First Quarter Update 2001 -- Market Analysis:  Lane Departure Warning and Lateral Guidance Systems
IVsource.net
25 March 2001

Through discussions with industry players, review of recent press coverage and sifting through sales literature, IVsource takes a fresh look at the potential market for lane departure warning and lateral guidance systems for the car, bus, and truck markets.  This update of last year's market analysis highlights key players and their market focus and offers estimates of  market size and promising application areas.

This report provides an analysis of the potential market for lane sensing and lateral guidance systems for road vehicles.  The automotive, heavy truck, and transit bus sectors are addressed.

Note that this analysis is based on information available as of Spring 2001; however, things continue to change rapidly in this field, so we expect our analysis to be updated late in '01.

Information is provided in four sections:

Overview comments are provided for each area, and then key points from articles, sales literature, and government documents are noted.  Many of the articles come from IV Quarterly / IVsource and are available on the IVsource.net website; some of the others can be provided by IVsource upon request (Editor@IVsource.net).

[Top]

I.
Summary

• It still appears that no single player is stepping up to the challenge of an all-platform, all-applications stance.  For instance, AssistWare focuses primarily on truck fleets and truck manufacturers, Iteris on car and truck manufacturers, and individual manufacturers focus on their respective market segments.  Thus, an opportunity still exists for a single company to provide lateral warning / guidance systems for all platforms and markets, which could take advantage of common core technology and economies of scale.
  

• In the light vehicle and truck sectors, product introductions are happening at a rapid pace: sales for trucks are well underway, and supplier alliances are forming with automakers.  A $200M market is foreseen for LDWS for cars/trucks over the next 5-7 years.
  

•  Active control lateral support systems are now on the market in Japan and headed for the US within approximately three years.
  

• Many transit agencies are considering precision maneuvering support for bus transit, and a few actually have systems in place or being implemented.  The level of interest continues to accelerate.  Only one true supplier exists, namely Irisbus in France.   A $25M market for bus transit over roughly the next five years is envisioned (for purely the guidance portion of these systems; the total system cost for these implementations will run to hundreds of millions of dollars each).  New market entrants have an opportunity to step into this arena as either total system providers of Bus Rapid Transit (BRT) systems (competing primarily with Irisbus) and/or as focused providers of electronic guidance systems for precision maneuvering.
  

• Industrial automation:  we and others continue to project strong growth for Automatic Guided Vehicles (AGVs) for both indoor and outdoor use.

[Top]

II.
Overall Market Indicators for Driver Assistance Systems

Driver assistance systems such as night vision and adaptive cruise control have been entering the market for consumers, and collision warning has been available to heavy truck operators for several years.  We assert that the willingness of consumers and commercial vehicle operators to invest in these early systems strongly correlates with their likely future investment decisions in lateral sensing/guidance systems.

For driver assistance systems, the decision criteria for investment -- whether it be for night vision or for lane departure warning -- are essentially as follows:  do I feel safer? (consumer), does it reduce my driving stress? (consumer and professional driver), is my fleet measurably safer? (commercial fleet operator), and does it reduce my operating costs and boost profitability? (commercial fleet operator).

For commercial fleet operators, the answer to these questions has been "Yes" for forward-looking collision warning systems.  This is evidenced by Eaton VORAD, which has sold more than 50,000 of these units to date and continues to move "thousands" per year (according to an EV source).  Very positive safety improvements have been seen by their customers.  EV is now offering Adaptive Cruise Control to commercial fleets.

Adaptive Cruise Control for automobiles entered the Japanese market in 1997 and has been popular there.  ACC entered the European market in 1999 and over 5,000 equipped vehicles are on the road there.  Regarding the US, most car-makers continue to watch consumer reaction and system  performance in Europe before introducing similar systems to the more litigious side of the Atlantic; but Mercedes Benz began selling ACC in the Detroit area in August 2000, Toyota's Lexus made ACC available in October 2000, and Nissan, BMW, and Jaguar are expected to follow later this year.

[Top]

III.
Lane Departure Warning Systems for Cars/Trucks

Lane and road departures are the number one cause of fatalities on US roadways.  Product development and market introductions are moving forward at a healthy pace for lane departure warning systems.  Depending on the government's effectiveness in stimulating this process, the "stretch goals" that US Secretary of Transportation Rodney Slater announced last July for the IVI program could be significant.

Goals that are relevant to this report are:

• National Goal:  reduce crash fatalities by 20% over the next ten years.
  

• 10% of new light vehicles sold by 2010 should be equipped with one or more IVI systems.
  

• 25% of new commercial vehicles sold by 2010 should be equipped with one or more IVI systems.
  

Additionally, the Federal Motor Carrier Safety Administration has set a goal of a 50% reduction in heavy-vehicle-related fatalities by 2010.

Achievement of these goals will be based on the sale of millions of IV systems over the next ten years.  Most car and truck OEMs are now, at minimum, developing a product development strategy and examining supplier systems.  (However, we see clear signs that this product development activity is dragging somewhat in early 2001, due to the US economic slowdown.)

How might this LDWS market develop over the coming years?  IVsource believes it is fair to say that LDWS will sell at least at one-half the rate/volumes of the ACC market, and probably at half of the ACC unit cost.  This equates to a $202M market by 2007 (using the Tier One market report info which showed an $805M market for ACC).  Differentiating factors are:

• LDWS does not provide "an everyday tangible benefit" as strongly as an ACC system does (unless it turns out that drivers are very distracted by telematics!)
  

