Tag Archives: Toyota

Lexus DMS found wanting by Euro NCAP

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Toyota’s luxury brand Lexus recently had its DMS tested by Euro NCAP and got a miserable 0.3 out of 2 points. The vehicle in question was the 2023 Lexus RZ. 

It must have come as a huge shock to Toyota, which is struggling like Tesla to deal with the influx of quality Chinese cars. I understand that Woven (not Smart Eye) was the supplier.

It’s actually a huge positive for Seeing Machines and I’m feeling pretty confident that Toyota will do the sensible thing and find itself a supplier that can deliver maximum points from the Euro Cap DMS test. I certainly don’t expect it to choose Smart Eye, by the way.

I’m also hearing that Volvo may be experiencing buyer’s remorse for its choice of DMS. Let’s wait and see what happens there.

While the share price of Seeing Machines is an annoyance, I’m increasingly confident that the couple of auto wins predicted by Paul McGlone will come to fruition by the end of the first quarter of 2024. He delivered on Gen 3 Guardian and I can only reiterate my belief that all the auto contract delays have been due to the OEMs.

The writer holds stock in Seeing Machines.

Long live the King of the DMS

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In a recent note from Redeye, its analyst commented that whoever wins VW or Toyota in the second half of the year will be ‘King of DMS’. He seems to think it may be Smart Eye, whereas I’m convinced it will be Seeing Machines that wins both.

I also believe Smart Eye will soon suffer the embarrassment of Volvo choosing Seeing Machines for its 2021 flagship XC90’s DMS.

Certainly, after a successful fundraise Smart Eye looks ‘strong and stable’ but as the British electorate knows only too well, the truth will out. Propaganda eventually has to give way to reality. That time has arrived for Theresa May and will very shortly arrive for Smart Eye. Tick tock.

Enough of analogies, Smart Eye even as number 2 will have its share of the cake that SEE doesn’t want. China is a big market and I wish it well there. I just hope Chinese consumers don’t take a ride in Byton’s M-Byte when it launches later this year — it features SEE’s superior DMS.

I also believe that the BMW X5 and Audi A8 will revert to Seeing Machines – for as the Beatle song Drive My Car, could have said:  ‘Using a DMS at up to 37mph is all very fine, but I can show you a better time’.

In the auto world premium means ‘the best’. In a very competitive market Audi and BMW can’t afford to look like chumps v. Mercedes when it comes to safety. That is why auto OEMs are telling, yes telling, Tier 1s to use Seeing Machines technology.

Some will naturally dispute what I’m saying. Still, let those with ears to hear, hear.

The writer holds stock in Seeing Machines.

2019: Seeing the rise of driver monitoring

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It’s now mainstream news that 2019 will be the year the world realises that driver monitoring systems are the next big thing in the world of auto. After all even Waymo CEO John Krafcik has acknowledged that widespread adoption of autonomous cars is some way away – hence its use of a Back-up Driver Monitor in its vehicles.

Seeing Machines is the leader in this space and it’s great to see some of its OEM customers, such as Byton, BMW, Mercedes at CES 2019. Others that have been developing DMS now realise they will have to choose SEE if they want the best camera-based DMS system.

Smarteye’s move to develop a chip must be seen both as a validation of Seeing Machines’ auto strategy but also as an indication that it is losing out to the Fovio chip in winning OEM business.

Auto revenues underestimated

It’s my contention that in the light of the incessant and pressing demand for its technology Seeing Machines auto revenues from 2020 onwards will be seen to be vastly underestimated.

Examining a detailed note from house broker Cenkos dated 22nd June 2018 is revealing. In it, (page 14) analyst John-Marc Bunce predicted auto revenues of A$63m in 2021, rising to A$213m by 2022.

I’d argue that global penetration of DMS as well as Seeing Machines market share of that penetration have been underestimated. That is already becoming clear to industry insiders and will become obvious to investors very soon.

What I believe will trigger it will be confirmation that Seeing Machines has cracked any of the following: another premium European OEM (Volvo or VW), a US OEM (Fiat Chrysler) and a Japanese OEM (Toyota, Honda, Subaru). I don’t think investors have too long to wait.

