driver]

man, that should be illegal! lol anothe reason to be against american cars.

[RX400h]

man, that should be illegal! lol anothe reason to be against american cars.

You know what they say, "Imitation is the sincerest form of flattery." GM is certainly not the only manufacturer that does this. Historically, the Japanese have been known as the great imitators; they are now on the other end of the stick, so to speak. In the book "All Corvettes are red" there was mention of an tear-down room for competing sportscars. Based upon knowledge gained from the tear-down process, GM engineers were able to produce a sportscar that was unmatched at anywhere near its price. Today, the 06 Corvette Z06 outperforms sportscars costing $80,000 more.

I say, if the result is a better vehicle for the masses, keep doing it, as long as patents aren't breeched.

[cardona6569]

I had a Mercury Cougar XR-7 1987. This car had a digital dashboard. Current MPG, and INstant MPG, Quality of Fuel Gallons, Distance to empty, voltmeter, Temperature and Oil Pressure, all in a nice package. The 1998 Lexus I have does not have: Voltmeter or Oil pressure gauges and neither fuel quantity in gallons. This is a 1987 car had a 5.0 V8 gave 19-27.5 MPG. Cost was a lot less than a Lexus. It is still running with some rust. When I get in my Lex I feel many of the things the Japanese came to the US to Study before they built the LS because of my premium Cougar it was the most loaded model. Go to the Lexus site and read the history of the first Generation Lexus. The Japanese came a copied and improved in areas such a reliability, durability and rust prevention, all car makers have improved on that area specially the Japanese. The great thing about my Lex is the fuel economy for a car with such HP, which is more or less the same as my 5.0 which is a smaller engine.

C. PR

man, that should be illegal! lol anothe reason to be against american cars.

You know what they say, "Imitation is the sincerest form of flattery." GM is certainly not the only manufacturer that does this. Historically, the Japanese have been known as the great imitators; they are now on the other end of the stick, so to speak. In the book "All Corvettes are red" there was mention of an tear-down room for competing sportscars. Based upon knowledge gained from the tear-down process, GM engineers were able to produce a sportscar that was unmatched at anywhere near its price. Today, the 06 Corvette Z06 outperforms sportscars costing $80,000 more.

I say, if the result is a better vehicle for the masses, keep doing it, as long as patents aren't breeched.

[synergy]

man, that should be illegal! lol anothe reason to be against american cars.

Although I'm not hot on most American cars, I completely disagree with you.

Any smart business owner will tell you that in order to beat the competition, you have to know (and learn from) the competition. This means completely disecting their work from the ground up. This notion applies to anything that is pieced together... cars, electronics, software, watches and even websites... you name it, it's probably been disected! I guess it takes an entrepreneurial mind to think this way... not everyone has it (and that's ok). How do you think Microsoft got their start? (Hint: They weren't the first to develop a GUI OS!)

Great post rex... this was an excellent read.

[Rx330driver]

man, that should be illegal! lol anothe reason to be against american cars.

Although I'm not hot on most American cars, I completely disagree with you.

Any smart business owner will tell you that in order to beat the competition, you have to know (and learn from) the competition. This means completely disecting their work from the ground up. This notion applies to anything that is pieced together... cars, electronics, software, watches and even websites... you name it, it's probably been disected! I guess it takes an entrepreneurial mind to think this way... not everyone has it (and that's ok). How do you think Microsoft got their start? (Hint: They weren't the first to develop a GUI OS!)

Great post rex... this was an excellent read.

lol, i was kinda joking, but your gonna have to excuse my non "entrepreneurial mind". i know that people need to steal ideas, but im just a lexus kind of guy, so iwas just a little angered that they were stealing the hybrid idea.

[synergy]

your gonna have to excuse my non "entrepreneurial mind".

Doh... was hoping that wouldn't offend anyone, after all this was my FIRST post to this forum

I know that people need to steal ideas ...

I just meant that in business, disecting a competitor's work is not stealing... it's smart research. Federal laws prevent any company from 'stealing' ideas... they are mearly using the fine work of Toyota as a basis for their own work. I'm personally glad to see a U.S. auto company attempting to catch up to the technology curve.

As a Lexus owner, you should be proud GM is disecting your car to see how it works... it means you have a damn fine ride.

[Rx330driver]

lol not offended, just kinda smirking at the humor is all. :)