How Automakers Plan Their Products

Copyright (c) 2007 Center for Automotive Research (CAR)

AN OVERVIEW OF THE PRODUCT PLANNING PROCESS

The process of developing automotive business plans is incredibly complex, and often as reliant on intuition as it is on hard data. Many factors must be considered, including return on investment (ROI); surveys of market trends; forecasts of market size, sales, fuel costs and future consumer preferences; as well as technology availability and cost. Additionally, a new vehicle built at an existing assembly plant must mesh with the production cycle for other vehicles at that plant, as well as with the company’s overall assembly capacity.

These business plan decisions—which determine an automaker's major investments—entail many inherent uncertainties, not the least of which is the fact that market conditions can change dramatically. Given such complexity, it is indeed remarkable when a company launches a new vehicle that consumers want at the exact time they want it. And for a vehicle program to be fully profitable, consumer demand must hold up throughout the vehicle’s multi-year production life prior to replacement or redesign.

The complete 42-page Center for Automotive Research document: How Automakers Plan Their Products