Executive Briefings

Things Can Go Wrong When Automakers Share Parts

When Hyundai Motor Co. and its affiliate, Kia Motors Corp., announced Wednesday that they were conducting a massive recall of 1.7 million vehicles, it was a sign of what can go wrong when parts are shared by many vehicle models.

Since the recession, according to automotive industry analysts, more and more manufacturers have turned to the economies of scale involved in having fewer vehicle platforms and more interchangeable parts and components.

"This is supposed to be the ideal for making cars now," said Jesse Toprak, analyst for TrueCar.com. "This is how you get scale, value creation. It's not just about cost savings. It simplifies production. If demands shifts from one car to another, shared parts make it much easier to shift the mix. Overall it is great for the automakers."

But that's when the parts don't have potential defects.

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Since the recession, according to automotive industry analysts, more and more manufacturers have turned to the economies of scale involved in having fewer vehicle platforms and more interchangeable parts and components.

"This is supposed to be the ideal for making cars now," said Jesse Toprak, analyst for TrueCar.com. "This is how you get scale, value creation. It's not just about cost savings. It simplifies production. If demands shifts from one car to another, shared parts make it much easier to shift the mix. Overall it is great for the automakers."

But that's when the parts don't have potential defects.

Read Full Article