The announcement by the Yulon Group of Taiwan that its Luxgen brand, established in 2008, had made its first international showing at the Dubai Motor Show may have understandably passed many in the industry by. Yet the arrival of this new OEM prompts some intriguing questions as to the future of the industry.
Traditionally, industry analysts and business leaders have taken the view that consolidation and rationalization is inevitable, leading to ever-larger groups bestriding the world stage. Moreover, those groups would be grounded in the core automotive metal-bashing technologies of the previous century. Luxgen (derived from luxury-genius) questions both of those assumptions.
the empirical basis of branding is shifting away from the metal and the hardware, and into the services and the software
To be sure, the Yulon Group has been around since 1953, is the largest vehicle manufacturer in Taiwan, and has joint venture agreements with General Motors and Renault-Nissan (its recently-launched people carrier is based on the Renault Espace platform), so this business is not entirely disconnected from existing OEMs. However, Luxgen marks a definitive attempt to combine the information technology industry with the automotive industry to create vehicles that embody absolutely contemporary ‘intelligent’ mobile vehicle systems to enhance safety and environmental performance. The core differentiation comes in the form of the ‘Think +’ onboard computer system that combines video and audio entertainment, telecommunication, GPS navigation, safety alerts, car-owner exclusive applications and system settings.
After the problems that BMW experienced with the i-Drive, it might be argued that integrating and, more importantly, delivering to drivers a suite of IT-enabled features is not as easy as might be imagined. On the other hand, if new entrants are to break into the established ranks of global OEMs then it is likely to be via innovative brand positioning of this type.
The established OEMs have not been able to foster close synergies with global consumer electronics giants, and the last major effort from the IT sector to enter the automotive industry – Samsung in the 1990s – was a spectacular and expensive failure. However, times have changed with augmented electronics content on vehicles for safety, information and in-car entertainment, and a greater capability to deliver mobile services. With these developments, the empirical basis of branding is shifting away from the metal and the hardware, and into the services and the software. Yulon places a considerable emphasis on the depth of skills and resources in the electronics industry in Taiwan as a source of differentiation for the Luxgen brand.
The vehicle platform is nowadays rapidly becoming little more than a box within which to put the electronics and services that define the brand
Moreover, if Yulon can leverage this type of local resource, what is to stop other companies doing the same? Indeed, existing OEMs may be encumbered rather than enabled by their existing brands, associated as they are with an almost bygone era.
At the very least it suggests that the vision of the future that many senior managers hold within the industry – of information-rich and highly sophisticated networked vehicles interacting seamlessly with the external environment – is one that must be pursued at speed, and integrated with rejuvenated brand images. The vehicle platform is nowadays rapidly becoming little more than a box within which to put the electronics and services that define the brand. Perhaps the future of the industry is a hundred Luxgen brands.
Dr Peter Wells is a Reader at Cardiff Business School, where he is a Co-Director of the Centre for Automotive Industry Research and leads the automotive industry research programme within BRASS, also in Cardiff University. Dr Wells is also a director of AutomotiveWorld.com’s sister website AWPresenter.com. He can be contacted on email@example.com.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.