AUTO PRODUCTION PLANNERS FACE UNPRECEDENTED DISRUPTION
Positions working in the car product planning department of a major global vehicle manufacturer used to be much sought after. However, times have changed dramatically. That was the situation a few years ago, when companies were carefully structured to ensure a regular roll-out of new or facelift models. Nowadays it must be hell on earth to work in product planning or vehicle styling.
There used to be long term product plans stretching for a decade or more, but this is no longer the case. There is now such disruption that the planners cannot even be assured of the type of powertrain that will be employed in future products. It used to be a case of choosing between a petrol or diesel internal combustion engine or using both in a range, but it could be either of those combustion engine options as well as battery electric, hybrid or plug-in hybrid.
Styling is not as difficult, as most cars these days are SUVs or crossovers, which are almost indistinguishable from each other, but current whims sometimes call for a coupé or station wagon to be added to a product range at fairly short notice to widen a model’s potential market.
It is important to accept that the consumer is king and everything must be tailored to suit their requirements, which are very fickle these days. Being responsible for production planning is now a major nightmare as there is no structured buying patterns as was the case a few years ago. Now demand is driven not only by affordability and fitness for purpose, but in many markets there are incentives, such as those for battery electric vehicles, which can have a major effect on the market. This all makes production volume forecasting increasingly difficult.
Then, in several motor companies – including Volvo, Stellantis, Nissan, and Renault – there have been major changes in top management which can also have a big impact on the directions to be followed by product and production planners, as well as the stylists. What is interesting is that some of those people being called up by motor companies in financial trouble are from the older, experienced generation.
Now let’s look and see what are the motor industry disruptors that are causing the biggest shakeup in automotive history.
First, there was the mad dash to develop, build and sell electric vehicles to meet the demands of regulators and environmental groups in a comparatively short time frame. In many cases these vehicles were not properly developed and dogged by a host of glitches, from software concerns to wheels that literally came off!
Most companies did not fully recognise the role consumers play in defining what they really want to drive. It has turned out that not only sceptics, but ordinary persons-in-the-street are wary of a complete switch to EVs, due to high initial cost, range anxiety and a lack of real-life information on reliability and durability of these EVs. They simply did not buy them in the expected numbers, and many companies have had to turn back quickly and develop models with combustion engines, possibly with the addition of hybrid or plug-in hybrid technology.
But electric incentives from governments have also been cranked down or done away with, which increases initial purchase costs.
Then along to make things tougher, came the arrival – for the second time – of a Donald Trump administration in the United States. This time the rallying call was to make America great again by manufacturing more vehicles in the US instead of importing. However, this plan, using tariffs as the main hook, has backfired. Very badly.
The fact that many components that make up a “Made in America” vehicles these days are imported, as are the robots that are essential for modern auto production. High tariffs on these items, as well as on basics such as steel and aluminium, are resulting in costs rocketing. Buyers are staying away, and companies such as General Motors, Ford and Stellantis are haemorrhaging billions of dollars in extra costs.
Times have changed over the years since the US was the dominant player into the global automotive word. Nowadays globalisation and buying from the most favourable suppliers to control costs have been the tools used to ensure vehicle manufacturers stay afloat financially.
Here in South Africa the local automakers still face challenges as an outflow from Trumps ‘tariff-driven economy’ as well as from unique setbacks such as the closure of Arcelor Mittal’s long steel plant that was a major source of raw material for the industry.
Then there is the general downturn in the SA economy mixed with a tsunami of affordable new vehicles arriving from China and India besides a general deindustrialisation in the composition of income generators. Manufacturing contributed 25% of GDP in 1994 and now the percentage has crumbled to only 15%.
It will be very interesting to hear what solutions to the motor industry’ plight are put forward when the industry gets together at naamsa, The Automotive Business Council stages, its AutoWeek in Gqberha at the beginning of October.
By Roger Hougton
