Automotive Competence Center customer magazine No. 01 _ June 2005
> Hybrid engines in the fast lane – Unleashing the power of brands –
A view of the markets in the US, China and Japan
Developing, producing, selling and servicing automotive vehicles was a challenge
from the very beginning 100 years ago and it continues to be challenging. Vehicle
manufacturers and suppliers have to meet ever-more demanding customer
requirements, legislative and environmental standards, cope with raw material
shortages, and successfully perform in a broad set of countries and cultures.
Outstanding performance in the past is worth little beyond the financial buffer it
generates. Every day, every year, the jury – customers – are out to choose the
winners again. And these may differ from last years' winners.
To succeed in this complex and challenging battle, information is critical. Working
for leading automotive players in all regions of the world, the Automotive
Competence Center of Roland Berger Strategy Consultants has a wealth of
information at its disposal. Insights on the latest trends help us provide valuable
solutions to our clients' key challenges. Aiming to serve our customers even better
in the future, we decided to publish some of our knowledge in a new periodical
called "Roland Berger Automotive Insights". It will be distributed by mail to all
decision makers, experts and friends of the extended Roland Berger automotive
family. In this first issue we highlight and comment on the latest trends in hybrid
vehicles. Dr. Karl-Thomas Neumann, CEO and Member of the Executive Board at
Continental Aktiengesellschaft, shares his thoughts on the success of hybrid
vehicles from a supplier's perspective. You will also find some ideas about how to
improve the positioning of brands as well as updates on the latest trends in the
US, Japan and China.
I wish you insightful reading and welcome any feedback that further improves our
services for you.
Dr. Thomas Sedran
Partner at Roland Berger Strategy Consultants, Munich
If you have any suggestions or questions, please do not hesitate to contact us:
Roland Berger Strategy Consultants GmbH
Arabellastr. 33, 81925 München
Dr. Gabriele Blod
Dr. Heidi Sylvester
Cover: Axel Wierdemann
DesignTeam Roland Berger
Published three times a year
No reprints without prior permission of the publisher
3 | Automotive Insights
Automotive inSIGHTS | 3
Hybrid engines in the fast lane –
Challenges for established manufacturers
The hype surrounding hybrid vehicles has taken the automotive
world by surprise. Their market success illustrates the importance
of customer-oriented technology management. European and
American manufacturers have taken note.
Hybrid engines in the fast lane
With oil prices at a record high, global warming and depleting
fossil fuel stocks, calls for efficient, environmentally
friendly cars are becoming more frequent. Contrary to
Japanese hybrid pioneers, European manufacturers have
continued to depend on diesel technology and, in addition,
have focused their research on fuel cell and hydrogen
technologies. These technologies will not be ready for use
until sometime between 2010 and 2020, at the earliest.
Manufacturers and experts are having technical debates
on the strengths and weaknesses of diesel and hybrid
technologies. As a result, consumers have become more
confused and have not been encouraged to embrace
environmentally-friendly technologies. While the strength
of diesel lies in long-distance journeys, hybrid engines are
more efficient in cities, on short trips with a high rate of
stop-and-go. The air pollution debate in Europe and the
success of hybrid cars in the US and Japan could put the
hybrid engine on the fast track to success here at home.
In the US, diesel technology has always faced challenges
because of strict emissions laws. Driven by the discussions
on reducing emissions and public programs, over 80,000
hybrid vehicles were sold in 2004. More than 50,000 of
these were Toyota Prius.
In 2003, the Toyota hybrid gained visibility when environmentally-conscious
celebrities Cameron Diaz and Harrison
Ford drove up to the red carpet at the Oscars in their Prius.
Market research suggests that sales will more than double
this year, and has forecast that over 200,000 hybrids will
be sold. Over 100,000 of these are expected to be
Toyotas. By 2010, a market volume of 800,000 hybrid
vehicles is expected.
A challenge for European and American manufacturers
Toyota, which has thus far been world leader in terms of
growth, quality, and profit, is now taking advantage of the
opportunity to become a technology leader and to develop
an emotional image, particularly for its Lexus brand. The
strategic move toward hybrid engines is a cornerstone of
Toyota's strategy to become market leader by 2010. The
company has continuously developed hybrid technology
and is therefore years ahead of the competition. Toyota's
future plans include offering the hybrid option for all of its
vehicles. The company will therefore build up its production
capacity and strengthen its development activities.