To be fair to Bunce he did acknowledge in the above note: “If Seeing Machines, as a similar market leader to MobileEye, manages to win 60% market share of the DMS market, and we assume global penetrating of DMS is 80% in 2026, this would imply the potential for over 50m vehicles pa (which compares to our current forecast of 27m).

It seems perfectly logical to me that a big beast will acquire Seeing Machines long before this becomes a reality — and not for peanuts either. Indeed, it’s strategic value cannot be overestimated and, even as I write, I wonder if discussions are taking place at CES that may eventually result in a takeover.

The writer holds stock in Seeing Machines.

Panmure puts 28p price target on Seeing Machines’ auto division

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In a note published on September 18th Sanjay Jha, an analyst at independent broker Panmure Gordon, reiterated his ‘Buy’ recommendation and placed a 28p price target on Seeing Machines.

The price target is lower than the 30p target he had in June but is still a remarkable endorsement by an independent analyst of the company’s domination of the global market for automative driver monitoring systems given all that has recently taken place in fleet.

In the note Jha  concluded: “We welcome the rationalisation of the Fleet business which has been a major distraction to the much larger opportunity in the Automotive sector, which saw the share price peak at 14p. Our investment case has been based almost entirely on the upside from the Automotive opportunity and continue to assume that the Fleet business has no value. Seeing Machines is in the pole position to capture at least half of the Driver Monitoring System (DMS) market with competition effectively limited to one other player (Smart Eye). With design wins with five OEMs and many more to come, we foresee a growing royalty revenue stream for many years to come.“

Endorsing the recent appointment of Jack Boyer to Chairman and the appointment of Ryan Murphy as COO, Jha commented: “These are the first steps in what we hope is a major overhaul of the Board and the executive team.”

Jha forecasts sales of A$37.6m for the 2019 financial year, rising to A$50.5m in 2020. “We estimate cash deficit of cA$5m by FY20, which arguably can be covered in debt markets. However, we also believe that the management can cut costs further particularly in Fleet engineering.”

Pointedly, he appears to have a dig at the information flow and forecasts coming out of Seeing Machines: “We note that the management expects revenues in FY19 to be approximately in line with FY18. We believe they should stop giving guidance until they have a good handle over internal information systems. In the last month, we have had two different versions of Guardian units delivered and expected to be delivered. Our forecasts, for what it’s worth, is based on Guardian data provided by the CEO today and our expectations for the Automotive sector.”

More auto wins

I’m personally confident that Seeing Machines will soon announce some huge auto wins: Toyota, FCA and Volvo. Other OEMs that I believe will fall to Seeing Machines include: Mazda, Honda, Subaru and Audi.

Indeed, in a previous note (published 19th June) Jha confirmed: “We believe that Smart Eye has been launched in first generation models of BMW, Audi and Jaguar Land Rover. At the time, Seeing Machines wasn’t allowed to bid for BMW and Audi as they were tied with Takata’s commitment to GM. However, we understand that Seeing Machines have now displaced Smart Eye in second generation BMW and we expect they will replace Smart Eye on future Audi models too. As we have highlighted previously, Seeing Machines has more robust licensing model with two offerings: Software and System on Chip (SoC), the latter allowing OEMs to deploy DMS across models more quickly and efficiently. Smart Eye doesn’t have its own silicon expertise and is heavily reliant on Aptiv to win platforms.”

The writer holds stock in Seeing Machines.

Seeing Machines: it’s all about timing

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I was slightly surprised at the timing of the revenue warning this week from Seeing Machines, as it has been clear for some time that Fleet has not being doing as well as expected with delays to Gen 2 and no news of business via Mix Telematics. 

It was a point that was succinctly made in the note from John-Marc Bunce, analyst at house broker Cenkos, when he wrote: “The news released yesterday regarding the fleet business is clearly disappointing, especially considering the issues with the Gen2 were first raised in May 2018”.

Given that Fleet (and Rail) have been perennial disappointments there will be a lot of pressure on Chief Executive Ken Kroeger to sacrifice someone. This might go some way to assuaging the anger of investors who’ve seen paper profits evaporate.

Yet, for me, it’s the timing of this announcement that’s of paramount importance. For by smashing the share price down It conveniently clears the way for a low ball bidder to come in and look like a white knight to investors.

