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While the average time a product stayed in the market was around 7 years in 1970, this average has been reduced to 5 years – a trend consistent across the US and Western Europe. In Japan, life cycles have traditionally been much shorter, and some companies like Toyota have coped by building two generations on one platform, before changing both design and platform with the third generation. Together, the increase in model range and the reduction in life cycles have a drastic impact on the economies of scale that can be achieved.

Even the basic features of a car have not changed much since Ford’s days: a car still has four wheels, is propelled by a gasoline engine and its body is still welded together from pressed metal parts. Despite the profound impact that Ford has had on the “industry of industries”2, its competitive advantage was short-lived and Ford was soon overtaken by GM, which, based on the visions of Alfred P. Sloan, introduced a more decentralised organisational structure and offered customers the choice they wanted through a much broader product portfolio.

To put this into perspective, British Leyland (the former name of Rover) was nothing less than the 2 The Evolution of Competition in the Automotive Industry 21 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 US and Canada W Europe E Europe Japan S Korea China India Rest of Asia Latin America S Africa Other 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1975 0 Fig.

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A-10 Warthog

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