Dave Leggett | 19 May 2004
Interesting chat with Steve Young from AT Kearney yesterday afternoon about ‘Indego’ – the ‘Next Generation Car Company’. What are we talking about here? A cheap car for sure; lean and flexible manufacturing; direct distribution from manufacturer to customer; multiple assembly plants close to market; a mobility package that reflects whole life costs; extensive outsourcing - low vertical integration; a new brand with a ‘clubby feel’ - a little like smart or Mini; a car that is ‘good enough’ to meet the market need rather than ‘best in class’. And the high operating margin claimed (21.7% which compares with 16.7% for super-profitable Porsche) has a lot to do with retaining customers for high margin peripherals way past the traditional industry pattern of first-owner then gone.
And we’re talking single flexible platform, four models (straddling segment B through C) and ultimately, 250,000 units annual production – but if you set that against global B and C seg annual sales of around 20 million units, maybe that is not such a lot. The company hangs on to its vehicles from production to scrappage – eight years. Customers are on two or three year contracts, depending on what they want.
Typical customers? Steve emphasised that we’re not talking bottom of the market or barrel scraping here. The thinking is ABC1s, but people without a big technical interest in cars and maybe an emphasis on certain demographics – single women, young families. They just want a simple mobility solution and maybe there’s a brand reassurance element too.
He took me through the whole concept – it’s a holistic approach but Steve pointed out that elements of it along the value chain could be stripped out if necessary.
Is anyone going to turn Indego into reality? Steve said that the financial case has been made and the model that ATK has constructed would meet conventional investment criteria. But let's face it - the project isn't a bad intellectual exercise for a management consulting company. Can't do any harm with clients or potential clients.
How new is all this? Steve acknowledged that some of the ideas have been around before, but a lot of work seems to have gone into the whole picture and fresh look that is Indego. And some of the impetus for the work has certainly come from Martin Leach (and I wouldn’t mind betting that Jac Nasser would have liked to have a pet project like this on the go during his days at Ford).
Incidentally, he mentioned that Martin Leach is just completing his Italian language immersion course before taking up his Maserati position on June 1st. Molto bene!
I seem to take my camera with me everywhere I go these days (see below). Berkeley Square in London where ATK has offices is one of the city's finest Georgian (18th century) squares (there’s even a song about the place - ‘A nightingale sang in Berkeley Square…’). There’s a smart Bentley outlet there too – Jack Barclay. A black Continental GT was being backed out of the entrance as I walked past. Nice motor. The green in the centre of the square was a picture of tranquillity – people reading newspapers, picnicking or dozing, in the late afternoon sun. One enterprising chap had even set up a hammock (and no, that's not me inside it).
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