In the News

Ron Harbour
The Wall Street Journal (26 August) quoted Ron Harbour in an article about Ford's use of Wi-Fi technology to program custom features and options onto cars as they are produced. This allows individualized options to be offered - ranging from power-seat preferences to how quickly the transmission shifts gears - all without the auto maker having to spend money on variations of the same parts. Ron comments: "Auto makers always wanted customization, but they didn't want to pay for it."

Peter Bosch
Spiegel Online (23 August) and Manager Magazin (25 August) quoted Peter Bosch in two articles related to the Moscow Motor Show and the recovery of the Russian automobile market after last year's sales slump. Peter says: "Due to its longstanding strong growth rates, Russia was and will remain the center of attention for many car manufacturers. Although the biggest driving force for growth is Asia at the moment, countries like Russia counterbalance the slower dynamics in the established and developed EU markets such as Germany, France, or England." Regarding the fact that the top-selling cars in the Russian market originate from the domestic production, Peter adds: "On-site production is an absolute must. The import works only in the case of luxury cars – and this especially from Germany."

Ron Harbour
The Detroit News (24 August) quoted Ron Harbour in an article about the late-2009 recall of Toyota cars. Ron says the quality problems don't seem to have been caused by sloppy manufacturing: "I don't believe there was any degradation in quality at the plants that led to this whole thing. My conclusion is that it was a supplier quality and Toyota design issue."

August Joas
Automobilwoche (23 August) interviewed August Joas about the current rumors of Volkswagen's possible buy-in into Alfa Romeo – one of the brands of the Italian car manufacturer Fiat. August says: "Alfa Romeo is a very useful completion for the Volkswagen Group because the brand conveys – among other things – southern emotionality." The German press agency dpa-AFX as well as FTD Online quoted August.

Ron Harbour
The New York Times (12 August) quoted Ron Harbour in an article on GM’s strong quarterly earnings and the automaker’s naming of a new chief executive. Edward E. Whitacre, Jr. will step down on Sept 1 and will be succeeded by Daniel F. Akerson. Since GM’s reorganization in Chapter 11, GM has been solidly profitable. Says Ron, “When you look at all of the changes made, if they have some decent product on the market they can’t help but make money.” GM is now preparing to file for its initial public offering.

August Joas
Dpa-AFX (6 and 8 August) interviewed August Joas in a news brief on the positive half-year results achieved by German premium car manufacturers. August expects the trend to continue: “I think that there will be great growth opportunities for German manufacturers in China also in the future, and the markets in Europe and Northern America will regain their stability, too.” He points to several reasons for their success: “On the one hand, the mega groups benefit from exports. On the other, OEMs have systematically done their homework – for example by reviewing their product range and their costs. If the manufacturers want to achieve a return on sales of about 10% in 2012, they will have to continue these developments.” Automobilwoche, a leading German automotive magazine, and numerous news sites quoted these statements in their news coverage.

Matthias Bentenrieder
Handelsblatt Online (4 August) carried an interview with Matthias Bentenrieder on the challenges car manufacturers face due to product recalls. Matthias states: “Expensive and image-damaging product recalls can be avoided through integrated quality management.” Companies should encourage a “zero-error philosophy” among its staff. If an error with a high-risk potential occur does occur, Matthias says, communication is critical. “Customers, car dealers, and the public need to be informed. It is important to…communicate as openly as possible, explaining how the problem emerged in the first place and why it will not happen again in the future.”

Peter Bosch
Focus Online (26 July) carried an interview with Peter Bosch about the reasons German automotive manufacturers rebounded from the crisis in record time. Peter says: “ Germany… is rapidly growing as an export market. In addition to a weak euro, which helps car exports, automotive manufacturers worked hard for this success in the past year. They developed new models, drove innovations, and reduced costs significantly.”  As for the future of mobility, Peter believes that cars will remain important for personal mobility and as an emotional product. “But we will experience a shift in consumer behavior: People will pay for mobility solutions instead of hardware ownership. The best example is the success of Zipcar in the US.”

Matthias Bentenrieder
Financial Times Deutschland (22 July) quoted Matthias Bentenrieder in an article about the development of new sales models for electric vehicles. According to Matthias: “E-cars establish a completely new value chain. Hence, the traditional car dealership will gradually become less important.” Asked about the automotive manufacturers’ agenda in this emerging field, Matthias states: “E-car owners will need a package, including charging infrastructure and services. It is up to manufacturers to provide these solutions.”

Peter Bosch
Süddeutsche Zeitung (17 July) quotes Peter Bosch in an article about the expected transformation of automotive manufacturers into urban mobility providers. Peter says: “It is easily imaginable that it does not always have to be [your] own car and, moreover, not always the same one…. The perfect example is the US car-sharing company Zipcar. Their success is not about lending out everyday base cars to everybody but rather about being a member of a club that entitles you to use trendy lifestyle cars, which you can pick up directly at the roadside.”

August Joas
Financial Times Deutschland (13 July) interviewed August Joas in an article about the growing competition for German car manufacturers from Chinese brands. Industry experts estimate that China will represent the largest market for luxury limousines in the long term. August says: "While big and luxurious vehicles are increasingly stigmatized in Europe, their importance as classical status symbols rises constantly in China. German car manufacturers can strongly benefit from this market potential."

Christian Heiss and Marc-Oliver Schell
Automobilwoche (12 July) cites Christian Heiss and Marc-Oliver Schell in an article about supplier risk management in the automotive industry. Christian says: “Buyers normally lack a structured supplier risk management system in raw-material sourcing. And few have adequate solutions on hand if serious problems occur.” The risk analysis of sub-suppliers is also often inefficient. “The risk profile of sub-suppliers is not transparent," states Marc-Oliver. "Many suppliers therefore cannot evaluate how stable or prone their business partners are to crises and how likely a breakdown is.” To overcome these challenges, companies need to establish an effective supplier risk management plan, including emergency fall-back plans with an alternative network of suppliers and early-warning indicators.

Romed Kelp and Sven Wandres
Trans aktuell (2 July) carried an article highlighting the preliminary findings of the Oliver Wyman "European Truck Customer 2010" study on mobility services and quoted Romed Kelp and Sven Wandres. Romed says: "The crisis has left its mark. Customers are more demanding today. Therefore, truck manufacturers have to more strongly adapt their offering to individual customer needs." The study found that mobility services play a key role for truck customers today - therefore, reduced downtime, quick and quality-focused repairs, as well as mobility guarantees are major purchasing and satisfaction criteria for truck customers. Sven adds: "In the future, mobility service providers will have to distinguish themselves more clearly from competitors by highlighting their unique selling propositions and by differentiating their range of services more strongly." The full study will be presented at the 63rd IAA Commercial Vehicles trade show in Hanover on September 22.

Fabian Brandt
Produktion (24 June) carried a guest commentary by Fabian Brandt on the question of whether Toyota had lost its identity as a role model for the automotive industry over its recent major quality issues. In Fabian’s opinion, the principle of continuous improvement and the very strong quality orientation always have been core elements of Toyota's business design. He says that the drastic actions taken by Toyota, e.g., the sales halt of one Lexus model in the US, reflect an effort to correct shortcomings that occurred during the aggressive expansion of the company. Fabian is convinced that Toyota will emerge even stronger from its current crisis and will clearly remain a role model for the industry.

Jan Dannenberg
€uro (23 June) exclusively featured a study led by Oliver Wyman in cooperation with Rothschild on mergers and acquisitions in the automotive supplier industry. The article deals with the financial recovery of the Continental Group after two years of crisis. More and more automotive suppliers are focusing on growth strategies again, and acquisitions will play a key role. For the next three years a wave of consolidation is expected, which will lead to increasing profit margins. Jan Dannenberg, one of the study’s authors, says: "The automotive supplier industry as a whole is experiencing a constant upward trend. We expect global revenues for 2013 to reach pre-crisis levels." He adds: "The first quarter of 2010 was better than most automotive suppliers had expected. And the next months will even be better."

Romed Kelp and Sven Wandres
dpa-AFX (22 June) published a news brief highlighting the preliminary findings of the Oliver Wyman "European Truck Customer 2010" study about mobility services. The preliminary results of this pan-European customer survey reveal that mobility services play a key role for truck customers today. Thus, reduced downtime, quick and quality-focused repairs, as well as mobility guarantees, are major purchase and satisfaction criteria for truck customers. Independent service providers have a market share of 40% in the mobility services sector. If OEMs want to prevail in the marketplace, the study concludes, they must adapt pricing and services packages to meet individual customer needs. The full study will be presented on                                                                                                                                            22 September 2010 at the 63rd IAA Commercial Vehicles trade show in Hanover. Numerous German news sites have mentioned the survey findings in their news coverage, quoting study authors Romed Kelp and Sven Wandres.

August Joas
Financial Times Deutschland (18 June) interviewed August Joas about the decision of GM Group to manage the restructuring of Opel after its sudden retreat from previously stated demands for guarantees from several European governments. August says: "Opel's basic problem lies in non-differentiated products and in the weakness of its brand image. The battle for state subsidies, which lasted several months, has damaged Opel's image. Furthermore, the customer cannot experience the brand in a way that is as authentic and exclusive as he/she should be able to. It is a vicious circle: If the number of Opel units sold remains at the current low level, the brand will not be attractive enough for car dealers, who must therefore to take other brands into their portfolios and showrooms in order to survive."

Ron Harbour
International Business Times (15 June) quoted Ron Harbour in an article about the planned Tesla Motors IPO. Regarding Tesla's partnership with Toyota, Ron says: "It's an opportunity where you can envision them working on [electric vehicles] together, where they could get their engineers together. Tesla gains from the expertise of Toyota's experience."

Christian Kleinhans
Automobil-Elektronik (8 June) carried the cover story of the automotivemanager I/2010 - Christian Kleinhans' article on electric mobility and the new power play in the automotive industry. The article, based on the Oliver Wyman study "Electric Mobility 2025," deals with current trends and future opportunities for e-mobility. Christian explains that technology alone will not determine the fate of electric vehicles in the marketplace. A new understanding of future customer priorities, as well as the related product and service ranges, will play major roles. As a result, the customer, with his or her individual needs, mobility budget, and purchasing willingness, will become the focal point of strategic considerations.

Lars Stolz
Spiegel online (1 June) interviewed Lars Stolz on the ongoing low-cost vehicle boom. Lars states: "The low-cost, compact-vehicles segment is definitely growing. While the total market has declined worldwide by 12 percent in the past year, the low-cost, compact sector has increased by 13 percent - and this trend continues. With 70 percent of the production volume, Asia - and especially China - remains the world market leader in the low-cost, compact segment." Lars adds: "A significant expansion of the product range comes along with this development. By 2012 we expect the premiere of more than 50 low-cost, compact vehicles - about 20 in this year alone." Lars emphasizes that most low-cost cars are manufactured for domestic markets and are not designed for export to mature car markets.

Fabian Brandt
dpa-gms (28 May) quoted Fabian Brandt in a news brief on the growing trend toward cross-over concepts in the automotive industry. Fabian says: "Today, customers expect their new car to meet their increasingly individual and specific demands. This expectation has been encouraged by the automobile manufacturers themselves as they offer more and different variants. Hence, by now, instead of two or three body styles OEMs often offer four, five, or even more different derivatives on a single platform." Fabian explains that Oliver Wyman expects this trend to continue: "Even if not all the cross-over concepts are successful, the push to occupy niche markets will go on - the OEMs have opened Pandora's box."

Ron Harbour
The San Jose Business Journal (28 May) quoted Ron Harbour in a story about the NUMMI auto manufacturing plant, which will now be used by Tesla. Ron says that life, death, and rebirth "is fairly unusual for an auto plant. This thing has been down and back many times, and the reason Toyota walked away is it's a very high-cost plant, and the state of California does not make it conducive, cost-wise, to running a plant." Commenting on the advantages of using a "recycled" plant, Ron notes that, while Tesla plans initially to use only a fraction of the space it's purchasing, the automaker "will be able to save a lot of time and capital costs by using an existing facility, and one that hasn’t been in mothballs for years."

Ron Harbour
The San Jose Business Journal (27 May) quoted Ron Harbour in a story about the recently announced cooperation agreement between Toyota and Tesla. Ron says that it's understandable the companies might maintain an informal agreement at the outset and could try working together "and see what might be possible." He adds that the companies might "use bits and pieces from each other until they see the genesis of something more formal." Ron provides the example of Tesla struggling in the past with getting a reliable transmission, while Toyota has its own transmission division: "It's an opportunity where you can envision them working on that together, where they could get their engineers together. Tesla gains from the expertise of Toyota’s experience, and Toyota gains by selling their transmissions to Tesla."

Christian Kleinhans
Spiegel online (3 May) interviewed Christian Kleinhans about the pro and cons of state subsidies for battery-electric vehicles – one of the topics discussed at the German e-mobility summit held this week. Christian states: "At the moment, state subsidies for the purchase of battery-electric vehicles are superfluous. Vehicles with plug-in-hybrid or range-extender-technology will dominate the electric fleet over the next 10 to 15 years. Because of the high purchase costs combined with their limited range, purely battery-electric vehicles - functioning completely without a combustion engine - will not be the optimal choice for private customers in the forthcoming years." With regard to a possible support of the industry in the development of future car generations, Christian underlines: "Here, state subsidies are useful in order to take the lead. The subject relates to the whole German automobile industry and it is not a matter of only a few millions, but of billions, especially because other nations are determinedly pushing the topic forward."

Christian Kleinhans
Handelsblatt (3 May) quoted Christian Kleinhans in an article about the German e-mobility summit held this week. Christian agrees with the position of the German government. He is strongly in favor of not subsidizing the purchase of battery-electric vehicles: "Anyone who is willing to spend 40,000 euro for a battery-electric vehicle does not need to find 5,000 euro in his glove box." Nonetheless, government financial support in research and development will be indispensable in Christian’s opinion: "In the long term, electric drive will be decisive for the future of the German automobile industry. Thus, clear statements of support and a program to push e-mobility far more effectively than before are now required. If Germany wants to remain a major player in the automotive market, investments of about 15 billion euro will be necessary over the next ten years." With regard to marketing issues, Christian states: "In addition to focusing on environmental benefits, manufacturers should sell battery-electric vehicles using design, emotion, and fun – as true life-style products. The vehicles must stand out from the competition and be easily recognizable as electric cars."

Ron Harbor
The Toledo Blade (2 May) quoted Ron Harbour in an article about Toledo's two GM plants. Ron says: "Toledo Powertrain is a no-brainer for GM. It's a good plant in a good location. And to Toledo's credit, they've never had a culture where things were good enough. They're always trying to improve." Ron added that, while no auto plant is truly safe from closing in a globally competitive marketplace, both the Toledo and Defiance plants had made themselves attractive to GM because of their productivity.

Christian Kleinhans
Financial Times Deutschland (29 April) quoted Christian Kleinhans in an article about the hopes of German energy companies for the establishment of a Germany-wide electric service stations network. For the energy producers, the attractiveness of battery-electric cars lies in their function as electricity storage facilities. Christian says: "The costs for a single charging station will not be compensated for by the electricity sales. For the time being, public charging is not an important factor. At first, the recharge should be enabled in the private garage at home and at the workplace."

Jan Dannenberg
Automobil Produktion (20 April) quoted Jan Dannenberg in an article about automotive suppliers as well as OEMs and their challenge in avoiding expensive product recalls by means of traceability. By this procedure all components used during manufacturing are easily and positively identifiable. Jan states: "In order to react quickly after the identification of an error, all interfaces on the value chain have to be perfectly organized and accurately documented." Eventually, traceability not only saves money but also acts as a legal insurance policy for manufacturers.

Christian Kleinhans
Focus (19 April) interviewed Christian Kleinhans in its cover story about the rise of the Chinese economy. Christian points out the role of e-mobility in China’s route to the top: "China wants to take advantage of the technological revolution represented by the transition from the internal combustion engine to the electric drive-train in order to take the lead in the field of electric mobility. In 2030 the Chinese nation wants to produce 80 percent of all battery-electric-driven vehicles in the world. This has industrial and hence labor market dimensions for all traditional automaking nations."

