Auto Industry Should Simplify Vehicle-Option Offerings

PARIS – For a French consultant who studied automotive innovations, the most striking result was the poor way global auto makers market their innovative ideas.

“Taking a simpler approach is the biggest area for improvement,” says Remi Cornubert, who recently led a study called “Car Innovation 2015” for the European consultancy firm Oliver Wyman that totals more than 4,000 pages.

The number of new technologies in cars is increasing so rapidly that customers can’t keep up, Cornubert says. Additionally, auto makers and suppliers use confusing acronyms for their innovations.

Worse, different car makers call the same technology by different names, further adding to confusion in the marketplace.

While the antilock brake system (ABS) imposed itself on the market under a single name, today’s steered headlights are called everything from “intelligent light system,” to “adaptive headlights” and “dynamic cornering light.”

“It leads to customer confusion, instead of strengthening the OEM’s brand,” Cornubert says.

In Europe, where most buyers order their cars before they are built, the list of options can be long and confusing. Consumers don’t understand what is being offered because there are so many choices available.

U.K. prospectus for VW Golf lists Recaro Sports Seats under “R.”

The Audi A4, for example, is offered with three bodies, 14 engines, 13 trim levels and 100 optional equipment choices.

“The list of (Audi AG’s) options is a complex structure, in which innovations such as MMI, or Multi Media Interface” – Audi’s version of BMW AG’s iDdrive – “do not stand out,” Cornubert says.

Some auto makers list optional equipment alphabetically, rather than grouping them under functional areas, such as safety or entertainment, which makes it difficult for customers and salesmen, alike, to know what is important or even to find the option desired.

A U.K. prospectus for the Volkswagen Golf, for example, lists Recaro Sports Seats under “R.”

“Determination of optional equipment as the last step is most complex and confusing for the customer,” Cornubert says.

Yet, optional equipment is where auto companies make their profits. Only the Japanese, luxury and sports car makers earn money with their basic vehicles.

In a sales simulation conducted with customers in the U.S. and Germany, the “Car Innovation 2015” study found 49.3% of potential customers had no interest in an option even before the price was known.

Price knocked out 56.2% of those who had an interest in an option, and another 23.4% of customers dropped the option before signing the vehicle purchase contract. In all, only 17% of potential customers ended up buying an additional option.

“Overall, the market potential for innovations is often very low,” Cornubert says.

The consultant urges auto makers and suppliers to concentrate their research and development money on innovations that will become “blockbusters,” resulting in €1 billion ($1.4 billion) in sales revenue, or penetrating 100% of the market.

Past blockbusters include ABS, airbags and tire-pressure monitor systems.

The Oliver Wyman consultants studied more than 300 current innovations in development and rated just 33 as potential blockbusters by 2015.

The top three in terms of high degree of innovativeness and high importance and likelihood of success were the new steel-body concepts, crankshaft-starting generators and battery-energy management.

Other likely candidates for success include the host of technologies destined to improve fuel efficiency and technologies, such as the plastic fenders on the BMW 3-Series coupe and keyless entry and engine start-up.