Toyota's plans have made European manufacturers
nervous, as it could soon erode their market positions,
such as the idea that "exciting and innovative cars come
European and American automotive manufacturers have
long hesitated in addressing the hybrid issue. For years,
companies argued that two engines would be too expensive
and too heavy. When the Prius's hybrid engine was
introduced in 2000, manufacturers did not see it as a
challenge because of a design that resembled a science
project and insufficient driving dynamics. However, they
began to take the hybrid more seriously when the Lexus
RX400h was presented. AUTO BILD, a German automobile
magazine, gave the RX400h rave reviews: "Runs smoothly,
4 | Automotive Insights
is great fun and even calms your environmental
conscience." This statement precisely summarizes
customers' expectations of hybrid vehicles.
To make up for lost time, American and European automotive
manufacturers have undertaken impressive efforts
to catch up. They have announced the arrival of several
new car models for the near future. Ford, for example,
introduced a hybrid version of its Escape model at the
end of last year. Since demand for the car far exceeded
expectations, four more Ford hybrid models will hit the
market within the next three years. Honda plans to
introduce an over 240 horse power hybrid version of the
Accord, the highest selling model in the USA. General
Motors and DaimlerChrysler, who were long opposed to
the hybrid concept, are cooperating to develop an even
more efficient technology that they plan to present in
2007. Nissan is aiming for an annual output of 50,000
hybrid units of its Altima model, using Toyota electrical
components. VW has developed a hybrid prototype based
on the Touran. Audi is working intensively on a hybrid
engine for its new Q7 SUV. Even Porsche is considering
a hybrid version of its Cayenne SUV.
Customer-oriented technology management to ensure
successful market positioning
The example of hybrid engines shows that integrating
customer-oriented technology management into a
company's overall strategy is decisive. Already, the topic
of safety brought on surprises when the Euro NCAP Crash
test was introduced. While underestimated automotive
manufacturers shone with five stars, one premium
manufacturer had to accept a four star result for its new
product line. Now, the topic of the environment shows that
innovative engine technology alone does not sell cars.
Customers are looking for a complete package that
includes driving pleasure, performance, image, design,
safety and environmental friendliness.
If manufacturers continue their efforts to differentiate
themselves with high technology without considering the
value for their customers, they will not be successful.
Various technological developments such as by-wire
technologies and telematics illustrate this. The competition
between the technologies increased complexity and cost
pressure. In the face of negative customer reactions, many
companies are going to change their philosophies. They
are now moving away from the "technology creates need"
approach and toward the notion of "technology creates
value for customers". Companies who want to put this
approach into practice need a technological positioning
strategy that identifies new trends early and actively
pursues technological change. Technological value
creation at every level has to be consistently geared
toward brand positioning and target customer needs.
Hybrid vehicles will continue to move into the fast lane,
especially in the US and Japan. European manufacturers
must prepare for hybrid technology, which will compete
with diesel engines within the next few years. Companies
who want to maintain or improve their market position will
have to ensure that their technology management can deal
with the challenges of the future.
Partner at Roland Berger
Strategy Consultants, Zurich
5 | Automotive Insights
Hybrid engines from a supplier's perspective
Hybrid vehicles may only be a temporary solution on the way to environmentally
friendly cars. Nonetheless, suppliers will have to react to the growing trend efficiently
and flexibly in coming years.
Hybrid engines are being established as an addition to
conventional engines. Current worldwide sales figures
illustrate this trend and suggest that the hybrid market will
grow strongly in coming years. However, forecasts of actual
market volumes vary significantly, predicting sales of one
to eight million hybrid vehicles by 2012. Based on our
project experience, we believe that two million is a realistic
In the long term, hybrid vehicles will be a temporary
solution on the way to electric cars, which will use new
energy sources such as fuel cells. In 2004, Toyota, Honda,
Ford and GM sold more than 100,000 hybrid vehicles
worldwide. Hybrid technology has been most successful
in Japan and the US, but is also likely to gain popularity
Hybrid systems can basically be divided into two different
forms: mild and full hybrid. The difference lies in the
performance of the electric motor. With the mild hybrid
system, the electric motor can provide support of up to
15 kilowatts (approx. 20 horse power), and is used
primarily to start or to accelerate with low engine speeds.
The full hybrid system, on the other hand, has a much
stronger electric engine of 25 to 50 kilowatts (35 to 70
horse power) and can function at high engine speeds.
For short periods of time, the electric engine can be used
without the conventional motor.
