Christian Streiff, less than nine months into the president’s chair at PSA, may not have any history in the motor industry, but he is certainly a man who can spot trends and be bold in response to them.
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What catches the eye in his strategy document presented in Paris on Tuesday is that the average age of models in the showrooms must come down from 4.2 years to 3.2 years.
To a certain extent, that is a trend that is already embedded. So fast is the fragmentation of the market that just by ensuring that you have a new car in every new category ensures that you launch more than you did in the last cycle and hey presto, the average age starts to fall.
Some of the mainstream models and the successful classics may reach a grand old age as they did previously, but there will be more streams in the mainstream.
But either way, the ramifications for the design engineers are considerable and the way to examine what those are is to take Streiff’s own definitions of what is meant by a “model” and what is meant by new.
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By GlobalDataIn the three years to the end of 2006, there were two “new concepts”, four “line-up extensions”, nine “model renewals” and seven “restylings”.
The engineers tell us that the definitions are these:
- New concept: something like the first MPV or the first SUV;
- Line-up extension: introduction of a hardtop convertible to an existing full range;
- Model renewals: ditching the 206 and providing the 207;
- Restylings: a Streiff word for “facelift” or more commonly of late, “re-fresh”.
So now here is the give-away that explains the change of emphasis:
In the three years to 2010 there will be five “new concepts” (more than double), five line-up extensions (little change), 18 model renewals instead of nine (wow) and just one “restyling” rather than seven.
Isn’t this all going to be desperately expensive? With the market get more crowded all the time, demand falling and margins getting skinnier would there not be more virtue in throwing all the effort into more equipment on fewer cars rather than swelling the number of exterior shapes? The cost of dies for the presses is one of the largest expenses in a new model.
The answer to that from the engineers is interesting. They see considerable advantage in continuous renewal because simulated testing is getting cheaper and easier. A basic platform will do about twelve years, or the life of a new model and that model’s first and only “model renewal” without exceeding the 3.2 year average age of those two visually-differentiated cars.
The computer power available for simulated crash testing is now “phenomenal” according to one materials scientist, so the total cost of a fresh design is falling quite fast.
While the second take on the old platform is being designed, there is the opportunity to continuously upgrade features and optional equipment. Increasingly, a redesign is an opportunity to take cost out.
That has to work for suppliers too because three quarters of the vehicle by value is purchased from outside while 60% of the renewal is carry-over from the original platform.
It will be interesting to see how it works out in practice and whether those who lead the pace of model renewal find themselves in pole position in the market.
But one thing that Streiff will have noticed is what the financial analysts have been using as a valuation tool for some time. The average age of the model line-up has become a very good comparative guide to the earnings performance of competing manufacturers.
Rob Golding
See also: FRANCE: Streiff outlines PSA plan to 2015
