Balancing Global Customer Needs and Profitability Using a Novel Business Model for New Model Programmes in the Automotive Industry

Abstract

Business models need to evolve and respond to changing customer requirements and this is only further exaggerated when considered in the context of a ‘Global Market’ which has shifted in the last 60 years from ‘Manufacturer’ led to ‘Customer’ led ‘fashion’ based industry. The automotive industry is one example of an emerging fashion based industry.The objective of most viable businesses is to make a profit for their shareholders but, given the typical gestation period between concept establishment and the start of the production volume build, it is a challenge to establish a structured method to ensure programme and business profitability against the backdrop of a fashion based market. In this paper, a data driven methodology is proposed which focuses on data, structure, and the customer to maximise the probability of profitability. To achieve this goal, joins between Multi Criteria Decision Analysis, Parametric Cost Estimating and ‘Should’ Cost Estimating are explored. ‘Margin engineering’ is thus proposed as a new foundation for a future business model to guide medium term (one to six years) development projects towards a profitable outcome.