WHAT CUSTOMERS WANT? The customer is a king who must also drive a car.

Increasingly carmakers are inching closer to the customer's mind when he decides to buy himself his dream on wheels. Everyone knows that when it comes to choosing the perfect life partner, aspects like compatibility, religion and financial stability play a critical role. When it comes to choosing their living spaces, people have preferences which range from a bungalow, to high-rises to sprawling mansions. So when the time comes to deciding a vehicle for themselves, what happens? Choices abound; it could be a car, a pickup or an SUV. It could be a basic version or it could be the higher-end luxury model in the segment of their choice, provided it addresses three key issues. Does it answer their needs, does it reflect who they are, and does it give them value for money? In today's auto market, there is plenty to choose from which can answer these three questions for any customer at any given time. A passenger car is the obvious choice for single people. Family folks tend to opt for large vans or station wagons. For those looking for a mix-use automobile, choices vary from small pickups, small vans or compact wagons. Often, people wear their vehicles pretty much like they wear their clothes. Cars, SUVs are considered as important reflections of their personalities and invested in as such. In this aspect of automobile purchase, brand image of the vehicle of choice assumes paramount importance. The final decision has a lot to do with something that reinforces the buyer's identity, status and need. Since buying a car usually involves considerable investment, the buyer's budget is the third factor of extreme consequence. Many customers evaluate their options in terms of model's specs, its maintenance costs and the vehicle's resale value to get the maximum value for money. For buyers with low budgets these factors assume huge significance, while those with liberal budgets may not give them unnecessary weightage.

Keeping in mind these key considerations automakers proceed to manufacture vehicles that are safe for both occupants as well as their environment, with intelligent use of technology. Variations in styling both the exterior and interior of vehicles are done to match unique driver personalities and qualities. Airbags, anti-lock brake system (ABS) as well as side-impact and front/rear crushable zones have almost become mandatory for any good vehicle. Technology has taken safety way ahead of traditional features, with IT and computers giving drivers increasing control over the car and the driving experience. Today intelligent safety systems help anticipate eventualities, thus reacting such that the driver can avert an impending accident. Newer cars are softer on the environment, burning fuel more efficiently and reducing emission levels with the help of catalytic converters attached to increasingly powerful engines. Even diesel engines guilty of causing considerable pollution have improved over the recent years and give out much cleaner emissions than before. This is mainly due to the use of oxidizing catalysts that aid the breaking down of soluble organic factors. The drive for cleaner air has accelerated with good amount of contribution from fuel companies, who have worked towards creating fuel that is cleaner, lead free with the minimum presence of sulfur and detergents. Yet, experts are now announcing that any radical reduction on emission levels will come only with the commercial usage of hybrid engines or vehicles powered by electricity or other non-petroleum powered engines. Today, controls in technically advanced automobiles are located on the car's steering wheel, making it easier for the driver to concentrate, with only some selected buttons left to operate. In fact some cars even allow the driver to start the engine, air-conditioning, as well as, the radio from a distance of several feet. Rapid telecommunications development today makes it possible for owners to know exactly where their car is located. Automobile design has satisfied the most demanding of customers, with sleeker and natural lines. Rear bumpers no longer stick out awkwardly, having merged with the overall design. There are incredible varieties of colors, with some manufacturers even offering custom-painted cars. Leather-clad upholstery and luxurious wood finish add to

customer delight, lending finishing strokes to an emotive experience irrespective of brand, model or price. PSA: HOW TO BUILD HIGHER QUALITY CARS In an attempt to build higher-quality cars and cut costs, PSA/Peugeot-Citroen's platform sharing strategy has transformed the company's manufacturing process. Amongst the first PSA plant this change involves is the one in Sochaux, France. Peugeot 307 employs new production systems that are also designed to handle mid-size models based on PSA's PF2 platform. Even though, the Sochaux presently builds only the Peugeot 307, with modification in its equipment it could also build the Citroen Xsara replacement which will use the same platform when it comes into production in 2004. Its 307 assembly lines handle 334 different variations related to body style, powertrain and specification. Approximately 50 km northeast of Sochaux in eastern France, PSA has another plant at Mulhouse, which is also a center for PF2 production. While Mulhouse builds three-door 307s, Sochaux is involved in assembling five-door versions and the new SW derivative. PSA is also learnt to harbor plans for adding a 307 cabriolet eventually. Peugeot's 206 Coupe Convertible is made at Mulhouse. As in the case of the 206 CC, the future 307 cabriolet is also expected to use a folding hard roof system. Double duty The Sochaux body shop is the source of a number of parts, supplying Mulhouse with parts common to all versions of the 307, the underbody front sub-assembly, doors, hood and tailgate. Sochaux also does half of all the welding for vehicles assembled at Mulhouse, and its body shop is considered PSA's new benchmark. It is the first body shop that corresponds to PSA's platform strategy and will act as a model for the next body shop that is built.

