Platform consolidation to help auto companies share products and increase profit

Economies of scale is what the global automotive industry looks forward too. This will see major OEMs (Original Equipment Manufacturers) increase focus on larger volume and vehicle variants manufacturing based on few global vehicle platforms. Priority shifts to standard manufacturing processes, core engineering, and largely common parts. Platform consolidation is what top auto companies are banking on to help them share engineering, development and market research on one common platform. Agreements are entered into by auto manufacturers so as to help them to reach their full potential while combining resources and experiences.

Analysis from Evalueserve points to the fact that in the latter half of this decade, half the vehicles manufactured globally would be based on top 20 platforms. Platform strategy will see top OEMs lay emphasis on advanced core platforms. This refers to those that have scope for product development, are capable of innovation, and can accommodate localized manufacturing at a global scale. Evalueserve says that the 10 major OEMs, General Motors, Volkswagen, Toyota, Ford, Nissan, PSA Peugeot Citroen, Honda, Renault, Fiat and Daimler would reduce platforms to a third. The current number stands at over 175 platforms in 2010 and by 2020, this number would be closer to 60 by that logic.

One example of this platform sharing technology is that of Renault Nissan and who have formed such an alliance. The Renault–Nissan B Platform, now known as the V platform forms the basis for Clio, Micra, and Dacia. The Volkswagen Group MQB (Modular Transverse Matrix) platform is responsible for a range of VW, Skoda and Audi vehicles. The Toyota MC platform is responsible for the Corolla and Auris.

General Motors announced that they plan to halve vehicle platforms from 30 in 2010 to 14 in 2018. This is likely to result in cost savings to the tune of an estimated $1 billion a year attributed by product development projects. Economies that are emerging, such as, South America, China and South Asia would strongly influence car manufacturer’s strategies. This would affect marketing and manufacturing strategies, and product development. The report points to the fact that auto markets in emerging economies would account for upward of half the global light vehicles produced by 2015, which will result in a 8-9% CAGR growth for the ongoing five year period.

The above story is based on a report by Bhavya Sehgal and Pronab Gorai at Evalueserve.