General Motors is simplifying the options available on new models to lower product development and manufacturing costs, raise quality and improve inventory turnover.
Speaking in an analyst call, Alan Batey, GM’s Executive Vice President and President, North America, said that GM is working hard to “have a very disciplined approach” to inventory levels and that product development can drive that and lead to lower costs in product development and also in manufacturing.
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He cited the example of the new Chevrolet Cruze. “We’ve been doing a lot of work to make sure that we have the most uncomplicated and de-proliferated model strategy that we possibly can,” he said. On the 2015 model year Cruze – the model currently being replaced – Batey said that dealers in the US could order and build that vehicle in 266 different ways. “In the 2016 model year model you will be able to build that vehicle in just 22 ways. Why is that significant? It’s significant because obviously it lowers our product development cost and it lowers our manufacturing cost,” he said.
“It will also result in increased quality because people will get used to building obviously the same things. But importantly we believe that it will increase our sales and our sales turn rates because we’re going to have the right vehicle in the right place at the right time.”
Batey pointed out that most customers are going online and configuring their vehicle before they go to the dealer. “If you can configure in 266 different ways, the chance of arriving at one of our dealerships and finding that exact vehicle or a dealer able to swap in that exact vehicle was very difficult,” he said. “We believe that this strategy will really overcome that.”
