Drivers face the choice of black or white to speed up delivery of new cars

PARIS, July 12 (Reuters) – For Emilie Malherbe, choosing the color of Renault’s ( RENA.PA ) all-new Arkana SUV was easy because only three were available: black, pearl white and grey.

She and her husband quickly settled on the gray because what mattered most was the quick delivery of the car.

“We heard on television that we could face delays of six to eight months to get a new car,” said Malherbe, 41, a resident of the Calvados region in northern France. “I smiled when they said 30 days. But I got it in 15 days, which was great.”

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Facing a global shortage of semiconductor chips and other supply chain disruptions, carmakers in Europe are offering reduced car options so customers can get a new car before the holiday season ends summer.

That’s a big change for an industry that has relied heavily on customization, which complicates manufacturing processes and erodes profits.

Instead, legacy carmakers are chasing Tesla Inc, whose stripped-down approach to car options has helped boost profits.

If they want a fast car, consumers don’t have much to choose from.

Renault’s Fast track Arkana offer, already being delivered in France, guarantees a new car in a maximum of 30 days – compared to an average wait of five months.

The cars come in just three colors, compared to the usual full range of six. Only a single trim level (RS Line) is available and there is only one engine choice. Rush orders accounted for half of Arkana new car registrations in France in June.

If any buyer requests additional options, delivery is not guaranteed, according to Renault.

‘FEAR OF THE ELIMINATION OF THE SALE’

A source close to Renault told Reuters that the French carmaker expects these streamlined offerings to grow across the industry because its supply chain woes aren’t going away anytime soon.

“It sends the message that reducing commercial and technical diversity is consistent with good business,” the source said.

For years, legacy automakers have taken the approach that the ability to customize color, trim and accessories — and remotely monitor the vehicle’s progress as it’s built — is essential to sales pitches.

But according to a 2020 analysis by automotive consultant JD Power, across the entire auto industry, 98% of model combinations sell fewer than 50 units each and cumulatively account for just 25% of total sales.

The remaining 2% of combinations account for the remaining three-quarters of sales.

This is a far cry from Henry Ford’s mantra for his Model T that customers could have “any color as long as it’s black,” so that the production line could focus on efficiency and quality. Ford founded the Ford Motor Co. (FN) in 1903.

THE PARADOX OF INDUSTRY

Some major automakers have periodically talked about the need to return to fewer options, but have had a hard time following through.

In the U.S. market, for example, large light-duty trucks come in 70,000 combinations, said JD Power analyst Doug Betts.

“Industry has loaded this hill many times,” Betts said. “It’s just never been clear how to address the problem.”

“The fear is that if you don’t have data on which versions to eliminate, you can eliminate sales,” he added.

Supply problems and the need to simplify industrial processes to meet the high cost of electrification may have changed this.

“The automotive industry is experiencing a real paradox: on the one hand, it wants to produce on demand and not “push the metal”, but the reduced diversity of products makes it easier for customers to find the models they want in stock, ” said S&P Global. Mobility analyst Denis Schemoul.

“Reducing diversity benefits everyone,” he added. “And everyone will follow, even the Germans.”

Faced with component shortages, Volkswagen AG ( VOWG_p.DE ) in February trimmed options for its electric ID3, already available in Europe, to a single version to shorten delivery times.

“The priority of the Volkswagen brand is indeed to provide an offer that can be offered to its customers as quickly as possible, despite the limitations associated with the shortage of semiconductors,” VW said in a statement.

CHOICE OF CHOICE

The slimmed-down Up & Go offering from Renault’s low-cost Dacia brand focuses on engines and trim lines rather than reducing color options.

“By leading customers to two engines and a single finish, there is no more embarrassment about the choice … and thanks to this, from an industrial point of view, it is much easier to program, to plan,” said Dacia logistics and distribution director Dimitri Manoussis.

The program cuts 40 days off from delivery time. Dacia says the Up & Go, which is available in just 14 combinations, accounts for 30% of Duster SUV sales in France, while 400 combinations make up the remaining 70%. Duster is Dacia’s second best selling car.

“If we reduce product diversity, we make a lot of things more fluid,” Manoussis said.

Dacia will introduce the Up & Go across its range and expand it to Belgium, Morocco and Portugal by the end of the year, followed by the UK.

Renault’s “Ready to Go” is also good for the carmaker’s margins as the stripped-down “fast road” Arkana starts at €38,630 ($39,348), a similar price to the model’s top-of-the-range RS Line.

For customers like Emilie Malherbe, who originally wanted a fully loaded RS lineup, going for a simpler option was the only way to get a car in time for summer.

More simplification is coming. Stellantis has shortened the entry-level version of the new Peugeot 408 and will only offer two trim levels.

“The new 408 focuses on the most demanding trim levels,” said Peugeot product director Jérôme Micheron. “This will simplify the customer journey.”

“It’s easier and faster to set up your car on our website when there aren’t many options,” he added.

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Reporting by Gilles Guillaume in Paris and Joseph White in Detroit Writing by Nick Carey Editing by Ben Klayman and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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