Mary Barra skipped Europe's biggest auto show of the year to focus on what is arguably her biggest strategic announcement so far as General Motors CEO. While other managers were in Paris last month, Barra briefed investors on her ambitious plan to reduce GM’s confusing slew of more than two dozen, largely integrated vehicle architectures to just four modular megaplatforms over the next 10 years.
Like Volkswagen Group CEO Martin Winterkorn, Renault-Nissan boss Carlos Ghosn and Toyota chief Akio Toyoda, Barra knows that having prolific, flexible, globally compatible megaplatforms is a key to success in the fast-expanding, ultracompetitive volume car manufacturing business. Enormous economies of scale, lower development expenditure, faster times to market and the ability to build multiple cars on one line are some of the other mouthwatering benefits of megaplatforms. Mastering this part of the business could ultimately decide which automakers survive and which ones don’t as pressures from customers, competitors and regulators escalate.
Two of Europe’s largest automakers, PSA/Peugeot-Citroen and Fiat Chrysler Automobiles, do not have global megaplatforms and analysts say that leaves them vulnerable in an industry in which bigger is often better, especially when it comes to procurement and establishing a worldwide presence. Also, by the time GM is finally finished with this mammoth platform revamp it will be 2025 -- the kind of distant future one might almost expect from science fiction movies given the auto industry’s current rapid pace of change. By then, it might be commonplace on European roads for people to be chauffeured around in self-driven cars powered by hydrogen fuel cells with only water vapor as exhaust.
VW’s big head start
Just as GM’s chief executive described her long-term vision, VW was busy making those dreams a reality and pocketing the savings for itself. It was ramping up production of its new Passat, already the sixth model line underpinned by the group’s ultraflexible modular transverse matrix, better known by its German acronym MQB.
The race is on to find the most efficient and standardized megaplatform, the stakes are high and VW Group’s head start on its global competitors is substantial. Its MQB megaplatform puts it years ahead of rivals when it comes to the next evolutionary stage of mass car production. European competitors such as Renault-Nissan, PSA and Fiat Chrysler are rushing to catch up, shifting to a largely modular approach from a more integral one. But like with any strategic rollout that overhauls entrenched processes and disrupts business relationships, it entails big risks.
“The bigger the platform the bigger the recall will be if there is a problem,” said Ernesto Antolin, vice chairman of Grupo Antolin, the industry’s largest supplier of vehicle headliners. “That is the bad side of supplying a megaplatform.”
The reason Toyota’s massive, image-damaging recall in 2009-2010 was hard to contain was because it affected millions of vehicles made all over the world. In addition, VW’s launch of MQB, which is forecast to underpin nearly 6 million vehicles by 2020, has included a few bumps, although the carmaker has been able to contain them thus far.