Complete Concept Overview

The Next Generation Car Company

Concept Overview

© IndeGo Consulting Limited

2© IndeGo Consulting Limited

The auto industry model is recognisably the same as 100 years ago• Vertically integrated manufacturers• Few common parts – less now than then!• High fixed costs• Arms-length dealer network• Volume-driven• Transaction-focussed


This industry model drives some of the most significant costs in the business

Body and paint tooling and

facilities

Powertrain engineering and

production

Marketing and Distribution

Now compounded by reduction in credit availability


We looked to other industries where breakthrough thinking has produced successful new modelsIndustry New Players Business Model

Southwest, RyanAir

• Cost obsession• Simplified asset base• Fast turnaround• No frills

Dell • Supply chain obsession• Customer order driven• Standard components• Assemble close to market

Zara • Fast fashion• Focus on lead-times• Undersupply

• Low cost flights

• Simple configuration• Convenience

• High fashion at low cost

Customer Value


IndeGo concept is an extrapolation of current best practices, grouped together to provide superior results• Low investment, highly flexible, upstream design and manufacturing

model producing “good enough” cars for the “automotive agnostic” customer

• Lifecycle revenue focus for downstream model, based on leasing of vehicles to successive customers, before scrapping the vehicle at ~ 8 years old

• Customer-centric processes and organisation with clear and simple ownership of the customer relationship

• Virtual enterprise with high levels of outsourcing and predominantly variable cost structure


The consumer proposition is targeted at customers who value “peace of mind” and “predictable costs”

• “Family transport” – aged in 30’s with family, tight budgets, need reliable family transport, possibly as second car

• “Car as a washing machine” – well-established in suburban home, little or no interest in cars other than as a form of transport

• “Basic wheels” – transportation for personal use, potentially a first car for young people starting work

• “Hassle free” – people, predominantly women, who are nervous about technology and interactions with dealer and workshop staff

• Financially astute

• Open to new ideas

• Want flexibility

+


The concept is built around managing two flows

Requalified

Customer Data

Vehicle Data

Enquiries

Assembly

Recycling

CUSTOMERS

Refurbishment/Upgrade

Mobility Offer• Bundled package• “Peace of mind”/”Predictable costs”PRODUCT

Usage


Design and manufacture embodies a number of changes relative to the traditional model• Lean design and development resources, focussed on high value add,

low capital investment activities• Product designed for the typical customer, not the typical

development engineer• Sourcing reflecting higher levels of sharing across manufacturers for

key systems • Manufacturing focussed on producing the right car for the customer

rather than sustaining processes and employment


Product development becomes a small core team managing concept and delivery, with high outsourcing

• Full service suppliers (cost recovery within parts cost)• Contract Engineers (hire by the hour)• Turnkey services (fixed price for agreed deliverable)

Project Director

Project Director

Chief Engineer

Head of Product Creation

Head ofStyling

Chief EngineerBody

Chief EngineerElectrical

Chief EngineerVehicle

Chief EngineerChassis

Chief EngineerPower TrainStyling

3-4 Internal


• Access all product design information throughout the extended enterprise globally

• Optimise early stages of product development

• Embrace the dynamic nature of change by instant communication and resolve issues via real-time virtual meetings

• Capture intellectual knowledge and lessons learnt for future programmes

• Effectively re-use product information within and across platforms

Digitisation of processes enables exchange of data between partners at all stages in the life cycle


Product focus is on see/feel/touch features

• Leading Design• Good Safety• Fullsize Package• Great Practicality• Competitive Dynamics

• Standard basic telematics• Late configuration of options• In Mould Exterior paint• Removable Trim Panels• Infotainment options

Technology

Attributes

Features

• Long life for high investment items

• Modular structure key to supply chain design

Competitive with, but different to, conventional productsFocus on usability, visual appeal

Telematics enables customer contact and data collectionMost features easily changed or updated for remarketing

• Shelf Technology• Long Life Cycle Platform• Short Life Cycle Body & Trim• Upgradeable Electrics• Outsourced Powertrain


