Detroit Tries It The Japanese Way

Shared platforms and parts save time and money, but the Big Three are years behind

General Motors Corp. Vice-Chairman Robert A. Lutz had reason to feel proud. Facing a crowd at the Detroit auto show in early January, he announced that GM would soon start selling the Pontiac Solstice, based on the handsome concept roadster that stole the auto show two years ago.

And the company would save money by reusing the skeleton beneath the Solstice's sleek body for its upcoming Saturn coupe -- and maybe for the sporty Chevrolet wagon called the Nomad. "GM is managing its product development more efficiently than ever," he declared.

It must hurt Lutz's pride to know that Japanese rivals -- especially Honda Motor Co. (HMC ) -- have outpaced Detroit using this same strategy. General Motors (GM ), Ford Motor (F ), and DaimlerChrysler (DCX ) have diligently studied how the Japanese engineer more cars for less money, using a similar set of chassis and frame parts to create a common vehicle architecture, or "platform." But the U.S.-based carmakers have yet to really master this art, which involves assembling an attractive mix of cars and sport-utility vehicles from components already in the parts bin. Says Wesley R. Brown, an analyst at Los Angeles auto researcher Iceology: "We're just beginning to see the fruits of [Detroit's] new systems."

Failure to close the gap with Japan could hurt the Big Three down the road. Consumers want the freshest models, and Detroit tries to serve them by redesigning its passenger cars roughly every seven years. But the Japanese have shortened that vehicle life cycle to five years -- in part by relying on platform-based development, which allows them to conserve both cash and engineering resources. Toyota Motor Corp. (TM ) has amassed a net cash hoard of $16.5 billion and spends $14 billion a year on research and product development -- twice what either GM or Ford spends. These trends have led to a profusion of foreign models that Detroit is unable to match. As a result, U.S. carmakers could see their share of the market drop from 60.2% in 2003 to 56.5% by 2006, warns Iceology. The platform approach, in other words, is no longer simply an idea to explore. "We have to do this," says Philip R. Martens, Ford's group vice-president for product creation in North America. "The market is hypercompetitive."

NOT SO NIMBLE. By some calculations, the Japanese today are where GM hopes to be in 2005. Honda currently builds four very different vehicles on the Civic platform that it redesigned in 2001. In addition to the Civic compact, it makes the CR-V "cute ute," the boxy Element SUV, and the Acura RSX sports coupe. All four were brought to market in the three years following the redesign, with combined sales hitting 535,000 last year. Toyota can work nearly the same magic. It developed its Sienna minivan, the Lexus RX 330, and the Highlander crossover SUV using a modified version of the Camry sedan platform. GM, on the other hand, only recently unveiled plans to build multiple vehicles on its Chevy Cobalt compact platform (table). "The Big Three still are not pushing the envelope," says Joseph Phillippi, president of AutoTrends Consulting.

They are learning, however. Motown's top brass used to boast that nearly every part in an overhauled model was different from its predecessor -- never mind that all those changes drove up costs and took time to engineer. In past decades, only a small percentage of parts were reused from one generation to the next. Now, Lutz wants to raise that to 40% to 60% -- about on par with the Japanese. As GM develops the next-generation Chevy Silverado and GMC Sierra pickups for 2008, for example, it aims to reuse much of the existing platform. That should cut development costs in half, to nearly $3 billion.

For Detroit, such plans carry built-in frustrations: Even as GM saves money by carrying over some parts on its next-generation Silverado, its frame and the truck plants aren't flexible enough to make all the adjustments the designers want. At last year's Detroit auto show, the Chevrolet Cheyenne pickup concept was voted best truck by a panel of designers. The truck looked macho, with high window sills and a tall bed. And the windshield was pushed forward, pulling up the dashboard and leaving lots of room in the cabin. GM tried to make the bold styling and advanced proportions work. But its underlying pickup-truck platform wasn't flexible enough to handle the design changes. Lutz now concedes that "there's a limit on how far you can change the manufacturing process."

On the bright side, GM is putting its global resources behind its platforms, mining its European and Asian affiliates for vehicles, engines, and architectures that can deliver new cars to North America. A few years ago, Lutz happened to drive the Subaru WRX -- one of the best low-price sports sedans on the market -- and loved its precise handling and fast engine. GM owns 20% of Subaru, so Lutz was able to order up WRX parts quickly for a car on the drawing board at its Swedish Saab unit, the sporty 9-2X.

SLOW PROGRESS. Ford is on the same page regarding the consolidation of platforms. Martens learned about the approach while working at Ford's Mazda Motor Corp. affiliate from 1999 to 2002. Since returning to Ford's Dearborn (Mich.) headquarters, he has been on a mission to limit needless reengineering of parts. Ford engineers now choose from among just 4 steering wheels instead of contemplating 14, as they did in the past. And Martens has merged six separate vehicle-development groups into a single team, speeding decision-making and encouraging parts sharing. That has helped shave Ford's vehicle-development time -- a measure that is independent of the vehicle life cycle -- to 21 months, down from 29.

The idea, says Ford Chief Operating Officer Nicholas V. Scheele: "Engineer it once, use it often." And that goes for whole car architectures. Over the next eight years, Ford plans to use the Mazda 6 sedan platform as the base for 10 new vehicles. This base will spawn the Ford Futura family sedan and different versions for its Lincoln and Mercury divisions, as well as some future SUVs and minivans.

That strategy will take years to play out, however. At the moment, Ford still makes its Taurus sedan, Freestar minivan, and crossover SUVs on different platforms. Honda, in contrast, builds its Odyssey minivan and Pilot and Acura MDX SUVs on the same platform, and it will soon add a pickup truck. And all of these share many parts with the Accord sedan.

Chrysler is in this game, too. Three years ago, almost every one of its vehicles had its own platform. Even when the company decided to build the PT Cruiser on the Neon chassis in 2000, Chrysler couldn't reap the full benefits: Unable to assemble the cars in the same factory without making a huge investment, the company had to build the Cruiser in Mexico and the Neon in Illinois. Now, Chrysler Group CEO Dieter Zetsche wants to base the company's entire fleet of cars, trucks, and SUVs on just four platforms, down from 13. The consolidation will help Chrysler cut its five-year vehicle-development budget from $42 billion to $30 billion, he says.

Can Detroit catch up with Japan on versatile platforms? With cars like the Solstice, GM has shown that it can create attractive models on a budget and spin them into families. But matching Japan on speed and efficiency is still far down the road.

By David Welch, with Kathleen Kerwin, in Detroit

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