Common parts, branding can work together

Jim Wehrman got a new car a few months ago. A Honda man all the way, he traded in his Accord coupe - a car he adored - for a more upscale Acura TL. The two cars are on the same platform and are built on the same assembly line in Marysville, OH.

"When I traded in the coupe it was fully loaded, it had leather. To be honest, I really wasn't sure if I wanted to do this or not," Mr. Wehrman says.

"So I make my move, and now that I'm in the TL, I'm spoiled. It's more than gadgets. It has more horsepower, it has a five-speed transmission, it's quieter and a bit tighter. They were subtle differences that I didn't appreciate until I drove it a few weeks."

Mr. Wehrman is living proof that brand differentiation really can work as platforms share a growing number of parts. As assistant vice president of Honda of America Mfg.'s Purchasing Div., Mr. Wehrman has to pay close attention to parts that can and cannot be easily commonized.

He says Honda and Acura try to commonize parts whenever possible. "The catch is commonizing in areas where it doesn't impact the brand identity," Mr. Wehrman says. The Accord and TL share the same water pump and oil pump, but the engines are of different displacement and have different induction systems and compression ratios.

Mr. Wehrman oversees Honda's North American purchasing operation, which represents one of four purchasing regions worldwide for Honda. More than 90% of the parts used on every Honda platform worldwide are produced by local or regional suppliers, he says.

Honda management has declined to get involved in Covisint, the online purchasing network created by the U.S. Big Three, but Honda has not ruled out the idea of using Covisint as a trade exchange, Mr. Wehrman says.

"Online purchasing is inevitable," he says. "We believe there are parts of the the purchasing process that lend themselves to a common platform like Covisint. Parts of the purchasing process we may want to be exclusive, and we may want to do it differently.

"There's a lot of the hype, and the press centers around online auctions. But that is an area where we see very limited application. The fear among suppliers is that online auctions will turn purchasing into cost-only transactions. Our philosophy is, we cannot afford to do that."

And price cuts are not the sole domain of U.S.-based automakers. "We have strong expectations that all suppliers will work on cost improvement that will be reflected in some price improvement annually," Mr. Wehrman says. "We don't target a percentage."