Lean R&D
Seeking Low Cost car

Last update: December 12th, 2008
HOME  Portals: 5S   Production Lean Entreprise Maintenance Management Quality Strategy Version française AUTHOR

Since Renault - Dacia demonstrated the success and interest for developping low cost car (the Logan), almost all manufacturers go for the Low Cost models.

Challenges are manifold.

  • First challenge is to respond to market demand in emerging countries like China, Russia, India, and Brazil, identified as only growth potentials left.

  • Second challenge is to prevent competitor's monopoly to supply these new market segments for low cost vehicles sold less than 5,000 dollars and a possible ultra low cost segment for vehicles sold less than 2,500 dollars.

  • Third challenge is to develop an new approach for the low cost design, aiming the manufacturing of such low cost models yet still profitable. Furthermore, the new developed solutions may be set onto higher end models, improving their profit margin.

Lean thinking from early R&D

First thought about R&D for low cost cars is to simplify the bill of material, extend the use of common parts and reuse existing components for new and different vehicles.
Yet these measures are mere minor continuous improvements, small step kaizen, far from expected savings.

Indeed, extending a component lifecycle or fitting it onto another vehicle brings economies of scale and saves costs for development and tooling, but it brings a small series of few dollar savings per vehicle. The low cost car needs savings in greater extends to cut the sales price from about 10,000 dollars to less than 5,000.

The new R&D approach has to cut with old solutions and search for breakthrough, radical innovation, considering the function globally. Most functions in a vehicle are built around a chain made of sensors, actuators, calculator and interface with driver. To make the significant savings, it is necessary to reinvent the whole and not try to optimise one or an other of these elements independently.

A dual approach; technical and marketing

The technical and marketing approach is dual (each on its own field) and both together as the acceptable technical solutions will come after enquiring customers' wishes by marketing.

The technical approach strives to reinvent the chain and deliver the desired effect at targeted cost.

The marketing approach tries to discriminate what features are critical to customer in terms of perception of quality/cost ratio and what concessions he'll be ready to make about quality or functions to reduce the price of his purchase.

In a car, the driver perceives the quality of a function only through its effects, for example braking with an anti blocking system (ABS). He perceives an esteem value through the interface, sole visible element, like the simple air-conditioning knob for a manual system, compared to the more sophisticated interface driving an automatic air conditioner with dual right-left setup.

Author, Christian HOHMANN is director in charge of the Lean et Supply Chain practice at Agamus Consult (Paris, France)

Contact the author

Lean Portal

Lean survey in European automotive industry

Etude Lean dans l'automobile

Learn more and/or apply for 2008 issue

2007 awards

A Lean design approach is cost efficiently in development phase but prepares Lean efficiency in later mass production. Indeed, manufacturing costs in are greatly related to early choices made during development. That's why it is necessary to think lean upstreams and early, for the choice of technical solutions as well as in terms of design for manufacturing.

This page was brought to you by ©hris HOHMANN - http://chohmann.free.fr/