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AD&P; > June 2014 > TALK > Insights from IHS > Michael.Robinet@ihs.com 8 INSIGHTS FROM IHS Michael Robinet, Managing Director, IHS Automotive Consulting The Passion Equation Michael Robinet has been a managing director of IHS Automo- tive Consulting since 2011. Prior to that, he was the director of Global Production Forecasts for IHS Automotive. His areas of expertise include global vehicle production and capacity forecasting, future product program intelligence, platform consolidation and globalization trends, trade fow/sourcing strategies, and OEM footprint/logistics trends. Much has been written about the miniscule diference in build quality within today's vehicle oferings. It used to be easy to discern: ft and fnish, reliability and cost of owner- ship. Today, vehicles which cannot deliver on these basics do not make the cut. OEMs understand that the true difer- entiators going forward will focus on a number of factors, many of which are difcult to quantify. Such as "perceived quality." And now there's another: the "Passion Equation." Every buyer has a unique calculation which drives his/her passion for a vehicle. It is the holy grail OEMs seek when designing a new ofering—the ability to build a vehicle which spans as many buyers as possible to want to purchase a vehicle. We witnessed many years ago what happens when OEMs design a well-performing appliances with little character. A-to-B vehicles that check the boxes. The manufacturers end up incentivizing the vehicles to the edge of proftabil- ity, wishing they would have pushed the team harder to do more with less and give the vehicle some longevity over a fve-year cycle. Despite the need to improve fuel economy by an average of 5% per year going forward through the end of the decade in order to meet CAFE, designers and engineers have more levers to pull from styling, performance, capability, and packaging perspectives than ever before. No single route is the most desired to optimizing this equation. Every OEM has to consider their own capabilities, supply base, technol- ogy cupboard, cost tradeof, and global sales footprint. This balancing act is not easy. What is the optimal "Passion Equation"? It depends on a number of factors which include utility, the vehicle's vocation (how does it fulfll its mission?), practicality, fuel economy, performance characteristics, safety content, secu- rity, interior and exterior styling, powertrain match, brand/ vehicle image, and the dealer experience. When consid- ered as a whole, every buyer has a threshold for all these elements and uses them to grade the vehicle for these and others to complete the equation. Passion goes beyond a sub-4 second 0 to 60 found in the most recent Corvette, the visceral exterior styling or the highly functional interior. People who own Caravans, Camrys and even Ford Transit Connects have a passion equation with the diference being that their equations have diferent variables. Mid-30s homemakers with stay-at-home toddlers have passion for a minivan. It fulflls its role well (vocation), ofers a strong value for money, and gives the driver a sense of driving security and safety while deliver- ing on the vehicle promise. Diferent equation, same answer. The moral of the story is that half-hearted eforts to check the boxes from a content, styling, build quality, powertrain performance, ride and handling, interior material choice, color palette and other elements will be rewarded with a vehicle exhibiting an erratic product cycle (with an early volume swoon) and enhanced incentive intervention to keep volume stable. Early after launch, all involved realize that the mid-cycle enhancement needs more attention to fx the issues. We have seen examples of late where OEMs quickly realize they missed the mark. The 2012MY Chevrolet Malibu or the 2012MY Civic—both received immediate attention early in the cycle. OEMs who truly listen to their customers and scan the land- scape both internally and within their supply base for the best ideas and evolve their dealer experience are rewarded. Involvement from all facets of the organization is required— designers, engineers, suppliers, marketers, advertising and the critical dealer base—all need to be working cohesively. It is difcult to execute every time though the advent of global platforms, increased design fexibility and shorter cycles mean that one does not need to live with mistakes for 5 years. Relief is only a refresh away. 0614ADP Insights.indd 8 5/21/2014 12:49:31 PM