Platform Sharing: Risky Business

In the 1950's, when I was a boy staying up late to study Hot Rod magazine instead of algebra, I was confused by one salient question which has stymied philosophers for decades.

Why do there hafta be so many different parts to build cars that are so similar?

A few years later, after a couple months on the Chrysler Belvedere assembly line, I worked my way up to a gravy job sub-assembling fuel pumps. It is here, in the relative tranquility of quota-based piece work, that future great issues of automotive engineering are conceived.

"Why doesn't one pump fit all the cars?", I opined to my neighbor, a redneck kid with 1960's hair down to his collar.

"Aw, can the rocket-scientist bs, will ya. Go back to college if you're so smart."

Today, 50 years later, the big news is that through something called "platform sharing", automakers will save billions by utilizing common components, rather than separately sourcing multiple redundant vehicle architectures.

Boy, that was quick. Does this mean that someday American cars will have six-speed automatic transmissions?

What's a Platform?

A car's platform is the base of the vehicle, a core set of components. Auto builders have begun to call this "vehicle architecture."

"Platform" refers to the floor, plus maybe a bulkhead or two, which determine the vehicle's structural strength and crashworthiness.

Electrical architecture, chassis, subframes, suspension, drive train type and position, brake, fuel, and exhaust layouts, and steering geometry, combine to define an automobile platform.

The rest of the automobile is engineered around those basic building blocks.

So a company could have an architecture for small front-wheel drive cars, a platform for larger front-wheel-drive cars, another for rear-wheel-drive autos, a crossover CUV, and a larger base for trucks and truck-based SUVs.

Platforms consume a big share of the engineering resources that go into a new model. Developing a new platform could cost half a billion dollars. This includes a new powertrain and re-tooling costs in the assembly plant.

Some builders enlarge the platform concept to include processes, technologies, and personnel associated with the architecture.

Toyota has organized its product development group around an "executive chief engineer" structure. A dozen executive chief engineers, who are basically platform managers, oversee some 50 vehicle programs.

So Toyota effectively revolves around about 12 basic platforms.

Sharing the Wealth

Spreading development costs among multiple products makes obvious sense. Since the underlying architecture is invisible to most consumers, multiple vehicles can be based on a single design.

Platforming is quickly becoming the norm, as the overbuilt car industry struggles with globalization, and reaches for economies of scale.

Shared basic components make cars alike, so model differentiation requires superficial changes in styling, options, and ads to create brand awareness.

To build more models on fewer platforms, product differentiation skills are required. Weakly distinguished products, alike but distributed as different brands, risk earning the "badge engineering" epithet.

Capacity Utilization

Much of the cost of a new model car involve tooling and the factory. The more cars you build on a given assembly line, the lower the fixed cost per unit.

Production runs have been shrinking for years, with idle plant as high as 30% globally.

I remember when the Ford Mustang sold 1.1 million cars in it's first two years of production.

Today's top product, Toyota Camry, moved about 430K units in the U.S. last year.

Flexibility, building more than one platform, and several models, on the same assembly line, allows highly profitable 3-shift operation.

Restricting the number of basic platforms in versatile modern factories allows auto manufacturers to produce more niche models.

For instance, Chrysler builds Chrysler 300, Dodge Charger and Dodge Magnum, on their rear-drive LX platform, at one location.

Formerly, a model was profitable only if it sold in the hundreds of thousands. Now cars can be profitable when fewer are sold.

Bandwidth for Globalization

Globalization presents challenges to the overbuilt motor vehicle industry.

Every auto maker must evolve a global architecture strategy for worldwide platform sharing. They must sell the same multinational "world" cars, built off the same platforms, in as many regional markets as possible.

However, regional markets have been very demanding of products tailored to local tastes and budgets. Fuel prices vary across the globe, cars built for the US market will be too big and thirsty elsewhere.

The lack of market acceptance of Cadillac BLS in Europe, Pontiac GTO in the US, and Jag X-Type in both markets, illustrates the risk of lowest common denominator thinking.

General Motors' Epsilon platform shows the challenge.

Epsilon, introduced in Europe as the 2002 Opel Vectra and 2003 Saab 9-3, is targeted at the heart of the worldwide automobile market. This is "Camcord" country, dominated by Toyota and Honda sedans.