Sourcing pattern is driven by the approach taken on powertrain and body, and by short life cycle

Powertrain• Global supplier

(likely to be existing VM)

• Also drives sourcing of related systems e.g. fuel, exhaust, cooling

Body Structure• Tooling from low

cost country (~40% cheaper)

• Stampings sourced on lowest total cost basis

• Low variety and modular design enables global sourcing

• Supplied painted (e.g. powder coat)

Other• Leverage supplier

scale - use industry standard parts where possible

• Low cost/short life tooling for body and interior parts

• Lowest total cost sourcing including systems engineering


Body structure design and process has some similarities with premium aluminium cars• Major structural sub-assemblies supplied from a separate facility:

– Floor assembly– Front-end and rear-end assemblies– Body right-hand and left-hand sides (including door inner)

• Sub-assembly design would include features enabling dimensional accuracy (Master Build Sections and Master Location Holes), and would be designed to achieve maximum packing density

• Framing at the satellite assembly plants would consist of two stations:– Riv-bond process would be used in the framing process providing

a joint stronger than spot-welding– Adhesive would be applied robotically and the joints made by

either self-pierce rivets or mechanical fixings.


Plastic has a number of advantages for the body cladding panels • Can use moulded in colour process to eliminate paint shop• Other materials considered, but not suitable:

– Steel requires paint process and is then susceptible to damage during shipment and assembly

– Aluminium is only suitable for high-priced vehicles where weight is critical (high material and tool costs)

– Reinforced plastic (e.g. SMC) is most suitable for low-volume niche applications

• Skin panel design should contain interface to body structure supporting flexibility for model changes and easy panel replacement

• More dramatic styling is possible with moulded plastic• Recycling gains due to easy disassembly and grinding of

thermoplastics


Product structure enables radical changes to manufacturing processes and economics

• Inbound supply of systems and components from supplier plants with economies of scale

• Body structure assembled on 2 stage framing line using bonding and riveting

• Final trim and assembly using supplier modules with coloured body cladding added during assembly

Procurement Body in White Body Assembly Paint Trim & Final


More but smaller assembly sites – 50,000 units p.a. with 500 people, using standard industrial buildings

Assembly Hall

Class A Receiving &Marshalling

Offi

ces

Fram

ing

Line

Und

er-fl

oor/i

nter

nal

Trim

, Doo

rs &

Ski

ns

Driv

elin

e &

Tes

t

Finished Vehicle Marshalling &

Collection

Class B/C Inbound Logistics &

Consignment Stock

Logistics Area


Sales and distribution fundamentally changes the processes and principles of the traditional model

• Focus on providing mobility to the customer, with flexibility to adapt to their changing needs

• Additional value added services are key to deepening the customer relationship, and their profitability to the business

• Business emphasis on maximising profitability from a managed asset pool and a stable customer base, rather than “moving the metal”

• Key customer relationship is direct and phone/internet based


The consumer proposition is targeted at customers who value “peace of mind” and “predictable costs”

• “Family transport” – aged in 30’s with family, tight budgets, need reliable family transport, possibly as second car

• “Car as a washing machine” – well-established in suburban home, little or no interest in cars other than as a form of transport

• “Basic wheels” – transportation for personal use, potentially a first car for young people starting work

• “Hassle free” – people, predominantly women, who are nervous about technology and interactions with dealer and workshop staff

• Financially astute

• Open to new ideas

• Want flexibility

+


Market position will not be based on product technology or price, but superior service• Product

– Competitive in all key areas – dynamics, performance, safety, environment

– Superior in see/feel/touch features – infotainment, telematics, storage, “surprise and delight”

• Price– Aligned with BMW Mini One, rather than volume producers such as Ford,

GM, Volkswagen• Service

– “Best in the industry” – IT and process enabled – think “Four Seasons Hotels”

– Continuous value-adding consumer relationship based on quality, trust and value, rather than price


The consumer will select from a limited menu of bundled deals covering everything other than fuel