Le Monde (8 April) summarized the findings of Oliver Wyman's electric vehicles study, which predicted that in 2025 electric and hybrid vehicles will make up 16% of the automotive market. The study cites several reasons for slow development of sales of electric vehicles: High production costs and auto pricing, as well as a lack of infrastructure, are the main barriers preventing the market from taking off.

Fabian Brandt

WirtschaftsWoche (29 March) quoted Fabian Brandt in an article about the German car repair chain Auto Teile Unger (ATU). The company has been through several changes of strategy and is in the red. Now, ATU wants to return to its original value proposition: fast service and original-brand parts at a discount price. Fabian says: "Basically, this is a good decision. Fast and easy repairs are the business with the highest returns. For complex repairs you have to invest significant money in workshops and employee training." When KKR bought ATU in 2004, it was with the idea of taking the company public one day. But currently, an IPO is not in sight. Fabian explains: "A convincing story for investors is missing. At the moment it would be very difficult to draft such a story."

Stephen Weisenstein

The Detroit Free Press (28 March) quoted Stephen Weisenstein on U.S. automakers studying the development process that created the $2500 Tata Nano. Stephen says: "A clean-sheet approach has a significant impact on a company's ability to keep a design inexpensive. The Nano's cost is the result of both process and product. It's a simple design with a low level of content and inexpensive materials."

Michelle Hill

The Detroit Free Press (27 March) quoted Michelle Hill in an article about GM's plan to build more of its hot-selling Chevrolet Equinox and GMC Terrain crossovers: The company will expand one Ontario plant's body shop to produce extra Equinox bodies that will then be shipped about two hours to another Ontario plant for paint and final assembly. Michelle comments: "I cannot think of one plant right now in North America that is shipping bodies to another plant for assembly."

Christian Kleinhans

Focus (22 March) interviewed Christian Kleinhans on the topic of e-mobility. In two articles – one about government subsidy programs and the other on the possible success of niche manufacturers in the e-mobility market, Christian says: "In the long run, e-mobility will be a decisive factor for the competitiveness of the automotive industry. Hence, countries are competing against each other in handing out subsidies to buyers." Christian, however, is convinced, that: "Somebody who spends 40,000 Euro on a battery-electric vehicle (BEV) does not need to be subsidized with 5,000 Euro from the government. The subsidy should instead go to the manufacturing companies for industrialization of key technologies." Regarding the success of smaller manufacturers such as Tesla, Think, or CitySax, Christian says: "With such small expected production numbers, there are always enough interested buyers for a new technology. But the art lies in transforming the BEV into a mass mobile – at an affordable price level."

Christian Kleinhans

Die Welt (20 March) quoted Christian Kleinhans in an article about the role of e-mobility in the future of the Chinese auto manufacturing sector. Christian says: "Chinese car manufacturers have joined the race. For the brands in the Middle Kingdom, building vehicles with conventional drives is just a compulsory exercise with bought or copied technology. China is already focusing on battery-electric vehicles. Compared with Volkswagen, Toyota, or Ford (whose technologies are in their infancy still), the Chinese can catch up or acquire an advantage." According to Christian, Chinese car manufacturers benefit from a clear governmental policy of support: "Politicians in Beijing repeat at every opportunity that China wants to dominate the world market for electric mobility." He adds that manufacturers also benefit from the reduced level of expectations by the Chinese population: "Somebody who knows only an electric moped expects less from his battery-electric vehicle than someone who switches from a Volkswagen Jetta."

Peter Bosch

dpa and dpa-AFX (17 March) quoted Peter Bosch in a news brief about the competition among car manufacturers for leadership in the premium segment. Peter says: "In the medium term, a return on sales of 10 percent is possible for German premium auto manufacturers. They succeeded in dominating the premium market on a worldwide level through innovation, quality, and design. At least in the next five years, manufacturers can look forward to significant growth. There is considerable potential, especially in the emerging markets." The news brief asserts that in order to remain profitable and competitive, OEMs will need to work together with partners in certain fields. Peter, however, does not expect mergers or acquisitions to happen: "We will rather see partnerships in individual projects, for example, like the engine co-operation between BMW and the French PSA Group."

Remi Cornubert

L'Expansion (10 March) quoted Remi Cornubert (MTE) in an article about the rise of Volkswagen in global sales rankings. Remi says: "The German group is complete, with a strong presence across all product sectors." Regarding VW's manufacturing advantages, he adds: "Since the end of 2002 and the establishment of VW's modular manufacturing strategy - focusing on common parts - they have overtaken Toyota in terms of standardization."

Christian Kleinhans

Handelsblatt (4 March) carried an interview with Christian Kleinhans (MTE) on the opportunities and risks of e-mobility. Christian says: "The electro drive will replace the combustion engine probably not before 2050. However, over the long run, the battery-electric vehicle technologies will decide the future of the automotive industry in Germany." With regard to up-and-coming automotive power China, Christian states: "To get to the top and to be able to remain there, it is important that Germany promotes the development and the industrialization of the key technologies required for the electric drive system."

Peter Bosch

Reuters (3 March) quoted Peter Bosch (MTE) in a news brief about the willingness of car buyers to pay more for small cars with premium attributes than for a comparable non-premium models. Peter states: "It is the same as for expensive writing instruments or watches. Why shouldn't this work for cars? Sufficient profits are possible through higher revenues; manufacturers should invest in their brand image to justify higher price levels. The more exclusive the reputation, the better. Everything in a car that does not contribute significantly to brand differentiation should be mass-produced through partnerships. By such marriages of convenience, costs could be kept down without undercutting each other's business."

Christian Kleinhans

dpa (2 March) carried an interview with Christian Kleinhans (MTE) on the future of electric vehicles from the Geneva International Auto Show 2010. Christian says: "The breakthrough for e-mobility will take a couple years because many battery-electric vehicles remain concepts, which are not yet suitable for the mass market. The hybrid drive has gained in importance and is now coming out of the niche segment. The near future belongs to the plug-in hybrid. This is the bridging technology to make electric driving simultaneously more suitable for everyday use as well as more affordable." Financial Times Deutschland (2 March) quoted Christian: "As a first step, battery-electric vehicles will come into the market only in homeopathic doses. In particular, the readiness of most customers to pay significantly more for an environmentally friendly car is not especially pronounced." Handelsblatt (3 March) quoted Christian: "The battery-electric vehicle is not yet a mass phenomenon. Even in 2020 electro-driven vehicles will only reach a market share in the single-digit range. But in the end, e-mobility will be a decisive factor for the competitiveness of the whole automotive industry."

Rémi Cornubert

Le Monde (17 February) quoted Rémi Cornubert (MTE) in an article arguing that government programs and auto manufacturer incentives are artificially inflating consumer demand for cars, a situation that will be hard for manufacturers to manage an end to. Rémi says: "Once consumers are used to being on a drip of promotions, it's hard to go back. And the attempts to generate sales at any price may in the long run have serious repercussions - it may harm a brand."

Rémi Cornubert

L'Usine Nouvelle (11 February) quoted Rémi Cornubert (MTE) in an article about Toyota's quality crisis. Rémi says: "This doesn't call Toyota's business model into question. On the other hand, they will be more draconian in their procedures and more demanding than ever in the choice of their suppliers."

Rémi Cornubert

Challenges (11 February) extensively quoted Rémi Cornubert (MTE) in an article about Toyota's quality crisis. Remi says: "Because their image had been so perfect, this affair will obviously tarnish it. Their competitors have already taken advantage of the situation by making promotional offers for people to trade in their Toyotas. This crisis is interesting because consumers used to believe that these things happened only to American or European carmakers…. The Toyota business model tries to extend Japanese culture and Japanese thinking to every country where it makes cars, but this incident has proven that it's both their strength and their weakness – the race to global leadership has exposed some of the Toyota model's limits. Still, Toyota knows how to learn lessons from its mistakes."

Christian Kleinhans

VDMA Nachrichten (8 February) carried a two-page bylined article by Christian Kleinhans based on the Oliver Wyman study "E-Mobility 2025." Christian points out that battery electric drive is unavoidable in the long term. However, high investment needs face a relatively low earning potential. Therefore, the German government will need to push for subsidies for R&D and industrialization with regard to electro mobility. Christian adds that although low production volumes are expected for the forthcoming years, a rising and innovative electro mobility market provides entry opportunities especially for the manufacturing industries.

Michelle Hill

The Detroit Free Press (5 February) quotes Michelle Hill in an article noting that General Motors is considering meeting increased vehicle demand by installing factory body shops that are largely manual. Michelle calls GM's thinking innovative and says it shows that the automaker is considering all options. She notes, however, that most North American factories use body shops that are almost entirely automated; she remains skeptical that GM will ultimately go through with plans to add capacity elsewhere because of the cost, noting that Chrysler faced similar challenges when it launched the PT Cruiser in 2000: "It was just selling like hotcakes, they couldn't make enough of them, then boom ... (too much) capacity."

Peter Bosch

Reuters (5 February) quoted Peter Bosch (MTE) in an article about the opportunity for the Volkswagen Group to learn from the current image crisis of the Toyota Group. Peter suggests: "In times of rapid growth, Volkswagen should focus on its successful quality culture. Especially when using identical components across product lines, great care must be taken to ensure the proven high quality level. Otherwise the cost advantage of a higher level of parts commonality can easily boomerang when a mistake occurs."

Christian Kleinhans

Die Welt (1 February) quoted Christian Kleinhans (MTE) in an article about the future of electric vehicles. Christian notes that many OEMs are planning to produce electric vehicles, but they face many obstacles. With regard to cost problems, Christian says: "In order to increase the attractiveness of buying an electro vehicle despite a considerably higher purchase price, state subsidies must flow. After the 100,000-Roofs-Program for solar collectors in the late 90s, a One-Million-Electro-Vehicle-Program would be necessary."

Peter Bosch

dpa (1 February) quoted Peter Bosch (MTE) in an article about the current image crisis of the Toyota Group due to the recall of 8 million vehicles with faulty gas pedal assemblies. Peter says: "The problems Toyota currently faces could become very expensive. Nevertheless, the competition shouldn't underestimate Toyota, because the OEM will surely recover."

Ron Harbour

The Dow Jones Newswire (27 January) quoted Ron Harbour in a column about Toyota's  recall of up to 2.3 million vehicles aimed at correcting sticky accelerator linkages, as well as the suspension of sales of models on showroom floors. Ron says that the financial cost will be substantial, "but that is only the half of it. The other half is the communications to reassure people that Toyota is still the same quality. There is no telling what the cost will be to that image. It's the automotive equivalent of what happened to Tiger Woods." He adds: "Other than cash flow, the sales suspension for a week won't be a big issue. If a buyer comes back in a week, then it won't be that severe. But if that customer buys a Ford instead, then it is a much larger concern and could be damaging to Toyota."

Peter Bosch

Manager Magazin (18 January) quoted Peter Bosch in an article about the necessity for Magna Group to reinvent itself in order to succeed in the global marketplace. Peter suggests that the large automotive supplier group should use its cash liquidity for acquisitions: "Magna should react quickly now. In the current crisis there are plenty of technologically excellent companies for sale."

Christian Kleinhans

VerkehrsRundschau (15 January) quoted Christian Kleinhans on the topic of the prospects for e-mobility in the commercial vehicle industry. Christian says: "E-mobility will come in the next five to ten years. But especially with the current crisis it's doubtful whether the commercial vehicle industry will be able to push the expensive technological development alone. That's why state aid is necessary." And with regard to competition from nations like China, Christian says: "If we don’t want to be overtaken on the right, state subsidies for battery electric vehicles have to flow also."

Fabian Brandt

ZfAW (January) – the leading industry publication for value chain in the automotive industry – carried a bylined article by Fabian Brandt on the Downstream Business. Fabian writes that – whether in leasing, financing, insurance, parts, service, or used cars – the list of revenue sources in the downstream business is long. In Germany, manufacturers renounce an annual additional operating income of up to 1.4 billion euro and neglect important strategic control levers by ignoring downstream business. He concludes that, with an integrated distribution system across all segments, manufacturers can significantly improve their profit and increase customer loyalty.

Christian Heiss
Handelsblatt (30 December) quoted Christian Heiss in an article about Oliver Wyman's "Supplier Risk Management" study, which found that insolvencies of small- and medium-sized suppliers will adversely impact the manufacturing and automotive sectors during 2010. Christian says: "The slight upturn predicted for 2010 will not be sufficient for many suppliers to survive. To overcome the challenges in 2010 and to gain competitive advantage, OEMs need effective supplier risk management, emergency plans, and early warning indicators."

Ron Harbour
USA Today (23 December) quoted Ron Harbour in an article about Geely's acquisition of Volvo. Ron notes that Geely, one of China's better-known automakers, could tap Volvo's safety expertise, including its advanced body structure know-how. He adds that the acquisition also shows how Chinese automaking is evolving, and that its success is less dependent on cheap labor. Ron concludes: "The Chinese are very close to that level where they can compete on a global basis."

Jan Dannenberg
Finance (8 December) quoted Jan Dannenberg in an article noting that many companies have changed their M&A departments into in-house consulting departments to optimize capacity and save costs. Jan notes that the core competencies of M&A departments are mainly focused on transactions and are not comparable to those required for restructuring consulting. He says: "A small internal department cannot compete with an international experienced consulting firm with more than 3000 employees.” Jan recommends consideration of a combined solution: "The in-house consultancy could provide process know-how and help reduce barriers within the company, thereby assisting management in implementing the solution."

Christian Heiss and Marc-Oliver Schell
The dpa newswire (6 December) carried an article by Christian Heiss and Marc-Oliver Schell based on the findings of Oliver Wyman's "Supplier Risk Management" study, which provides an outlook for 2010 for the automotive and manufacturing industries. Christian and Marc-Oliver write that reduced hours, an order backlog, and a financial cushion have so far helped many suppliers stay afloat. But in 2010 many OEMs in both industries will be challenged by procurement risks. Therefore, it is even more important over the next few years to protect against adverse effects by focusing on supplier risk management. The Oliver Wyman study was featured in more than a dozen key media outlets in Germany – an English language summary can be found here.

August Joas
Financial Times Deutschland (23 November) quoted August Joas in an article about the necessity for OEMs to realign their sales models after having neglected their own sales businesses for years. August says: "Sales being at present the focus of producers is due to the weakness of the markets." He adds that despite the obligation to reduce costs, sales directors must invest in new ideas: "In the future, the vehicle and the technology will no longer be the decisive factors in the purchase of a car; and sales strength will finally make a difference."

Peter Bosch
Automobilwoche (16 November) quoted Peter Bosch in a cover story about options for Opel's restructuring following GM's decision to retain ownership. Regarding a potential insolvency of Opel, Peter says he "can't imagine GM cutting off Opel's money supply." He adds that to do so would reopen public debate after the surprising GM decision to retain Opel. Moreover, GM would lose control over Opel to a bankruptcy administrator and initiate a process with an uncertain outcome for GM and for Opel. Regarding damage to the Opel brand over the last 12 months, Peter observes: "Certainly, the headlines of the last month were not beneficial."

Michelle Hill
The Wall Street Journal (3 November) quoted Michelle Hill in a story about Ford Motor Company’s return to profitability. Michelle says: "They're not reinventing the wheel for every new program, and that saves money. Changes to work rules now let union workers perform multiple tasks, allowing Ford to reduce the number of specialty workers and save time and money on the assembly line."

Ron Harbour
Audimobil (November), the in-house magazine of Audi, carries an interview with Ron Harbour about the Harbour Report and the measurement of Hours per Vehicle (HPV) in the premium segment. Ron says: "The secret for success in measuring Hours per Vehicle has been quality. As plants have improved their methods for building quality, the level of end-of-line repair has been reduced. The most successful companies in the industry have been those that best understand the balance between labor, automation, capital investment, and other tools of total output." He concludes: "Audi can drive labor content down for all its vehicles, but particularly for the smaller A1-A4 vehicles." Ron adds that, although some HPV gap may continue to exist between manufacturers because of premium-brand differences, it should be nowhere near as large as it is today.

