Carmakers Juggle Production Economics in Electronic Era

Marrying the fast pace of consumer electronics to the slower realities of carmaking may be the auto industry’s biggest challenge, executives tell Reuters.

Manufacturers say the need to recoup tooling costs makes it nearly impossible to reduce a vehicle’s product cycle to fewer than six years. Yet the sensors and electronics in today’s cars can be outdated in only one year.

The trick, according to executives, is to design vehicles so their “hard” parts (such as engines and transmissions) can be used through at least one product cycle—even as their software may be updated repeatedly over the same period.

There’s another reason to maintain a model lifecycle of six years or more, Reuters notes. Rolling out next-generation products sooner may not give customers enough time to pay off their current cars. Shorter-term leases partly offset that issue. But Reuters notes they also can flood the market with previous-generation vehicles that can reduce resale values for owners who don’t plan to trade for 6-8 years.