DaimlerChrysler AG expects to save about $100 million annually by sharing information with Hyundai and Mitsubishi on the parts sourcing for a new family of global engines.
DaimlerChrysler will use that savings to pay for premium features, such as variable valve timing and electronic throttle controls, on the family of 1.8-, 2.0- and 2.4-liter engines. Engine production begins in Dundee, Mich., next summer.
All three companies are collaborating on the engine project, with nearly identical plants being built in Korea and Japan. Each company will tune versions of the engines for their own specific applications.
Bruce Coventry, president of the three automakers' Global Engine Manufacturing Alliance, said Monday at the Management Briefing Seminars that project managers from the automakers used an "open book" pricing approach when sourcing parts for the new family of four-cylinder engines.
The $100 million figure was arrived at after comparing what it cost DaimlerChrysler to produce four-cylinder engines in Saltillio, Mexico, for the Dodge Neon, Chrylser PT Cruiser and other cars, Coventry said.
Each automaker, Coventry said, placed parts such as pistons and camshafts, on a table and told the other partners what they paid for each component. "We shared sources, bundled volume and then we went shopping together," he said.
Coventry said the automakers also were able to save money by:
- Buying three sets of manufacturing equipment at once to outfit the plants in Michigan, Korea and Japan.
- Outsourcing everything that isn't core to manufacturing the engine block, cylinder heads and crankshaft.
- Using only proven technology in the new family of engines.
- Used the best ideas from each automaker and set up a system where each partner shared the computer language and programs; this helped cut development time.
- Took a commodity approach to purchasing such components as fuel injectors, camshafts and pistons.
Coventry said that engineers working together found and eliminated mistakes, which further saved time and development costs.