Michelle Hill
The Kansas City Star (23 October) quoted Michelle Hill in an article about several US auto plants adding a third shift (i.e., running around-the-clock) to meet demand for popular models. Michelle says: "I think the main issue with three-shift plants is when they can get the preventative maintenance done, whether it's on the weekend or during breaks. With auto plants increasing their flexibility and the ability to produce different models, I think you'll see more three-shift operations as capacity continues to be taken out."

Christian Heiss
Automobil Industrie (12 October) quoted Christian Heiss in a cover story about how shrinking western markets and the increasing demand for low-margin compact cars are threatening Germany as an auto manufacturing base. Christian comments several times on consolidation, reduction of overcapacity, increased flexibility of production plants, and global production networks. Christian notes: “Wherever OEMs are not pushed into rigid cycle times and vehicle structures due to high levels of automation, they have to increase flexibility.” Commenting on “premium” compact cars, he adds: “Measured in hours per vehicle, there is big potential for optimization. Thirty percent fewer HPV are possible for premium medium-sized and luxury class.”

Remi Cornubert
La Tribune (10 October) quoted Remi Cornubert in an article about the future of electric cars. Remi says that Renault’s prediction that electric-vehicle market share will reach 10% by 2020 is overly optimistic. He says that electric vehicles will make up only 3.5% of auto sales by the end of the next decade.

Ron Harbour
The Warren OH Tribune Chronicle (27 September) quoted Ron Harbour in an article about auto parts maker Delphi emerging from Chapter 11 bankruptcy, which is expected in coming weeks. Ron says Delphi and other auto parts suppliers face the challenge of adapting fast enough as automakers adjust their production to fluctuating customer demand. He adds: “We know September (sales) will be down. The question is, what will the fourth quarter look like?”

Christian Kleinhans
Produktion (24 September) carried a bylined commentary by Christian Kleinhans based on the Oliver Wyman “E-Mobility 2025” study, which proposes a partnership between industry and the state to boost the technological edge of the German automotive industry. Christian writes that new collaborations and alliances should be established, i.e., vertical partnerships among manufacturers, strategic key suppliers, and research institutes, as well as horizontal partnerships among OEMs and suppliers to effectively and efficiently advance technology development and innovation.

Christian Kleinhans
The Wall Street Journal (24 September) quoted Christian Kleinhans in an article about FPL Group and Duke Energy deciding to replace their combined fleet of 10,000 cars and trucks with electric-powered vehicles starting next year. The article cited Oliver Wyman research which estimated the electric vehicle market share at less than 4% by 2025 and also found that manufacturing costs today for electric vehicles are 150% above those of a conventional vehicle. Christian says: “In the next 10 years, electric vehicles will be a loss-making proposition all down the value chain.”

Christian Kleinhans and Remi Cornubert
Oliver Wyman’s recent Electric Vehicles Study, released at the 63rd Frankfurt IAA Auto Show, has generated enormous media attention around the world. Study findings have been featured, and MTE Automotive practice partners have been quoted, on the dpa newswire and in more than twenty leading business publications across Germany. Christian Kleinhans also conducted two television interviews on this topic. In France, the study findings were quoted on the AFP newswire and in more than a dozen leading media outlets. Remi Cornubert also conducted radio and television interviews on this topic. A Dow Jones Newswire (17 September) story summarized the study and quoted both partners: “In the next 10 years, electric vehicles will be a loss-making proposition all down the value chain," says Christian. The study estimates that electric vehicles will comprise only 3.2% of the market by 2025, and that manufacturing costs today for electric vehicles are 150% above those of a conventional vehicle, with that margin narrowing to 60% in 2025. Remi adds: "The industry won't be profitable for a long time, but it will emerge totally modified and will owe its long-term survival to the technological revolution.”

Jan Dannenberg and Lars Stolz
OEM&Lieferant Jahrbuch (17 September) carried a bylined article by Jan Dannenberg and Lars Stolz entitled “Red Alert for Suppliers.” Based on the Oliver Wyman/VDA “Continuing Crisis or Rebirth of the Automotive Supplier Industry?” study, Jan and Lars give advice on how suppliers can see opportunities in the current crisis. They write that the focus through the end of 2009 is to lower capital costs and to safeguard the availability of capital within the context of financial restructuring. Key steps include strengthening the equity base, optimizing cash flow, and reducing borrowing costs. To reposition the business starting in 2010, the company’s entire financial structure must be realigned.

Automotive Design Europe (10 September) carried a detailed summary of Oliver Wyman’s recent Electric Vehicles Study. The study found that electric cars will remain more expensive than their conventional competitors for a long time, achieving only a 3 percent market share over the next 15 years. Key factors for the acceptance of electric cars were found to be driving range and cost. The study found that only 13 percent of potential customers would accept a range below 250 km, and that only 14 percent would be willing to pay more for an electric car than for a conventional one (unfortunately, in 2025 manufacturing costs for electric vehicles are still expected to be 60 percent higher than the costs of conventional cars). Regarding hybrid technology, the study found that by 2025 mild hybrid will be a kind of basis technology for medium to large size vehicles; fully hybrid will become a feature associated primarily with SUVs. The study concludes that, while automakers won’t earn a profit on electronic cars for many years, the market for innovative power train components, including lithium ion batteries, electro motors, and high-voltage power electronics, will reach €80 billion, or 7 percent of the entire component value creation of the automotive industry, by 2025.

Remi Cornubert
Challenges (3 September) quoted Remi Cornubert in an article about automaker Peugeot. Remi comments on synergies and competition between the Peugeot and Citroen models. He says: “The Peugeot 5008 compact MPV will more directly compete with vehicles outside of Peugeot Citroen because it is quite distinct from the Citroen Grand C4 Picasso. Also, these models have made great improvements in perceived quality, which is good for both brands, as it allows them to achieve economies of scale because they are based on the same platform.” In the same article, Lippincott’s Denis Bonan comments on Peugeot’s larger brand challenges: “The first goal of any brand is to cultivate a differentiation that is perceived by customers. At Peugeot, this differentiation is not yet evident.” Remi counters: “Peugeot does have several strong brand assets – a reputation for quality and reliability, a glorious racing past, and the lasting presence of several iconic models – aka “sacred numbers.’ ”

Fabian Brandt
The dpa newswire (30 August) quoted Fabian Brandt in an article entitled “Car scrapping programs: Necessary support initiative or waste of effort?” The article discusses the benefits of the German car scrapping program (Abwrackprämie) and discusses the consequences of the expiration of the program. Fabian notes that in France in the 1990s a similar initiative had nearly no long-term impact. However, he concludes: “In Germany, experts agree that the situation is different. Above all, the decision was correct from a macro-economic standpoint because the supplier industry was strengthened by this program. All in all, the program is worthwhile.”

Peter Bosch
KFZ-Betrieb (27 August) quoted Peter Bosch in an article about the Oliver Wyman/J.D Power study, entitled “Automotive Shopping During the Crisis,” which analyzes customer satisfaction with automotive sales processes and provides recommendations for automakers and dealers on how to optimize their sales and services. Peter says: “Those who methodically focus their activities on customer needs and significantly improve customer service particularly in the area of purchasing decisions will be the only ones able to weather the economic storm largely unscathed.”

Michelle Hill
Newsweek (24 August) quoted Michelle Hill in an article about Buick’s attempts to shed its old-fashioned, down-market image in the hopes of attracting younger. Michelle says: "They're doing everything right with Buick by moving it into this premium market. But it's going to take more time than what they hope for to change customers' minds." The article notes that while GM's other core brands - GMC, Chevy, and Cadillac - have clear identities, Buick's new image depends entirely on its forthcoming cars. Michelle comments: "If they can get consumers into the vehicles to test drive them and get them excited about it, people will be willing to pay a similar price for them as they would an Acura or a Volvo. GM has to get it right. They have no choice."

Ron Harbour
The Detroit Free Press (23 August) quoted Ron Harbour in an article about tooling automation company Comau, which is 100% owned by Fiat Group and seemingly well-positioned to bid on business with Chrysler as Fiat brings its small cars to some of Chrysler's plants in the United States. Ron says: "All things being equal, one might assume that Fiat would give deference to Comau. But I think ... they will have to compete for it."

Michelle Hill
The Financial Post (22 August) quoted Michelle Hill in an article asking whether European consumers will buy Canadian-made cars. Michelle says that the trend is still toward car companies building where they have a strong base of buyers, and Europe has enough unused capacity to fill its own plants without having to resort to Canadian production. She adds: "I don't see it expanding into the wave of the future. The cost to ship to the European market alone is huge."

Ron Harbour
The Associated Press (13 August) quoted Ron Harbour in an article about cautious efforts by U.S. automakers to increase production to meet the revived demand for new cars and trucks sparked by the Cash for Clunkers program. Ron says: "They're watching (sales) daily. No one's going to get caught with their shorts down again."

Ron Harbour
The New York Times (11 August) quoted Ron Harbour in an article about how General Motors must move quickly to recast its image and products. Ron says: "GM has no choice at this point. They have got to convince people that their cars are better and their brands are cool."

Rainer Münch and Jan Burgard
Automobil Industrie (3 August) carried a bylined article by Rainer Münch and Jan Burgard based on Oliver Wyman’s study entitled "Global Supplier R&D Benchmarking." Rainer and Jan analyze the key aspects of an efficient R&D strategy. They write that a good R&D organization is first of all differentiated by the fact that future development areas are effectively selected in the form of pre-development projects. The authors cite the three central criteria for sorting out new technologies: rapidity, cost effectiveness, and customer orientation. They also note that successful portfolio management in the R&D function is enabled by integrating different departments early in decisions.

Lars Stolz

Automotive News (3 August) quoted Lars Stolz in an article about the state of European auto suppliers. Lars says that overhead reduction has been suppliers’ common plan of action for the past year. He cites an Oliver Wyman survey which found that (1) 85% of suppliers will not be profitable in 2009, (2) most do expect to see an increase in revenues this year, and (3) only 20% forecast a return to 2007 economic levels in 2011. Lars predicts that North America will once again be a growth market for European suppliers: “U.S. business activities will still play a major role for suppliers, especially as European OEMs build their local supply base and try to establish natural hedges against currency fluctuations. For the remainder of 2009 and 2010, we see a deeper and more fundamental restructuring before suppliers start to realign themselves strategically with the emerging situation. North America still provides ample growth opportunities.”

Michele Hill

Ward’s Auto (17 July) quoted Michelle Hill about the Oliver Wyman’s decision to keep the Harbour Report private this year, following a vote by participating automakers. Michelle says: “We’ve had success with the European and South American reports being private, so we made the decision to make (North America) private. We’ve discussed the possibility [of making the report private] for several years and went back and forth. Some OEMs with good rankings wanted to go public, others private. This year, the majority wanted private.” Hill says participating automakers will be free to release information concerning their own companies but can’t disclose data referring to competitors.

Ron Harbour

The New York Times (15 July) quoted Ron Harbour in an article about the flexibility of Fiat’s Tychy, Poland, assembly plant. Ron says that the ideal combination of automated robots and individual workers has been critical to Tychy’s success. He notes that success is not as simple as the more robots, the better: “With people, you can change the mix [of models] in one day or one week. You can’t do that with robots.”

Michelle Hill

The Detroit News (14 July) quoted Michelle Hill in an article about the profitability of smaller cars. Michelle says: “[U.S. automakers] haven't been able to make money on small cars in the past." She adds that the game is beginning to change, citing recent concessions by the United Auto Workers that have made the automakers' U.S. factories more competitive, while advances in product development and manufacturing have further reduced costs.

Automobilwoche (9 June) quoted Fabian Brandt and Andreas Meyer in an article about the auto service industry and a recent Oliver Wyman study entitled “Current trends in the service business: The automotive crisis as opportunity or threat?” Fabian and Andreas say that the service sector contributes on average more than 50% of the profits of automakers. They note that smaller and less technologically proficient garages are extremely vulnerable now without a connection to a manufacturer or a system provider.

Ron Harbour

WirtschaftsWoche (3 June) carried an interview with Ron Harbour about the future of Opel. Ron says: “The GM/Opel production system is not responsible for the current corporate distress – the company has been making at least as much progress in the productivity of its plants as its competitors. The GM system is very close to Toyota, which is still considered to be the industry benchmark. However, the total capacity of the plants is just too high. In principle this problem could be solved in two ways: Option One – Opel reduces its manufacturing footprint and closes several locations in Europe, just like Ford has done already. Ford has only four large manufacturing plants left in Europe; GM still has ten. Option Two – Opel or its investors manage to increase the utilization of the plants by selling more cars or by producing cars for other brands in Opel plants. This is what the Magna concept is about – plants that have been recently updated, like the Rüsselsheim plant, should be flexible enough for that.”

Ron Harbour

Automotive News (1 June) quoted Ron Harbour in an article about flexible auto manufacturing plants that can quickly and easily change the model being produced. Ron says: “Those that are good at it have done it almost without fanfare.” He notes: “If you’re in the situation GM, Ford and Chrysler are in, it allows for a more thorough consolidation of capacity. To close one plant, take the product out and put it in another plant, the plant you send it to has to be flexible enough to build both vehicles. It allows for a faster and more orderly rationalization of capacity if you have flexibility in the plants you are going to keep.”

August Joas and Ron Harbour

WirtschaftsWoche (4 May) quoted August Joas and included an interview with Ron Harbour in a six-page article entitled "Rolling the Dice." The article deals with possible consolidation in the automotive industry – e.g., Opel with Fiat or Magna, General Motors in the possession of the State, and Daimler badly hurt and moving closer to BMW. The article argues that whichever combination emerges, the Volkswagen group has a good chance of being among the winners. August says: "We have been waiting for the consolidation of the automotive industry for years – and now it arrives quickly." He says that the most important survival/success factors are high production volume, strong brands, success in established markets as well as in emerging markets, technological know-how for alternative drives, and a solid financing and investor structure. August concludes: "VW best meets these requirements for becoming a big winner during the current industry change." In Ron's interview, he contradicts negative stereotypes about U.S. automakers: "The U.S. manufacturers don't even have to hide from the Japanese any longer. The irony is that the Big Three are as fit as they've ever been, requiring few working hours per car, with low production costs and plants that are flexible, and producing high-quality vehicles." Ron notes that GM, Chrysler, and Ford are unprofitable largely because of labor agreements they signed decades ago that committed to paying retirement and health benefits.

Ron Harbour
The Dow Jones News Wire (8 April) quoted Ron Harbour in an article about Fiat's potential costs to convert any Chrysler plant in the U.S. to produce its own cars. Ron estimated the per-plant cost between $200 million and $500 million given the age, location, and condition of suitable facilities. He noted that the bulk of the costs would come from renewing body and paint shops.

Fabian Brandt and Sven Wandres

Automobilwirtschaft (26 March) carried bylined article by Fabian Brandt and Sven Wandres entitled "Recapture Strategy in the Service Market." Fabian and Sven write that, with an average contribution margin of about 30 percent for manufacturers and more than 50 percent for dealers, after-sales is a crucial source of income for the automotive industry. Service, as an important customer touch point, is also a fundamental driver of customer satisfaction. The authors identify the decisive areas where manufacturers should act if they want to secure sustainable market leadership in after-sales service; they include a chart showing the agenda for profitable growth in after-sales and a sidebar summarizing eight trends in after-sales service. (This article was first published in Oliver Wyman's automotivemanager II/2008.)