• To purchase LDWS, drivers have to choose to "protect themselves from themselves"
  

• LDWS is vastly easier to integrate into the vehicle (no control, no interface to engine)

LDWS may be offered within a "bundle" of services, rather than as a stand-alone product.

As a further indicator of the perceived strength of this product area, the International Standards Organization (ISO) is now well into the process of defining an LDWS standard.

According to their March 2000 Business Plan, USDOT's Intelligent Vehicle Initiative program has Road Departure Collision Avoidance listed as one of eight problem areas targeted.  Light vehicles (LVs) are the key focus, as this is where the majority of crashes occur; other platforms will be involved as "stepping stones" to LV deployment.  Benefits of LDWS, as listed in the Business Plan, include reduction of crashes by 30% (road departure).  Section 8.2.3 describes the approach to Road Departure Collision Avoidance, with operational testing during 2002-04 and deployment beginning in 2008 (IVsource sees this as a super-conservative deployment estimate, as Ford is due to equip cars beginning in 2003).  NHTSA invested in a six-year project with Carnegie-Mellon University to develop and validate performance specifications for road departure collision avoidance.

Several government programs worldwide are either evaluating LDWS or going so far as to conceptualize advanced systems.  In the Netherlands, one of three recently-approved pilot projects is "Lane Departure Warning Assistant," planned from 2000-2002.  Information on this and other projects is expected to be published soon.

In early 2001, systems that incorporate active control of steering are emerging as well:  lane departure avoidance and lane keeping support are now on the market in Japan.  In fact, Japanese automakers are keen to enter the US market: they view the market for lateral assist systems in the US as considerably stronger, due to the large amount of long distance highway travel.  Active lateral driver support systems can be expected to enter the US market as soon as in 2004.

[Top]

IV.
Bus Transit Guidance / Docking Systems

The benefits of precision docking for transit buses include reduced tire scuffing (tire replacement is a major cost for bus fleets), and more rapid loading/unloading of passengers, especially those "with wheels" (e.g., strollers, wheelchairs).  Rapid and reliable loading times are essential to maintaining the reliable schedules that passengers demand.  Also, level loading and the absence of "curb gap" greatly reduce the occurrence of mishaps and stumbles that can occur at bus stops, which translate into lawsuits for bus operators.  (The annual liability/legal costs for US transit systems is in the range of $800M, so the financial incentive to equip buses is definitely there.)

For electronically guided bus systems within a Bus Rapid Transit scenario, costs for electronic guidance are typically less than half that needed for a light rail system, with the added advantage that the buses have the flexibility to leave the route to circulate in neighborhoods and office parks.  The key is to make bus service "feel" like rail service to customers, as rail has the higher customer appeal.  Systems like Civis (marketed by Irisbus) and Phileas (being implemented in Eindhoven, Netherlands) are doing an impressive job of this.

In terms of the underlying technology, electronic bus guidance is being implemented with systems incorporating buried wires, magnetic reference markers, and machine vision.

The US Transit IVI Working Group has recommended to USDOT a stretch goal of equipping 10% of all new transit buses with IV systems by 2010.  5000 new buses were delivered to US transit agencies in 1998; assuming this volume remains constant, then a 10% market equals 500 buses annually.  Typical IV package equipment costs can be estimated at $5000, so a conservative market estimate is $2.5M.

However, IVsource expects that precision docking easily could be a retrofit item, and thus nearly any of the 75,000 buses in operation in the US are candidates, as are hundreds of thousands more overseas (where bus usage is significantly greater).  We maintain that a reasonable estimate for the five-year time frame is that some 20 cities worldwide will adopt precision docking systems.  Assuming (conservatively) that this capability is installed on 100 buses per city, then 2000 buses are likely to be equipped.  Again assuming a typical IV package cost of 5000, this then constitutes a $10M market in the near term for precision docking.

For guided bus systems, IVsource estimates that 30 systems will be either operating or in implementation within five years, worldwide (roughly ten systems each in Europe, the Americas, and Asia).  Each project will range around $100M for the total system, including vehicles and infrastructure improvements.  For the electronic guidance portion, $10,000 per bus and another $10,000 per mile is estimated.  Using average figures of 30 buses per system and 20 miles each, this equates to $300,000 per site for buses and $200,000 per site for mileage, or $500,000 per deployment.  For 30 systems, this implies a $15M market.

Major participants in this arena are the US Federal Transit Administration, Frog, Irisbus, London Transport, Washington Group International, PATH, and Toyota.

(3M was a key player, with a fully productized Lane Awareness System consisting of magnetic roadway marking tape, vehicle sensors, and a driver interface; however, they backed out of both the transit and snowplow markets in late 2000, putting their magnetic tape on the shelf.)

Of the current players, Irisbus is by far the most active player in marketing a total system (Civis) worldwide.  Frog can be expected to market their system concept worldwide as well, based on observing their marketing efforts in AGVs for port automation.  Washington Group International (the new conglomeration of Morrison Knudsen and Raytheon's civil engineering unit) may seek to expand their concept to other locations, but the company focus is much broader and a specific marketing of precision maneuvering for buses is unlikely.  Toyota's approach will most likely stay in Japan.  FTA and London Transport are obviously important players as advocates and implementers of systems.  PATH is very active in marketing its capabilities within the US; however, they do not have a commercial product or a service/support capability (they may have a commercial spinoff in mind, though).  Thus, there exists an opportunity for other players to step into this arena as either a total system provider of BRT systems (competing primarily with Irisbus) and/or as a focused provider of electronic guidance systems for precision maneuvering.

[Top]