Wednesday 8th Apr 2020 - Logistics & Supply Chain

The demise of the World Car concept

Doom and despondency characterised the end of 2006 for many Western carmakers. In the US, Ford’s December sales plummeted by 13 per cent, GM was down 9.6 per cent and despite an expensive incentive plan aimed at clearing 2006 inventory, Daimler Chrysler only managed a single percentage point rise.

The closure of Peugeot’s Ryton plant underlines the overcapacity in the European market  where demand in the new EU member states has yet to fulfil expectations. Ford is poised to sell one or all of its European premium brands, sales of high-margin 4x4s and pick-ups have stalled in America while in Europe a European commissioner has declared virtual war on gas-guzzling 4x4s.

Only Toyota seems unstoppable – December US sales up 16 per cent. Is there no hope for the established manufacturers? There should be, but it might involve abandoning some grand concepts. Dr Christhof Spathelf, head of group manufacturing overseas for Volkswagen, spoke about this at the Odette conference in Munich towards the end of last year. He pointed out that predictions for the next 10 years suggest huge growth in emerging markets – 73 per cent in China, 162 per cent in India and 79 per cent in ASEAN countries.

The touted solution from many makers, has been the World Car concept, with the possible exception of the US which is assumed to be irremediably exceptionalist – although that doesn’t stop them buying Toyotas, curiously. You could have single platforms which, with a little tweaking at the accessory and fit level, will sell into every world market with stunning economies, not particularly on manufacturing but in R&D, marketing, and balancing global logistics flows.

But according to Dr Spathelf, the World Car concept is dead for the simple reason that a single platform won’t satisfy all, or even most, markets. ‘Even in emerging markets, requirements are fundamentally different – ASEAN wants pick-ups, India likes hatchbacks,’ he says.

‘Even at the equipment level, requirements are too diverse. India needs air conditioning and Russia is more concerned about heating. ’

The result, says Spathelf, is that there is no uniform trend in either production, marketing or sourcing strategies. Not all models will survive in a given region. For what it’s worth, Spathelf claims that VW believes that what we think of as globalisation will mature into a regionalisation of global players. In other words, within a reasonably homogenous region global players will have their own assembly plants, component plants and the rest serving tailor-made regional concepts and reflecting regional issues.

In turn, he reckons, this means that there will be little or no further expansion of truly long distance supply chains. If anything, they will tend to shorten.

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