Three factors will drive hybrid market development
worldwide. First, European (ACEA), Korean (KAMA) and
Japanese (JAMA) automotive manufacturers are working
toward emission reduction. This is the result of voluntary
commitments as well as current and future emissions laws
(especially with regard to CO2 emissions).
Secondly, further environmental protection issues, such
as the current discussion on particle emissions, will play
an increasingly important role.
Finally, the added value that hybrid vehicles can offer,
namely improved driving dynamics without increased
energy consumption, is a decisive factor. Higher fuel
prices will also help hybrid vehicles achieve a higher
Regenerative braking substantially helps reduce emissions
and fuel consumption. If the mild hybrid system is applied,
consumption can be reduced by five to seven percent. The
full hybrid system, combined with a modified brake, leads
to an even greater potential for reduction. When braking,
an intelligent steering system distributes the braking
energy between the conventional brake and the hybrid
engine. In this way, as much electric energy as possible is
recovered, which can be used to power the hybrid system.
This leads to increased driving comfort and dynamics,
without increased fuel consumption.
On a modular basis, Continental offers mild and full hybrid
systems, as well as the appropriate braking systems. This
enables the company to react to market requirements in
a flexible and cost efficient manner. With our mild hybrid
system in GM’s Silverado and Sierra SUVs, we are one of
the first suppliers to deliver hybrid systems for vehicles in
Dr. Karl-Thomas Neumann,
Chief Executive Officer and
Member of the Executive Board
at Continental Aktiengesellschaft
6 | Automotive Insights
Unleashing the power of brands
Targeting the right 'archetypes' in China: a case for holistic brand management
from the people's view in the car industry
In the highly competitive Chinese car market, brands
have become key for turning the tide for car makers.
Knowing the eight 'archetypes' of Chinese consumers
and the tricks of 'delimiter marketing' might provide
the decisive edge.
'If you've got a good product, you've got a good brand' is
no longer a valid adage. The times when cars sold themselves
have become a faint memory. This is especially true
in China. Overly optimistic prognoses after years of incredible
growth led to excess capacity and subsequently to
fierce price wars and free-falling margins. The employment
of brand forces here is key for reversing the fortunes of
many a car maker.
The 'brand experience' from the people's perspective
is not the experience of a product viewed in isolation,
which is the way engineers tend to see products. People
experience and perceive a brand in a broader, sociopsychological
context of 'worlds of values'. Knowingly or
unknowingly, people hold on dearly to their beliefs and
orientations and communicate these through their symbols.
We are all extremely adept at sensing the meaning
behind symbols and determining whether or not we wish to
be associated with the values of that symbol's user group.
People are actually highly selective when it comes to
expressing solidarity with the values of a particular group.
The more a consumer's value system matches a brand's
perceived values, the more likely – and the more frequently
– a decision will be made to consume this particular
brand: People holding traditional values buy traditional
brands and hedonistic people purchase hedonistic brands.
This correlation is overwhelmingly demonstrated by Roland
Berger Strategy Consultants in an extensive long-term
study of over 100,000 consumers worldwide.
The power of symbols becomes especially evident in
China. The Chinese change all names that are too difficult
to pronounce in their own language. BMW has simply
become 'Bao-ma', which means 'precious horse' and
Mercedes-Benz is known only as 'Ben-chi', meaning 'run
very fast'. When Chinese luxury car drivers are asked what
they want in a car, it often becomes clear that they have an
'unclear' brand perception. Drivers who would opt for a
BMW have often been seduced by the dynamic 'run very
fast' Mercedes nickname, while Mercedes types who like
the idea of a 'precious horse' have been drawn to BMW.
Roland Berger has found a way to reveal the individual
value system of people and to group people with similar
orientations regardless of socio-demographic brackets.
Eight of these so-called value-demographic archetypes
exist in China. The largest are the 'self-centered' archetype,
with a share of about 21 percent in the metropolitan
population, followed by the 'traditional maximalist'
archetype and the 'hedonist' archetype. Those falling
into the 'self-centered' category have both progressive
performance and progressive hedonist orientations and
reject the entire traditional value set. Although traditionalists
only score 10 percent they are in the majority in
rural areas, where they challenge the predominance of
the self-centered group. This forms a source of tension
across the entire Chinese population.
The key to a brand's market success – or a carline for
that matter – can be found in its 'delimiters'. So-called
'delimiters' are composed of the protagonists and antagonists
of a brand and represent the beginning and the end
of the brand's specific value spectrum. These two user
groups have such strong emotional attachments to the
brand (either positive or negative) that they influence their
social environment or archetype peers, swaying them
either for or against the brand. Delimiters provide
orientation for the majority of less emotionally attached
people in the 'indifferent middle', and thus influence the
ultimate success of the brand in no small part.
