The future of the Automotive industry?

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In his Video blog this week Al Ries tosses us the thought that Automotive giants like Ford and Chevrolet might, in future, cut their wide model ranges down opting instead for a single model that they can focus their efforts on.  Unlikely, I think, but its clear that something has to change in the Auto world.

The reason that I think Al is wrong is really because the Automotive industry is full of emotion – emotional consumer buying decisions of course but emotional business decisions too.  Somehow I can’t see the guys at GM, Chevy or Ford accepting that they have been heading in the wrong direction for the last fifty years and winding down to a corner shop operation, whatever the commercials might say.  But that’s just my gut feel.

Ben Bacon suggests in a comment that Mini is a example of this in action, which it isn’t really, but I get his point.  The Mini idea though might suggest a pattern for the future.

There are a lot of issues to consider here, but just to take a few key ones – Environment, fuel consumption, cost of product development and staying in the game and decreasing car ownership (I think so).  One solution to this might be that the globals sell off brands or even some models like Stingray and Mustang that are really brands in their own right just like Mini, to marketing organisations, but offer a manufacturing resource to the new owners.  Design can be sub-contracted out by the new owners to specialists (It seems often to be anyway) and so even might distribution and other stuff.

What you get as a result is a kind of Mini scenario, with global distribution that avoids the environmental cost of shipping vehicles, or even parts, around the world.  The brand owners can choose what markets they go for and manufacture locally and develop models that they feel meet the demands of their segment.

OK, so that’s the Automotive industry sorted, what’s next?

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3 responses to “The future of the Automotive industry?

  1. Phil

    Interesting idea. One question is how different are the various models an auto manufacturer produces anyway?

    I read somewhere (can’t remember where) that VW has a standard chassis for all its models (including the Skoda Octavia), the engines are pretty much interchangable so that the main difference between the models is in fact in the styling.

    One trend that might develop in the futue might be 1 or 2 centrally manufactured chassis/power train assemblies which could perhaps even be shipped folded up 10 or so to a container to local manufacturers who would then mate then to different bodies and sell them as local brands.

    The next step beyond that would be for the customer to use a website to specify exactly what s/he wants from his vehicle and then the variations could be built into the body before it’s added to the standard chassis.

    All the best

    Liam

  2. Thanks Liam

    Yes, VW/Audi (Or “The Concern” as they are known to the inner sanctum) invented what they call the “platform system” where basically they have a kit of parts that their subsidiaries – VW, SEAT, Skoda Auto, Audi call from to create their models. Their idea was that it generate volume and therefore savings of scale for their components suppliers and keeps the end price down, and it has worked. One weakness I think will in the future be that they have to transport components around the world and they have to support a wide range of models, which was Al’s point in the first place.

  3. Sounds kind of grim. I thought the old days had the idea “any color you want, as long as it’s black”, and people these days demanded more choice.

    What some people are saying is that there may are superficial choices offered (like color and name), but really we’re all buying the same model.

    The car industry has been increasingly led by government intervention (a lot of goverment subsidy went into building the roads and highways we drive on, a lot still goes into maintaining them, and the government stopped supporting the railroads.)

    With environmental concerns, governments may force a new change in the automobile industry. They don’t seem to have the will power to do so yet, as they get a lot of money from fuel taxes and fuel related tax income.

    But when they do, the roads themselves may be different.

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