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Creating a car at Chrysler, 2014

Now and then, automakers create a new car or truck, sometimes based on an existing one. To outsiders, the process may seem simple, but because of the almost insane number of possibilities, it’s rather complicated. Leaders have to be careful, because of the high cost of engineering a new car — even if it’s a variant of something that’s already made.

small car development team

We will look at the general process followed by most companies before getting into what we believe to be the current (formal) Fiat-Chrysler process.

The general process: how most companies create new cars

This was contributed anonymously.

There are two major different “new vehicles” created by a car company.

The Next Big Thing. These come along rarely (e.g. the minivan, Saturn, Dodge Viper, Saturn Sky/Pontiac Solstice, Chrysler/Maserati TC). Because these are “revolutionary” and not “evolutionary,” they typically need to be driven by a strong leader who is willing to take risks. There is usually no infrastructure nor data inside the company, so the leader must provide his vision. If the products are successful, the leader becomes legendary. If the products are unsuccessful, the leader is, at the least, tarnished — and possibly fired. The stakes are high.

Successors to current vehicles. This is the most common case, and there are always several programs going on inside all auto companies. Typically they are timed out to make use of the needed resources (people, facilities, capital). No company can afford to renew everything at one time.

counterattack; the Neon development team

A lot of research is done inside and outside the company to document the strengths and weaknesses of the product being replaced. This includes customer likes / dislikes, quality scores, warranty, pending regulatory issues, and design (styling). All of these are controlled by cost. Some of the issues include:

car sketches1) Marketing wants to provide as many new unique features as they can, which makes the product easier to sell — but this adds risk and cost. In addition, if a product is too complex, with too many options and build combinations, Manufacturing cannot be sure they will build it right, and the dealer will not be able to stock all the combinations.

2) Warranty can always be improved by increased testing and development time, which conflicts with the need to reduce costs and turnaround time.

3) Manufacturing always has issues with aspects of the current product that are difficult to build, or takes more time to achieve good quality.

4) Regulatory issues regarding safety, fuel economy, even recycleability, are always changing driving changes. The current product can become unsaleable in future years due to regulatory changes.

5) The Design Office always wants to create rolling works of art.

All of these must be in a business case, — and, the launch timing is established and must be held!

aerial view

Marketing sets the price they feel they can sell the proposed car for, based on competitor’s offerings and knowing part costs for the current product. Besides the cost of any new part, tooling to create the part must be considered; these figures can run into many hundreds of millions of dollars.

A very simple equation can explain it all:

(Price)-(parts)-(assembly cost)-(overhead*)-(tooling cost)=(a positive number as high as possible)

* For example, engineers, testing, lights and heat in buildings

A small cross-functional team is usually created five or six years before the scheduled launch; it gathers information and pulls it all together, starting at a high, general level, and then refining it with more and more detail. This is driven by a cadenced series of management reviews; at any of these, the team can be given the order to proceed or sent back to start all over. As the product definition gets more detailed, more people are added to the team to support the workload.

CATIA v6 image for mechanical engineering

This process proceeds with improved product definition, then part designs, then prototype parts, then prototype vehicles, then testing and any fixes required, and finally with pilot cars built on the intended production line until the day comes to begin production of saleable cars. Usually, this starts slowly, then rises as rapidly as possible while still maintaining quality.

By the time these final steps happen, a new team has already been formed to start the process all over again.

The current Fiat Chrysler process

Based on what we’ve heard from insiders, we believe the process is supposed to work like this:

Step one: long range planning

This is our impression of the official process, based on various statements and writings. It is not based on official documentation, and could be incorrect. One source said it could be short-circuited by executive whim

Ideas from brand managers, executives, or long-range product planners are discussed by the three group, and together they produce a long range planning (LRP) memo if they agree that the idea should work. They then get input from manufacturing engineering and the engineers in charge of the relevant platforms, and set up a request for a product load study. The study looks at the impact of the new vehicle on the company, from engineers to stylists to marketers to factories.

chrysler new yorker in the pilot plantThe group that weighs in on the product load study and viability judgements includes:

These groups also use the initiative database, internally called “ESP.” The product planning department then takes all the information together and:

A study team is then assembled to refine the timing estimates and assumptions, and settle outstanding issues and requirements. This starts with a long meeting that includes:

It takes one or two weeks for these groups, along with teams from body-in-white, paint, mechanical engineers, and tech support to come up with refined estimates of the cost of the vehicle. It’s then just another couple of days to review the assumptions and complete the investment plan.

Step 2: Review

There are then three sets of reviews, given the billions of dollars involved in such ventures. These are, in order (they are not done simultaneously, and don’t take long):

  1. Estimators and manufacturing department heads and executives review the estimates and proposal
  2. The same group, along with Program Planning, review it again
  3. The executive vice president of manufacturing signs off, and the propsal moves on

Step 3: In-depth study and launch

So far, after idea generation, around a month has gone by.

Now, the idea has been approved by the executive vice president of manufacturing, and it is published into the initiative database; Program Planning creates binders which are circulated to...

checkerboard square

Binders are used so that revisions can be sent out automatically, at relatively low cost. Now, Advanced Vehicle Engineering works with other groups to refine the options (e.g. choose which suspension architecture and specifications will be used, work with Design to set up the look and feel, and set key options such as drivetrain choices); then engineers and designers work on the final design. This process can take anywhere from around two years for a relatively minor addition, to six or seven years for something completely new.

Some of the choices facing product planners:

car designersThe days of one person being able to create a car and sell it are long, long gone, — and, indeed, had already ended by the time the first Chrysler was created, by Fred Zeder, Carl Breer, and Owen Skelton, and their staff. Today, it takes hundreds or thousands of people, and billions of dollars, to create a new car — even one based on an existing design.

The next step: Manufacturing and supply chain management.

Also see “Creating a car in 1955,” which focuses mainly on styling, and “Chrysler and Mercedes Engineering: From Best Practices in the 1990s to Behind the Curve in the 2000s.

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