Has VW found carmakers' Holy Grail?

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IOL mot pic feb11 VW MQB platform 1 . Virtually all small and medium front-wheel-drive Volkswagen family models, including the latest generations of the VW Golf and Audi A3, are being designed around MQB as their base.

Ulrich Hackenberg isn't yet a household name but if Volkswagen's $70 billion (R620 billion) bet on his big idea pays off, he may join the likes of Henry Ford, Alfred Sloan and Taiichi Ohno in the canon of auto industry pioneers.

Since the heyday of Henry Ford and his Model T, the world's automakers have considered the “global car” to be their Holy Grail - the same basic design that can be built, in subtle variations, and sold in different markets.

Take that fundamental concept, stretch it across many different vehicle types, sizes and brands, then build them by the millions, and you begin to sense the enormity of Volkswagen's rapidly evolving “mega-platform” strategy and its potential impact on competitors around the globe.


Auto engineer Hackenberg nurtured this bright idea for three decades, after early pitches to auto executives were largely ignored, until somebody finally bought it wholesale. The man who bit was Volkswagen chief executive officer Martin Winterkorn.

Hackenberg's fundamental rethink of vehicle platforms, the industrial Lego from which cars are designed and made, is helping power the German company to the top of the global sales charts several years ahead of its 2018 target. It could also make VW one of the most profitable carmakers in the world.

IOL mot pic feb11 VW MQB platform 2 Computer imager shows just how versatile the MQB platform is, as only one dimension is fixed. .

The strategy is not without risk. It could, for instance, expose Volkswagen to the threat of a massive global recall if a single part, used in millions of cars, fails.


But rivals have taken note of the power behind its move. Volkswagen's modular platforms are being benchmarked by most of the world's top automakers, including Toyota and Ford.

“We'd be crazy not to,” said a senior Ford official, requesting anonymity because of the proprietary nature of the subject.

VW's work on its largest mega-platform, known internally as MQB, began in earnest in 2007 and is being implemented over the next four years at a cost of nearly $70 billion. The potential payoff is compelling: Projected annual gross savings by 2019 of $19 billion (R269 million ) with gross margins approaching 10 percent.


Volkswagen is expected to announce a record profit for 2012 of more than $30 billion (R266 million) on 22 February. Senior analyst Max Warburton commented: “VW looks to have unstoppable momentum - in China, the US, Europe and most of the rest of the world.”

That momentum has been building for some time, even before the initial deployment in 2012 of Hackenberg's brainchild.

Industry-leading levels of commonality - the proportion of parts that can be shared among different models - are nothing new to VW. At a gathering in Japan five years ago, Renault and Nissan executives lifted the bonnetss of several VW Group vehicles side by side - including models from Skoda, Seat and Audi brands - and saw trouble.

“They had the same engines, the same clutches, the same ventilation.”

“They all had identical parts,” says an executive who attended the presentation. “It was a level of commonality that didn't exist at Renault-Nissan.”

Late in 2011, as the outlook darkened for French carmaker PSA Peugeot Citroen, its board was given a similar demonstration, and a similar shock, at the company's high-security research centre in Velizy, southwest of Paris. Technicians took apart the front ends of two different VW cars and swapped most of their components.

“They were a little dumbstruck by the realisation that there was a whole new world out there - and their development was 10 years behind,” recalled one participant.


After a six-year gestation, VW has just begun to implement its sophisticated and highly flexible platform with the deceptively simple label MQB, a German acronym for “modular transverse matrix.” Virtually all of the group's small and medium front-wheel-drive family models, including the latest generations of the VW Golf and Audi A3, are being designed around MQB as their base.

The new platform features a far greater degree of plug-and-play modularity, flexibility and parts commonality than at Toyota, General Motors, Ford and other competitors.

MQB “could be the single most important automotive initiative of the past 25 years,” said Michael Robinet, managing director of IHS Consulting in Northville, Michigan. “It really changes the game.”

With the new mega-platform strategy supporting its 12 brands, from spartan Skoda to Audi, Porsche and Lamborghini, VW is poised to snatch the global sales crown from Toyota as early as 2014.

VW envisions enormous leverage from MQB. The plan is to boost global sales to 10 million or more, with roughly two out of every three cars - some 40-plus models totaling 6.3 million sales a year - built on some variation of the MQB platform.

Even Toyota, the current global sales leader, is playing catch-up with its German rival.

None of VW's competitors has the diversity of brands, the breadth of technology, the sweeping geographic footprint or the deep pockets necessary to support and take advantage of such a wide-reaching initiative as MQB.

“There's no doubt we have fallen behind,” said a senior Toyota executive who declined to be named because of the sensitive nature of the subject. “We have not even begun to make the fundamental structural changes that VW has in designing and applying flexible vehicle platforms.”

The sense from competitors and auto analysts is that VW's rollout of MQB is likely to be as influential as such earlier innovations as Ford's adaptation of standardised parts, GM's “ladder” of brands and Toyota's streamlined production system.


VW's suppliers see MQB as a watershed event, a break with a past when really big vehicle platforms might have yielded orders for as many as five or six million identical components over their typical six- to seven-year life cycle.

Now, with the implementation of MQB, “they're being asked for quotes on 35 million parts,” said a senior European industry executive.

More importantly, the modularity enables VW to design, engineer and build a wide variety of vehicle size and shapes - from a subcompact Polo hatchback to a full-size, seven-passenger crossover that's due in the United States in 2015.

The flexibility of the MQB system also allows VW to create more cars that are more tailored for specific markets at a lower cost, and it doesn't have to sell so many units to break even, according to Morgan Stanley analyst Stuart Pearson.

MQB isn't the only weapon in Hackenberg's arsenal.

Larger Audi, VW and Porsche models with longitudinal engines - mounted in a north-south configuration - will use a similar set of components dubbed MLB that already underpins a number of Audi vehicles.

And many of the group's ultra-luxury and performance brands will employ a third component set called MSB, designed for premium rear- and all-wheel-drive vehicles such as the Porsche 911, the Bentley Continental and the Lamborghini Gallardo.

Each of the three modular component sets will come in different variations that will enable enormous flexibility in terms of product design, while accommodating a wide range of powertrain options, from gas and diesel engines to electric motors and batteries. - Reuters

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