Our industry has never been afraid of borrowing concepts or technologies from other sectors. Today’s vehicles are littered with examples. Electronics governing the control of today’s engines started with concepts from the space program in the ’60s and metallurgy of many of today’s growing materials choices started in the military or vehicle racing. We also have borrowed from the music industry. The concept of “cadence” (the measurement of a beat or movement) rightly has a place in understanding the frequency of vehicle programs. Essentially, how often vehicles are renewed with major revisions or new platforms is the issue.
The global leaders in the regular renewal of their vehicles and power plants have long been the Japanese OEMs. For decades, one has been able to set their watch by the regularity of their vehicle renewal cycles—essentially every five years for high-volume nameplates such as a Toyota Corolla, Honda Civic or Mazda6. Cycles were hubbed out of the home market then cascaded to other high-volume, technologically demanding markets such as Western Europe and North America. Other OEMs were not as timely though in core, high-volume segments such as the European B or C segments; regular cadence and technology/styling renewal had a major bearing on market share and thus profitability. In North America, we were less rigid on regular product renewals—often we would want to extend a vehicle to draw out the amortization of tooling and concurrently build the new and old version simultaneously. Often called the “classic” strategy for the renaming of the older version as a classic offering and thus a lower price to differentiate from the newer offering.
The convergence of cadence from a global perspective has been an ongoing trend for the last decade. Driven by the need to achieve higher real economies of scale—past just a common build process to the actual sharing of a high number of key components globally—has been a driver for all regions singing from the same songbook. The convergence of emission standards (albeit slow and plodding) has been a tremendous accelerant to the introduction and adoption of global vehicle platforms for virtually every region. In days past, we would send our outdated and lower technology offerings to regions with lower emission standards and consumer expectations, which mean running these designs for another decade or so. Examples include the Volkswagen Santana offerings in China or utilizing a modified version of the older Opel Corsa in Brazil. These vehicles still had life—just somewhere else.
Today, the convergence of emission standards for most major markets, the need to be as efficient as possible in a hyper-competitive industry, and the growth of the Internet as a medium to highlight the latest global designs to all markets underscores the need to have the world move in lockstep. These factors have driven down global cadence in high-volume areas such as the B-segment by several months. By the end of the decade, expect your average B through D segment offerings to register a weighted average cadence of 5.5 to 6.5 years. A major change from 7 to 8 year average of the last decade.
How does converging cadence impact the industry? Globalization has not only impacted the number of regions building the same platform, the condensed launch schedule is a new wrinkle impacting OEMs and suppliers alike. In years past, it could take 3 to 4 years to launch a new platform between 2 or 3 key regions. Today, the launch sequence is tighter, more crowded, and ultimately places many more demands on the supply base to be globally coordinated. Additionally, the “mother plants” for several key global offerings are starting to shift away from the traditional home region of the OEM, offering a new level of complexity for long-held supplier relationships. OEMs are seeking to better balance global cadence from an annual perspective: loading their engineering and procurement teams evenly aids in better cost control, quality and ability to react to changes in the environment. Similarly, suppliers seek the same balance of engineering requirements due to the inability to ratchet engineering and tooling capability up or down. Global platforms offer a regular cadence or flow to future vehicles. This commonization of global processes and structures also acts as an enabler to faster installation rates of new technologies across regions and vehicles—both a positive and negative depending upon which side the supplier sits on.
Our industry has passed the point of no return with respect to converged cadence of major platforms. The next plateau is a reduction in the number of systems between platforms and structures, a process already well underway. In the end, we should fully expect a faster, more active production development and launch environment which demands a global footprint from the bulk of the supply base and a global view from OEMs. In this brave new world, those that embrace converged cadence and the impact thereof will be able to benefit from it.