Ron Harbour

The Associated Press (18 March 2009) quoted Ron Harbour in an article about General Motors plant closings. Ron says that many factors go into an automaker's decision to close a specific plant, and in many cases, they're difficult for outsiders to pin down. In the past the rational was clearer – a company would chose the oldest plant, or one with an unfavorable labor agreement. "Now, there are absolutely hundreds of criteria. What is the willingness of the work force there? What have they accomplished in terms of quality performance? There are a number of intangibles that you can't put a number to, and those are the tie breakers."

Ron Harbour

Automobil Produktion (March 2009) carried a cover story interview with Ron Harbour on the global auto industry. The industry outlook: "We are expecting a consolidation process unlike anything the sector has seen in a long time." What worries him: "The protectionism being initiated by some governments." Current sales levels: "We have possibly reached a point where the downward spiral is losing speed. The critical question is: How long will we remain stuck at the bottom?" Detroit Three productivity: "GM, Ford, and Chrysler are being placed in a completely false light…. The have made dramatic and very radical changes – in terms of improvements – in the past 20 years." The role of quality in competitiveness: "The key to success is always quality…. We have visited factories where more than 1,000 vehicles were waiting to be touched up. What's being done there is the most expensive, time-consuming and unproductive way to produce quality…. Being productive means: Do it right the first time!"

Jan Dannenberg

The dpa newswire (14 February 2009) carried an interview with Jan Dannenberg entitled "The automotive supplier crisis hasn’t reached its peak yet" that was carried in the business press across Germany and Switzerland. Jan discusses the crisis that automotive suppliers face in the coming months and forecasts how hard the sector will be hit by the economic downturn: "In the past weeks the first dominos fell. The peak of the bankruptcy wave will be reached in March." He notes that companies owned by financial investors or with a weak capital structure will be most severely affected. Jan also warns against the collapse of the financially stricken Schaeffler Group: "The fall of Schaeffler would lead to a meltdown in the automotive supplier industry. Schaeffler and Continental would be to the German automotive industry what Lehman Brothers was to the U.S. financial sector."

Michelle Hill and Jim Schmidt

Business Week (12 January 2009) quoted Michelle Hill and Jim Schmidt in an article about the production capacity of U.S. automakers. Michelle says that U.S. manufacturers don't have the "wiggle room" of foreign competitors in selectively reducing capacity: "To become profitable, U.S. automakers will need to close at least a dozen of their 53 factories in North America in the next few years." Jim notes that many Western European governments are giving their carmakers financial assistance, but they get the money only if they don't close plants at home: "Since the likes of Volkswagen and Renault-Nissan don't want to shut new, low-cost plants in the east, they're eyeing cuts in places like Spain, Portugal, and Italy where there is less political pressure."

Peter Bosch

Financial Times Deutschland (9 December 2008) quoted Peter Bosch in an article noting that Fiat CEO Sergio Marchionne says the automaker won’t survive without outside assistance. Peter argues that partnerships among manufacturers can significantly reduce development costs, and envisions a market two years from now with only six global operating car companies. He says: "After a history of unsuccessful mergers of large automakers, the future lies in alliances."

Ron Harbour

CNN TV's "Situation Room" (12 December 2008) interviewed Ron Harbour on the potential impact on auto parts suppliers if one of the Detroit Three automakers goes out of business. Ron says: "If one of those companies was to go down and to go bankrupt, it would have a huge impact on a supplier like Denso. It wouldn't take them down, because they're a big supplier and they're a big global supplier, but it would have a huge impact on the number of jobs in those plants. And, of course, the automakers that remain, like Toyota, would be concerned. Would it have an impact on the quality of their parts or the delivery of their parts? What would that mean to them? Would it cause any other kind of problems? So, they have spent a lot of time trying to plan for that contingency."

Remi Cornubert

Le Nouvel Economiste (4 December 2008) extensively quoted Remi Cornubert in an article about the U.S. auto industry, entitled "Too Big to Fail." Remi says: "If recent months have given the impression that the U.S. won't intervene to save its auto industry, that is best explained politically, i.e., the Republicans are seeking to slow the bailout programs and the Democrats still haven't assumed control. Regardless, seeing GM put the key under the door [i.e., go out of business] would be an economic and social cataclysm which no government could solve. It would be the same thing in France, which would seek to protect the national manufacturers on which depend, directly and indirectly, 10% of our active workforce."

August Joas

Newsweek (1 December 2008) extensively quoted August Joas in an article about government bailout of automakers and the future of the industry. Regarding the question of what cars and business models will survive, August says: "No one knows whether the future belongs to hybrids, electric cars, or ultra-efficient gas-powered models. It's another reason consumers are holding back, as they wait for new technology to hit the market. They want to get a better sense of what kind of new car will still have resale value once the technology switch proceeds and are uncertain how government plans to steer this process with taxes and incentives will affect the models they might like to buy." Regarding the potential for government bailouts, which in the past have propped up uncompetitive firms at the expense of competitive ones, August says "A smarter - and fairer - policy would be to prop up the market by subsidizing car buyers instead, letting them decide which models and companies deserve to survive."

Ron Harbour

The Dow Jones Newswire (28 November 2008) quoted Ron Harbour in an article about the manufacturing overcapacity of the Detroit Three automakers. Regarding plant utilization levels, Ron says: "They've been playing catch-up all along and finally were in pretty good shape [until the sales slump]." He notes that vehicle assembly plants get most of the attention when automakers lay off workers or shutter factories, but dozens of sprawling parts factories that supply engines, transmissions, and sheet-metal stampings are getting hit as well. Ron adds that plants which have been closed down completely still carry some costs. Regarding the prospect for a federal bailout, he notes that Detroit Three will be challenged to explain how they can be profitable in an industry on track to sell millions fewer vehicles than it did just a year ago: "They're going to have to be very aggressive."

Ron Harbour

Investor's Business Daily (14 November 2008) quoted Ron Harbour in an article about efforts by GM to avoid bankruptcy. Regarding the question of whether GM can turn a profit on smaller, more energy-efficient cars, Ron says: "They can be profitable with smaller vehicles"; he notes that GM has moved virtually abreast of Toyota in productivity. He adds that: "This is not the GM of old. It's very strong – other than the balance sheet." On the other hand, Ron also acknowledges that government investment or loans can't save an industry that cannot sell its products: "If sales don't turn around, all you're doing is delaying the inevitable."

Raymond Tsang

Agence France Presse (14 November 2008) quoted Raymond Tsang in an article about the effects of the global financial crisis on China's auto industry. Ray says: "The pace of growth slowing down is to some extent beneficial to the industry because we'll be taking out a lot of the inefficient capacity." He expects a wave of consolidation over the next 12-24 months in the fragmented sector, which has more than 100 automakers, many propped up by regional governments. Ray adds: "We'll be taking out a lot of the inefficient players or taking out a lot of products." He cautions, however, that companies should be careful about drastically cutting back on investment and R&D in China: "They really need to think about longer-term growth prospects in this market and try not to overreact to the current economic situation."

August Joas

Produktion (13 November 2008) carried a guest commentary by August Joas entitled "Don't Be Afraid." August writes that, despite the financial crisis and its severe consequences for the automotive industry, now is the time for action rather than fear. He emphasizes that the automotive industry has successfully overcome previous crises and emerged stronger from each one. August writes: "External governmental support can help the industry, but the real rescue comes from within. The crucial matter right now is to accomplish the balancing act between customer-orientation and cost-cutting." He proposes a model pipeline with high-mileage, environmentally friendly drive systems that are clearly designed to meet the needs of customers. August concludes: "Now is the time for acquisitions and partnerships aimed at jointly tackling development tasks or tapping new markets and acquiring new customers."

Michelle Hill

National Public Radio's "All Things Considered" (10 November 2008) quoted Michelle Hill in a story about a potential bailout plan for the Detroit 3 automakers. Michelle estimates that an additional 30,000 autoworkers will probably have to lose their jobs and 10 more plants will have to close. She says the job losses at dealerships and parts suppliers will be considerably bigger.

Romed Kelp

KFZ-Anzeiger (6 November 2008) quoted Romed Kelp in a story about the Oliver Wyman Truck Customer 2008 study, which recommends that, as the surging truck market comes to a halt, makers of commercial vehicles concentrate more intensely on cost-optimized, customer-focused product offerings. Romed says: "At the end of the booming market, it will again become vital for all manufacturers to focus more closely on customer needs and to improve their interaction with the customer. As a result, customers can be retained more easily and increased revenue per customer can be achieved." He adds that additional service offerings are particularly important: "Particularly in times of slowing economic growth, manufacturers' service offerings are important factors to support profitability. Service also has significant development potential – provided that the offers are professionally prepared and benefit both the customers and the manufacturers."

Matthias Bentenrieder

Financial Times Deutschland (5 November 2008) quoted Matthias Bentenrieder in a story about auto manufacturers' dealer networks being threatened by a wave of bankruptcies. Given the intensity of competition for customers in this industry, dealer troubles add a new challenge. Matthias says: "Many dealers have been operating at a subsistence level for years. Their death will come quickly if manufacturers don't intervene."

Remi Cornubert

Challenges (30 October/5 November 2008) quoted Remi Cornubert in an article about hard times for automakers Renault and PSA, which is reminiscent of a major downturn in the 1990s. Remi says: "One difference is that, in 1993, there wasn't a credit crisis. Today, consumer credit is being squeezed, which poses a real problem for European consumers, 95% of whom purchase their cars on credit."

Christine Benard

Centraliens carries a feature article co-authored by Christine Bénard entitled "Reinventing the Competitiveness of the French Auto Industry: A Great Opportunity for Value Sourcing." Christine writes that, in an economic environment that is more and more tenuous, automotive suppliers are being confronted with their own economic difficulties, which in turn can put French automakers at risk. She addresses the question of whether a manufacturer's decision to outsource from low-cost countries is always correctly taken and well-implemented, as well as whether suppliers in high-cost countries can adapt their business models to remain competitive. The article then describes Oliver Wyman's proprietary Value Sourcing thinking and the firm's step-by-step methodology for Value Sourcing. Christine concludes: "We believe it is necessary and possible to complement a low-cost sourcing strategy with a restructured, reinforced network of French auto suppliers that is global, adaptive, organized, and competitive."

Ron Harbour

WJR Radio in Detroit (30 October 2008) interviewed Ron Harbour on the topic of ongoing merger talks between GM and Chrysler. Ron says: "[GM and Chrysler] are not talking a lot [publicly] and I don't blame them. They're trying to make sure that it doesn't end up where one of them goes down no matter what the market does. They figure if they get together they'll be stronger and be able to make it through. And if they can tie it in with some of these loans from the government, maybe they can make a go of it. No one's really talking, but I wouldn't be surprised if we hear an announcement in the next couple days. It has to be that fast or else one of them may not make it." Regarding UAW president Ron Gettlefinger, Mr. Harbour says: "The good thing for him is that he is trying to be a constructive part of the solution. They [UAW] don't want the days of old...he wants to be a part of making it grow and not just trying to fight for every last job. He wants to grow those jobs."

Peter Bosch

manager magazin (27 October 2008) quoted Peter Bosch in a cover story asserting that German auto manufacturers may emerge from the worldwide automotive crisis in a stronger position. Peter says: "The companies that can master the complexity of the situation will win – it's no longer all about the technology. How will you manage change successfully for the next ten years? This is the crucial question." Commenting on the effect of the green movement in the auto industry, he adds: "Car manufacturers have to master the environmental issue, much as they did the safety issue. Still, for most buyers the environment will not be the main determining purchase criterion."

Romed Kelp

Die Welt (16 October 2008) carried a bylined article by Romed Kelp about the need for makers of commercial vehicles, faced with declining sales, to concentrate more intensely on cost-optimized, customer-focused product offerings. Romed cites the firm's Truck Customer 2008 study, which found that brand alone is not enough to create a competitive edge and that manufacturers lack a broad understanding of individual customer needs. He writes that, in mature European markets, the primary focus should be placed on optimizing the interface between customers and manufacturers and on generating additional sales by providing intelligent services. In emerging markets, Romed recommends that service structures be improved in order to keep brand promises and compete with local manufacturers.

Remi Cornubert

Les Echos (16 October 2008) quoted Remi Cornubert in a story about the economic health of the auto industry. Remi reports on a recent Oliver Wyman study which found that: "For the first time, in certain market segments, buyers are saying that they intend to spend less money to purchase their next vehicle that they did to purchase their current vehicle." He says: "This is a major change in the consumer's state-of-mind and spirit."

Raymond Tsang

China Securities News (16 October 2008) has published the findings of the Oliver Wyman Truck Customer 2008 study, quoting Raymond Tsang. The study recommends that truck manufacturers offer even more cost-optimized trucks and services tailored to the specific needs of customers. It concludes that, following the end of an economic up-cycle, it is most important for manufacturers to orient themselves closer to their customers' needs, and to improve their customer interactions.

Ron Harbour

BusinessWeek (15 October 2008) quoted Ron Harbour in an article about a potential GM-Chrysler merger. Ron says that such a deal would be hard for the United Auto Workers union to support because: "Chrysler already needs to cut as many as four plants and shed more workers."

Remi Cornubert

Les Echos (13 October 2008) quoted Remi Cornubert in an article about automakers attracting women car buyers. Remi says that: "Even though Lexus has better results at the moment, it seems that Infiniti might have finally found its customer. Its positioning is consistent with its brand image, and above all, its work on the total customer experience is very promising. That's what has been missing from the automobile sector. The worst thing for an automotive brand is to be all over the place. You have to have a firm grasp of what the customer wants and then permit her to position herself."

August Joas

Wirtschaftswoche (13 October 2008) quoted August Joas in an article about the effect of the financial crisis on the automotive industry. The article notes that German flagship brands BMW and Daimler also are challenged by the need to balance conflicting consumer demands for environmentally friendly cars and luxury cars, while simultaneously figuring out how to make money building smaller cars. August says: "Compact cars are sold by brand name and marketing, unlike luxury class vehicles whose sales are more dependent on technology. However, all cars of a premium brand should carry the premium brand value." August adds also that premium brands should be more concerned with real customer value: "A well made iPod or BlackBerry interface in the car is far more important today than the latest high-tech innovation, which is of no particular use for the customer."

Romed Kelp

OEM & Lieferant (8 October 2008) carried a bylined article by Romed Kelp about the Oliver Wyman Commercial Vehicle Manufacturer Cooperation in Sales and Service study, which found that cooperative agreements are one way for manufacturers to face the challenges of increasing customer expectations for service and sales combined with rising cost pressures. Romed writes: "Cooperation is an inexpensive way to offer new services and allows companies to use each others' infrastructure. This type of partnership is particularly appealing in markets where both partners are niche players." The study concluded that each partner could rack up savings in the tens of millions in a single medium-sized European market.

Lars Stolz

Handelsblatt (6 October 2008) quoted Lars Stolz in an article about the suffering U.S. automotive market and its impact on German suppliers, who may eventually benefit from the situation because American car manufacturers still urgently need modern technologies from Germany to make their models more fuel efficient as well as to reduce emissions. In the near term, however, he says the U.S. crisis will have a negative impact on German suppliers; European suppliers earn one quarter of their sales volume in North America. Lars says: "This part of their business will be ebbing away, but in the medium and long term, the crisis is a big opportunity for German suppliers, who lead in innovation and are well set up for the current challenges."

Remi Cornubert

La Croix (4 October 2008) quoted Remi Cornubert about the failure of automakers to accurately assess customer needs. Remi says: "Cars suffer from an overflow of equipment, compared to the actual needs of consumers. For some, excessive electronics have even become a source of insecurity for consumers. Manufacturers must determine which equipment is differentiating in the eyes of the buyer and which is not, which implies a questioning of current models. One can only sell to customers that which they need."

Remi Cornubert

L'Express (2 October 2008) quoted Remi Cornubert in an article about the "greening" of the automotive industry. Remi says: "The explosion in oil prices since the beginning of the year has accelerated the green 'awakening.' "

Remi Cornubert

Enjeux Les Echos (October 2008) quoted Remi Cornubert in an article about the strong global growth of Audi sales in recent years. Remi says: "While ambitious, a goal of 1.5 million vehicles per year may be achievable for Audi. In convertibles, coupes, and 4x4s the manufacturer has proven its ability to systematically attack the top range of each segment."