GM plans to build Epsilon-based vehicles with over a dozen variations.

This platform defines mid-size vehicles from GM's Chevrolet, Saab, Saturn, and Pontiac divisions for the foreseeable future.

Shared platforms must be designed from the beginning with enough "bandwidth" to spawn a range of distinct products.

When vehicles are too similar, so that consumers begin to notice, the carmaker has created its own competition.

Engineering and design must create different identities for each product, or the brand premium for upscale variants will shrink.

If the platforms "tunable" components, like steering and suspension, are flexible, engineers can change the character of an automobile based on them.

Consider GM's Epsilon-platformed Chevrolet Malibu, very similar to the Saturn Aura.

But the Malibu looks different, and doesn't drive like an Aura, which is tuned for Euro-style handling. Chevy's version will be tuned a bit softer.

Nissan's Turnaround

The urgency of this technical coalescence is illustrated by the turnaround at Nissan.

When Carlos Ghosn took over as Nissan CEO in 1999, the company was on the verge of bankruptcy.

Nissan had 15 different platforms in the late 90's, but based the dramatic come-back on a range of new products based on just two platforms

The Front Mid-ship (FM) platform gave birth to the hot rear-wheel-drive products; 350Z, Infiniti G35, M35/45, and FX. The FF-L platform is the basis for the front-wheel-drive Altima, Maxima, Murano, and Quest.

As a result Nissan now makes predominately front-drive FF-L platformed cars, and Infiniti rear-drive FM based vehicles.

The lesson was not lost on other builders. Brands under one roof began to blend.

Volkswagen was quick to employ this strategy with New Beetle, Jetta, Golf, AudiA3, Audi TT, SEAT Leon and Toledo, and Skoda Octavia sharing the A platform and 65% of their components.

Few consumers would notice that the pricey Audi TT is coplatformed with the proletarian New Beetle.

Likewise, VW's C platform underlies Passat, Audi A4, Audi A6, and Skoda Superb.

VW D platforms are the basis for Phaeton, Bentley Continental GT, and Audi A8.

This is well executed architecture apportioning.

The Law of Averages

Auto companies are quick say everyone benefits from platform-sharing. But it is not a panacea for the surplus of brands and capacity.

A $500 million new platform has a manufacturer's eggs all in one basket.

Sharing platforms risks bigger recalls as common design defects ramify through an entire group.

This strategy must be executed carefully or it will compromise brand and product integrity for fleeting cost savings.

Shared components cannot be optimized for each vehicle as perfectly as dedicated components. When many models are sourced off a common platform, product identity can vary inversely with the number.

Niche models, like the big-bang-for-the-buck Nissan 350z, are limited in refinement by their bloodline. The FM chassis is stiff, giving the Z a characteristic flat cornering style. But that stiffness, required to support heavier brothers, adds weight, anathema to sport enthusiasts. The result is a slight hesitation when the throttle is mashed, and a constant need for power upgrades.

There is also a dumbing down process going on, exemplified by Ford's failure with Jaguar. Cross breeding Jag with Ford just didn't work. Premium brands require distinct identities, sometimes this is intangible. Disturbing a luxury brand is a business risk.

The less expensive, and therefore lower margin, cars in the platform group are the beneficiaries. The 350Z is a bargain sports car due to diffusion of costs among platform mates.

Likewise Toyota Camry benefits from sharing its bloodline with Avalon and Lexus ES300.

Audi TT, exquisite for the price, would be impossible today without shared mass-market parts.

This the consumer value that well executed platform sharing can deliver.

Badly executed, it devolves to badge engineering.

Conclusions

Platform sharing is here to stay.

Enthusiasts who value the uniqueness of their favorite ride will continue to be disappointed, no doubt.

But I fear for the future. The casualty here is leapfrog innovation.

Risks and costs associated with product development on a global scale deter even the brightest from investing in real change.

The auto industry has never been a technology leader, having copied much of it's DNA from advancements in aviation.

To me, platforming reinforces the industry's conservatism at a bad time: steel stamped cars with internal-combustion piston engines are 100 years old.

For consumers, the message is: study the DNA before the wedding. Cars don't come with nutritional labels. Knowing what platforming underlies your intended purchase is one key to a satisfactory overall experience.