With the largest collection of design studios backed by the world’s largest automobile manufacturers, Southern California has been seen as the undisputed hub of automobile design for decades. But your next Ford or Chrysler could be designed in Europe, or China.
The first automobile design studios appeared in Southern California in the 1970s and just over a dozen have sprung up since then. With its multicultural environment, car culture and trend-setting reputation, Los Angles was seen as a haven removed from the big automakers’ Midwest headquarters where vehicle designers have the freedom to think outside the box.
Car manufacturers have felt it important to keep up with the latest design trends to keep their car designs fresh, and the latest car trends, such as oversized wheels, started out in California before they caught on nationwide.
But now, just as each of the three big U.S. automakers are engaged in large-scale cost-cutting and restructuring programs to bring their North American operations back to profitability, they’re also investing in engineering, design and development centers overseas, aiming to draw on design talents from other regions and develop a more global business outlook.
Perhaps the most striking example of this trend was seen in March when Chrysler said it plans to close down its Pacifica Advance Product Design Center in Carlsbad, Calif. — a studio that focused on vehicle trends decades into the future and had a part in designing some of the U.S. automaker’s biggest recent hits, including the Chrysler 300 sedan.
The decision to center design operations near the company’s headquarters in Auburn Hills, Mich., was not necessarily to shave costs at the automaker, which was acquired last year by private equity firm Cerberus Capital Management for $7.4 billion, having struggled under the ownership of Germany’s Daimler-Benz since 1998, but rather as part of the company’s new global focus, according to Jim Press, Chrysler’s vice-chairman and president.
“There was some foresight in moving design to Los Angeles 30 years ago, but now you’re getting design inputs from all over the world,” said Press in an interview at this year’s New York auto show in March. Vehicle design is becoming less Los Angles-centric and more global, he noted.
Press pointed to Chrysler’s plan to develop a global B-category car — entry-level compact vehicles — with Chinese automaker Chery Automobile to compete with small, inexpensive and fuel-efficient cars like the Chevrolet Aveo, Honda’s Fit and Toyota’s Yaris.
“I think it’s a mistake for Chrysler to close this studio,” said Aaron Bragman, an industry analyst at Global Insight. “I can see why they’d do it to save money, but it takes a very powerful and influential force out of their design team, and California is still one of the big design centers of the world because it’s cosmopolitan and has influences from all over the world, especially from Asia, and you just don’t get that in Detroit.”
Bragman also notes that operating a business division in California is expensive, given the salaries demanded by workers and local taxes. Nissan, for example, moved its U.S. headquarters from southern California to Nashville, Tenn., last summer to save on costs, he noted, although Nissan Design America, one of the Japanese automaker’s U.S. design centers, remains in San Diego.
And when it comes to playing on the global stage, Chrysler’s ability to expand internationally is questionable, Bragman said. Last year, just 9 percent of the automaker’s sales came from overseas operations, whereas GM saw some 60 percent of its sales revenue come from international sources, he said.
“To focus globally, yes that’s good for company that’s global, but Chrysler isn’t and their ability to expand overseas is, I think, questionable,” Bragman said. “For GM to have design influences internationally is a necessity; for Chrysler to claim international influences is optimism — true, they want to have greater role internationally, and they have to have one if they want to survive, but it remains to be seen if they can do it on their own or through partnerships, which I think is more likely.”
With a recession looming and gasoline prices well over $3 a gallon, market research firm J.D. Power and Associates now expects U.S. auto sales to fall to 14.95 million cars and light trucks this year, down from a previous estimate of 15.7 million vehicles and below a sales level that’s generally seen as healthy — about 16 million vehicles. So it’s not surprising that U.S. automakers are focusing on overseas markets where double-digit annual sales growth is now the norm.
China, for example, is figuring prominently in the design direction of Buick, an iconic American brand that’s seen as old and stuffy here in the United States but is GM’s most popular brand in China. GM’s Buick Riviera coupe concept, for example, which was shown at the Detroit auto show last January, was designed in China.
At the same time, Ford is reorganizing its design and engineering centers around the world to make the company more global and speed up vehicle development. Certain engineering centers will be responsible for developing the core attributes of Ford brand vehicles worldwide.
Ford’s Fiesta is one of the most visible parts of the automakers’ new global focus and part of a plan to breathe life into its core brand. The global car, which is expected to look much like the stylish Verve concept compact car shown at the Detroit auto show in January, was designed in Europe and will go on sale in North America, Asia, South Africa and Australia by 2010.
The global trend could be an ominous sign for the car design community. Chrysler’s decision to close its California-based Pacifica design studio is the latest sign that demand for design jobs in North America is declining, according to Bill Barranco, principal of Autovision, a recruitment firm based in Palo Alto, Calif., that serves automobile designers and design studios in Europe, North America and Asia.
“The market is shrinking dramatically,” Barranco recently told automotive industry publication Ward’s Auto World. “Ford [is] not hiring anybody. General Motors doesn't need any more people. If anything, they're hiring for [South] Korea or Australia or Germany,” he told the publication, adding that while Toyota needs a few designers in Michigan, Hyundai-Kia isn’t hiring and Nissan is cutting designers.