Reports last week suggested that General Motors is undertaking an extensive overhaul of its vehicle development process that will include designing its global vehicle fleet around just a few building blocks. Global product development chief Mark Reuss told Reuters that the company is aiming for up to 2.5 million units in sales per year from a variety of models built on the same platform as the Chevrolet Cruze, for example, according to the report. Under this process, updates to exterior styling and electronic features will happen more often, and GM intends to eventually use over-the-air software updates (GM already updates its infotainment systems in this manner. The Opel Adam includes an entertainment system operated via smartphone, which can be updated based on app selection. This also applies to satellite infotainment systems in the US, accessed via OnStar). Ammann added that the new scheme will spread engineering and research costs for a given lineup over millions more vehicles, a move that could make platforms last more than a dozen years.
The move by GM can be seen as part of a greater strategy within the industry of consolidation onto fewer platforms with huge volumes, or ‘megaplatforms’. The strategy of the megaplatform essentially reduces the vehicle to a series of parts that are then given set parameters wherever possible. This level of standardisation reduces R&D expenses and engineering times as it makes modules for different vehicles interchangeable. As a design parent, GM has 25 active platforms in 2016; by 2020, IHS Automotive forecasts that this will decrease to 20 platforms.
As modular architectures advance, it will require massive future investments; this is expected to continue to speed consolidation and alliances amongst OEMs. The average volume per platform for all major automakers increases through 2020, with most using fewer platforms to support that volume but offering more vehicles derived from each platform. Making these platforms last longer is the next stage of increasing their efficiency.
Tie suppliers in
In addition to this, the trend toward platform efficiency has the potential to reduce the number of unique engineering bases, reducing complexity and lifetime costs in production. In order to accomplish the change, GM will increase annual capital spending to about USD9 billion through 2019, up from USD7 billion in 2014. Between 2016 and 2019, capital spending will increase to between 5% and 5.5% of revenue, up from 4.4% in 2014. Spending will then fall closer to 2014 levels as a share of revenue and will also be directed to new priorities, Ammann reportedly told Reuters. In this context, the growth of the megaplatform can be seen as a way of applying further pressure on suppliers to reduce prices, with the promise of not just larger contracts, but longer ones as well.
The move by GM can also be seen in the context of a new purchasing scheme announced last year that forgoes conventional supplier bidding and focuses more on an analysis of the suppliers' facilities and costs. Suppliers who agree to be part of a new programme, called the One Cost Model, will receive long-term contracts from the automaker for periods ranging up to the life of a vehicle. In return for these lengthy contracts, the automaker will not seek bids from other suppliers.
Under the programme, suppliers looking for business from GM allow a team of the automaker’s engineers and purchasing executives to evaluate its factories and costs data. The evaluation, which GM calls activity-based costing, assesses material costs, labour, scrappage, production cycle times and other costs. GM then meets with the supplier to discuss the evaluation and a potential agreement. The One Cost Model programme further requires suppliers to identify fresh cost-cutting opportunities from time to time.
IHS Automotive forecasts that GM will shift to Vehicle Strategy Sets beginning in 2018, with the Opel Corsa first on the GLOBAL DELTA/D2XX platform. We forecast that by the middle of the next decade, GM will move to four core sets including front-drive products sized from A to E segments (VSS-F A; VSS-F B/C; VSS-F D/E); rear-drive products for Cadillac sized from C to E classes (VSS-R); body-on-frame truck (VSS-T); and high-roof, front or all-wheel-drive unibody SUVs (VSS-S).
