General Motors will massively streamline its basic automotive architectures from 26 to just 4 by 2025, which could save the company billions in production costs.
The move by Chief Executive Mary Barra is intended to simplify the engineering and manufacturing of GM's future cars and trucks, while enabling the company to deliver better-differentiated designs more quickly to customers around the world.
The savings on components, tooling and other manufacturing-related expenses could be enormous, but such a massive overhaul of development and production processes is "incredibly disruptive, expensive and painful," said Morgan Stanley auto analyst Adam Jonas, and requires "a well-oiled machine, culturally, managerially and financially."
Barra's 2025 strategy envisions GM developing four highly flexible and scalable "vehicle sets" to cover front-wheel drive vehicles, from the compact Chevrolet Volt to the full-size Impala; rear-wheel-drive vehicles, from the sporty Chevrolet Camaro to the luxury Cadillac CT6; crossover and sport utility vehicles, and trucks.
"It's something we've been working on for more than a couple years," Barra told reporters on Wednesday. "We've done extensive benchmarking (and) there's been tremendous progress made already."
GM's vehicle-set concept employs some common components and structures, which will save engineering, purchasing and tooling costs, while allowing the automaker, at least in theory, to better tailor individual models to regional markets and specific sectors – a small crossover for China, say, that might share some basic parts, but not sheet metal, with a mid-size sedan for Europe.
Other automakers are well ahead of GM in this regard – US rival Ford expects to be building most of its vehicles on just nine platforms by the end of 2015.
Some industry experts are skeptical of GM's ability to implement such a sweeping plan.
A former GM executive, who did not wish to be named, said: "You are not going to get from a large rear-wheel-drive Cadillac to a Volt, crossovers, large SUVs and full-size pickups with four architectures/platforms/component groups, call them what you will."
While GM's vehicle set concept sounds relatively simple on paper, it involves variations of three different modules – the engine compartment, the passenger compartment and the cargo compartment – with provisions to change such specific hardware as engines and suspensions to match vehicle size and type, as well as market segment and geographic region.
It is "a pretty amazing transformation" of GM's processes, said Mark Reuss, who succeeded Barra in January as head of global product development. "This is the key to unlocking scale and (meeting) specific customer requirements around the world," he told investors on Wednesday.
Former GM executives who spoke with Reuters on condition of anonymity raised questions about the cost and competitiveness of the vehicle-set concept, but noted that Barra and Reuss have the technical background and "chops" to pull it off.
While the transition to the new processes could be expensive, once the systems are in place, the company may not exceed the current $15bn it spends each year on engineering, R&D and capital equipment, said one former executive, adding: "Those bills are already pretty significant."
Another said Barra's new vehicle-set strategy "is basically about keeping GM in the ballgame. It's not going to put them ahead."