ARTICLES
Product-service systems in the automotive industry: the case of micro-factory retailing
Abstract
Solutions to the economic and environmental impacts of the automotive industry have largely focused on technological innovation at the level of products or processes. This paper argues that, in order to achieve sustainability, change processes must be undertaken at the functional and systemic level.
The concept of product-service systems (PSS) represents a valuable opportunity to introduce such changes. PSS is predicated on new forms of product ownership, stewardship, design and producer–consumer interaction. The challenge now is to investigate ways in which the PSS concept might be introduced at the empirical level.
Introduction
Awareness of the economic and environmental problems associated with the automotive industry continues to grow. In the economic sense, a variety of factors, including market fragmentation and stagnation, the capital intensity of production technology, and low profitability have called into question the long-term viability of a business paradigm based on mass-production and high-volume sales
Sustainability and the automotive industry
The global production system for automotive manufacture has been characterised by a high degree of consolidation amongst the major manufacturers. One of the principle driving forces behind this ongoing merger and acquisition activity is the pursuit of improved economies of scale. In the search for increased profit margins, companies have adopted a strategy of mass-production, high-volume output and sales to global markets.
Sustainable business models and system innovation
As described earlier, the automotive industry has been successful in achieving a variety of eco-efficiency gains. In addition, there is growing evidence that manufacturers are considering the life-cycle environmental implications of car production, use and end-of-life management in the design of new vehicles and models.
Product-service systems
A product-service system (PSS) has been described as ‘a system of products, services, supporting networks and infrastructure that is designed to be: competitive, satisfy customer needs and have a lower environmental impact than traditional business models’ [17]. At its core, the PSS concept is based upon a fundamental shift in the relationship between the producers and the consumers of a product or service.
Challenges for implementing the PSS concept in the automotive industry
It is clear from the above analysis that the adoption of the PSS concept within sectors of the automotive industry could represent an interesting and effective means of addressing some of the economic and environmental concerns outlined earlier. However, if the merits of such an approach are to be accepted by the industry, there is a need for robust methods of evaluating the full sustainability implications of the adoption of such systems in comparison with the prevailing paradigm.
Conclusion
This paper has argued that the concept of PSS represents a viable alternative for the introduction of the types of functional and system-level innovations necessary to address sustainability challenges in the automotive industry. Furthermore, it has demonstrated that the adoption of an MFR approach, based on novel approaches to vehicle design that facilitate the economic viability of small-scale localised manufacturing sites, might allow the adoption of a full scale PSS at local levels