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IndeGo: Products-into-Service
Jeremy Faludi, 21 Apr 04

According to a recent Financial Times article, the former head of Ford Europe, Martin Leach, has a brilliant idea to bring sky-high profits back to the auto industry (21.7% margin rather than today's 5.9%) while giving consumers cheap cars--and as it happens, it's the same business model Greenniks have been propounding for years. Stop selling cars and only lease them, being responsible for all maintenance & service; also build everything off the same body and just change the exterior panels to give customers different models; use colored plastic for the panels so no paints are used (a surprisingly large percent of car mfg toxins are paint). Manufacturing would be in small plants simply doing assembly (though unfortunately the parts would be coming from cheap overseas places, but that's the way it largely is today anyway).

The biggest increase in profitability, on the Indego model, would come from leasing the vehicles - so when one driver returns a car, it can be refreshed and released as a second-hand model. In effect, the second-hand market, profits from which are currently shared by dealers and private buyers, would be controlled by the manufacturer... Servicing and repairs would be included in the lease, again locking in profits not currently seen by manufacturers...

Some of what is being suggested is already under way in the industry, while much of it is lifted from successful businesses in other sectors including Dell, the computer maker; EasyJet, the airline; and Zara, the clothes retailer...

Car dealers could begin to sell their own-brand cars, bought in from white-label manufacturers...

Unfortunately Leach doesn't appear to be actively pursuing this, since he already has a job. But a detailed business plan has been drawn up, so hopefully someone will take the bait. Apparently Wal-Mart, General Electric and Microsoft have all been suggested. Hmmm...

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I believe that Bill Ford (chairman and/or CEO) has also talked about a similar scheme with ford becoming a sort of transportation-service-provider. This would have been a few years back.

Posted by: eas on 22 Apr 04



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