TO THE EDITOR:
Are OEMs clueless? With the advent of autonomous vehicles, they should stick to what they do well, but with a twist.
Automakers should design their vehicles to be remanufactured several times over their life. Registered vehicles will markedly drop as autonomous vehicles are employed eight to 10 hours per day vs. the legacy vehicle employment of one to two hours per day and 150,000 to 200,000 miles during a vehicle's lifetime. As a result of retaining the legacy design, the provider of autonomous services will be required to replace vehicles every one to two years; depreciation would become the largest cost driver for the service provider.
OEMs should focus their energies on designing vehicles to be remanufactured, retain their ownership as a supplier to the service provider and perform the remanufacturing process, which will be a three to four times greater volume than new-vehicle production, which will drop by 70 to 80 percent. The profit margins for such a business model will exceed the current model by 100 to 200 percent.
The driver of the material increase in profitability of remanufacturing is that depreciation costs could be easily controlled and the depreciation cost per passenger mile would be less than experienced in the legacy model. Also, note that the automakers, by controlling ownership of their autonomous-focused vehicles, will be able to control the intellectual property of their millions of lines of code of their firmware software.
RON GIUNTINI, Principal, G35 Software, Lewisburg, Pa., G35 is a cloud-based application software company. The writer has experience in remanufacturing supply chain management.
