The automotive industry is at a crossroads. The key to survival and prosperity will be to achieving and sustaining competitive differentiation. Competitive differentiation depends on distinguishing quality, cost/value, and timeliness attributes. The industry is experiencing significant changes: (1) Quality – the definition of quality has moved on from traditional objective measures (such as reliability, durability, noise) to expanded definitions that are more subjective, experiential and emotional criteria. (2) Cost/value – the price of an auto has decreased due to the declining real cost of goods (competitiveness has forced automakers to take out costs and pass saving on to consumers), and the margin shrinkage that is the result of information transparency. Internet sites are offering retail prices, dealer invoices, rebates, financing, online buying services, etc.; this has enhanced the consumer’s power. (3) Timeliness – bringing a product to market quicker than the competition will mean that an OEM can nimbly translate market trends into products eagerly sought by buyers. Attractive products require fewer incentives to move them over their lifetimes. The implications of how automakers approach and execute differentiating strategies: attributes are continually being redefined by creative designers and engineers, new materials, and new technology; a greater focus is being placed on features that are useful and valued by consumers; experiential attributes are increasingly significant as sources of differentiation; customer handling excellence (while important) will always be outweighed by product attributes; and competitive benchmarking is useful only up to a point. For all automakers, the foundation for competitiveness are: invest in fresh, attractive, affordable, consumer‐driven products rather than incentives that push product to consumers; nimbleness must be achieved through accelerate product development; push for the use of intelligent platform, subassembly and component sharing; target flexible manufacturing and work practices; optimize order to delivery processes; cap production of individual car lines to control supply; and focus on key developing markets (the last “battlefields”).
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