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The Globe and Mail

What design is worth to an auto maker’s bottom line

Alfonso Albaisa, a Cuban from Miami, leads Nissan Motor Co.’s design department from a huge studio in Atsugi, Japan.

Kathryn Rapier

In a long room the size of three football fields are 35 full-size clay models of upcoming cars and trucks, many of which the public won't see for another four years. Alfonso Albaisa, a Cuban-American from Miami, leads Nissan Motor Company's design department from this studio in Atsugi, Japan. Milling machines carve out the lines of the next Infiniti sedan or Nissan Titan truck. At the far end of the studio, you might see a tiny kei car for the Japanese domestic market.

Between 500 and 600 people work in the Atsugi studio, shaping cars for Infiniti, Datsun and Nissan, which together account for more than half the 9.96 million vehicles sold last year by the Renault-Nissan Alliance, the world's fourth-largest automotive group as of 2016. Nissan also has design studios in California, London, Bangkok, Rio and India.

"What [design] is worth and what it costs are very different," Albaisa said. Compared with the engineering department, which employs about 10,000 people, the design group is small. But their impact is anything but. "The value of design, as a differentiator, is probably worth billions. Because when you make something that's hot, it sells a lot and the company makes huge money."

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He points to the Qashqai SUV as an example, which has been a cash cow for Nissan in Europe – so much so that the company will sell it in Canada this year. "That contributed hundreds of millions to the company," Albaisa said, "but it didn't cost us very much to make from our design standpoint."

The style of a vehicle wasn't always worth so much, but it has become a key differentiator between increasingly homogeneous products.

Why have cars become so homogeneous? Car designers often blame increasingly strict safety and fuel-economy regulations, which shape a vehicle's aerodynamics and structure. Less discussed, but no less important, is the consolidation of the auto industry. As automotive brands amalgamate into just a handful of giant groups, there are fewer mechanical differences between vehicles due to parts and platform sharing.

Lamborghini's upcoming Urus SUV, for example, will probably be based on the same basic architecture as SUVs from Audi, Volkswagen, Bentley and Porsche, which are all part of the VW Group. BMW is co-developing its new sports car with Toyota. Fiat's 124 Spider is made by Mazda and underpinned by its MX-5 chassis. Such strategic alliances spread costs over more vehicles, making the creation of niche models – such as the Fiat 124 – possible and profitable.

So if what's under the hood is increasingly similar, it's what's on the outside the matters.

"The gap between a good car and a medium car is getting quite tight," Albaisa said. "Design is the one thing that's going to have people notice the car and then create curiosity in the brand."

Take Mercedes-Benz, for example. As of 2011, its sales were lagging behind rivals Audi and BMW. Around the same time, two things happened: Benz went on a product offensive, launching a barrage of new models, and Gordon Wagner, the company's chief design officer, defined a new look for the brand's vehicles. Mercedes-Benz became the top-selling premium automotive brand in 2016 – a remarkable come-from-behind win.

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"I can't put a number on it, but I would say [design] is a major reason why we became No. 1 last year," said Robert Lesnik, head of exterior design for Mercedes-Benz. "First of all, there was a change, visible, from where we came from. … People noticed that our cars looked different."

Lesnik pointed to the Mercedes-AMG GLC 63 Coupe next to us, on display at the New York International Auto Show. It's a fastback SUV, matte grey with yellow stripes. It's loud, brash and sporty. It looks like a Mercedes the way Spider-Man looks like Peter Parker. It couldn't be more different from the conservative sedans that once defined the brand.

Lesnik believes it was the style of these non-traditional new models – four-door coupes, SUV coupes and new sports cars – that attracted new, younger customers to Mercedes.

Similarly, Kia used to be known primarily as a value player that undercut rivals. In 2006, the company hired chief designer Peter Schreyer away from Audi – where he'd designed the original Audi TT – and began to focus on creating a brand identity through style.

"The North American public mostly responded to [Kia's] effortless design," Albaisa said during our interview in New York. "So people were talking about that company in words that they used to use for us – and that was really infuriating."

In the United States, Kia sales have seen massive growth during Schreyer's tenure as designer. In 2006, the company sold 294,000 cars; last year, it sold 647,000, according to data from GoodCarBadCar. Canadian sales have seen similar growth.

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Design is just as important, if not more so, at the top end of the automotive market.

"The major reason to buy Lamborghini is design," said Maurizio Reggiani, the company's R&D director. "For me, what my big job is is to mitigate the compromise between design and engineering. … I try to put [few] constraints on the designer because I am fully aware that when you see a Lamborghini you say, 'Wow!' Otherwise, you don't sell."

Andy Goss, the global sales director for Jaguar Land Rover, sees design as a way to stand out in an increasingly crowded international market.

"There are more and more competitors, particularly in North America, particularly in China," he said. "I think there's a car launch in China every three days now.

"I think, for us, [design] is the way we've broken through the clutter."

Apart from the CEO, Goss says, JLR's chief designers – Ian Callum for Jaguar and Gerry McGovern for Land Rover – are the most important people at the company.

The car industry has come a long way from the days when Henry Ford would sell you a Model T in any colour so long as it was black. But just as the prominence of design in the auto industry becomes undisputed, its importance is being questioned.

Autonomous cars and car-sharing services will disrupt the traditional car industry like nothing else over the past 100 years. If you're ordering a car to your door only when you need it – through Uber, for example – are customers going to care what it looks like as long as it gets there quickly?

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