Customized vehicles to become the order of the future

JAKARTA (JP): The future of product development in the country's automotive industry has become the foremost concern of major automakers.

It is not purely about the attack of CBUs, but also the trends and purchasing power of the domestic market, among other things.

Agus Langgeng, chief editor of OTOMOTIF tabloid, shared his views during an interview on Monday.

Question: It seems to me that local automobile producers and assemblers have been slow in developing new car products. What do you think?

Answer: This is because of the economic scale of the Indonesian car market. The development of a new product requires the economic scale to make it viable. For Indonesia it would take at least 10 years to reach the necessary economic scale to shift to a new product. This means it would require 10 years to recover the investment made to produce one new vehicle product in Indonesia.

Launching a new car product requires a lot of work and investment. It not only deals with the reprogramming of the robots working the assembly lines, but more than that. It takes new pressing units and more hardware work.

If you see a change in vehicle designs in Indonesia every year, those are only face-lifts or minor improvements. That does not change the basics. To change the basics would take at least 10 years to pursue.

Unlike Indonesia, producers in car-producing countries like Japan and Germany need a shorter period of time to achieve the necessary economic scale because their market is the global market. Thus, they can launch a new product in a few years and they could even produce many variants for one new product. For instance, Toyota produces six or seven series for its new Corolla.

Besides economic scale, what other factors slow down new product development by local assemblers?

In Indonesia, it all depends on the principals, mostly in Japan.

Even the popular Toyota Kijang vans, they are not the monopoly of Toyota Indonesia. Toyota, as the principal, also develops similar vans for the Philippines, India and South Africa. When Toyota Indonesia was preparing a new Kijang, the testing and other preparatory work were conducted in Japan. And it still required the approval from the Japanese principal to launch the new Kijang.

That shows that Indonesia assemblers have no flexibility in new product development.

What about the influx of imported vehicles. Do you think this increase of built-up car imports will also impact new product development by local assemblers?

Yes. Even now it is already hurting new product development by local assemblers. This is just a logical consequence of business. If we talk about business, we talk about margins, not only about the quantity or number of cars sold.

Selling imported luxury cars surely has a bigger margin than selling mass produced vehicles such as the Kijang. When we sell one Toyota Lexus the margin is the same as selling 10 Kijang vans.

This big margin surely encourages our assemblers to join the fray and import built-up cars. The local assemblers of Toyota, Honda, Suzuki and others have all entered into the business of importing built-up cars. This will eventually affect their activities in new product development.

In terms of numbers, the entrance of imported built-up cars has not disturbed the market of local assemblers. But in business terms, it will affect the appetite of local assemblers to design and introduce new products.

Do you think that Indonesian car assemblers really need to develop new products?

Yes. They still need to do this.

Their principals may produce products with strong reliability and good design, and these vehicles can be used practically anywhere in the world. But still, a local touch will give something different to local customers.

Some assemblers give a local touch to their principals' global products by giving them local names such as Taruna and Karimun. They are not Indonesian products, but global products given Indonesian names.

But that's not the answer. I think Indonesia car assemblers still need to have their own team of car designers to cater to the needs of Indonesian customers.

If we talk about the global car industry, what are the main factors affecting new car designs?

Trends. There has been an increasing understanding among car producers in the world over the past few years that most decisions to buy cars are influenced by women. That's why, all over the world, car producers employ female car designers to give female touches to their products.

When discussing design, the cubic form is identified with males, while the rounded form is identified with females. And all cars are now moving toward a rounded form. Even Volvo and Jeep, which have been so conservative in their cubic designs, are now moving toward more rounded bodies.

What about in Indonesia?

The female touch in car designs affects everyone in the world, including in Indonesia. But in Indonesia there is a more important factor affecting people's decisions to buy cars, namely the family factor.

Foreigners often don't understand Indonesians. Even if a family has only one child, they buy a Kijang van. If they have more money, with still one child, they will buy a Kia Carnival. That's funny to me. Why a Kijang or Carnival for such a small family?

Buying a larger vehicle like a Kijang will surely affect efficiency, especially in the cost of fuel. A Kijang uses more fuel than smaller vehicles like sedans or smaller minivans such as the Hyundai Atoz. But still people here prefer a Kijang van to smaller vans.

Again the consideration is family. They want to take their grandfather, grandmother, sisters, brothers, nieces and nephews in one car, which is why they buy the Kijang. They don't realize that they will not take all those family members every day.

But again, it's a matter of education. Our car producers have never spent any money educating their consumers about buying cars.

What will be the future of car designs?

Car producers will be guided by competition, therefore they must provide super-satisfaction to their valued customers. The trend is that they will produce customized vehicles. For instance, when we want to buy a Mercedes, Mercedes would accommodate our personal needs and demands. For instance, Mercedes would let us choose the car's color, any color, what kind of bumpers we want, what kind of trunk we would like to have and so on and so on. They could even adjust it to our budget.

In Indonesia, people have started to chose customized products. When people buy a Mercedes S-class, they can contact certain suppliers to make the vehicle more customized. So, the direction and trend toward customized products is there. And local car producers must anticipate that.

Basically, customized services are to serve the egos of the people. It's very natural that people want to look different. OK, I have a Kijang but my Kijang should be different from the Kijang down the street. Astra International should be able to provide such customized services.

Mass products will remain. But customized products should not be neglected and should be treated with care because the market will expand quickly, and again the margin is larger. (Riyadi Suparno)