While manufacturers are constantly trying to reduce unit costs, the final cost of their products is dependent on various factors including design and specifications, which makes up more than two-thirds of the product’s price.
There are several measures that the automotive industry can implement in order to cut their production costs. Most of these measures involve adopting new-age digital tech and automation into the process in order to improve speed and efficiency, while also focusing on resource optimization.
In this blog, we will look at some useful tips that the automotive industry can implement into their manufacturing process in order to save money during the production process. Let’s dive in!
1. Telematics
While the initial costs of setting up telematics might be higher, it adds a lot of value to the automotive industry in the longer run.
For instance, Fleet Managers can use the information collected from Telematics to better understand the functioning of the vehicle and take certain decisions based on this data to reduce the overheads involved in running the fleet.
Additionally, insurers can also use this tech to estimate damages, reduce fraud, and in cases of theft, track the vehicle’s location.
Telematics has been around for a few decades now, but it hasn’t seen a lot of widespread adoption until now, which has been growing due to improved vehicle connectivity and smartphone integrations.
2. Design-driven cost reduction
Cost reduction has become an overall operational strategy in the automotive industry. However, given the pressure of being able to meet customer demands without increasing costs, these companies struggle to stay afloat while squeezing car makers for profits.
The ideal strategy for car manufacturers would be to identify and implement design-driven cost reduction measures, where they identify critical features of the car that customers value and cut out costly waste.
The result? They are still able to satisfy the customer while also maintaining competitive prices in a rapidly changing world.
3. AI in the automotive industry
AI has a lot of potential in the automotive industry and is seeing widespread adoption in the last few years.
Implementing AI into business processes not only helps reduce manufacturing costs, it also helps increase production and efficiency.
In addition to helping manufacturers produce safer vehicles, AI can also help the insurance industry make the claims process more efficient by predicting risks and reducing insurance costs.
Additionally, since AI gets smarter with more data being fed, it can eventually help manufacturers identify new avenues of cost optimization which can further help them save more money in the production process.
4. Vehicle inspection automation
Vehicle inspections are a crucial step involved in the automotive industry. However, the current process of inspections is largely manually driven, making it a costly, tedious, and time consuming process.
Opting to automate this process using the right AI tools can help reduce the operational cost involved in this process while also adding a layer of standardization to improve the overall efficiecny and accuracy of the proecss.
For example, Inspektlabs (a popular AI-powered damage detection tool) can help detect 160+ types of damages across all types of vehicles with 90%-95% accuracy and generate a detailed report with repair vs. replace decisions in just a few minutes.
This will reduce the need of a manual inspection by quite a lot i.e. lesser operational costs needed to hire and manage an inspector who is meant to be doing this full-time.
Conclusion
The automotive industry is evolving rapidly, and cutting costs has become more important than ever. One of the most effective ways to do this is by embracing modern digital technologies. As the industry continues to grow, adapting to these innovations isn’t just an option—it’s a necessity.