Good brands have a very high user share within their peer
group of protagonists and at the same time a considerably
less brand user share within their peer group of antagonists.
Good brands are strongly polarized as a result.
Weak brands are more 'democratic' in that they have
succeeded in acquiring a representative cross-section of
the population. Although this might seem favorable at first
glance it means that none of the value segments are over
or under-represented in the brand's consumer base. These
brands therefore have no strength, no weakness, no identity
and no real proponents – and are expendable as a
In the worst case, a brand simultaneously addresses
incompatible archetypes. What results is a double loss of
market share since opposite value segments eventually
will withdraw their loyalties and stop consuming the brand.
Many studies by Roland Berger have compellingly shown
that brands with strongly polarized 'delimiters' achieve
above-average market share and above-average profitability.
The correct polarization generates powerful 'pull-forces'
for the brand. Without this polarization and without these
pull-forces, the brand must resort to buying market share
with a much more costly 'push-force'. In the Chinese car
market, this has occurred at the expense of profitability.
The secret of strong brands is that their pull force is less
expensive than pushing the consumer.
Strategic brand management must therefore focus on the
> What values does your brand symbolize from the
people's perspective, what does your brand stand for?
> What is the optimal 'delimiter' polarization to bring your
brand in a favorable position within the competitive
environment and market dynamics?
> What are the competitors' anticipated moves and which
strategic traps can be laid to keep them off your target
The overall marketing mix must be effectively geared
toward the right strategic protagonists to attract more than
half of them to the consumer base. The difficulty lies in
simultaneously delimiting the brand from the right antagonists.
In extreme cases, it may even be necessary to
actively remove the antagonists from the consumer base
through anti-marketing. If successfully executed, the
remaining value segments will then automatically align
themselves to the advantage of the brand.
Delimiter marketing, although it might appear somewhat
counterintuitive, ultimately results in the more efficient and
effective use of dollars spent for managing the entire
marketing mix. Delimiter marketing and its implementation
requires precise strategic considerations, foresight, total
commitment and management's full courage.
Partner at Roland Berger
Strategy Consultants, Beijing
8 | Automotive Insights
My car is my castle
After the initial gold rush, the car market in China is getting more complicated.
Wei Zhu, Partner at Roland Berger Strategy Consultants, talks about the major
challenges facing companies that are active in the automotive sector.
What cars are Chinese buyers currently interested in?
This is not an easy question to answer. Over the last few
years, almost every international car brand has come to
China, either via joint ventures with local manufacturers or
via exports. You can now see almost every model out on
the streets. So what customers want first and foremost is
more choice. The days when buyers were happy to get hold
of any car no matter how outdated it was, are gone. Now
suppliers have to provide state-of-the-art cars with all the
extras. And they have to bring their latest models to China
as soon as they go on the market in western countries.
Do you expect a truly Chinese taste to emerge?
I think it would be overly simplistic to speak of a single
taste. There are some considerable geographical differences.
In the northern parts of the country, for example,
customers are more focused on sporty and powerful cars.
In eastern regions, people tend to place greater value on
the size of a car. Generally speaking, you could say that the
Chinese taste is closer to American than to European
tastes. People in China want a really big car.
What is the outlook for the Chinese car market?
There will clearly be much more competition. All major
players are active in China and they all are committed to
investing considerable amounts. In addition, growth in the
domestic car market is beginning to slowdown slightly.
As in mature western markets, car sellers will now have
to cope with a buyer's market. As well as market consolidation,
competition in terms of quality and price will
become much fiercer.
Some domestic Chinese car manufacturers are fighting
to retain their share of the market. Can they survive in
such a competitive market?
They are currently competitive in low-end segments due
to capital and technical constraints. But companies like
Cherry are trying very hard and are strongly supported by
their local governments through tax breaks and public
investment in infrastructure. Given that an increasing proportion
of the Chinese population now has the purchasing
power to buy their own cars, new opportunities are arising.
In the long-term, it is very likely that a Chinese car manufacturer
that uses the potential of the domestic market to
grow will become successful on a global scale.
But this will not happen without using foreign expertise.
No, and it is no surprise that Chinese investors are
showing a strong interest in European brands. The general
feeling is that China has to have its own brand. This can be
achieved in three ways: first, by using the expertise derived
from cooperation with global players and then developing
their own range like Cherry and Jily are doing at present.
