Customized vehicles to become the order of the future

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)