Currently reading: Fiat Chrysler Automobiles calls for widespread components sharing
FCA claims car makers could save billions by sharing more under-the-skin parts
3 mins read
12 May 2015

Fiat Chrysler Automobiles (FCA) has renewed its call for further mergers across the global car industry.

It has released an independent report that makes the case for a massive sharing of core components, including engines and transmissions, by car manufacturers.

The 25-page presentation puts forward the argument for a mass merging of engineering and development and even a merging of factories between brands. The report says: “It is about choosing mediocrity or fundamentally changing the paradigm for the industry.”

The report’s anonymous author says that expenditure on research and development (R&D) by automotive firms has spiralled upwards since the low point of 2008, in the wake of the credit crunch.

According to figures in the report, a total of £55 billion was spent globally by the biggest car manufacturers in 2008, rising to £87bn in 2014.

The report suggests that spending will continue to rise, as car makers are pressured to invest in ever more efficient powertrains, greater levels of active safety and autonomous driving technology.

Furthemore, compared with other industries that have big product development budgets, the automotive industry has to invest in products that have a much shorter lifecycle and (usually) lower profit margins, further raising costs.

The FCA report breaks down development costs. It suggests that the R&D and tooling for a vehicle hoovers up 75% of the budget. R&D for the powertrain and the powertrain tooling accounts for another 20%.

The contention is that as much as 45-50% of the money invested in product development is in technologies and components that are “undiscernible to the customer”. 

Moreover, there is now almost a complete overlap in powertrain and transmission offerings between mainstream makers, a situation intensified by the various brands having to meet the same CO2 and other pollution targets.

The report suggests that, in the medium term, car makers need to ditch traditional approaches and work towards major R&D and production integration, sharing platforms, transmissions and even factories across the industry.

The approach would be similar to non-Apple mobile phone production, where processors and software are shared across many different brands but the products are built by third-party factories.

Automotive brands would remain separate entities and concentrate on differentiation through design and branding.

The downside of an industrial-level merger is that it would take probably a decade to align product development on a single platform and powertrain family.Currently, the average car maker has 18 different platforms in its portfolio, 20% less than in 2004, and about 3.3 different ‘top hats’ (body styles) per platform, 30% higher than in 2004.

Reducing the number of individual architectures is a major concern for the entire car industry, with Volkswagen spending huge sums to roll out its MQB front-drive architecture and Toyota recently announcing its own TNGA (Toyota New Global Architecture) project.

The report quotes Raj Nair, Ford’s vice-president for global product development, as saying that the brand currently has 12 global platforms, will cut that to nine by 2016 and wants eight as a “long-term target”.


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Automotive analysts have been highly sceptical that such wide-ranging mergers could become a reality. However, the financial pressure on mass makers remains intense.The report is described as a “dispassionate look at the industry from the outside using insider knowledge”.

FCA denied it was an indication that the company was “up for sale” or that achieving a mega-merger was a “matter of life or death” for it.

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12 May 2015
Makes sense. They already share gearboxes and engines.

12 May 2015
FCA has become a desperate tart, offering itself to just about anybody. It's the Sally Bercow of car makers. Mind you, at least Sally has had some success in that department, unlike FCA.

12 May 2015
I dream about the early 30s, when I could choose a chassis from a chassis manufacturer, like Invicta, an engine from an engine manufacturer, like Meadows, a gearbox from a gearbox manufacturer, like Cotal, and a body from a coachbuilder like Vanden Plas and, hey presto, I have exactly what I want. Come on, 21st century, surely you can do this and at a lower price?

12 May 2015
And yet, the Japanese made upcoming Fiat roadster will have Italian made engines, and won't be branded as an Alfa Romeo because Alfas " Have to be made in Italy ". How 'bout those savings Sergio?

12 May 2015
tuga wrote:

And yet, the Japanese made upcoming Fiat roadster will have Italian made engines, and won't be branded as an Alfa Romeo because Alfas " Have to be made in Italy ". How 'bout those savings Sergio?

Excellent point! And many sub-systems like fuel injection, bearings, turbos, gearboxes come from third party suppliers anyway. Eg Jaguar and BMW have the same transmissions by ZF, so this happens anyway.

12 May 2015
I disagree that engines are not "discernible to the customer". Most engines have a unique character (as well as performance and economy) that help to sell the brand, particularly to enthusiasts. It's especially highly unlikely with premium brands with premium engines like BMW and their straight-sixes, Jaguar's new Ingenium range, or Volvo's Twin Engine. It's different for Audi as they can share 'in-house'. I know Mercedes sell their 2.1 diesel to Infiniti but it's out-dated and due to be replaced anyway.

12 May 2015
While I appreciate the economical advantages to this argument I think having manufactures conducting their own R&D has a stronger case. Imagine a future where R&D focused on the wrong engine solution say diesel hybrids just for arguments sake but overlooked hydrogen powered or pure electric, this could lead to manufactures heading into a technological culdisac.

12 May 2015
Volkswagen Group does this and everyone appears to love it. Badge snobbery still alive and well.

12 May 2015
What FCA appears to be proposing goes far beyond the purchasing of components, sub-assemblies, electronics, and even drivetrains from specialist manufacturers (or even competitors) which is already widespread in the industry. These proposals could have profound implications for competition and choice for the consumer. They might seem superficially attractive in the short term as a cost-cutting measure, particularly for a weak player such as FCA. In the longer term, it could stultify the R&D that manufacurers undertake, not just to reach targets on fuel efficiency, CO2 output etc. but, crucially, to gain an edge over their competitors. Put simply, why should VAG (for example) spend a fortune on developing more efficient technologies if the competitive advantages they would bring are nullified by having to share them with their competitors? I know of no example in industrial history where "forced" sharing of technologies has improved choice and value for the customer. In fact, the experience of Soviet-era Russia indicates that precisely the opposite is true. I imagine that competition authorities would be very cautious about any such moves and, personally, I would hate the thought that the only real choice available to me in buying a particular type of car would be superficial, concerned with appearance and trinkets, rather than the quality of the engineering underneath. So, a terrible idea, IMHO.

12 May 2015
More like this please.


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