April 27, 2012
As carmakers compete to slash costs, they’re overhauling product-development approaches, placing an emphasis on shared parts and common designs.
The new strategy aims to improve profits and products. Its pioneers are some of the biggest names in the business: Volkswagen AG, Nissan Motor Co. and now Toyota Motor Corp. Signature elements of the strategy, known as modular engineering, include:
- Basing multiple models and millions of vehicles on one platform.
- Simultaneously developing multiple models with shared engineering teams.
- Commonizing components across segments, not just sibling nameplates.
“It seeks simultaneous achievement of improved products and reduced cost,” said Takeshi Uchiyamada, Toyota’s executive vice president for global R&D. “We will be able to decrease costs through commonization.”
Toyota is the latest convert. On April 9, President Akio Toyoda said Toyota had reconfigured its product development into what it calls Toyota New Global Architecture. The shift aims to reduce development time and shave engineering costs 30%, in part by standardizing half of the 5,000 parts that go into a typical Toyota vehicle.
“Instead of traditional model-by-model developing, we will put all products with the same platform into the same bag and develop as a group,” Uchiyamada said. The engineering methods will first be applied to three front-wheel-drive vehicle platforms that account for about half of the company’s global production volume, he said, adding that the shift would take “years” to complete.
As an example of the change under way, global purchasing chief Shinichi Sasaki said Toyota had trimmed the number of radiator configurations it uses from 100 to 21. Toyota’s overhaul follows similar moves at other automakers to combine platforms and share parts. Volkswagen will introduce a modular platform this summer. Nissan unveiled its take on the new engineering practice in February.
The tactic saves money by maximizing volume for any given component. It also streamlines product development and allows engineers to more easily pinpoint design glitches. At dealerships, standardized parts should mean easier service and training of service technicians.
But it also opens the door to massive recalls because any botched design would be repeated millions of times across a company’s lineup. It also may put new stress on smaller suppliers, as automakers gravitate toward parts makers that specialize in the handful of commonized parts and can deliver them worldwide.
VW’s new MQB modular platform debuts in the Audi A3 and VW Golf this summer in Europe. It could be used in as many as 4 million vehicles a year by 2017. VW’s approach, in development since 2007, delivers a platform flexible enough to accommodate models with varying widths, lengths and wheelbases—as well as diesel, gasoline or hybrid drivetrains—while standardizing the engine position and front axle.
Nissan will start selling cars developed with its modular system in 2013. Nissan uses four modules—for the engine compartment, cockpit, front underbody and rear underbody—as well as a common electronics architecture. A wide range of vehicle types, from crossovers and SUVs to sedans and hatchbacks, can be developed by mixing and matching modules from the commonized bin.
Nissan says the process will allow it to double the use of commonized parts in the next generation of vehicles from 40% now to around 80%, and cut costs 30%. Hideyuki Sakamoto, a Nissan vice president, told Reuters the automaker will standardize parts for as many as 1.6 million vehicles, up from 50,000 to 200,000 now.
Auto platforms traditionally have been grouped by size. But the new approach tries to break free of that constraint and standardize parts across segments. At Toyota, groups of similar vehicles will be developed concurrently to share know-how and engineering.
Chief engineers will be given more decision-making authority. A general manager position slotted between the chief engineers and vehicle group leaders will be removed to speed decision-making and increase accountability.
Product development will be lumped into one of three regional groupings to better tailor the vehicles to local needs. Cars for North America and China will come from the same R&D groups because those markets have similar tastes, Toyota says. Product development for Europe and Japan will be combined, reflecting similarities in those markets, and emerging markets other than China will make up the third grouping. Lexus vehicles will be developed on a global basis.
Takaki Nakanishi, an auto analyst at Bank of America Merrill Lynch in Tokyo, applauds Toyota’s R&D overhaul but warns that results will take time. Toyota “has been slow in updating its platforms and powertrains, and we think its current versions are inadequate for today’s needs,” he wrote in a report. “It is not easy to turn a large ship around.”
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