[English] Automobile platforms and industrial risks

After the last wave of merging of the nineteen-nineties strengthened the multi-brand groups, the automobile industry found itself confronted with a problem: How to maintain the diversity (multi-brand) of products whilst benefiting from the size effects (production of series).  Volkswagen provided a solution to the problem by re-interpreting Alfred Sloan’s recipe[1]: Link a mass-production strategy to a diversification strategy, which allows savings of scope and range at once. In actual fact, the Stuttgart firm, who has seen a steady drop of profits, embarked upon an important reorganization programme after the 1992-1993 crisis. The primary objective was to rationalize the development of products and also the line of vehicles by reducing the overlaps (of products) and the redundancies (of investments) in the group interior. Since 1995 the group have recovered their vim. The key to success was to produce sixty different models from four platforms developed by Audi and Volkswagen.

These platforms (also referred to in the automobile sector as assembling platforms) enable a set of vehicles to be produced on a same base technique. In a usual way, the technical base is made up of the chassis, axels and rolling railed vehicles. Nevertheless, this does not mean that the share is restricting itself to the technical base. The Volkswagen[2] group also use an organ bank (motors, gear box, knobs, brakes etc), some supplied by the automotive suppliers, which they then distribute to different models. By way of example, on the Volkswagen Golf IV platform, the group were also producing the Volkswagen Beetle and Bora, the Skoda Octavia, the Seat Toledo and the Audi A3. All of these vehicles benefited from common organs on a mechanical or interior level.

However, constructing vehicles with the same DNA does carry some risks : When one component is affected, all of the vehicles acquire this congenital defect. Volkswagen has paid the price more than once. There are no less than 290 000 vehicles, which the group recently have had to recall in order to sort out problems of leaking diesel oil on various models owing to a simple defective screw on the priming pump of diesel motors (from 3 or 4 cylinders).

Another worrying phenomenon is that the increasing importance of the suppliers in the automobile production (see newsletter n°5) can drive them, in the case of a defective abundant  component, to block the production to their clients. Automotive supplier Bosch, which is today the leading automobile supplier ahead of the American supplier Delphi, has just, with a batch of defective jet pumps, brought a fatal blow to the German automobile industry. The constructors of BMW and Mercedes have not only had to suspend the production of several sites but also introduce an extensive recall campaign. BMW has not expressed an opinion on the episodes  of this scandal (primary objective of the Bavarian constructor is to resolve the problem). In their favour, Mercedes has already accused Bosch of the decline of their sales in January. The Mercedes Car Group sales (Mercedes et Smart brands) show a decline of 6,4%. Despite everything, the Daimler Chrysler group appear to be nevertheless keen to show themselves to be conciliated with Bosch and intends to find an agreement with the German automotive supplier.

The running of the automobile industry makes one think that it is possible for this type of industrial incident to recur and it can chiefly for two reasons. On the one hand, the key technology group is finding themselves in the hands of some big suppliers. Thus, as soon as one among them recognizes a problem, this problem will affect a large number of vehicles. On the other hand, the rapid obsolescence of technologies poses the problem of their validation. The « sloanisme » was based on a generic and standardized organ bank. Nowadays, it’s about complex technologies which are difficult to develop. Yet the cost imperative leads to reducing the conception phase and therefore the testing and then validation phase of the technologies. Consequently,  the automobile industry integrates less and less in truly reliable technologies. We therefore have the right to ask ourselves if, in view of the increasing complexity of technology employees, it would not be necessary to rethink the innovative role in the chain of the automobile values, the objective not being to reduce it but to question them on the procedures which will allow it to be better controlled. This perhaps implies that not only the procedures of validating technologies will be re-examined but also the dealing of quality.

However, reinforcing this type of procedure poses several problems. First of all, it would lead to an increase in vehicle development costs and therefore their price (which can pose some problems regarding competitiveness). Secondly, this would reinforce the position of large companies, who are already almost the only ones in power to supply this type of technology subject to price and quality demanded by the constructors, which, in the end, would not resolve the problem[3].

However, whatever the issues, the group of players of the automobile industry are duty bound to lay the problem down on the table. The multiple damages could well be, in the long run, more expensive than planned, as in addition to the supplementary costs created by the reparation of the damage undergone by the consumers, the recalls could provoke a weariness and mistrust among the consumers, who are increasingly called upon to validate the newest technologies.


[1] Alfred Sloan, director of General Motors, introduced in 1923 a new production system based on the diversification of models known as “sloanisme”. This term, derived from the name of its creator, consisted of multiplying the combinations of a limited number of standardized parts in vehicles with regularly renewed main bodies.

[2] For more details on the Volkswagen platform strategy see

Simpson T. W. (2003), « product platform design and optimization: status and promise», Proceedings of DETC’03, 2003 ASME Design Engineering Technical Conferences, September 2-6, 2003, Chicago, Illinois USA.

Weck L. O., Suh E.S., Chang D. (2003), «Product family and platform portfolio optimization», Proceedings of DETC’03, 2003 ASME Design Engineering Technical Conferences, September 2-6, 2003, Chicago, Illinois USA.

[3] Bosch for example, holds the biggest share of high pressure diesel injection systems and has difficulty meeting the demand. Just like what we saw some time ago with the Peugeot 307, strong rates in the automobile production are incompatible with quality.