Romed Kelp

DVZ Deutsche Logistik-Zeitung (30 September 2008) published a bylined article by Romed Kelp about the Oliver Wyman Truck Customer 2008 study, which recommends that truck manufacturers offer even more cost-optimized trucks and services tailored to the specific needs of customers. Romed writes that even though truck manufacturers meet their customer's needs, this does not necessarily differentiate them in the marketplace. Manufacturers must aim to achieve a maximum in customer satisfaction, and in this area they fail due to a lack of understanding about what truly drives satisfaction. Romed says: "At the end of the up-cycle it becomes more important for the manufacturers to orient themselves closer to their customers' needs, and to improve their customer interaction. In this way more customers can be retained, and more revenue per client can be achieved."

Ron Harbour

The Wall Street Journal (29 September 2008) quoted Ron Harbour in an article about the manufacturing dexterity of Honda's auto plants, which have emerged as a key strategic advantage for the company because it has enabled the firm to increase production of fuel-efficient vehicles. Ron also notes: "Honda has the ability to adjust faster than its competitors if fuel prices ease and demand for bigger vehicles increases."

Ron Harbour

The Dow Jones Newswire (22 September 2008) quoted RonHarbour in an article about GM's decision to build 1.4-liter engines for its next generation of compact cars at a new plant in Flint, Michigan. Ron says: "The change is as much from trucks to cars as it away from V-8 engines and big V-6s to four-cylinder and more fuel-efficient V-6s. There's always a lot of attention given to assembly plants, but the powertrain plants are almost as big an issue or bigger."

Christian Heiss

Borse Online (18 September 2008) quoted Christian Heiss in an article seeking to explore sourcing strategies to benefit from the weak U.S. dollar. He notes that, by optimizing purchases and the structure of expenses within the non-strategic procurement market, companies can counteract the recession: "By systematic relocation of procurement into the dollar area it is possible to compensate for 40 to 70 percent of current exchange loss. This applies especially to companies that run intensive production activities in Germany and have strong exports into the dollar area."

Ron Harbour

Automotive News (15 September 2008) extensively quoted Ron Harbour in a story detailing the history of the NUMMI joint venture between General Motors and Toyota. Ron recalled the reception his father, Jim, got in 1980 when he initiated the Harbour Report: "He made this presentation of the findings, and basically GM told him, 'You don't know what you're talking about. We're the biggest in the world, and therefore we're the best.' They summarily dismissed those numbers." But, he adds, "What we found out later was that GM did take it seriously and did many of their own studies. If anything, we were probably understating the problem." Ron says efforts to spread the lessons of NUMMI to GM initially "sputtered and didn't go anywhere. They bring [Jack Smith] back and throw him in a GM plant and he's one of 3,000 people. All of a sudden he looks like the zealot among the 2,999 other people, and they all look at him like he's some kind of freak." He adds, however: "By the late '90s, they had traction and were making significant improvement," noting that that the UAW bought in when it learned that making plants more productive sometimes meant that GM would move outsourced work back in-house. Ron recalled being in a GM plant when stamping dies were brought back into the plant: "There were union people standing around applauding. That was a big, emotional event."

Remi Cornubert
Strategie (11 September 2008) quoted Remi Cornubert in an article about Volkswagen's rapid growth. Commenting on the company's efforts to address environmental concerns across its Volkswagen, Audi, and Porsche brands, Remi says: "Volkswagen is seeking to reduce average CO2 emissions for all its vehicles. They do not wish to take the risk of having any vehicles prohibited on an environmental basis in the United States, where half of its vehicles are sold."

Ron Harbour
The Wall Street Journal (8 September 2008) quoted Ron Harbour in an article about slow-selling vehicles being a drag on General Motors' profitability. Ron explains that each model, even if only a variation of another vehicle, requires some engineering effort. Producing models in small numbers lowers manufacturing efficiency. Every vehicle needs its own documentation, manuals and brochures. Dealers have to be trained to service each model and have to spend money to keep them in stock. And each vehicle needs a certain amount of advertising and promotion. Ron says: "For every model, you've got some investment costs, and if you don't sell enough of them, you might not be able to cover the capital costs."

Romed Kelp

Krafthand (September 2008) carries a bylined article by Romed Kelp about the Oliver Wyman Commercial Vehicle Manufacturer Cooperation in Sales and Service study. Romed writes that: "Cooperation is one way to avoid being dashed between the rocks of rising expectations and falling revenue. This is an inexpensive way to offer new services and allows companies to use each others' infrastructure and experience." Romed notes that OEMs could benefit from cooperation with partners from other industries - such as car rental companies, telematics service providers, or financial services companies - by enhancing the scope and quality of their portfolio of services. Furthermore Romed proposes partnerships with competitors to jointly operate service outlets: "This type of partnership is particularly appealing in markets where both partners are niche players. Our calculations show that each partner could rack up savings in the tens of millions."

Remi Cornubert
Capital (September 2008) extensively quoted Remi Cornubert and Jan Dannenberg in a 15-page cover story entitled "The Secrets of Success of the German Auto Industry." The article contains detailed sections on quality, engines, design, productivity, and performance of the industry, highlighting the capabilities and innovation of German car manufacturers. Oliver Wyman assisted in the preparation of the article, including in-depth interviews with Remi and Jan as well as Automotive practice background materials. Regarding design, Remi says: "German cars now compare with Italians in terms of style. For the premium buyers, they have become a standard." Regarding innovation, Jan notes: "Medium-sized companies produce 70 percent of all automotive innovations. These smaller companies offer their innovations to the car manufacturers, which in turn help to finance the development for a temporary exclusive right on these innovations."

Greg Gardner

The Associated Press (26 August 2008) quoted Greg Gardner in a story about Ford Motor Company's efforts to retool its Michigan Truck plan to build up to four different body styles (aka "tophats") on two different sets of underpinnings. Greg says that, once retooled, Michigan Truck will be comparable to the flexible plants run by Honda Motor Company: "In East Liberty, Ohio, Honda is able to build the Civic, the CR-V, and the Element. If Ford can do three or four tophats, that will be, in concept, comparable to what Honda can do today."

Fabian Brandt

Automobilwoche (25 August 2008) quoted Fabian Brandt in an article about automakers' recent focus on creative events and collaboration with car dealers to target potential customers. Fabian explains: "Experience has shown that face-to-face communication is clearly superior to media-related communication," and its impact will increase even more. He notes that dealers need creative help to develop marketing plans, and proposes "that manufacturers offer a marketing 'toolbox' for its sales partners, who can choose from several elements."

Jan Dannenberg

Automobilwoche (11 August 2008) carried an interview with Jan Dannenberg on the topic of auto supplier consolidation, most recently the Schaeffler-Continental deal. Jan says: "The offer from Schaeffler shows evidence of the undervaluation of suppliers. We are heading for further concentration of the industry." He cites a recent Oliver Wyman study that analyzed 60 transactions of suppliers over the last five years and found that the majority of the combined companies emerged reinvigorated. Jan says he expects Russian and Indian firms to actively seek to acquire publicly traded suppliers, especially in the technology sector: "The fastest growing divisions are often the electronics and software segments." He concludes: "The automotive supply industry is hiding a lot more potential than is expressed by stock prices and valuations. The high innovation, the multitude of technologies, and the long-term basis for contracts are guarantors of sustainable growth."

Romed Kelp
Automobilwoche (August 11) quoted Romed Kelp in an article about the Oliver Wyman study entitled "Commercial Vehicle Manufacturer Cooperation in Sales and Service." The report shows that cooperative agreements are one way to face the challenges of increasing expectations of service and sales combined with rising cost pressures. Romed says: "This is an inexpensive way to offer new services and allows companies to use each other’s infrastructure. This type of partnership is particularly appealing in markets where both partners are niche players."

Matthias Bentenrieder

Handelsblatt (August 11) quoted Matthias Bentenrieder in an article about the impact that the U.S. market crisis has on automotive manufacturers. BMW was the first manufacturer to act. It restocked its protection against risk for residual value to nearly 700 million Euros and therefore cut the earnings outlook for 2008. In analyzing the issue of declining values for the German automotive manufacturer, Matthias says: "In the U.S., I definitely see the likelihood that the German competitors of BMW will have to advance their provision for the leasing business."

Raymond Tsang

China Auto News (4 August 2008) published an interview with Raymond Tsang about automakers' cost innovation during their R&D and design processes. Cost innovation is becoming increasingly important to automakers, he says, and it does not incur extra costs for them. Raymond discusses how Chinese companies have certain advantages such as cost innovation; however, their lack of cooperation is a weakness.

Greg Gardner
The Associated Press (22 July 2008) quoted Greg Gardner in a story about Ford Motor Company. Greg says for Ford to convert an auto plant's operations from trucks to cars is no easy feat and could easily cost tens of millions of dollars per factory. He adds that the changeover is critical since Ford has lost small-car sales because it didn't have enough inventory. Greg explains: "You can't use the same conveyor system for trucks as you can for cars. There's some equipment, like torque wrenches and things like that ... those are common to any vehicle. But really heavy-duty capital equipment has to be different."

Greg Gardner
The Associated Press (21 July 2008) quoted Greg Gardner in an article about Ford Motor Company's plans to expand its employee buyout offers. Greg says: "I think they're just trying to get as many veteran employees to take the buyout so they can begin to backfill them with the $14.25 per hour [new hires]. As they adjust to demand for cars, then it becomes even more urgent to get as many of those new hires as you can."

Greg Gardner
The Associated Press (18 July 2008) quoted Greg Gardner in a story about General Motors' plans to cut production capacity for trucks/SUVs to meet demand. Greg says: "Just closing all your truck plants is not a viable long-term strategy. Some of them will have to be converted."

Michelle Hill

The Louisville Courier-Journal (16 July 2008) quotes Michelle Hill in an article about the potential for future Ford plant closings (particularly in Kentucky). Michelle says: "The F-Series, the Mustang and the Explorer are core to Ford. They are their icon vehicles, and Louisville is the only place the Explorer is built." Regarding future truck production, she says: "I believe there are still plants to be announced for closing. I hate to say that." Michelle notes that the Kentucky Truck and Louisville Assembly plants will be insulated, but adds she expects Ford to announce it is closing a truck plant "by the end of the third quarter. There is still too much capacity on the truck side."

Markus Mentz
The dpa newswire (15 July 2008) quoted Markus Mentz in an article about automotive suppliers' increasing share of vehicle value creation. Markus cites Oliver Wyman's "M&A in the Automotive Supplier Industry" study, which found that mergers can help companies generate growth and increase their efficiency and competitiveness. He notes that manufacturers are cutting their direct supplier lists down to a select few systems suppliers. Markus concludes: "These suppliers must deliver ever-more-complex systems and modules and cover all applicable production facilities for their customers worldwide. More and more suppliers are being forced to rethink their strategies on national and international M&A."

August Joas
Automobilwoche (14 July 2008) quoted August Joas in an article about the sharp decline in U.S. SUV sales. August says: "During the next five years, the sales volume of large SUVs will decline significantly," adding that the ongoing discussions about CO2 and increasing gasoline prices will continue to affect the consumer acceptance. He concludes: "In five years, a soccer mom won’t drive an SUV anymore. She will ask herself: 'Do I really have to move two tons to drive to kindergarten?' But there will be demand for smaller and more environmentally friendly SUVs."

Remi Cornubert

Aerospace Industry (14 July 2008) quotes Rémi Cornubert in an article about manufacturers looking for the right balance in outsourcing. Regarding lessons the aviation sector can learn from outsourcing in auto manufacturing, Remi says: "Initially, some auto suppliers did not have the technical capabilities they claimed. Therefore, carmakers now assess their suppliers' capabilities. Moreover, the way work was shared was relatively unclear. This led to shadow engineering, a situation where the OEM and the supplier duplicated design efforts. Moreover, there has also been a lack of clarity as to how projects are managed. More than 10 years on, outsourcing in the automotive industry is still not completely mature."

Ron Harbour

The Detroit Free Press (13 July 2008) quotes Ron Harbour in an article about Toyota's decision to halt the production of the Toyota Tundra pickup and Sequoia SUV for three months. Ron says: "I think today's announcement is just underlining the fact that people have to remember this isn't something that has just hit the Detroit Three, it's also hit Toyota and Nissan. People just aren't buying those vehicles right now." Regarding Toyota's announcement that it will begin to assemble its Prius hybrid in Mississippi in 2010, he said this development underscores "how flexible and how quickly Toyota can change production capacity."

Ron Harbour

USA Today (11 July 2008) quotes Ron Harbour in an article about Toyota's efforts to increase production of its Prius hybrid. Ron says: "Automakers are all staying up late and trying to figure out the best way to reconfigure plants to build what the market wants right now."

Ron Harbour

The Detroit News (9 July 2008) quotes Ron Harbour in an article about Toyota's attempts to shift plant production to build more small cars. Ron says that Toyota has already adjusted production in the United States to turn out fewer large trucks and SUVs and produce more cars: "The plants they have can do it in as short a time as anybody."

Ron Harbour
Business Week (8 July 2008) quoted Ron Harbour in an article about The Harbour Report 2008 finding that Chrysler has become one of industry's most productive carmakers. Ron says that the hard part for Chrysler will be keeping those productivity gains as a slumping car market forces the firm to slow its assembly lines and close plants. He says: "It will be tough. Sales are down so much this year that it will offset some of the other gains Chrysler is making."  Ron adds that the company's big challenge going forward will be boosting profits and cash flow to fund new models and technology.

Greg Gardner

The Pittsburgh Tribune-Review (3 July 2008) quoted Greg Gardner in an article about the inability of automakers to meet the strong demand for hybrid vehicles. Greg says the kink in the hybrid supply chain is the production of nickel hydride battery packs, i.e., the makers of the rechargeable batteries did not anticipate the surge in demand: "It's particularly acute for Toyota."

Ron Harbour and Greg Gardner

The Associated Press (3 July 2008) quoted Ron Harbour and Greg Gardner in an article about Honda Motor Company's success in building small cars to match consumer demand in the U.S. Ron notes: "They are better positioned than anybody in terms of the products they have for this kind of environment." Greg says that executives of the Detroit Three wish they could convert their factories from trucks to cars, but to do so is difficult and costly because cars require different tooling and because conversion would cost millions of dollars: "Now we're in a situation where because of the cash burn rate, those kinds of wholesale investments may be prohibitively expensive." Greg adds that, as a result, the Detroit Three could wind up with truck factories sitting idle while they maximize output at small-car plants. Ron adds that logistics can stand in the way of such capacity increases because some parts of the factory can't move as quickly as others: "In any plant you always have one area that's the bottleneck. You can only run as fast as that bottleneck." Ron concludes that relieving a bottleneck might take additional tooling, and that also takes time and money: "It could take a year or two to get it all done and get it all cranked up."

Ron Harbour

The New York Times (3 July 2008) quoted Ron Harbour in an article about the Detroit Three automakers' manufacturing strategy of undertaking broad layoffs rather than flood the market with unwanted trucks and SUVs. Ron says: "Instead of building vehicles and selling them at deep discounts, the companies are shutting the plants. It's painful, but it's smarter than the alternative." Commenting on Honda's ability to quickly switch a plant from making SUVs to Civic sedans, he adds: "The key is they are able to change the mix of products to what is selling right now."

Remi Cornubert

Enjeux Les Echos (July 2008) quotes Rémi Cornubert in an article about attempts by French automakers to predict future markets trends. Rémi says that in 2000 "[then Renault head] Louis Schweitzer perceived the development of the market perfectly - first reaching emerging markets and then Eastern Europe. He then set out to develop a car for these new customers."

