TRAVERSE CITY, Mich. -- Just as the industry warms up to the idea of niche vehicles, here comes the next big thing: the microniche.
A microniche is a model that sells only a few thousand units a year but that an automaker keeps alive for a halo effect on a brand.
Chris Theodore, vice chairman of ASC Inc. in Southgate, Mich., said automakers must learn how to make such small-volume products profitable or at least sustainable.
"It's going to take a different approach to manufacturing," Theodore told an audience here at the Management Briefing Seminars last week.
He said the number of North American models selling fewer than 10,000 units a year more than doubled in the past six years, from 54 in 1999 to 117 in 2005.
While automakers fondly recall the days when they expected 250,000 sales from a model, the reality is that volumes are falling as model variations proliferate. Last year, the average nameplate sold only about 48,000 units, Theodore said.
ASC and other companies are attempting to sell automakers on the idea of outsourcing low-volume vehicles. The argument is that outside parties have lower overhead and more flexibility than a traditional auto assembly plant. "Paint is the crucial roadblock," Theodore said, referring to the strategy of building third-party assembly lines. "Paint plants are very expensive."
Experts say the typical cost of a paint plant can run as much as $250 million.
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