Friday, 6 August 2010

Platform sharing

We’ve all heard it before - “the Jaguar X-Type is actually a Ford Mondeo”, “the Audi TT and Skoda Octavia are the same car”, “the Fiat 500 is a Ford Ka in drag”.

The recent ascendancy of VW AG to the plinth of most profitable and highest volume car maker in the world suggests that rather than be something to giggle about, ‘platform-sharing’ is the technological innovation of the century - at least in vehicle mass-production.

VW AG own seven mainstream car brands - VW, Audi, SEAT, Skoda, Bugatti, Lamborghini and Bentley (Porsche and Suzuki are soon to enter the fold); And all drivetrains and chassis they’ve developed for their current line-up are used, not just across models, but increasingly frequently, across brands.

It’s no wonder Volkswagen currently has no less than 15 different models on sale in the UK. Jaguar by comparison, have only just started re-engineering their models to share platforms and they only have four.

The new Audi A1 is a great illustration of how VW AG go about the business of making cars. It is mechanically identical to each of: a Skoda Fabia, VW Polo and SEAT Ibiza. They share everything from engines, to gearboxes and crash structures; they even use thesame buttons for their controls. Despite this, the most basic A1 lists at c. £13,000 while the equivalent Fabia is some £4,000 cheaper.

The quadruplet obviously have different exterior body panels, lights, grilles and badges but the price-differential relies on where in the market VW AG has positioned each car. Marketers love to talk about “perceived quality” and “badge prestige” but for our purposes, we’ll call it “Tesco Value versus Tesco Finest”.

It’s about the way a car makes its owner feel and what it says about them when it’s on their driveway. The oily bits in modern cars have had a very long gestation - the petrol engine for example, has been with us going on for a century. Mechanials are pretty much as good as they are ever going to be so manufacturers have had to come up with all manner of clever ways to differentiate their wares from the rest.

Toyota came up with the biggest hoax the world has ever seen a.k.a “Prius”, while the Germans dreamt up “premiumisation”. (Yes, that word came from Germany; just count the syllables).

So beyond sheet metal, the A1 is afforded nicer quality materials in its interior and more electronic gizmos than the ‘no-frills’ Skoda Fabia. It’s also marketed as a bit of a fashion accessory so buyers of the A1 are offered far more options to customise* their cars.

It’s a very clever strategy and like the best ideas, once someone comes up with it, you wonder why, “things haven’t always been done that way”. Why spend money on R&D, developing bespoke components for each model when most people are not geeks like me and don’t care all that much what’s under the bonnet?

VW AG forecast that between them, the A1, Fabia, Ibiza and Polo will sell around 1.4million units over the next 4 years. Why [again] depend on 400,000 units of the Audi A1 to pay for development costs when they can be shared across 1.4million?

It’s such a no-brainer, it won’t surprise me (or many others) if we’re down to just four car companies worldwide by the time the next World Cup rolls around. Four companies with brand-upon-brand and sub-brand-and-sundry. A “make-your-own” pizza approach to selling cars if you will.

It would be far simpler to make just the one car and through options, allow buyers to spec what they want from the £9,000 of the lowliest Skoda, to the £20,000 of the poshest Audi. Any dealer who’s tried to sell a Citroen C6, or a Renault Vel Satis or Vauxhall Signum will tell you this approach doesn’t work with the modern consumer.

There’s an artificial ceiling on how much the market will pay for cars wearing certain badges. Toyota went as far as forming a whole new brand in Lexus to get around this; likewise Nissan with Infiniti and Honda with Accura. Image is everything and if you’re looking for more proof, just look at the Evoque on the opposite page.

The manufacturers have bent over backwards to accommodate our snobbery and it’s all very noble, and you can call me cynical but I spy an opportunity.  If you catch yourself thinking about buying a Skoda infused with “Audi-ness”, save yourself a few pennies and just buy the Skoda.

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