Jan Dannenberg

ZfAW (July 2008) carries a bylined article by Jan Dannenberg and Dr. Guido Schacht (Senior Risk Manager, HypoVereinsbank) entitled "Automotive Suppliers - A High-Performance Industry." The authors write that in the past, suppliers strived to become either cost leaders or technology/innovation leaders. However, now he top companies combine multiple success factors such as a clear customer orientation, good business management practices, innovative leadership, high employee qualifications, and cost-effective manufacturing. In particular, cost position and globalization expertise will become increasingly important to ensure future success.

Jan Dannenberg
The Dow Jones Newswire (29 June 2008) quoted Jan Dannenberg in a story about auto industry contract manufacturers, which typically produce low-volume niche models. Jan says that the contract manufacturing sector may be in for a decline because large manufacturers have adapted their assembly techniques to allow for building cars in smaller quantities: "The economically viable minimum could be reduced to as few as 5000 units, depending on the differences between the niche model and the model that it is based on." He adds, however, that a move away from contract manufacturing "does limit the ability of auto manufacturers to react both quickly and cost-effectively to market changes."

The Xinhua News Agency (23 June 2008) reported on they key findings of the Oliver Wyman Car Innovation 2015 study following a CEO Roundtable and press event on that topic, which was held in Shanghai on June 19. Most major economic daily newspapers in China carried the story, typically entitled "Insufficient Resources and Spending Hinder China Auto Industry’s R&D Development," and more than 50 online news sources also carried the story.

Ron Harbour

The Detroit Free Press (20 June 2008) quoted Ron Harbour in an article about Honda's flexible manufacturing facilities, which allow the automaker to increase production of fuel-efficient cars. Ron adds that Honda's overall strategy has helped also: "They never really got into big SUVs or pickups or V8 engines. So that's a segment of the business they don't have to retract from."

Ron Harbour

Reuters (17 June 2008) quoted Ron Harbour in a story entitled "Should Cerberus Double Down or Fold on Chrysler?" Ron notes that Chrysler's recent new vehicle offerings failed to move quickly enough toward smaller and more fuel-efficient vehicles: "They were kind of caught flat-footed. In this industry, there is no forgiveness."

Greg Gardner

The Associated Press (17 June 2008) quoted Greg Gardner in a story about an announcement by Ford that the company would close its Michigan Truck Plant for nine weeks, beginning in late-June. Greg said: "The announcement casts doubt upon Michigan Truck's future. The company, could retool pickup truck plants in Dearborn; Claycomo, Mo.; or Louisville, Ky.; to make both the new F-150 pickup and the large SUVs. Ford now is operating too many truck factories on one shift and likely will close some of them."

Remi Cornubert

Le Journal de Dimanche (8/14 June 2008) quoted Remi Cornubert in an article about Renault's launch of its Koleos 4X4 SUV. Remi says: "The Koleos bet is a longshot, because the age of the SUV is behind us."

Remi Cornubert

Liberation (13 June 2008) quoted Remi Cornubert in an article about Renault's launch of its Koleos 4X4 SUV. Remi says: "Admittedly, it takes three or four years to design, manufacture, and sell a new vehicle, but the timing is not good. Consumers are feeling great pressure to be sensitive to the environment and to fuel economy."

Greg Gardner

Bloomberg (12 June 2008) quoted Greg Gardner in a story noting that 8 of Ford's 15 North American vehicle-assembly plants are running below full capacity. Greg says Ford's factory problems extend beyond trucks: "They have to look at the under-utilized capacity in existing car plants."

Peter Bosch

Reuters (12 June 2008) quoted Peter Bosch in an article arguing that rising gasoline prices will force German luxury car manufacturers like Daimler or BMW to cooperate more closely. Peter expects a real footrace for petrol-saving technologies, noting that the race has already begun in lithium ion batteries. He says: "There are several development areas for which partnerships between automotive manufacturers [i.e., those not among the world's top five] would be reasonable. We will also see strategic partnerships between suppliers and manufacturers."

Greg Gardner
The Detroit News (11 June 2008) quoted Greg Gardner in an article about Ford's plans to shift truck plants to car production in a bid to keep up with changing consumer demand in the United States. Greg says: "Converting a factory to flexible manufacturing can take up to six months and cost $250 million or more. The actual cost could be much higher once product development expenses are factored in."

Ron Harbour

Les Echos (9 June 2008) quoted Ron Harbour in an article describing the productivity improvements of the Detroit Three automakers that were highlighted in The Harbour Report 2008. Ron notes that: "The Detroit Three have improved to the point where they require about one-third the number of people they employed in 1990 to manufacture the same number of cars." Commenting on the prospects for further increases in productivity, he adds: "Over the next three years the Detroit Three's profitability should logically go up, but further large jumps in productivity are unlikely because is isn't possible to automate much more and because reduced volumes make productivity gains more difficult to achieve."

Ron Harbour and Michelle Hill

Just Auto (8 June 2008) quoted Ron Harbour and Michelle Hill in an article detailing the findings of The Harbour Report 2008. Michelle says: "There is no doubt, based on our visits to more than 20 plants over the last year, that continuous improvement in manufacturing processes are taking hold in just about every company. Everyone is focused on reducing waste and building quality into their processes more than ever." Ron adds: "Lean manufacturing and continuous improvement efforts do not always produce immediate improvements, nor are they immediately recognizable. But as shown in The Harbour Report 2008 results, companies that are producing consistent, sustainable improvements to their manufacturing operations are providing automakers with a cost advantage over their rivals."

Ron Harbour

The Detroit Free Press (8 June 2008) quoted Ron Harbour in an article about the amount of plant capacity each automaker in North America uses. Ron says: "What's really important to look at is the range. Running over 100% wastes money by paying overtime wages. Running far below 100% - several are running at less than half their potential - fails to make full use of expensive plants. Plants today cost $1 billion, so if it sits idle, that's a lot of assets that are underutilized."

Remi Cornubert

Le Monde (5 June 2008) quoted Remi Cornubert in an article about winners and losers caused by rising oil prices. Regarding automobile manufacturing, Remi says: "Manufacturers will be forced to spend billions of euros on research and development to bring new technologies to market."

Remi Cornubert

Courrier Cadres (June 2008) quotes Remi Cornubert in an article reviewing the alternative fuel/technology choices for future automobiles. Remi notes that in the race for the "clean" car, hybrid technology is still a clear leader: "This solution is simple for the driver and doesn't require any modifications to the distribution network."

Automobil-Produktion published a 90-page special issue, created in cooperation with Oliver Wyman, on "Innovation in the Automotive Industry." The entire issue focuses on the Oliver Wyman "Car Innovation 2015" study, which identifies the factors that are relevant to the planning and management of innovation in the automotive industry. The issue contains:

§      An editorial co-written by August Joas and the magazine’s chief editor

§      An interview with Jan Dannenberg, who among other things says that "all too often innovations fail to address customer needs"

§      Jan Burgard and Jan Dannenberg on the five topics that "Car Innovation 2015" addresses: megatrends, technology, customer, business strategy, and organization

§      Christian Kleinhans and Peter Bosch on environmentally friendly technologies and the OEM’s CO2 agenda

§      Christian Heiss and Lars Stolz on low-cost cars

§      Jan Burgard and Rainer Muench about including the customer's perspective into the innovation process

§      Peter Baumgartner and Almut Pesch on global megatrends and their impact on innovations

Matthias Bentenrieder

VerkehrsRundschau (June 2008) interviewed Matthias Bentenrieder about economic trends in the automobile rental and leasing industry. Following a two-year boom in rental and leasing, pan-European traffic is still increasing, especially in Eastern Europe. Matthias notes, however, that experts fear an economic slowdown in Germany next year: "Currently there are more and more indications that general growth will decline in 2009." He recommends that, to be competitive in the future, rental and leasing companies: "Offer a complete service package, including financing and telematics solutions, as well as management services."

Remi Cornubert

Le Figaro (30 May 2008) quoted Remi Cornubert in an article about Renault and PSA manufacturing fewer vehicles in France. Remi notes that producing vehicles in Eastern Europe can: "significantly lower the production costs, particularly for lower-priced models, while also growing the automakers' markets in the East."

Greg Gardner

The New York Times (30 May 2008) quoted Greg Gardner in a story announcing that, faced with plummeting demand for General Motors sport utility vehicles and pickup trucks, one-quarter of GM's unionized work force has accepted the firm's latest buyout offer. Greg says: "They're finally recognizing that there's a sea change in the vehicles people are going to buy."

Ron Harbour
The Wall Street Journal (29 May 2008) quoted Ron Harbour in a story about the U.S. Big Three automakers recent elimination of tens of thousand of factory jobs. Ron says: "[The Big Three] are all concerned because of what the market looks like now."

Romed Kelp
Deutsches Handwerksblatt (22 May 2008) published a bylined article by Romed Kelp on the topic of Oliver Wyman's Commercial Vehicle Manufacturer Cooperation in Sales and Service Study. Romed writes that sales and service networks for commercial vehicles are increasingly feeling pressure, with new technologies, service contracts, mobility guarantees, and customer needs continuing to raise the bar on expectations. The study found that cooperative agreements are one way to face these challenges. "It is one way to avoid being dashed between the rocks of rising expectations and falling revenue," he adds. "This is an inexpensive way to offer new services and allows companies to use each other’s infrastructure."  Romed also cites a well-known example, the information center at Mercedes-Benz that works with truck body manufacturers to test complete vehicles.

Greg Gardner
The Indy Star (21 May 2008) quoted Greg Gardner in an article about a decision by General Motors' to move die sets from its Pittsburgh stamping facility to its Indianapolis stamping facility. Greg says: "Be careful not to draw any sweeping conclusions about the future of the [Indianapolis] plant beyond 2011. On the other hand, it might mean the plant continues to get new product." The article also cites Oliver Wyman data showing that GM Indianapolis produced about 28 million individual auto parts last year, compared with 52 million in 2003. Greg concludes: "Indianapolis continues to get smaller, but it's still a big supplier for GM."

Ron Harbour

The Wall Street Journal (20 May 2008) quoted Ron Harbour in a page 1 story about the shrinking size of the U.S. auto market. Commenting on an assertion that recent boom years in total sales were a bubble, he agrees: "Going forward, 16 million is a good year." Commenting on new [Toyota, Honda, Kia, Volkswagen] auto assembly plants that will open in the U.S. in coming years, he notes that the new capacity -- nearly one million vehicles a year -- is likely to keep the Big Three under pressure to go beyond their current downsizing: "There's no doubt that some North American plants will have to close as a result."

Remi Cornubert

Le Figaro (14 May 2008) quoted Remi Cornubert in an article about the alliance between Renault and Nissan, which is currently being hailed as a success by analysts, despite the well-publicized failures of similarly structured deals. Remi says: "Renault was smart enough to respect the culture of Nissan, which enables it to profit from the advantages of the alliance without focusing on any disadvantages that came with it."

Remi Cornubert

Le Figaro (9 May 2008) quoted Remi Cornubert in an article about Toyota surpassing General Motors in global sales. Remi says: "Despite sluggish sales growth in Japan, the breadth of Toyota's product range, from luxury models to subcompacts, and its presence in global markets allow the firm to deaden the shock from any single market."

Ron Harbour

Business Week (5 May 2008) quoted Ron Harbour in a story about U.S. auto brands. Regarding Ford's Lincoln/Mercury brands, Ron says: "You can look at it and say Mercury is not cost-justifiable, but it's an unknown where those Mercury buyers would go. Some of them could go to Lincoln, but there's no guarantee they will stay within the Ford Motor family. You could be kissing goodbye a couple hundred thousand sales, and they just can't afford to do that right now. Also, Lincoln dealers are having a tough enough time as it is, with two brands, without taking one away." Regarding GM's stable of brands, he adds: "GM's got far too many brands. But where do you go first? I don't know. They've really been building the GMC brand, and a lot of Pontiac dealers are aligned with GMC now. So now, would you break them apart?"

Markus Mentz
M&A Review (May 2008) quoted Markus Mentz in an article about stock markets reacting favorably to M&A among automotive suppliers, a key finding in the Oliver Wyman study "Mergers and Acquisitions in the Automotive Supply Industry." Markus says: "Consolidation among suppliers reduces transaction costs for the manufacturer at the same time industry

Jan Dannenberg

Manager Magazin (May 2008) asked Jan Dannenberg to test the Audi S5-Coupe (as part of a serial column in which Managing Directors, CEOs, CFOs, or high-profile consultants in German business are asked to test-drive a new car). The article introduces and supports the Oliver Wyman brand and features the capabilities of the firm's Automotive practice - it is as much about the firm and Jan's work in the industry as it is about the car. Jan concludes his S5 review: "Audi has developed a design icon based on excellent technology, suitable for car buyers whose children have left home but who are still interested in taking a joyride."

Greg Gardner

The Associated Press (30 April 2008) quoted Greg Gardner in an article about the impact of a Canadian Auto Worker contract agreement with Ford. Greg said that Ford may have agreed to the higher costs in order to avoid a strike that would disrupt supplies of some higher-margin vehicles: "Given the products that Ford's building in Oakville [Ontario], it has become a strategically important plant. These are profitable vehicles that are selling reasonably well given the overall economic climate."

Greg Gardner

Business Week (28 April 2008) quoted Greg Gardner in an article about GM's decision to reduce production of pickups and SUVs. Greg says the cuts look like "a realistic assessment." He adds: "The full-size pickup and SUV market is not going to rebound anytime soon. It looks like that they [GM] don't plan on making up very much of the production loss due to the American Axle strike." Regarding the industry sales outlook for this year, Greg says: "Obviously, the larger, heavier vehicles are taking the biggest hit."

Remi Cornubert

Le Figaro Economie (16 April 2008) quoted Remi Cornubert in an article about a joint development and manufacturing agreement between Nissan and Chrysler. Remi says that the agreement allows both automakers to achieve economies of scale and offer a full range of vehicles in multiple markets. Remi says: "Joint projects make it possible to limit development costs while bringing flexibility of operation."

Romed Kelp

VerkehrsRundschau (10 April 2008) carried a bylined article by Romed Kelp about a new Oliver Wyman study about cooperation in commercial vehicle service and sales. Large commercial fleets demand increasing service requirements, usually offered by OEMs, and the study measures how manufacturers can cooperate and where advantages for customers can be found. Romed says: "We discovered that specific customer needs have not completely been covered by manufacturers yet. For OEMs, service cooperation will become attractive, especially far from their home markets, when two manufacturers cooperate in markets where no one OEM has a clear lead. In mid-size European markets, both partners could save a substantial amount."

Christian Kleinhaus

BR television (8 April 2008) interviewed Christian Kleinhans in a story about increasing customer demands adding to the challenge of choosing a new car in the middle segment. The interview notes that the question of which car technologies are sustainable is becoming more and more important. Christian refers to the Oliver Wyman "Car Innovation 2015" study, which analyzes more than 300 automotive concepts. Commenting on alternative fuel options, he says: "The combustion engine fueled by natural gas should be considered, but only by those drivers who don’t use their car very often. Even if natural gas is 50 percent cheaper than gasoline, a single fill-up would only last 300 kilometers."

August Joas

Wirtschaftswoche (7 April 2008) quoted August Joas in an article about the post-Chrysler-affiliation Mercedes-Benz brand. The article notes that Mercedes-Benz is the only German brand within the top ten global brand names; in fact, according to industry experts the company's economic turnaround is strongly supported by the durability of the star symbol as an image. August says: "On average Daimler’s customers are a bit older, but in general these customers are willing to spend a lot of money. They also have a strong loyalty to the brand."

Remi Cornubert

Le Figaro Economie (5 April 2008) quoted Remi Cornubert in an article about a recent jump in the sales of Smart cars. Remi says: "People want smaller vehicles to use in the city, and small cars are also now more acceptable from an ecological point of view as well. It is important to note, however, that these cars, because they consume less, also make it possible for drivers to reduce their overall automotive budget."