Peugeot has put into practice round-the-clock production on the 307 lines at Sochaux. The plant's 307 capacity is presently at 290,450 units per year, taking into account a fourth shift working Friday, Saturday and Sunday. Mulhouse provides 237,000 units of capacity. Its workers have refined the 307 body shop processes for an operation that sustains highlevel output and quality levels at relatively lower costs. They also worked towards reducing indirect production costs including maintenance and logistics by 35 percent when compared with the Peugeot 406 also manufactured at Sochaux. It took over six months for PSA to optimize every detail of the welding and robotic equipment using a pre-production cell of 10 robots. Consistent quality was obtained by preparing, testing and validating each of the 4,500 spot welds on the 307. According to an insider, "This was a lot of work but it has given us very high quality. Fewer than 0.8 percent of today's spot welds are unsatisfactory." In case a robot misses spot welds on the main underbody assembly line, a spare welding cell at the end of the line automatically completes the missing welds. Dimensional testing while on the assembly line is conducted on each completed 307 body built at Sochaux. In the first ever instance, PSA is doing it robotically, by mounting a laser sensor on the robot arm, which is programmed to check several locations. Although different points are monitored on each body, all 100 critical points are measured at least once every five to ten units. All these have had an impact on improving quality. Peugeot quotes independent surveys by French company Estel which found out that customer perceptions of quality are higher for the 307 than for the Volkswagen Golf or Audi A3. "We are slightly above the best of our competitors," said Eric Apode, who was quality director at Sochaux during the 307 production launch. He was recently promoted to product manager for a vehicle program code-named G9 at the Sevel Nord plant in Lieu

Saint-Amand, France. Sevel Nord - a joint venture between PSA and Fiat - produces the Peugeot 807, Citroen C8, Fiat Ulysse and Lancia Phedra full-size minivans. In spite of the fact that quality improved at both Sochaux and Mulhouse, quality issues at suppliers' end affected the 307 launch. It was particularly noticeable for leather seats, for which PSA asked the supplier to halt production and address the problem. Although this increased the waiting time for some early customers, it helped prevent delivery of 307s with faulty seats. Intervening with suppliers When the supplier of the instrument panel module was reported causing an average of 10 quality incidents a month, Apode decided to intervene directly. "We took the step of asking the supplier to perform a 100 percent inspection of the specific functions that were causing the problems," Apode said. PSA also gets suppliers to pay for any quality incidents, for the amount as calculated to cover costs for time lost because of the problem and the extra labor required because of it. There are other automakers as well, who have suppliers paying for their quality errors. VW makes suppliers pay more; Renault makes them pay less, while Mercedes does not require a payment at all. It has become increasingly difficult to solve quality problems before production due to the rapid speed of new model launches. In case of the 307, PSA was producing 1,800 units a day within five months of job one. Therefore, the role of suppliers became critical in the production of the 307, for which PSA purchases 70 percent of the vehicle's value from outside. With the 307, Sochaux started outsourcing seats to Faurecia, which is 70 percent owned by PSA. Faurecia is responsible for designing and building seat modules.

To speed assembly, the PSA has decided to use more modules in the future, according to Alain Besnard, director of production management and coordination. While, today a typical 307 hatchback requires 25 to 26 hours to assemble, use of more modules is expected to reduce that to 17 to 18 hours by 2005 or 2006. A possible future module happens to be the wheel assembly, for which PSA is considering using lesser number of workers on the assembly line because it has a highly experienced and skilled work force (with an average age of 44 ) working here. As part of PSA's long-term evaluation of its production process, it is considering the possibility of use of supplier parks. It is involved in developing a pilot program at the assembly plant in Rennes-la-Jannais, France, which builds the Citroen Xsara and C5. A supplier park is operated by a management company, which rents out space to suppliers. This park is being built in close proximity to the PSA plant, connected by a conveyor instead of rail or road. "Suppliers will not be obliged to set up in the park. We want to retain our flexibility of purchasing," said Didier Edelblutte, manager for component flow at Sochaux. He does not foresee a supplier park at Sochaux. "Our plan for developing Sochaux in the 2006-2008 time frame is to integrate the stock as close as possible to the production lines [with parts sequenced and delivered directly to the production line]," Edelblutte said. PSA's objective is to deliver a vehicle to a customer within 25 days of ordering, on any day. PSA believes that a new software will help it achieve its target by end of the year. Presently, PSA is able to deliver within 25 days for 85 percent of customers, and specifying only the week of delivery when orders are placed. The 307 exhibits strong traits of material innovations, with a new aluminum hood, which has saved over 7 kg of traditional steel.

"The material is more expensive and the hood is not cheaper to make, but the 7kg is significant," said Alain Hamm, Sochaux site director. "For reasons of weight, we'll be putting more and more aluminum on future vehicles." The Mulhouse plant also draws from the Sochaux facilities for stamping and assembling hoods. With a production figure of 2,500 per day, it might be the highest-volume application of aluminum fabrication in the entire auto industry. The design of the plastic fenders on the 307 was mainly for ease of repair. In incident of a frontal impact, the 307's front-end design ensures that the fender fasteners snap easily. This avoids damage to the fender and headlamp assemblies which can be easily reattached. Low repair costs result in favorable car insurance ratings. The 307 marks PSA's first use of plastic fenders. Amongst other things, which are happening for the first time at PSA, is the use of tailored blanks in 307 stampings. Much in use by most major carmakers, tailored blanks are created by laser welding different grades and thickness of steel together to obtain the right strength in the right places for difficult stampings, such as car doors.