Vehicle Type

• Sub-compact sedan

• Compact sedan

• Mini-MPV• Crossover

Usage

• Mileage• Driver flexibility• Damage

excess• Holiday Cars• Car Pooling

Service level

• Roadside assistance

• Repair and maintenance arrangements

• Concierge services

Lease

• Period – months to years

• Break points• Flexibility

options

All slotted against a price table based on vehicle age


Focus on the whole life cycle offers additional revenue

Vehicle Usage Related Services Adjacencies

• Insurance• Servicing• Repairs• Product customisation• Product substitution• Driver changes• Temporary vehicles• Mileage options• Condition surcharges

• Fuel payment (SIM-Pay)• Mobile telephony (Virtual

Network Operator)• Daily rental access• Music/video on-line• Emergency support• Navigation helpline• Traffic alert• Concierge services

• Non-auto insurance• Mortgages• Personal Loans• Credit Cards• Fashion products• Travel• Entertainment

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Service and repair will be provided by third parties as part of tiered service packages

• Integration of vehicle diagnostic software and supporting telematics allows customer care to contact the customer to advise them of servicing or repair requirements and to schedule the appointment

• Both fixed network and mobile servicing will be provided – all outsourced, with usage and response time determined by the service level selected by the customer

BronzeSilver

GoldPlatinum

Service Level

In-car Telematics Linked to Call Centre

Branded 3rd Party Service Providers


Low perceived transaction value of €10/day will allow direct sales – but test drives still neededTransactions Made Primarily through

Virtual Channels• Single channel only – no internal competition

from independent dealers

• Centralised call centre for vehicle support and sales backup

• Proactive approach to customers to make tailored offers or alert them to service needs

• Indego will operate a small number of physical outlets in major retail locations

• Test drives will be available there, and through selected daily rental partners

55%

29%

7% 6%3%

Extrem

ely VerySom

ewha

t

Not Very

Not At A

ll

Importance

84% of Customers Want to ‘Touch’ the Car When Choosing


Cars will be delivered direct to the customer, at home or work, including all supporting services

• Distribution will be outsourced to third parties complying with required customer care standards

• Branded transporters will operate from assembly plants and distributed “break bulk” facilities to deliver direct to customer on a 5 day lead-time from the plant

• Vehicle registration, taxation, other pre-delivery requirements and refurbishment of returned vehicles will be handled by the logistics operator

• The vehicle will be handed over by the driver who will also capture additional customer profile data and collect the vehicle which is being replaced

• Distributor and delivery vehicles will be fully integrated into the IndeGo IT infrastructure for both supply chain and customer care applications


We have developed a practical launch strategy which is flexible, but provides a realistic way forward

• Purchase commercially available product as a fleet buyer

• Add aftermarket telematics functionality to the extent possible by technical constraints

• Offer as a “mobility package” through direct marketing and marketing partners

• Leverage existing aftermarket infrastructure for service and customer support

• Include used cars within the offer from the outset in order to test repetitive lease concept

Downstream

• Commission exclusive adaptations of existing product

• Commission unique variants (body and trim features) on existing platforms

• Commission bespoke flexible platforms with high level of outsourced systems

• Own industrial capacity in market for new car assembly and used car refurbishing and upgrade

Upstream


We believe that the IndeGo downstream approach is defensible for a period without exclusive product• “Clean sheet of paper” approach, unconstrained by legacy and tradition• More flexible leasing periods – not a fixed multi-year commitment• Superior service in all interactions – not easily replicated by existing players

with dominant transactional cultures– Named account manager for each customer– Proactive contact for customer care and additional services– Collection/delivery of vehicles at start and end of contract and for servicing

• “Peace of mind” assured by telematics fit to all vehicles• Availability of used cars, at correspondingly lower price points• Upgrade opportunities to switch cars or add new features e.g. infotainment• Bundled additional services e.g. daily rental vehicles when travelling• Links to car-pooling schemes to share costs and reduce parking issues

All addressable by competitors, but not immediately, and together form a strong defence


Documents

Complete Concept Overview