Jan Dannenberg and Guido Hertel

Automobil-Elektronik (April 2009) published a bylined article by Jan Dannenberg and Guido Hertel based on the Oliver Wyman Car Innovation 2015 Study, entitled "The car of tomorrow." The study considered global automotive innovation megatrends, current innovations, customer attitudes, general economic conditions, structural changes affecting the industry, and best practices of automotive manufacturers and suppliers. The authors write that, as in the past, electrical and electronic components will continue to be the most important enablers and drivers, accounting for 60% of all innovations. To optimize costs, automotive companies must follow a clear trend of integrating, combining, and further standardizing various functions. By intelligently linking existing components and modules, automotive companies will increasingly shift their emphasis from individual applications to system applications that combine more than one component.

Greg Gardner

The Detroit News (28 March 2008) quoted Greg Gardner in an article about the effects on U.S. automakers of a strike at American Axel. Commenting on the ability of the company's factories in Mexico and overseas to absorb work from the striking Michigan and New York plants, Greg says: "It's not something that can be done overnight. It depends on how much excess capacity they have in Mexico - and they've already taken on additional work there (because of the strike)." He adds that labor costs account for 12-14 percent of a part's price, so American Axle will have to determine if lower labor costs offset increased transportation costs, including fuel, and logistical problems. Greg also says: "It's harder to deliver just in time when you're going from Mexico to Oshawa, Ontario, or Fort Wayne, Indiana."

Remi Cornubert

Le Figaro (27 March 2008) quoted Remi Cornubert in a story about Tata Motors purchase of Jaguar and Land Rover. Remi says that, in addition to acquiring vehicles to fill out its range of product offerings, "Tata will also acquire significant research and development assets and other know-how that will benefit its operations."

Jan Dannenberg

SinoCast China Transportation Watch (24 March 2008) quoted Jan Dannenberg in a story about multinational automobile component makers shifting their focus to emerging markets such as China. Noting that Bosch has moved more high-value-added product manufacturing to China and other countries in Asia-Pacific, Jan says: "As production costs are rising and profits are falling, an increasing number of small car parts makers will be washed out from the market."

Thomas Kautzsch and Markus Mentz
Borsen-Zeitung (15 March 2008) quoted Thomas Kautzsch and Markus Mentz about Oliver Wyman's M&A in the Automotive Supply Industry study. Thomas and Markus note that stock markets are reacting much more favorably to M&A among automotive suppliers than to M&A in other industries, both for German and international mergers. Markus says: "The buyer and the takeover target usually have comparable business models and are of similar size. Consolidations among suppliers also reduce transaction costs for the manufacturer at the same time industry efficiency increases. This encourages shareholders to look favorably upon the transaction."

Greg Gardner
The AP Newswire (10 March 2008) quoted Greg Gardner in a story about BMW's decision to decrease its European production/workforce and increase its North American production/workforce by 2012. Greg says: "This is completely driven by the plunge in the dollar. It is untenable to produce at a much higher cost in Germany."

Remi Cornubert

Le Monde (6 March 2008) quotes Remi Cornubert in an article about Chinese auto manufacturers' sales in Europe. Commenting on China Automotive's plans to sell 3000 BS4/Brilliance models in Europe this year, Remi says: "Compared with 16 million vehicles in Europe, that remains very marginal." Commenting on the level of threat that Chinese automakers represent to established global automakers, he adds: "The Koreans spent ten years penetrating the American and European markets. In the short run, I do not see Chinese automakers taking a significant share of market. On the other hand, in five to ten years they will be a true threat."

Remi Cornubert
lefigaro.fr (4 March 2008) quotes Remi Cornubert in an article about the increasing number of very small automobiles entering the market. Remi says: "Consumers have turned to smaller vehicles to reduce their automobile budget, which has recently increased dramatically with the cost of gasoline. These new models are much lighter and more fuel-efficient."

Jan Dannenberg

L'Expansion Management Review (March 2008) carried a bylined article by Jan Dannenberg and Jan Burgard explaining the findings of the firm's Car Innovation 2015 study. The authors write that only a small fraction of the technologies in development will have a meaningful impact in terms of either new revenues or the features on cars most people drive. They say that, to meet the competitive and environmental challenges, auto companies will need to establish a new innovation management process that is aligned with global megatrends, customer preferences, and the need to reduce processing and development costs. They add that manufacturers must continually cull their innovation portfolios to ensure that they are focusing on the innovations that customers will value and be willing to pay for.

Matthias Bentenrieder

Wirtschaftswoche (25 February 2008) quoted Matthias Bentenrieder in an article about the future of the automotive leasing market in Germany, which now represents 35% of all licensed cars. Matthias notes that with thousands of cars soon entering the market after their leasing contracts expire, those with poor fuel efficiency will re-sell for lower-than-normal prices. Also, with the global financial crisis beginning to have its first effects on the auto market, Matthias says: "It is no longer a question of whether there will be an impact, but rather how tough it will be." With manufacturers, leasing companies, and retailers threatened by revenue decreases of hundreds of millions of euros, the levers that can be used to mitigate the problem are limited. One possibility for manufacturers is to offer leasing customers new cars before their contracts expire in order to sell the off-lease cars in a better economic environment. Matthias doesn't endorse this idea, as manufacturers "would flood the market with young used cars and beat-up their own new-car pricing,"

Lars Stolz

Industrieanzeiger (11 February 2008) quoted Lars Stolz in an article about Oliver Wyman's "Automotive Suppliers in China" study. The study says that, while only a few Chinese automotive suppliers currently pose a genuine threat to established automotive suppliers, the purchasing departments of the international automobile manufacturers are increasingly discovering China as an attractive place to purchase manufactured parts. Lars says: "The premium manufacturers, which once purchased only a small percentage of their parts from low-wage countries, have set themselves even higher targets. They intend to boost their purchasing volumes in China by factors of anywhere from three to eight."

Michelle Hill
The Detroit Free Press (6 February 2008) quoted Michelle Hill in an article on the impact of financially distressed suppliers on automakers. Michelle says: "When a consulting firm investigates a supplier, it typically considers its factory operations, quality, management team, and finances. All of those factors cascade down to a company's financial health. That kind of evaluation has become important, as several suppliers filed for bankruptcy in recent years."

Greg Gardner
The Detroit Free Press (5 February 2008) quoted Greg Gardner in an article speculating that Ford's future subcompact car for the United States, called "Verve," will be built in Mexico. Greg says: "You look at what GM is doing with its new plant in San Luis Potosi and it makes sense that Ford would look at upgrading Cuautitlan, especially since they have idle capacity there now."

Jan Dannenberg
Welt am Sonntag (3 February 2008) quoted Jan Dannenberg in a story about the evolution of car technology. Citing Oliver Wyman's Car Innovation 2015 study, Jan says that tomorrow’s cars are being shaped by global mega-trends that include eco-friendly engines, safe and active security systems, as well as a personalization. He adds: "The combustion engine will remain because many fuels can be used, but in the long term there will be a competition between hydrogen, electric, and fuel cells." Jan also predicts that there will be large developments in safety, and that cars will feature a variety of sensors to protect drivers from accidents. He concludes: "An active safety system that is able to identify dangerous situations in advance will need to be proven before being implemented."

Jan Dannenberg

Automobil-Produktion (February 2008) published a bylined article by Christian Kleinhans and Jan Dannenberg about auto CO2 emissions. The authors write that consumers intend to react to the climate change debate by purchasing more environmentally friendly cars, but very few consumers are able to judge whether a car is environmental. Accordingly, three-quarters of European consumers would like to see an "eco-seal" for cars. At present, consumers perceive Japanese and French brands as being environmentally friendly, but German car manufacturers are catching up. European consumers believe that German automakers will produce the most environmentally friendly cars in ten years, and the authors argue that to do so, German car makers must now apply the same rigorous and sustained commitment to environmental compatibility as they have in the past to safety and quality.

Ron Harbour

DBusiness (January/February 2008) quoted Ron Harbour and cited The Harbour Report in an article arguing that GM has essentially matched Toyota in vehicle assembly productivity in North America. Ron calls out GM's Oshawa, Ontario, plant and says the plant's workforce is among GM's best. He says: "That site builds 20% of GM's North American sales volume and consistently does it well. The employees are a key driver."

Ron Harbour
Automobilwoche (28 January 2008) featured an interview with Ron Harbour and August Joas entitled "Harbour Sees Good Prospects for German Locations." August and Ron argue that, concerning the European automotive industry, and Germany in particular, there is significant room for improving efficiency as well as quality. Ron says: "The differences in efficiency among the European factories are much bigger than the differences among U.S. factories." The article also cites the importance of The Harbour Report, and Ron provides a preview of new topics in the next issue: "We will also examine the R&D and design departments of the OEMs and examine their efficiency." Ron still sees good prospects for German factory locations and says: "In the automotive industry it's not all about labor costs. The infrastructure, the supplier base, as well as efficiency are all important." In these areas Germany is very well positioned because in recent years quality and efficiency have improved a lot. Ron concludes: "The premium OEMs in particular all have a chance to keep their production in Germany."

Christian Heiss

Auto Service (16 January 2008) published a bylined article by Christian Heiss and Lars Stolz based on the firm's "Automotive Suppliers in China" study, which found that, for now, only few Chinese automotive suppliers pose a genuine threat to established European suppliers. The authors recommend that European automotive suppliers enter the Chinese market aggressively with the latest technologies; they also note that cooperative ventures with Chinese automotive suppliers are a useful option. Lars writes: "Premium auto manufacturers, which once purchased only a small percentage of their parts from low-wage countries, intend to boost their purchasing volumes from China by a factor of anywhere from three to eight." Christian adds: "Keeping a close eye on the Chinese supplier market for the product range in question is a matter of survival for European automotive suppliers, because it will enable them to respond quickly to emerging local, supra-regional, and eventually international supplier structures."

Greg Gardner

The Vail Trail (9 January 2008) quoted Greg Gardner in an article about the auto industry's role in climate change. Greg says: "The auto industry has a lot more understanding and actual commitment to sustainability and environmental progress than the general public gives them credit for." He notes that GM is ahead of its Detroit competitors, having invested in flex fuel technology - though with mixed results, given the limited availability of the ethanol fuel that can power flex vehicles. Greg says that, though product development is slower to evolve due to its dependence on what consumers will buy, car companies across the board have made their manufacturing plants more environmentally friendly: "The know-how is there. They get it, and they know how to do it, and it's saving them money."

Remi Cornubert

Le Figaro Economie (5 January 2008) quoted Remi Cornubert in a story about Renault's prediction of 10% growth in 2008. Remi says that "The Renault Dacia models should have strong sales growth, but for the high-end models, which generate higher margins, there is more uncertainty."

Jan Dannenberg

Automobil-Produktion (January 2008) carried a bylined article by Jan Dannenberg entitled "A Ride on the Razor's Edge." The article, based on a joint Oliver Wyman / HypoVereinsbank study of the auto supplier industry, focuses on the key success factors in the industry. Jan writes that the automotive supplier industry is one of the most intensely competitive sectors in Europe. Despite prices falling 2.4 percent each year, on average, most companies still manage to report profitable growth. But not all suppliers grow at the same rate. The top performers – those in the top quartile – managed to improve nearly all performance indicators. Suppliers in the bottom quartile, on the other hand, saw their average return on investment drop from 2.9 percent in 2001 to -1.0 percent in 2005. Jan concludes that the performance differences across the industry are extremely small; therefore, in addition to globalization and networking capacity, the key challenge for the future is to pursue a combined strategy of cost and innovation/technology leadership.

Remi Cornubert

Le Figaro Economie (18 December 2007) quoted Remi Cornubert in an article about the resurgence of Audi as a premium auto brand over the last fifteen years. Remi says: "It is one of the most successful re-positionings of a top-tier brand. Audi gave a style and a personality to cars that were already good but were somewhat less refined."

Jan Dannenberg

Frankfurter Allgemeine Zeitung (15 December 2007) quoted Jan Dannenberg in a story about the firm's "Car Innovation 2015" study, which identifies the levers that auto manufacturers and suppliers must use to be among the innovation leaders of the future. Key success factors include a long-term innovation vision, intelligent business models, customer-centered innovation marketing, and low-cost development processes. Jan says: "Currently, only one-fifth of all R&D expenditures serve the purpose of brand differentiation. All automotive manufacturers and suppliers should seek to increase this proportion to 30% or more."

Matthias Bentenrieder

Firmenauto (10 December 2007) quoted Matthias Bentenrieder about the increasing use of full-service vehicle leasing by small- and medium-sized businesses and public fleets. Matthias says: "Basel-II-obligations and attractive, worry-free package offers from automakers and fleet management contractors make choosing full-service leasing easy." He notes that another trend in fleet management is to outsource fleets to specialized contractors: "With 25 vehicles, about 40,000 euros can be saved yearly. And the fleet manager gains full transparency into monthly total costs; he also gains higher planning reliability."

Matthias Bentenrieder

Financial Times Deutschland (7 December 2007) quoted Matthias Bentenrieder in an article about large companies choosing to rent commercial vehicles instead of leasing or buying them, which shifts risk to the rental firm and more easily covers short-term capacity spikes. Matthias says: "Large firms can benefit greatly by outsourcing their vehicles this way. The number of large enterprises renting more than 50 commercial vehicles has increased dramatically in recent years." He also notes that truck manufacturers are discovering that fleet management is an effective tool for customer loyalty: "From the customer's point of view, equipment can be seen as technically interchangeable; but services offer a chance for competitive differentiation."

August Joas

Expatica Germany (4 December 2007) quoted August Joas in a story about European automakers attempting to gain a competitive advantage over their Asian rivals by stressing a commitment to environmental friendliness. August says: "Environmental-friendliness is something car customers expect as a matter of course; they don't want to spend more money in order to get it." He agrees that motorists do rate the environmental impact of a car more highly than they did only a few years ago, but notes that many are confused by the plethora of low-emission ideas on offer: "Consumers are crying out for information that will help them make a decision."

Jan Dannenberg

Automotive News Europe (26 November 2007) quoted Jan Dannenberg in a story about the widening gap between successful and endangered auto suppliers in Europe. Citing the findings of the recent Oliver Wyman/HypoVereinsbank study, Jan says: "The demands from automakers for price reduction are already higher than suppliers can meet by cost reductions. And all suppliers expect the pressure to increase considerably."

Remi Cornubert

Le Figaro Economie (24/25 November 2007) quoted Remi Cornubert in a story about the battle among automakers to reduce vehicle carbon-dioxide emissions. Remi notes that internal combustion engine technology still has significant potential for improvement: "Automakers can reduce CO2 emissions by 15-20% by 2010." Commenting on the hurdles that prevent the broad rollout of hydrogen-powered vehicles, Remi notes that: "It would require billions of euros in investments to equip and stock service stations with hydrogen."

Jan Dannenberg

Produktion (22 November 2007) quoted Jan Dannenberg in a cover story about the recent Oliver Wyman/HypoVereinsbank study that focuses on answering the question of what sets successful automotive suppliers apart from unsuccessful ones. Jan says: "suppliers are like top athletes for whom just a hundredth of a second can make the difference between victory and defeat. Only those companies that take the lead in nearly all success criteria can be successful."

Remi Cornubert
Le Figaro Economie (19 November 2007) quoted Remi Cornubert in a story about the new Fiat 500. Remi says: "Fiat has restored some of its mystique while also modernizing its cars." Commenting on Fiat's strategy for profitability, he adds: "Keeping the supply of very popular models below the level of demand allows for the car to be sold without a discount."

Jan Dannenberg

Automobilwoche (14 November 2007) quoted Jan Dannenberg in a story about the joint HypoVereinsbank/UniCredit and Oliver Wyman study that focuses on the question of what sets successful automotive suppliers apart from unsuccessful ones. The study found that in the future, cost position, strong networking skills, and globalization expertise are the factors that will gain the most in importance. Jan says: "Top performers in the supplier industry are doing everything they can to continuously optimize costs. Where cost cutting is concerned, there are no 'sacred cows' in the supplier industry."

