If the next Dodge Charger or Jeep Wrangler update arrives in showrooms a bit more quickly, it might have something to do with Fiat Chrysler’s streamlined development process.
The company is touting a reorganization it announced earlier this month as a way to get new or updated vehicles to market faster.
Chief Technical Officer Harald Wester, who is also executive chairman of Maserati, will lead the streamlined product development organization. That’s an answer, FCA CEO Mike Manley said, to a rapidly changing technology landscape.
“The industry has never experienced technological change at the pace we are now seeing, so we’re unleashing the creative energy of our engineers and technical experts for the benefit of our customers and stakeholders worldwide,” Manley said.
The evolving technology in every vehicle is just one aspect of the changes happening now. Vehicle launches are picking up steam, too.
An annual report released in June found that the average of 40 new model launches a yearfor the industry from 2000-19 is expected to increase to 62 a year from 2020-23.
“Technology is changing so fast, and new vehicles are being launched in numbers that we’ve not seen before that it’s critical that it’s fast for automakers, fast to market,” said Michelle Krebs, executive analyst for Autotrader.
That’s key when developing a new vehicle can take years.
And the newer the vehicles are, the more likely it is for automakers to gain sales, Krebs said.
The desire to capture those sales, however, reinforces the pressure on automakers.
“That freshness does not last very long any more” when everyone is freshening their product line, Krebs said.
Carla Bailo, president and CEO of the Center for Automotive Research in Ann Arbor, echoed that sentiment.
“In today’s world, the old product development process isn’t so appropriate. Technology is moving so fast, the customer demand and requirements for new products is … not like it used to be,” Bailo said. “People aren’t going to wait three to five years for a minor change or a full model change. They want their product to be up to date almost immediately.”
Ford president and CEO Jim Hackett is is also pushing his company to change or transform usable concepts into reality faster, Bailo said. The race to develop electrification and self-driving technology has heightened the urgency.
Making these processes faster involves getting rid of layers of approvals and flattening the organization to put decision-making at the lowest possible level, ideas which have been part of the tech world for a long time, Bailo said.
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The auto industry’s need to focus on safety is part of what seems to put it in catch-up mode. Industries such as aviation and automotive are among the most scrutinized and regulated.
Bailo acknowledged that change can also involve risk, so making sure the proper checks and balances remain in place is crucial.
The pace of change is happening even as vehicle sales are considered post-peak after record highs in recent years. Sales in the U.S., however, remain around 17 million annually.
Sales are still strong, but it doesn’t mean automakers will have a larger pie to fight over, meaning the environment is highly competitive and companies are looking for advantages.
The streamlining announcement comes as FCA and the maker of Peugeot, PSA Groupe of France, are solidifying their planned merger, as a binding agreement was signed on Wednesday. That deal could be finalized in 12 to 15 months, opening up connections for technology movement that don’t exist now.
Group plays as a team
So what is FCA actually doing?
Spokesman Eric Mayne offered a basketball analogy. Rather than five people playing one-on-one on the floor, the group plays as a team. Essentially, it’s a more coordinated approach, with less focus on subsets and geography.
The company’s footprint doesn’t change, and engineers will still be “everywhere,” but they’ll be better coordinated. They’ll also still be able to respond to consumer preferences in each market, Mayne said.
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Does it mean fewer people?
Mayne said no, that there would be some reassignment, but “this is not about head count.”
The company said the new organizational structure would reduce complexity and improve “delivery effectiveness” with efficiency gains to generate quality improvement at the same time product development times decline.
“The new organization consolidates three core activities: engineering, program execution and management, and program support. Until now, product development had been served by multiple organizations that operated as regional sub-groups or stand-alone units,” according to FCA.
The company said the most significant part of the change is the integration of powertrain and vehicle engineering.
“Previously, powertrain engineering was decoupled from the vehicle product development process. Now, it is embedded in a unified, global organization that promises improved cross-regional collaboration and more effective resource deployment. The new, flatter product development organization will also enable speed in decision making and best use of technical competencies around the globe,” the company said.
Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions, said the reorganization is part of FCA’s effort to stay profitable and relevant. The industry’s intense level of competition, he said, requires evolution.
“Fiat and Chrysler, even years after the merger, still work in silos where the former Chrysler Group develops trucks in North America while the European branch focuses on the car-based vehicles. Relatively little development crosses the Atlantic even if the vehicles are built on different shores,” Fiorani said.
But newer vehicle architectures are on the way.
“These new architectures provide a basis for greater parts sharing across models and better connectivity within the vehicle and between the vehicle and its surroundings. The next generation of vehicles will talk to the local infrastructure, improving traffic flow, reducing emissions and making driving safer,” Fiorani said.
The developments will increase information sharing between the vehicle and the manufacturer, Fiorani said, to allow over-the-air updates and even sense vehicle issues before they become a problem.
“FCA needs to prepare for this shift, and this restructuring will reduce the cost and speed the development of these new technologies,” Fiorani said.
Contact Eric D. Lawrence: elawrence@freepress.com or (313) 223-4272. Follow him on Twitter: @_ericdlawrence.
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