Why car makers are trimming the variety and number of options

One is to streamline the online buying process. The fewer choices, the simpler the path and the easier it is for customers to compare models, particularly when the final figure is more than likely what you will pay monthly, rather than the full list price.

That doesn’t mean car makers are scrimping on equipment, though. Increasingly entry trims are being cut and the customer is being directed at the full-menu higher trims.

Dacia had started an online programme in France called Up & Go that steers customers towards a high-spec version, currently of the Dacia Duster small SUV. This model, “over-equipped” with extras like keyless entry, comes with a fixed monthly price lower than the sum of its extra kit (€249 in France) and is then prioritised on the production line to ensure faster delivery.

“We’ve spent significant efforts reducing diversity in the [Renault and Dacia] range to simplify the offering to the customer, but also from the engineering perspective, we’ve reduced the number of parts by almost 40% versus the project they replace,” said Thierry Pieton, chief financial officer for Dacia owner the Renault Group, on an earnings call in April.

“This has massive implications: less engineering, better leverage with suppliers, each part in larger volumes, less inventory and more efficient aftersales.”

The manufacturing advantage comes from reducing the need to change tooling or to kit the assembly line with different parts for different models.

“The ripple effect it has on the business is quite amazing. When you have less complexity, it immediately improves quality, because there are fewer things to go wrong,” said Kumar Galhotra, president of the Ford Blue combustion-engine division, in March.

Ford has already started down that route with Ford Puma. “If you compare the Puma with the Ford Focus, we’re talking logarithmic-scale differences in the complexity behind those vehicle lines,” Ford of Europe chairman Stuart Rowley said last year.

“That simplifies the business from the supply base and the manufacturing plants or logistics to the customer facing offer. It just runs goodness across the board. And if you compare the Mustang Mach-E to the Puma, it's the next level of efficiency.”

As part of its simplification process, Ford in April has said that it will no longer make the three-door version of the Ford Fiesta from this summer and has axed the entry-level performance version, the ST2.

Tesla is showing the way forward here. Investment bank Jefferies counted 60 combinations for the Model 3, including different powertrain, paint and option packages, compared with 1120 combinations for the Volkswagen ID 3, a car that has already had reductions compared with typical Volkswagen combinations.

On the BMW 3 Series, meanwhile, Jefferies counted 5760 combinations of the petrol model and 9600 for the diesel model.

Premium customers expect to customise their new car to a greater extent, but even there BMW is looking to cut the complexity as it looks to minimise the price hike for electric models.

“We will especially reduce the number of available combinations, because certain combinations make no sense at all and are never chosen,” BMW CFO Nicholas Peter told journalists last year.

The same thing is happening at BMW’s big rival.

“Variation at Mercedes-Benz was a nightmare: we wanted to cut it down and cut it down,” Tobias Moers, the outgoing CEO of Aston Martin and former head of Mercedes performance arm AMG told Reuters in April.

That’s very different to Aston Martin. “Here, this is our purpose,” Moers said, highlighting the company’s recent 20% increase in options such as different leathers and paint colours.

The same process is happening at Bentley and Rolls-Royce, where profits have multiplied on increased levels of personalisation. Bentley has promised 24 billion unique possible configurations on a forthcoming unnamed model to be revealed later in May.

Caterham, meanwhile, boasted of “quadrillions” of option combinations when it launched its configurator two years ago.

On more volume brands, a push for simplification might be done to cut costs, but increasingly that means installing a new piece of technology to all models, rather than keeping it as an option.

The simplicity to make all cars in the range with a digital screen in place of dials or an electronic handbrake in place of manual one, for example, can override the extra cost, particularly if the brand can negotiate a better price for the item from the supplier on the promise of the increased volume.

“Cost-wise, there has been a mentality in the car industry that on entry-level models you have to cut things out and that’s how you get a lower-priced car,” said Henrik Fisker, the boss of EV start-up Fisker, at the European launch of the Ocean SUV in March. “We're able to convince some suppliers to give us almost the same price for higher-value things, because we have more volume.”

One example he gave was the electric adjusting steering column. For Fisker, this works to create another advantage. Having the electric steering column in all models means that the company can add an additional feature over the air (Fisker wouldn’t say what) as part of a digital update.

And this is increasingly the future of options. No longer will the factory be responsible for installing them, but the owner will do that themselves by approving upgrades that come over the air.

The car maker creates one vehicle essentially with all the hardware needed and sells features through its life – features that can shift from owner to owner and gives companies new revenue streams that aren't dependent on whether a salesman has done an effective job pitching an option in the showroom.

Car makers worry about leaving money on the table in vehicle sales by restricting options. In a digital future, theoretically, that won’t be the case.

As BMW has shown with its iX concept with E Ink, that might even extend to selling a car in one colour and changing it digitally. Henry Ford would definitely approve.

Features cut by parts shortages

Another factor reducing features is the shortage of parts including semiconductors, the brains behind most new features on modern cars, which is still hampering production. A step-change in electronic complexity in new cars is calling for more and more chips in the midst of a global shortage, meaning car makers have had to cut out options.

For example, BMW customers are reporting that cars are now being delivered without Apple CarPlay and Android Auto functionality, while Mini has stopped making manual versions of its models, citing supply shortages. Customers on the Range Rover Evoque forums, meanwhile, are flagging up cases of Land Rover removing the driver interactive display over chip shortages.