21 May 2011

Aluminium Cars, the Market and Production Volumes

The target market for an all aluminium car would be very much dictated by company policy and business strategy of the automobile manufacturer. For example when Audi produced the A8, which was a relatively expensive, lower volume, luxury automobile, the company strategy was to demonstrate that the material aluminium is fundamentally suitable for vehicle body manufacture and to illustrate the ease with which body repairs on aluminium vehicles could be carried out. Daily volumes for the A8 ran up to about 80 vehicles a day and because the A8 was at the higher priced end of the market it was felt that the increased costs associated with the initial excursion into using aluminium structures could be more easily absorbed.

For the A2 on the other hand, which was a smaller family type hatchback, the emphasis was on production technology and on validating the process of high volume production.

Daily production for the A2 ran at around 300 vehicles a day and the production processes have a degree of automation similar to that utilised in the production of steel bodied cars which is around 85% and is markedly different to the 25% automation level initially employed on the production of the A8, although steps were taken to increase this level of automation to a similar level to the A2.

In order to achieve the production volumes required at acceptable costs and quality levels, Audi entered into agreements with strategic business partners, identified through their work on the A8. This was with a view to improving the material properties of the aluminium alloys they used i.e. optimising the materials for specific functions to help overcome shortfalls identified in their previous exposure to production of aluminium vehicles such as removing the need to perform straightening operations during the production process.

One of these relationships was with Alcan, one of the main producers of aluminium. This has resulted in Alcan becoming one of the biggest suppliers of aluminium parts for the A2, not only supplying finished components such as extrusions and castings but also developing and supplying the specialist materials previously discussed.

Audi also sought to improve the production processes they had identified as most appropriate for aluminium car production again by entering into strategic business partnerships with the suppliers of specialist welding, bonding and mechanical fixing equipment.

Besides the business partnerships they entered into, Audi sought to develop core skills in the production of aluminium cars, in their case this centred around the ability to produce very high quality, close tolerance outer skin components on a volume basis.

Having invested somewhere in the region of 300 million Euros in plant and capital equipment Audi have committed to the further and increasing use of aluminium in their car designs not just for the models mentioned but across the whole range of vehicles produced by Audi. This effectively means that the use of aluminium will increase in all market sectors that Audi supply to.

Ref. Dr. Wolfgang Ruch (2001)

Audi have demonstrated that Aluminium cars are a viable alternative to steel cars in both medium and high volume production. For the high volume option where margins would be tighter they needed to achieve high levels of innovation both in the development of the car and of the supporting manufacturing processes in order to make this a viable enterprise. Without access to the company figures on sales and profit margins the assumption that they have managed to meet a market need and have done that cost effectively has to be made and is supported by the evidence of further investment in capital equipment required to raise the automation level for the A8 model.

A clear part of Audi’s approach was also to answer the make or buy questions as part of their business strategy making good use of external expertise whilst developing their own core skills in areas they felt they could excel, getting this balance right is also crucial to success in terms of where and how capital is invested in order to keep an edge over competitors and to be able to compete in the market place.

Tha last Audi A2 left the productions line at Neckarsulm in August 2005 but set the standard for aluminium cars manufactured on a high volume production basis.


  1. This comment has been removed by a blog administrator.

  2. A lot of great points here. Aluminum cars will continue to be marked and sold at a higher volume going froward.