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Study urges bigger role for suppliers

FRANKFURT — Car companies should give more new-model development responsibility to suppliers and focus on issues such as brand management, a study says.

If suppliers developed and produced the majority of components and sometimes even assembled vehicles, a car company would save money and could concentrate on brand definition, styling and packaging, said Juergen Gerlach, managing partner at Accenture GmbH, which conducted the study.

“This makes a lot of sense economically, and customers would benefit greatly,” said Gerlach, who is responsible for Accenture’s global automotive consulting division.

“Just look at V-8 engines in German cars,” he said. “It cost Audi, BMW and Mercedes-Benz ($651 million) each to develop their own, and the customer can’t tell the difference.”

The three German brands should have considered using a single V-8 engine developed and produced by a supplier, Gerlach said.

“Then each manufacturer could distinguish the basic engine with its own motor management system and put a distinctive engine cover on it,” he said. “This would result in enormous synergies in supply and procurement, cost savings in research and development, and economies of scale.”

The concept is not new. It echoes author James Womack’s prediction in his 1990 book, The Machine That Changed the World.

What is new is that many auto executives believe the scenario is either possible or probable by 2010, according to a recent Accenture poll of 500 senior auto executives.

More than 60 percent expect a fundamental restructuring of the value-added chain, from r&d and manufacturing right through to distribution, dealer network and after-sales relationships.

“We can see a far more dynamic approach by today’s automotive leaders toward these issues than formerly,” Gerlach said. “But we also see the industry’s 100-year history was not sufficient preparation for the radical changes manufacturers face in the next decade.”

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