I know that such a bid won’t immediately deliver anywhere near the full value that resides in this business – given the importance of its DMS technology to increasingly autonomous cars.

Still, many long-suffering shareholders would probably jump at the opportunity to sell at a very decent profit. Moreover, it ought to ignite a bidding war.

New contract wins

In any case, let me confirm that it is my belief that Seeing Machines:

1) Is set to win auto contracts with Toyota and FCA (news on the former is overdue).

2) Will be supplying its technology to one or more of these companies: Apple, Waymo and GM Cruise. (They’ll want more advanced systems than the non eye-tracking ones used by Uber, I’m sure).

3) Will see its tech used by Canadian Pacific Railway.

The writer holds stock in Seeing Machines.

Seeing Machines will win FCA

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I firmly believe Seeing Machines is set to make it 3 out of 3 in the US, when it adds Fiat Chrysler Automobiles (FCA) to its existing customers, General Motors and Ford.

I know this runs counter to the views of the SmartEye analyst Viktor Westman but I’m confident Veoneer with Seeing Machines will be the preferred choice for FCA. My reasoning is simple: FCA is already a key customer of Veoneer and Seeing Machines has not only a superior DMS system but a very close working relationship with Veoneer.

If you were FCA would you choose a DMS system that is inferior to that of your main US rivals?

Japan

Meanwhile, over in Japan, it seems that Seeing Machines has made great progress in cracking that market. Toyota by all accounts is in the bag. Moreover, Seeing Machines is exhibiting its DMS with Japanese Tier 1, Nexty Electronics (that is part owned by Toyota) at the 1st Automotive World exhibition in Nagoya, Japan this week.

Euro NCAP agrees camera-based DMS crucial to prevent driver distraction

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Last week I spoke with Richard Schram, Technical Manager at Euro NCAP. For those backing camera-based DMS systems he provided a very positive update on the organisation’s plans.

He agreed that the problem of driver distraction could not be solved without cameras but he doesn’t think it is feasible to mandate that by 2021 (for 2020 the coffee cup DMS is what will be pushed for, as it’s easily achievable). By 2022 he expects EURO NCAP to be incentivising the introduction of AEB linked to camera-based DMS. Moreover, Schram agrees that: “by 2024 camera-based DMS will be part of most European passenger cars”.

Given the 3-year lead times for the introduction of technology into cars, it’s clear why the more safety-conscious car manufacturers are moving swiftly to integrate camera-based DMS systems into future car models.

I asked Colin Barnden, Lead Analyst at Semicast Research, to put Schram’s comments into context and he said that it “clearly confirms that Euro NCAP and the EU are in alignment”.

The he went on to explain how:

  • “Drowsiness and attention detection (DDR-DAD) – coffee cup : mandate introduction from 1 September 2021 to 1 September 2023. Euro NCAP 5 star rating starts with these systems in 2020.
  • Distraction detection (DRD-ADR) : mandate introduction from 1 September 2023 to 1 September 2025. The importance of the comment, “[in] 2024 camera-based DMS will be part of most European passenger cars” cannot be overstated and confirms my understanding that distraction detection systems will only be camera based. This will apply also to vans, coaches, buses and trucks – a total of between 20-25 million vehicles per year in my estimation (and that is just the EU28).”

Barnden added: “As previously mentioned the adoption rate for camera-based DMS will be dictated by the rollout plans of the OEMs and they are well ahead of the advisory bodies (Euro NCAP, Consumer Reports) and the legislative bodies (the EC, NHTSA) already. My attention has moved from Europe to where’s next.”

His opinion is that Japan is next. “FotoNation, Seeing Machines and Smarteye are all making a concerted effort there and that is a clear signal of OEM interest. Development of mobility services (eg Waymo) are much more advanced in the US.”

Personally, I’m expecting Seeing Machines to clinch OEM a big contract with Toyota in the next few months (then Honda), as first mentioned in my blog article: Seeing Machines set to win 75% of global DMS market. In that article I also forecast that further progress in the US is close at hand.

I think the evidence is clear that Seeing Machines is set to be the next Mobileye.

The writer holds shares in Seeing Machines.