Second, by combining car parts from abroad like China
Brilliance's Zhonghau brand, where the design comes
from Italy, the chassis from Germany and the engine from
Japan's Mitsubishi. Third, by taking over an internationally
known brand and using it to gain an international reputation.
SAIC was attempting to take this approach by bidding
for the British car manufacturer MG Rover. The bid, however,
Partner at Roland Berger
Strategy Consultants, Shanghai
9 | Automotive Insights
New policy reshapes the Chinese automotive landscape
China's government has long aspired to create global car champions. It's revised
automotive industry policy might just do the trick. With local automotive companies
gaining clout, global OEMs have their work cut out for them.
The Chinese government's revised automotive policy, which
aims to catapult local players into the global OEM league,
encourages consolidation within this fragmented industry.
Under the revised policy, which was published in April
2005, an OEM has the right to decide upon joint ventures
and new product plans if it gains control of 15 percent of
the market. Local automotive OEMs have been given a
strong incentive to build up scale fast.
Domestic OEMs have reacted quickly. Not surprisingly, it
was well-positioned, top-tier companies that spearheaded
M&A activity. China's top 5 automotive companies, which
between them control 67 percent of the market, have
either already completed M&As or are in merger talks.
Recent M&A activity includes Shanghai Automotive
Industry Corporation's acquisition of China National
Automotive Industry Corporation, Changan's purchase of
Jiangling, and NAIC's merger with Zhenyu. Ongoing merger
discussions are taking place between Hafei and Changhe;
Chery and First Automotive Works-Yangzi are in serious
talks and Beijing Automotive Industry Holding Company
is discussing a possible deal with JAC.
End of the road for small companies, global OEMs also
The revised policy marks a radical about-turn for the Chinese
government. Over the past 15 years, it has tried to
push consolidation within the industry by strictly controlling
joint ventures. Its success in creating a consolidated
market, in which local players could compete with global
OEMs, was limited.
Companies that depend on local protection and local
political struggles for their existence continue to be
commonplace in almost every province. Their small scale,
low efficiency and lack of experience make them inferior
competitors to international OEMs, which have the upper
hand in product development, branding, cost control as
well as sales and distribution management. These companies
will become fodder for competitive local OEMS trying
to build up their market share.
Further M&A activity among local Chinese OEMs is inevitable.
This consolidation process will likely leave only four
or five automotive giants in China. Yet it will also mean the
end of the road for hundreds of small companies.
Global OEMs should be concerned about the government's
revised policy. They need to consider three aspects.
1. Global OEMs should carefully reconsider their overall
China strategy and honestly answer the following
questions. What are our overall objectives for China?
Where do we want to compete? Do we want to treat
China as a market only, or are we trying to leverage
China as a local cost production for global business?
2. Global OEMs need to reevaluate their partnerships in
China. Companies need to determine whether the
partner and partnership can survive and thrive under
the new policy. OEMs need to decide whether they need
to invest in new partnerships or smoothly phase out
3. Global OEMs need to act quickly. In coming years, room
to maneuver will decrease as Chinese companies take
advantage of the new policy. Local OEMs will get larger,
become more powerful and will have control over their
own strategic development.
Partner at Roland Berger
Strategy Consultants, Shanghai
10 | Automotive Insights
As OEMs in the US drift apart, a new world order may emerge
When it comes to sales growth, OEMs in the U.S. automotive market experienced
mixed fortunes this past year. If the rates of change continue unabated, Toyota
may soon knock Detroit's automotive icons from their pole positions.
Sales of passenger cars and light trucks in the U.S. market
amounted to 3.9 million units in the first quarter of 2005.
That was a contraction of 0.4 percent against the yearearlier
period. In short: the U.S. automotive market stagnated.
Yet what appears on first glance to be a rather
insignificant fall in vehicle sales may actually conceal a
seismic transformation taking place within the U.S.
Of the seven major players three grew considerably:
Nissan, Toyota and DaimlerChrysler
Growth rate Q1 2005 versus Q1 2004 plotted against
Q1 2005 sales volume
respectively. During the same period, three major players
saw growth shrink considerably: Volkswagen, General
Motors and Ford. These vehicle manufacturers saw growth
shrink by 9.7 percent, 5.2 percent and 5.2 percent
Honda performed in between these two groups, but fared
a little worse than the market. Product cycle differences
between Honda and the other Japanese OEMs may have
been the reason for that. Honda's Accord and Civic lineup
is aging, whereas Toyota and Infiniti have already
modernized and extended their product line up.
