When the world’s car-makers were feeling the pinch a few years back I wrote a piece speculating on the future shape of car manufacturing in Europe.  Now we are facing double-dip recession and a double-dip car-sales slump in Europe, so maybe its time to dust off my predictions and start again.

Last time around, the many trade-in schemes and new cars for scrap programmes put in place by  governments desperate to save their critical motor industries and minimise unemployment were, in typical fashion, exploited by manufacturers with no ideas, intent in salvaging the old ways.  The changes that were really necessary never came about.  We’ve struggled on with a Sellotape solution for a while, but there looks like being three million fewer cars sold in Europe this year than in 2007 and the French and Germans in particular haven’t scaled back production.  It’s true that luxury marques like BMW and Mercedes continue to sell, which also suggests that manufacturing standards also need looking at, but both countries still have all the overheads without the sales.  What’s more, cash-strapped governments aren’t in a position to bail them out again, so it’s becoming clear, even to the industry’s ostriches, that they are going to have to bite the bullet.

The idea I was expounding previously was that car design and marketing would be separated from manufacturing in much the same way that The Coca-Cola Company separates marketing from production.  If the automotive industry were to adopt this approach local manufacturers would build cars for global brands who would design and market them.

If you think this is far-fetched, you should know that its a model that is already up and running.  The Finnish Valmet company already produce cars with other firm’s badges on them and look set to start producing the Mercedes A-Class.  There seems no reason why businesses that specialise in production wouldn’t have a better chance of meeting the quality and volume demands of the shifting market.  There may be other advantages to this arrangement too.  For example the carbon footprint of car production is increased by the distance they often travel from production plant to showroom.  There seems no reason why we shouldn’t see production lines for VW and Fiat running side-by-side in the same specialist local plants.

Michael Weaver
August 10, 2012

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