Remi Cornubert

Le Figaro Economie (3/4 November 2007) quoted Remi Cornubert in an article about the recent economic performance of both Renault and PSA Peugeot Citroen. Commenting on Renault's recent launch of two new models, Twingo II and Laguna III, Remi notes: "The sales performance of these new models will make it possible to judge the strength of Renault's revival."

Jan Dannenberg and Raymond Tsang

First Financial Channel (2 November 2007) in Shanghai televised an interview with Jan Dannenberg and Raymond Tsang on its "Auto Forum" program. Jan and Raymond presented the firm's Car Innovation 2015 study findings and discussed how the study impacts the Chinese auto industry and market.

Peter Bosch

Elektronik Automotive (1 November 2007) quoted Peter Bosch in a story about the Oliver Wyman "Auto & Environment 2007" study, which identified a clear trend toward consumer environmental preferences. Peter says: "The climate change debate has caused environmental compatibility to come up out of nowhere to take fifth place among purchasing criteria. If this trend continues, environmental compatibility could become permanently established as a third basic expectation, alongside reliability and safety - although most customers are not necessarily willing to pay more for that." The study found that nearly 80% of Europeans intend to react to the climate change debate in their next car purchase; however, the overwhelming majority of people surveyed stated that doing without a car is not an option.

Lars Stolz and Christian Heiss

Automotive Materials (November 2007) published a bylined article by Lars Stolz and Christian Heiss based on the firm's "Automotive Suppliers in China" study, which was released in August. The authors write that, for European automotive suppliers, pursuing the right China strategy will be a critical success factor in helping preserve competitive advantages. Not only does this market offer strong sales growth and low-cost production opportunities; it is also home to potentially dangerous competitors, whose exports have been growing by an average of 70% per year over the last few years. Lars says: "The premium manufacturers, which once purchased only a small percentage of their parts from low-wage countries, have set even higher targets. They intend to boost their purchasing volumes in China by a factor of three to eight." Christian notes that the study's medium-term scenario shows that "in the last few years, the profitability of automotive suppliers in China has decreased by more than half, due to falling prices and the growing sophistication of automotive purchasing departments, which have learned how to analyze factor cost differences, as well as increased competition and rising quality demands."

Remi Cornubert

Le Monde (24 October 2007) quoted Remi Cornubert in an article about the competition to be the world's number one automaker. Remi says that, for 2007 it is difficult to say whether GM or Toyota will be number one. Regarding the future, he adds: "It is a non-issue; the changing of the guard is inevitable. Toyota will become the world's number one automaker; the only question it is when. If it turns out to be 2008, that would not be surprising."

Lars Stolz

n-tv (16 October 2007) broadcast an interview with Lars Stolz on the topic of the opening of the BMW World in Munich. Apart from automobiles, BMW World (which cost 250 million euros to build) offers restaurants, shops, exhibitions, and space for events. Asked whether the project is worth the expense or not, Lars says: "Such projects are expensive but pay off in the end. A company has to invest in its brand and of course, for a premium automaker like BMW the premium idea and the premium auto delivery are of particular importance."

Remi Cornubert

Les Echos (15 October 2007) quoted Remi Cornubert in a story about automakers seeking to reduce vehicle carbon dioxide emissions. Remi says that automakers are now obliged to accelerate work on this issue and slow development efforts related to more superfluous equipment: "An increasingly large percentage of R&D budgets is now being dictated by legislation."

Jan Dannenberg

Wirtschaftswoche (15 October 2007) quoted Jan Dannenberg in a cover story about BMW's plans to reduce its costs by about six billion euros yearly, requiring their engineers to increasingly build modules and parts that fit into a whole model range. Jan says: "BMW is better at this than most of its competitors, but there is still room for improvement." Jan notes that the cost-cutting program will have an effect on suppliers that were previously happy with BMW because in the past the automaker allowed them to earn wider margins than the competition did. He concludes: "BMW will differentiate between replaceable commodity parts and supplier parts that really differentiate the brand. For those who supply commodity parts, the pressure will increase."

Peter Bosch
kfz-betrieb (October 2007) quoted Peter Bosch in an article about the marketing of eco-friendly cars. The article cites the firm's Auto & Environment 2007 study, which found that: half the people surveyed want to limit the number of miles they drive, but only 15% consider that to be enough; nearly 30% of European consumers intend to switch to a more environmentally friendly drive system; 18% would like to purchase the eco-model of a given model series, but only slightly less than 13% would be willing to pay higher costs for that model. Peter concludes: "The climate change debate has caused environmental compatibility to come up out of nowhere to take fifth place among purchasing criteria. If this trend continues, environmental compatibility could become permanently established as a third basic expectation, alongside reliability and safety - although most customers are not willing to pay more for that."

Christian Heiss and Lars Stolz

Automobil-Produktion (1 October 2007) quoted Christian Heiss and Lars Stolz in an article based on the firm's study on Automotive Suppliers in China, which found that pursuing the right China strategy will be a critical success factor in helping suppliers preserve their competitive advantage. Lars says: "By pursuing an aggressive, innovation-driven strategy, European suppliers will be able to position themselves as first-tier suppliers to the fast-growing Asian manufacturers and capture an above-average share of the industry growth that will occur in China. Christian adds: "Keeping a close eye on the Chinese supplier market for the product range in question is really a matter of survival for the European automotive suppliers, because it will enable them to respond quickly to emerging local, super regional, and one day international supplier structures."

Christian Kleinhaus

Automobilwoche (24 September 2007) quoted Christian Kleinhans in a story about the tendency of auto manufacturers to produce niche models more and more in-house. Christian says this trend will reverse, noting that using third-party manufacturers' capabilities gives brand owners "strategic flexibility" as it spreads the risk to the third-party manufacturer. He concludes that third-party manufacturers should also prepare to "serve the niche within the niche, specifically for vehicles with production volumes of less than 1,000 cars a year."

Christian Heiss

Financial Times Deutschland (13 September 2007) quoted Christian Heiss in an article about Oliver Wyman's "Automotive Suppliers in China" study, which found that in the near future suppliers will deliver even more integrated components to manufacturers, with today's 65% of production done by suppliers increasing to 77% by 2015. "Manufacturers will concentrate on assembly, sales and marketing. For suppliers this means higher standards that can only be fulfilled by large companies."

Lars Stolz

Frankfurter Allgemeine Zeitung (13 September 2007) quoted Lars Stolz in an article about Oliver Wyman's "Automotive Suppliers in China" study. Lars says that China will be key to the success of European automotive suppliers: "Premium manufacturers will increase their purchasing volume from Chinese suppliers by threefold to eightfold."

Peter Bosch

Automobilwoche (10 September 2007) quoted Peter Bosch in an article about Oliver Wyman's "Auto & Environment 2007" study, which found that consumers in Europe and the U.S. intend to react to the climate change debate by purchasing more environmentally friendly cars. Despite the fact that environmental compatibility has become established as a third basic expectation, alongside reliability and safety, Peter says that: "Most customers are not willing to pay more for that."

August Joas

The dpa newswire (7 September 2007) quoted August Joas in a story about the desire of consumers in Europe to purchase more environmentally friendly cars. August says: "Environmental compatibility has risen to be the fifth most important purchasing criterion for new cars," citing Oliver Wyman's "Auto & Environment 2007" study. He suggests that car makers need to apply the same rigorous and sustained commitment to environmental compatibility that they have in the past to safety and quality. August notes that even though "most customers are not willing to pay more for that," most stated that an independent eco-seal for cars would represent an important factor in their purchasing decision.

Le Figaro Economie (4 August 2007) published a story about the "flex-fuel" vehicles, citing an Oliver Wyman study finding that, by 2030, 10% of vehicles sold will run on flex-fuel.

Remi Cornubert

Le Figaro Economie (1 August 2007) quoted Remi Cornubert in a story about increasing automobile prices. Remi says that the days of manufacturers increasing prices faster than inflation are over, noting that the cost of the technology being added in to many cars is causing a polarization of the market between low-cost transportation and loaded SUVs and 4X4s.

Remi Cornubert

Automotive World (1 August 2007) quoted Remi Cornubert in a story featuring the firm's "Car Innovation 2015" study, which concludes that just 33 of more than 300 technologies now under development are potential "blockbusters" by 2015. Remi says: "We took the term (blockbuster development) from the pharmaceutical industry. It means a development that has potential revenues of 1bn euros a year, or 100% penetration in the marketplace."

Remi Cornubert

WardsAuto.com (31 July 2007) carried an interview with Remi Cornubert about the ways that global automakers market their innovative ideas. "Taking a simpler approach is the biggest area for improvement," says Remi, noting that the number of new technologies in cars is increasing so rapidly that customers can't keep up. He adds that acronyms, different names for the same technologies, and listing optional equipment alphabetically rather than grouping it under functional areas: "lead to customer confusion, instead of strengthening the OEM's brand." Remi cites the firm's Car Innovation 2015 study conclusion that, overall, the market potential for innovation is often very low. He concludes: "Only 33 of 300 current innovations in development have the potential to be potential blockbusters by 2015."

Larry Alberts

Bloomberg TV (27 July 2007) carried an in-depth interview with Larry Alberts on the topic of "China's Logistics Crunch." Larry discusses the unique challenges and high costs of logistics services in China and efforts by the government to support infrastructure development. He explains that logistics issues also can serve as a barrier to firms seeking to enter the China market.

Remi Cornubert

Le Figaro (18 July 2007) quoted Remi Cornubert in a story about General Motors' purchase of a 50% stake in VM Motori. The article notes that this acquisition will help GM in the development of new diesel engines. Remi says: "The diesel is critical in Europe, where it represents 50% of sales. To remain competitive without enormous R&D expenditures, GM had few alternatives." He adds that the R&D cost for a new engine is typically on the order of a billion euros.

Jan Dannenberg and Jan Bugard

First Financial Channel (2 November 2007) in Shanghai televised an interview with Jan Dannenberg and Raymond Tsang on its "Auto Forum" program. Jan and Raymond presented the firm's Car Innovation 2015 study findings and discussed how the study impacts the Chinese auto industry and market.

Automotive Design & Production (27 June 2007) carried a feature article quoting Adrian Slywotzky and introducing the concept of strategic risk and summarizing the key messages of The Upside as they apply to the auto industry. Adrian concludes: "Seen early and managed proactively, [strategic risks] become the next big growth opportunity. Imagine Sony with iPod. Imagine Motorola with a cool customer brand. Imagine Ford having Toyota's position in hybrids."

Jan Dannenberg

Welt am Sonntag (24 June 2007) carried a bylined article by Jan Dannenberg on the topic of the firm's "Car Innovation 2015" study. Explaining that 40% of R&D spending in the automotive industry is wasted, Jan writes: "There are a lot of reasons for these false investments. Neither manufacturers nor suppliers consider customer needs; also, the sales channel fails to adequately explain these innovations to customers. As automotive manufacturers concentrate on new innovation fields such as comfort, security, power enhancement, or emissions, they often forget that the car has to remain affordable."

Adrian Slywotzky

Management Today (12 June 2007) cited Adrian Slywotzky and The Upside in a column about the auto industry. Columnist Stefan Stern writes "In Adrian Slywotzky's new book The Upside there is a fascinating chapter which looks at the possibilities of collaboration breaking out in this industry. Simply out, these companies simply cannot afford to carry on developing new models on their own. They have to partner up, and share investment costs. Will it happen? Not until we apply the jump leads to the tender parts of motor company CEOs."

Thomas Kautzsch
Frankfurter Allgemeine Sonntagszeitung (20 May 2007) quoted Thomas Kautzsch in a story about the continuing acquisition wave and its effects on global stock markets. Thomas says: "The boom is continuing. Private equity firms and companies have a lot of money at their disposal, and the deals are getting more and more expensive." He notes that "pressure on companies from hedge funds and other investors has increased," forcing firms to sell off marginal business and distribute their capital to the shareholders. Thomas adds that firms that choose to sit on their capital reserves will become the target of acquisitions themselves. On the question of when the M&A boom will end, he concludes: "The first signs of overheating can already be seen. When the big credit-financed transactions start to break down, the market for mergers and acquisitions will begin to collapse as well."

Jan Dannenberg
Automobil-Produktion (15 May 2007) published an in-depth interview with Jan Dannenberg on the topic of the new Oliver Wyman "Car Innovation 2015" study. Jan says the global automotive industry is currently losing money at the rate of 27 billion euros per year. He cites as a major cause the many technological innovations that are being developed without considering the customer's willingness to pay for them. "The study shows that customers are only interested in every sixth innovation that is offered by manufacturers. In the end, high R&D expenses and increased production costs produce returns that are much too small." According to Jan, automakers have lost sight of the fact that the car still has to be affordable as they continued to develop technology for improved comfort, security, power, and emissions. Jan concludes: "Nowadays, 780 euros per car are spent on R&D, but the same auto sales results would be possible with R&D expenses that are 20-30% lower. In some cases the cost-cutting potential for innovation could approach 40% across the value-added chain."

Guido Hertel and Fabian Brandt
Automobil-Technik (May 2007) published a bylined article by Guido Hertel and Fabian Brandt about the growth in automotive electronics and the challenge it represents for auto repair shops. Fabian writes: "While customers can look forward to many user-friendly innovations, the requirements for the garages are increasing due to the diversity of functions." Guido adds: "The complexity of the cars has been growing continuously in recent years, and even small cars have up to 20 electronic control devices, while high-end vehicles have up to 70." Fabian suggests that car manufacturers invest in appropriate education programs and diagnostic equipment for repair shops. Guido concludes that "intensified cooperation between manufacturers and garages increases customer satisfaction but, more importantly, opens up new opportunities for generating after-market sales in the electronics domain."

Thomas Kautzsch
Maschinenmarkt (30 April 2007) quoted Thomas Kautzsch in an article about the Oliver Wyman Value-Pricing Study in Germany. The study found that, even though capital goods manufacturers recognize the need for a better pricing process, only 7% have used sophisticated pricing methods to date. Thomas argues that profitability can be enhanced more effectively by raising prices than by cutting costs: "Most manufacturers of capital goods view prices as a parameter set by the market, over which they have little influence, but even small price increases can have a huge impact on profitability." He notes that the Value-Pricing approach is disassociated from a classic list price and "leverages new profit models, such as payment by production performance or machine availability, royalties for new production processes, or profit-sharing from benefits achieved by the customer."

Wolfgang Krenz
Verkehrsrundschau (15 April 2007) published a bylined article by Wolfgang Krenz about auto industry trends. Wolfgang writes that European manufacturers will rely on economies of scale and technology leadership to remain competitive with Asian manufacturers. He notes that customer needs rather than technology are driving new selling strategies. With many vehicles technically the same, Wolfgang says that the complete service package is going to drive sales success. He advises manufacturers to concentrate on those areas that deliver the highest customer value.

Jan Dannenberg

More than 30 German newspapers (19-26 May) quoted Jan Dannenberg about Oliver Wyman’s “Continuing Crisis or Rebirth of the Automotive Supplier Industry?” study, conducted in cooperation with the VDA. The study found that suppliers around the world are feeling the full force of the crisis and analyzed the effectiveness of current industry countermeasures. Jan says: “The measures being used right now like shorter work weeks are enabling companies to briefly catch their breath, but they are not a long-term solution. For this reason, automotive suppliers are being forced to make significant adjustments in their cost structures.” Börsen-Zeitung emphasized the study finding that no profits will be generated this year or next, and that a return to 2007 levels of profitability won’t be will be reached in 2014. Platow Brief added the finding that CEOs expect that up to 500 of the world’s 4,000 automotive suppliers with revenue of more than €20 million to declare bankruptcy by the end of 2010.

August Joas

Handelsblatt (29 May) carried a “Statement from August Joas” in a regular feature in which directors of management consultancies present their business philosophy regarding customer service. August says: “ ‘One size fits all’ is not the right answer, because the customer is always unique and requires individual solutions and consultation. Customer orientation also means not only offering good strategic ideas, but also checking them for feasibility and having them ready for implementation.”