Growth rate Q1
2005 vs. Q1 2004
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000
Q1 2005 sales volume
The blanket -0.4 percent figure covers over an array of divergent
change figures These represent the changing fates
for most of the major automotive OEMs. In the U.S. market
at least, major OEMs are increasingly drifting apart from
one another. Some suppliers, especially those with strong
ties to selected OEMs, are moving in step with the OEMs.
Several vehicle manufacturers as well as parts suppliers
have announced changes at top-management level.
Continually high crude oil prices and
the resulting upward pressure on fuel
prices is starting to have an impact
on customer preferences. Although
not everyone agrees, many experts
believe that consumers are shying
away from traditional SUVs and light
trucks toward either mid-sized versions
or different propulsion systems
such as diesel powered engines for
full sized trucks.
In order to illustrate just how quickly
the major OEMs are currently drifting apart in the U.S.
market, we just have to imagine what would happen if the
rates of change displayed from Q1 2005 vs. Q1 2004
remain constant for the next few years. If that rate of
change continues, Toyota would sell more cars in the
United States than Ford in only three years, it would
outsell DaimlerChrysler in four years and sell more cars
than General Motors in 5 years.
Of the seven major players, three grew considerably:
Nissan, Toyota and DaimlerChrysler. They booked growth
rates of 11.5 percent, 9.5 percent and 4.2 percent,
Wim van Acker,
Partner at Roland Berger
Strategy Consultants, Detroit
11 | Automotive Insights
From the Keiretsu pyramid to a global network
OEMs are changing the rules by which they select suppliers. With their traditional
ties to carmakers disintegrating, Japanese automotive suppliers must reposition
themselves to survive.
Japan's automotive industry from its inception was shaped
by Keiretsu, those business groups that have long bound
banks, trading houses and industrial firms into loosely knit
conglomerates. Sticking together by holding shares in each
other and buying each others' wares, foreign companies
were largely prevented from gaining a foothold in this market.
While the pyramidal tier structure has long dominated
the relationship between carmakers and parts suppliers
throughout the world, the Keiretsu system kept Japanese
suppliers especially bound to OEMs because of cross
Long-term purchasing relationships, intense collaboration
and the frequent exchange of personnel and technology
between OEMs and select suppliers characterized Japan's
Keiretsu automotive sector. Parts suppliers were guaranteed
business in turn for devoting their best technologies
and resources to one OEM.
But then Carlos Ghosn arrived at Nissan Motor in 1999
and refused to play by the traditional Japanese rules.
Under Ghosn's tutelage, Nissan dissolved the Keiretsu
relationship it had with hundreds of suppliers, keeping
only four major parts makers on board. Once Nissan
questioned the received business practice, its local rivals
followed suit. It wasn't long before Mazda and Mitsubishi
Motors started to shed their ties with shareholder
suppliers and began to embrace an open supplier
Japanese suppliers – from a protected King's castle
to the level playing field
The withering of Keiretsu obligations means competition
among suppliers has increased. Japanese suppliers now
have to compete with local and foreign companies.
In addition to the traditional supplier selection criteria for
Japanese OEMs – quality, testing capability in Japan, and
co-development capability – OEMs are placing increasing
emphasis on the outsourcing of systems or modules to
improve efficiency. More and more RFQs are also being
sent to foreign global suppliers. A network structure based
on an open supplier selection policy is emerging from the
collapse of the Keiretsu pyramid structure.
No longer guaranteed business from within the Keiretsu
and unable to survive on their own because of suboptimal
scale and limited technology investment, Japanese
suppliers need to seek out new collaboration opportunities.
They also urgently need to define a clear long-term
strategy. Like their global rivals, Japanese suppliers must
choose between three roles: system integrator, technology
satellite or process satellite.
Japanese OEMs – pace of entering global network
structure not uniform
The shift from Keiretsu to a global network based on open
supplier selection is gathering speed. Yet some Japanese
OEMs still lack a clear strategy. Mazda, Nissan and Mitsubishi
are rapidly reforming their supplier selection models.
Nissan clearly promotes a 'project partnership' policy
when it comes to open supplier selection. Honda however
is wavering. Toyota, long considered the quintessential
Keiretsu OEM, still favors Toyota Group suppliers despite
attempts to reform its business model.
Partner at Roland Berger
Strategy Consultants, Tokyo
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