Managing Essentials

International The Golf VII: The unseen innovation?

The Paris Motor Show started on September 29th for two weeks with all major car manufacturers showing their innovative power with new electric or hybrid cars, creative designs or new systems making drivers lives easier. The most revolutionary concept this year however will probably be presented in a car which stands for tradition, the Golf VII by Volkswagen. With 29 million sold the Golf is well known all over the world and is one of the most important car lines for Volkswagen. The Golf stands for the company, as a car for everyone, and with the Golf Class it established the name for a complete new class of cars. What makes the 7th generation of this car so special? It is the way it was developed. After the Audi A3 the new Golf is the first real volume car developed with the Modular Transverse Matrix, the MQB (Modularer Querbaukasten) a system by which cars are developed in a modular design based on a standardized but flexible platform. Today all car manufactures use modules to build their cars, however, what is a module? Literature often sees a module as part of a system but with a functionality of its own. Therefore a module is independent and can be used in different systems should its functionality be needed. Using modules helps to reduce complexity by dividing a system into smaller, less complex systems. Therefore it is possible to outsource to a supplier not only the production but also the development of a module. Especially for producers of a complex product like a car, that combines the knowhow of many different disciplines, this is essential. In order not only to build modules but to create a modular strategy, modules have to be replaceable. This means to standardize connectors, distances and dimensions for the platform it operates on. Industries producing white goods and computers are a good example of this. If someone is building a room in which they would like to place a washing machine, they do not have to think about the brand or if the machine can spin 400 or 1800 rpm, they have only to reserve a defined space with a plug and a water connection. The same with a computer; the defining part of the platform is the main board, but the modules like memory, graphic card or processor, can be chosen freely to complete the computer. In the automotive industry the concept of component sharing has had a long tradition since the 1960s by using a common platform for different car models. Also Volkswagen started their standardization across the models this way and like their competitors, VW added the use of modules in the following years. Now Volkswagen is moving on to the next step by creating an assembly kit strategy which they perceive as a turning point in the design and production of future automobiles. The MQB is designed to provide the architecture for car models ranging from the Audi A1 to the VW Passat. Unusual for a car platform, the newly developed MQB platform is variable in size and therefore not set to only one market segment. On the other hand the fixed distance between the front axle to the firewall and the mounting position of the engine provide a standardized environment. With the MQB, the Modular longitudinal kit - MLB (Audi A4, Bentley Continental, Porsche Cayenne) and the Modular standard drivetrain kit MSB (Porsche Boxster, Audi R8, Lamborghini) the new strategy will be implemented throughout the VW Group. Because of MQB the development of a new car model will become faster and cheaper, which makes not only the niche vehicles more profitable. In addition it will be possible for VW to build all MQB cars

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on the same assembly line, which will help to optimize factory utilization. Consequently cars can be produced where they are to be sold reducing the need to be shipped around the world. In an interview he gave to the car magazine Auto Motor und Sport Ulrich Hackenberg the Chief Development Officer of VW said that a reduction of around 30% of the time to build a car and cost savings of 20% are expected. It is wrong to think that the VW Golf, the Audi A3 and the Skoda Octavia will be identical cars in different dresses. The used modules dont have to be of identical construction, but they should be interchangeable. Country specific requirements and product differentiation will make different versions of the same module type necessary. Nevertheless island solutions for only one model should be avoided. Theodore Paul Wright described 1936 the benefit of using equal parts with the concept of the experience curve: Each time a cumulative volume doubles, value added costs fall by a constant percentage. Research by Bruce Henderson from the Boston Consulting Group in the 1970s confirmed the experience curve effect. Depending on the industry potential savings of up to 25% have been identified. If so executed the MQB can have an enormous impact on the spare part market. If it is possible to use the modules of a current car model, it is not necessary to produce and store older modules as spare parts after the stop of production. A phase-out management for none-model-specific parts could become obsolete. If the customer can profit by this is a question of the size and complexity of the modules. In general a high availability of spare parts makes repairs cheaper and easier and this results in a high resale value for the car, which always has been a big plus with the Golf. However, if the customer has to buy a module for US$ 200 because a plastic holder for US$ 0,50 is broken, this advantage is gone. What does this all mean for the new generation of the Golf? For the first time ever the new Golf VII with its modern design has become lighter and the car is also more efficient and more luxurious. What seems to be a giant leap for VW appears as a small step for the Golf; the Golf is still the Golf and this is good. The Golf has always been a timeless and reliable car and now the new one has become better but the price is still more or less the same. There is no reason why it should not be a real success. In the automotive industry especially, standardization and cost reduction have always played a major role. Fords One Ford strategy or Nissans Common Module Family are other examples. Volkswagens MQB, MLB and MSB might put VW in a leading position, but VW has only just begun to use the MQB and only time will show how far this strategy will go and how successful it will be. Until 2018 Volkswagen wants to develop 40 to 60 different car models with MQB. Now they will have to prove that this is more than just marketing. If it is successful then it is a good example of the continuing potential of standardization.
The beginning of a new era: Volkswagen introduces the Modular Transverse Matrix (MQB) (Volkswagen AG) www.managing-essentials.com/2kw Beginn einer neuen ra: der Modulare Querbaukasten. (Volkswagen) www.managing-essentials.com/2kx

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Intel Report: MQB Architecture at Audi and the Volkswagen Group (Jamie Vondruska) www.managing-essentials.com/2ky Volkswagen Is Leading Auto Innovation With The MQB Platform (Seeking Alpha) www.managing-essentials.com/2kz Ulrich Hackenberg im Interview: Baukasten ist riesiges Unternehmens-Tool (Bernd Ostmann) www.managing-essentials.com/2k1 Wright, T.P., Factors Affecting the Cost of Airplanes, Journal of Aeronautical Sciences, 3(4) (1936): 122-128. Henderson, Bruce (1974). "The Experience Curve Reviewed: V. Price Stability". Perspectives. The Boston Consulting Group. Retrieved 2007-03-24. www.managing-essentials.com/2k2 Volkswagen's MQB chassis set to lower prices across models (Michael Taylor) www.managing-essentials.com/2k3