How Are Western Car Makers Adapting to China’s Rapid Development Speed?
The automotive industry is undergoing a seismic shift, and at the heart of this transformation is the remarkable speed at which Chinese car manufacturers are developing new vehicles. A senior member of a Chinese car maker recently shared an eye-opening story: a prestigious German engineering consultancy approached them, boasting they could cut development times from five years to three. The response? A confident admission that they had developed their latest electric vehicle in just 18 months. This stark contrast in timelines has left many Western car makers scrambling to keep up.
Why Are Chinese Car Makers So Fast?
The rapid pace of development in China can be attributed to several factors. First, the average time to develop a new vehicle in China is around 20 to 24 months, whereas Western manufacturers often take 36 to 50 months. This difference isn’t just a matter of efficiency; it’s a matter of survival. As Chinese brands like MG, BYD, and Chery gain traction in Western markets, established players must adapt or risk losing market share.
Eric Zayer, head of autos for Europe at Bain, points out that the speed of development directly impacts costs. The longer a project takes, the more resources are tied up, and the higher the risk of launching outdated technology. In an industry facing unprecedented financial pressures, this is a crucial consideration.
Another significant advantage for Chinese manufacturers is their ability to pivot quickly in response to market trends. For instance, during the pandemic, a surge in interest for camping led to a boom in off-road vehicles. Chinese companies were quick to capitalize on this trend, showcasing models like the iCar V23 and MG Cyber X at the Shanghai Motor Show.
What Can Western Manufacturers Learn?
To compete effectively, Western car makers need to adopt a more agile mindset. Klaus Stricker, global head of automotive at Bain, emphasizes the importance of continuous development. While Western firms often focus on launching a “generation one” product before moving on to the next, Chinese companies are constantly iterating and improving their offerings. This approach mirrors the software industry, where updates and enhancements are part of the product lifecycle.
Moreover, many Chinese manufacturers have the advantage of starting fresh, designing platforms optimized for modern technology rather than relying on outdated architectures. This flexibility allows them to integrate cutting-edge features more seamlessly.
The Demographics of Development Teams
Another factor contributing to the speed of development in China is the age and experience of the teams involved. Research indicates that Chinese development teams tend to be younger and more focused on future technologies like electric drivetrains and software. In contrast, Western teams often carry the weight of legacy systems and may struggle to adapt quickly to new paradigms.
Interestingly, the work culture in China also plays a role. Reports suggest that many Chinese employees work exceptionally long hours, often adhering to a ‘996’ schedule—9 am to 9 pm, six days a week. This intense work ethic fosters a culture of loyalty and competitiveness, which can be challenging to replicate in Western markets.
Strategies for Western Car Makers
So, how can Western car manufacturers catch up? One approach is to leverage their global networks more effectively. For instance, Volkswagen is exploring a two-shift R&D system that allows them to develop projects across different time zones, maximizing productivity. They’re also ramping up local R&D centers in China to take advantage of the faster development cycles and more cost-effective supply chains.
Renault is another player making strides in this area. The company claims to have cracked the code for rapid development, promising that the new electric Twingo will take just 21 months to develop. CEO Luca de Meo confidently challenged competitors to match this speed, highlighting a shift in mindset among Western manufacturers.
Nissan is also on board, aiming to reduce development times from 55 months to 37 months for its new platform, with plans to cut that further to 30 months for subsequent models. However, the challenge remains: how to increase speed without sacrificing quality.
The Balancing Act of Speed and Quality
As Zayer points out, Western manufacturers often prioritize perfection over speed, which can lead to delays. If a product doesn’t meet performance standards, teams may go back to the drawing board, causing further setbacks. In contrast, newer players in the market are more willing to accept a certain level of imperfection in exchange for speed and cost efficiency.
The automotive landscape is evolving rapidly, and the ability to adapt to these changes will determine which manufacturers thrive in the coming years. The big takeaway? Embracing a culture of agility and continuous improvement isn’t just about keeping pace; it’s about redefining the future of mobility. Start with one change this week, and you’ll likely spot the difference by month’s end.