VW extends lead in common architectures -- but there are risks

Automakers are fast-tracking flexible architectures to underpin multiple models across different brands and segments to catch up with Volkswagen Group's modular platform development strategy.

Common platforms reduce costs and streamline new car development but bring risks as well as rewards, industry insiders say.

If an automaker creates too many cars off one platform, the resulting vehicles end up looking the same, said Nissan Global Chief Marketability Engineer Jerry Hardcastle.

"If you get obsessed about modularity, you lose design creativity," he told Automotive News Europe. "VW could not build a [Nissan] Juke."

But other executives say the benefits outweigh the risks.

"There are significant savings in material costs, engineering costs, installation, investment and validation," said Peter Mertens, Volvo's r&d chief. "If you have one architecture and don't have to do everything for each vehicle, you can save a lot."

VW Group plans to build more than 40 new vehicles across its volume brands on its front-wheel-drive modular transverse matrix (MQB) architecture. The first cars to use the MQB – the VW Golf, Audi A3, Skoda Octavia and Seat Leon – are already on sale.

"The modular toolkits not only bring us considerable economies of scale. We are also transferring our most important technologies and innovations to all brands and regions," VW Group CEO Martin Winterkorn told the company's annual meeting on April 12. "Instead of a large number of island solutions, there is a single technical system into which our concentrated expertise flows."

Morgan Stanley estimates that VW sold about 100,000 vehicles based on MQB last year, mainly Audi A3 models. The automaker will use MQB for about 40 percent, or nearly 5 million, of its vehicles by 2020, IHS Automotive and Bernstein Research estimate.

The platform will underpin cars from Polo-sized subcompacts to the mid-sized Passat. VW expects MQB will underpin 2 million of the cars it sells in 2014, rising to 4 million in 2016, according to a company presentation to investors on Jan. 30.

The next key MQB launch will be the Passat, which debuts in 2014.

MQB joins the Modular Longitudinal System (MLB) platform introduced on Audi vehicles in 2007; the Modular Standard System (MSB) that Porsche is developing; and the New Small Family architecture that underpins VW Group's smallest cars, the VW Up, Skoda Citigo and Seat Mii.

Flexible architectures are not new to the industry – automakers have worked to standardize production since Henry Ford launched the Model T – but MQB is different from competitors' common platforms because of its high flexibility, according to Morgan Stanley analyst Laura Lembke.

MQB vehicle dimensions are adjustable in terms of wheelbase length, as well as the car's width and height so the platform can span across more segments than comparable systems from VW's competitors.

VW has said that, according to its knowledge, no competitor platform will have this technology over the next five years at least, Lembke told investors in a report. MQB also allows for niche models that might not be financially feasible on their own, Lembke said.

Overhyped?

Not all observers are convinced that VW has found a big strategic advantage with its modular architectures. "The MQB platform is an interesting and logical further step for VW's already industry-leading platform strategy. But it is not going to dramatically lower costs," Max Warburton of Bernstein Research said in a report to investors.

Much of the savings VW attributes to MQB will happen anyway as automakers improve efficiency when a car is replaced. "A new Golf and Audi A3 should have better volumes and pricing," Warburton said.

A common platform does not reduce labor costs, factory assembly hours or raw materials content, and economies of scale are best at annual production of less than 1 million units, he said. MQB may also cause VW to overspecify parts for its small cars, Warburton said.

"An air conditioning system for a Passat cabin will be far too powerful for a smaller cabin," he said.

However, other automakers also see benefits from increasing the use of common platforms and components.

Toyota plans

Toyota is developing a common platform it calls Toyota New Global Architecture (TGNA) that focuses on simultaneous development of multiple models and massive use of common modular components.

The approach will be applied first to three front-wheel-drive vehicle platforms that account for about half of the company's global production volume.

Toyota has not identified the nameplates, but Japan's Nikkei business daily said the next-generation Prius is among them.

"No company in this industry has ever exceeded 10 million units, but we would like to achieve that level, and the means that we can use to get there is TNGA," President Akio Toyoda told Automotive News Europe sister publication Automotive News in April.

BMW and Mini will share a new front-wheel platform that will underpin up to 12 cars, starting with the replacement for the Mini hatchback due next year. The different modules allow much more flexibility on the final size and body shape than traditional platform sharing, said Kay Segler, head of Mini. He gave the example of a water pump. "We try to do it so you can use not just the same pump but the whole system with linkages so that you don't have to develop five slightly different pumps for five models," Segler told Automotive News Europe.

PSA/Peugeot-Citroen plans to produce its compact, mid-sized and SUV models on its new Efficient Modular Platform 2 (EMP2) architecture that is also expected to underpin Opel's next Astra compact hatchback and Zafira compact minivan. PSA says that by 2014 it will produce about half of its cars with the EMP2. Previously, PSA used three different platforms to make its subcompact, compact and mid-sized models. The first vehicles to use the EMP2 are the latest Citroen C4 Picasso and Peugeot 308.

PSA says EMP2 will help the company reduce r&d and production costs by developing and producing the same components for a wide range of sedans, hatchbacks, wagons, crossovers, cabriolets and coupes. Other benefits include a per-car weight reduction of 70kg, which will help reduce average fuel consumption in future Peugeots and Citroens by 22 percent, depending on the model.

Recall risk

There are worries that basing huge numbers of vehicles on a common architecture could lead to massive recalls. "If you get the design wrong on key modules, the risks associated with recalls become exponential," said Matteo Fini, a production specialist at IHS Automotive. VW says it has installed an early-warning system to avoid recalls on components.

Automakers must also avoid pitfalls that a switch to a one-size-fits-many philosophy could bring. Renault-Nissan is developing a four-module platform dubbed Common Module Family (CMF) that Hardcastle said will be restricted to the automakers' compact-sized vehicles, including the next Nissan Qashqai and X-Trail.

The differentiation from the segment below is important, he said: "We don't want a customer who has bought a Juke and then changed to a Qashqai to say: 'It's the same as the car I've just got out of.' "

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