E.U.:PAG effort to share costs hits hurdle
By Mark Rechtin
Automotive News / September 29, 2003
FRANKFURT -- Ford Motor Co.'s Premier Automotive Group has grown cool to one of its original tenets - to save money by sharing platforms across its four brands.
Instead, Jaguar, Volvo, Aston Martin and Land Rover executives will focus on sharing technology and components. Each marque also is attempting to stretch its own platforms to generate more models within the individual brand.
"The dogma of platform sharing has been replaced by a more flexible, intelligent approach," says Richard Parry-Jones, Ford's chief technical officer and head of global product development, in an interview here. "You will see more sharing of components but less sharing of hard points."
This new strategy rejects conventional wisdom that sharing platforms can generate big profits by slashing production costs. It also underscores mounting concern with PAG that too much commonization can undermine brand identity.
Already, Jaguar has been stung by criticism that its X-Type and S-Type sedans do not differ enough from their platform mates in the Ford Motor family.
"We still need economies of scale, but it's more important to keep the consistency of product philosophy and product taste," PAG Chairman Mark Fields says. "What's important is to maintain the esprit de corps of the brands."
Three share platforms
Three PAG vehicles - the Jaguar X-Type, Jaguar S-Type and Volvo S40 with its upcoming derivatives - already share platforms with various vehicles in the Ford family. Next year, Volvo's P2 platform - the bones of the S60 sedan and XC90 sport wagon - will be the basis of the Ford Five Hundred and Freestyle.
But additional platform sharing will be the exception rather than the rule. Executives say sharing platforms across the four luxury brands - with their different product, powertrain and factory schedules - has been too complicated. The partners have found it more practical to share components, engineering and testing.
"Can Volvo and Jaguar share platforms?" says Bob Dover, the outgoing president of Jaguar Cars Ltd. and Land Rover. "Maybe not, but they can share brakes, HVAC systems, fuel systems and alternators."
That can save as much money as sharing the floorpan assembly, Dover says. "You scavenge parts from the parts bin when you can't afford the tooling, and justify what you need to make a (marque) special."
But with Ford's earnings under pressure, PAG's strategy may not yield enough profit, says Laurie Felax, vice president of Harbour and Associates Inc., a manufacturing con******cy in Troy, Mich.
Last year, Ford decreed that the luxury group should contribute 33 percent of Ford's projected pretax profit of $7 billion in 2005. It is unclear whether that target still stands - the old target included Lincoln, which no longer is part of PAG.
Gain came from Volvo
The luxury group generated a profit of $166 million in the second quarter. Insiders say the entire gain came from Volvo.
"If I have that many different brands, I need to get a bigger bang for the buck," Felax says.
She says sharing platforms could save hundreds of millions of dollars, and done correctly, it wouldn't hurt brand image. "I can maintain the image of (the individual marque) because the customer has no idea what's underneath."
But the luxury brands are developing their own platforms.
Aston Martin no longer will share underpinnings with Jaguar. Instead, one platform will be the basis for all Aston Martin products.
Jaguar is considering the adaptation of the new XJ's aluminum body for the next-generation S-Type. The company does not want the next S-Type to share a Ford platform.
Volvo wants to use just two platforms and two assembly plants to
The next Land Rover Discovery platform will be the basis for a vehicle named the Range Rover Sport. Despite its name, the vehicle will bear little in common with the Range Rover, which was developed with former owner BMW AG.
David Thursfield, Ford's executive vice president of international operations, says PAG must aim for "intelligent integration" of the brands. That means finding savings in areas that don't undermine brand identity.
"We need to use our technical leverage so that we don't reinvent the wheel four times over," he says.
For example, Jaguar can add diesels to its lineup by borrowing technology from Ford rather than engineering an engine from scratch.
Aston Martin can defray the cost of engineering the DB9 by borrowing Volvo's crash facilities. And Land Rover can escape its costly deal to buy V-8 engines for the Range Rover from BMW. Instead, Land Rover will rework Jaguar's V-8.
"People give us a hard time about sharing components instead of entire platforms," Parry-Jones says. "But multimedia, navigation systems and wiring harnesses alone cost more than $1,000 per car, and the potential for savings can swing as much as 40 percent."
Dover says the brands must reduce overlap and waste, but it can take a long time to generate savings. For example, Jaguar and Land Rover want to share powertrains.
The two brands have three V-8 engines and three six-cylinder engines between them, even though total production volume is only 300,000 units. "That's just crazy," Dover says.
For the next generation of engines, Jaguar and Land Rover will share one V-8 engine and one six-cylinder engine.
But engine families typically are redesigned every 10 to 12 years, so the switch cannot be made quickly.
Focus on product plans
Rather than look to share future platforms with other Ford operations, Dover says Jaguar first must focus on its own product plans. One vexing question: Should the next S-Type use an aluminum body?
Dover says the car could run down the same assembly line as the next XJ and XK at Jaguar's Castle Bromwich assembly plant. That would make the line more cost-effective.
On the other hand, an aluminum body - rather than the current steel version - would increase the cost of the S-Type's engineering and raw materials. That's a 30-year bet that Jaguar must get right. That's the life span of a new press shop that Jaguar must consider when it plans its manufacturing strategy, Dover says.
The four brands that make up PAG appear determined to preserve their autonomy. And that militates against any widespread effort to use common platforms.
In a recent interview, Volvo Car President Hans-Olov Olsson suggested that platform development was a brand prerogative that he will defend vigorously. He said: "It's up to the Volvo organization to do what we believe is right for Volvo."
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My next Ford.....