Volkswagen’s component-sharing strategy has proved a successful way to reduce its manufacturing costs. However, this means a faulty component affects a large number of vehicles and a recall [such as this week’s one to replace faulty ignition coils in 850,000 cars worldwide – click here for story] is costly. On top of this, consumer awareness of this strategy reduces brand value.
Volkswagen, Europe’s largest carmaker, is to recall as many as 850,000 cars due to potential ignition problems. If it arises, the problem affects the vehicle’s running, and potentially reduces power output. The setback could affect VWs, Audis, Skodas and Seats fitted with 1.8 litre turbo, V5, V6 and W8 petrol engines built between 2001 and 2003. This news of the faulty ignition coils has sent shares in the company into decline.
Volkswagen, more than any other car manufacturer, has embraced the strategy of platform-sharing, in which a single chassis is used to make a number of different cars, and it has used the same approach with its engines. The 1.8 turbo engine, for example, is fitted to VW‘s Golf, Bora (Jetta in North America), Beetle and Passat models; Audi‘s A3, A4, A6 and TT; Skoda‘s Octavia; and Seat’s Leon. This is a total of 10 different model lines in all.
Recalls of the remaining engine variants – the V5, V6 and W8 – will affect fewer vehicles, but will still amount to a significant number. The V5, in particular, has been used for several years, and is fitted to the Golf, which is VW’s biggest-selling model, and the Seat Toledo.
Component-sharing undoubtedly reduces manufacturing costs. However, any defects can prove extremely costly, as they will in this case. Volkswagen suffered a similar problem last June when it had to recall 950,000 cars worldwide because of brake problems. This latest recall can only damage consumer confidence in the brand further.
The policy of component and platform sharing can also detract from the brand value, as customers become aware that Seat’s £15,000 Leon Cupra shares its chassis, engine and many other parts with Audi’s £25,000 TT.
SOURCE: Datamonitor COMMENTWIRE (c) 2003 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.
