The way to make money selling cars is to share platforms, or so they say.
Indeed, sharing parts and vehicle design costs improves the economics of product development through the entire product cycle.
Europe's two most profitable mass-market automakers started the decade with the most consolidated platforms. PSA/Peugeot-Citroen annually averages 195,000 vehicles per platform and Volkswagen group averages 225,000, said forecaster DRI-WEFA in its recent OEM sourcing strategy study.
In contrast, troubled Fiat Auto averages only 80,000 units per platform.
But in the long run, strong brands and product differentiation and excellence may be more critical to profitability.
BMW has the second highest profit margin per car in the world despite having per-platform production of just over 100,000 units per year. That's well below the global annual average of 125,000 units per platform, but BMW's brand image lets it charge premium prices.
As European consumers have become wealthier, their tastes have shifted and their freedom to express those tastes in their purchases is growing.
Commodity cars are a declining business in Europe. Prestige brands will increase their share of European sales from 16 percent in 2000 to over 20 percent by 2008, according to DRI-WEFA. The growth will come at the expense of traditional mainstream brands.
The traditional heart of the mass market, the upper-medium segment led by the Opel/Vauxhall Vectra, Ford Mondeo and Volkswagen Passat, is shrinking fast.
The share of traditional upper-medium segment cars fell from 17.3 percent of European sales in 1993 to just 13.3 percent in 2001, and is still falling, DRI-WEFA said.
These are not bad products. They are widely recognized as well-designed and well-executed vehicles. But the segment has been carved up by luxury-brand product expansion and new concepts such as small minivans.
Even mass-market automakers are trying to create vehicles that transcend basic transportation needs to reflect desires and lifestyles.
Automakers can keep costs down through efficient sourcing, platform sharing, and productive and efficient plants. They are essential, but only defensive efforts.
What really builds profitability over time is the product. Strong products underpin the long-term development of brand premiums that ensure profitability.
* Edmund Chew is an Automotive News Europe staff reporter