Decontenting car interiors & brand loyalty
What has happened to the value of modern-day car interiors? The process of decontenting has been going on for years and has taken flight in recent times. It means car manufacturers are taking out content from their interiors, like leather interior elements, to limit costs. Lower costs, obviously benefits the bottom lines of the manufacturer, but has a big impact on the consumer. After all, car prices haven’t exactly dropped in recent times.
Cutting costs or cutting corners?
Decontenting means using lower-grade parts or removing quality from unseen areas to cut costs (Rechtin, 1996). The reasons are often economical and not uncommon in any business. Terms like lean, optimizing, reorganizing or restructuring or efficiency are often thrown around to detract from the remarkably simple bottom line: costs. It makes perfect sense, as any company needs to look out for its health. It’s their responsibility towards stakeholders, customers, and their people to keep the company thriving.
Decontenting has the obvious advantage of reducing costs. Decontenting becomes a serious problem when product quality suffers and consumers are essentially being misled. It's where cutting costs turn into cutting corners. The result:
- Brand reputation – Decontented vehicles are not sold for less, but often contain inferior quality materials, parts, or systems. Recalls, bad reviews and negative advice from sellers can irreparably damage a brand's reputation.
- Brand loyalty – When a brand compromises on quality, it goes at the cost of brand loyalty. A recent survey showed that only 20% of car owners are committed to their brand for their next purchase.
Recent research commissioned by GST Autoleather, a One 4 Leather member, showed that 33% of American and 53% of Chinese car owners who have synthetic materials in their car believed it was genuine leather. Of these car owners, 7% of the Americans will definitely be changing their car brand, and 58% will probably consider other brands in the future. The Chinese car owners are more decisive: 9% of consumers who believed they had genuine leather in their cars will definitely leave the brand, and 65% will probably consider other brands.
Decontenting is easily sugarcoated with an elaborate ‘positive’ vocabulary. Ford CEO Jim Hackett used the term ‘reductive design’ to describe the process, which makes it seem like a good thing (Posky, 2019). Yet, this ‘reductive design’ rarely benefits of the end-consumer.
A competitive business
The automotive industry has been very competitive since the Second World War and with foreign car brands becoming more easily accessible, the pressure was on in the European and North-American car markets to keep up. Japanese car brands were producing economical cars for lower prices. Certainly, these lacked the flair and automotive ingenuity of other brands, but with fuel crises and attractive prices, these quickly gained market share. To compete, brands had to reinvent themselves and find ways to lower their prices.
As price competitiveness increased, car brands started cutting costs by using simpler technologies, lower-grade parts, removing quality from parts customers don’t see or removing any unique special touches. This trend persisted and some brands paid the price for wanting to cut too much. Toyota, famous for its visionary approach to production (their principle of kaizen – meaning continuous improvement on all levels of production – is used in industries around the world), has had to recall vehicles in large numbers since the 2010s. For a brand once synonymous with quality, that’s a smear on the reputation. There are numerous examples, and some are quite worrying like GM’s intended decontenting of safety technologies (making ABS and other measurements optional). If you can believe forums and references from several industry media outlets, by 2020, the American brand has become close to synonymous with decontenting. An author from Automotive News even named the decontenting strategies from Tesla ‘following the old GM’s playbook’.
Decontenting as a fallback to cut costs
Though the above examples serve to clarify what we talk about, decontenting has become a go-to approach for automotive brands. It’s an understandable method, and no brands are more in need of such tactics to make them more attractive as the highly-priced electronic vehicle producers. Profitability and market attractiveness are a major challenge for brands like Tesla and Polestar. McKinsey (2020) estimates a cost gap of $12,000 between the production costs of electric vehicles and internal combustion engine vehicles. Though preferences have shifted to electric driving, market competitiveness is challenging. Decontenting is an obvious solution, simplifying the interiors and removing expensive elements. Not just for costs, but also to increase energy savings.
It comes as no surprise from that aspect, that electric vehicle producers are vehement promotors of ‘vegan interiors’. In automotive, that means plastics and chemicals, which have nothing to do with sustainability or animal welfare in the long run. Yet, these materials are much less costly and, therefore, of high interest to manufacturers looking to cut costs. The vegan label and current trend have offered car brands a legitimization to switch to other plastic alternatives, setting a whole new decontenting move in motion. This is a trend, that has become absolutely worrying. Even consumers who are still on the fence about using leather or not fall victim to misleading labeling and enigmatic material ‘brand names’ that hint at being leather (but are in fact vegan synthetics).
Pay more for less?
There is a major shift happening in the food, fashion, and interior industry. Many brands work to tie together their supply chains and create more sustainable products or even commit to regenerative supply chains. Leather is a natural part of that, but also a material abundantly available. Cutting costs may be in the interest of businesses, but it’s never been better for the planet. As Randy Johnson, CEO of GST Autoleather said to International Leather maker: “The desire for further ‘cost imperatives’ resulted in the fact that petroleum-based synthetic products became more attractive. The product planning community started converting low entry leathers to low cost, synthetic material, giving them trade names and branding them as ‘engineered’ or ‘better than natural’. We need to reverse this narrative.”
In all fairness, decontenting is at this point not to anyone’s benefit. With brand loyalty and reputation on the line, and major upheavals in the way we produce, it’s obvious that this form of cutting costs and corners can no longer be continued.
- Bunkley, N. (2019) Is Tesla following Old GM’s playbook? Retrieved from: Autonews [Accessed on 28 October 2020]
- Carey, N. (2020) GM should emerge from pandemic with permanently lower costs: CEO. Retrieved from: Reuters [Accessed on 28 October 2020]
- McCowen, D. (2014) Are your seats actual leather? Retrieved from: Drive.com [Accessed on 28 October 2020]
- Griffiths, I. (2020) Pole Position. International Leather Maker Magazine May/June 2020.
- McKinsey Center For Future Mobility® (2020) The future of mobility is at our doorstep – Compendium 2019/2020. Retrieved from: McKinsey [Accessed on 28 October 2020]
- Niedermeyer, E. (2010) Too Good To Be True: How Toyota’s Success Caused Killer Decontenting. Retrieved from: The Truth About Cars [Accessed on 28 October 2020]
- Posky, M. (2019) Reductive Design: Ford’s Secret Recipe for Affordable Cars? Retrieved from: The Truth About Cars [Accessed on 28 October 2020]
- Rechtin, M. (1996) Decontenting: When there’s no costs left to cut. Retrieved from: Autonews [Accessed on 28 October 2020]
- Truett, R. (2002) GM hits the brakes on BS; antilock will become options on low-end cars. Retrieved from: Autoweek [Accessed on 28 October 2020]