Since BUV-type vehicles are not currently on the market, it is easy to assume that an ultra low-cost
vehicle cannot be profitably sold. Otherwise, large companies would be serving the market already. Restated, “Why haven’t the multi-national corporations (MNCs) pursued this market?”
Multi-nationals do not pursue the market due to lack of margin and lack of market volume (willing buyers with money).
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The Institute for Affordable Transportation (IAT) believes buyers abound if the price-points are $1000 - $3000 dollars. Tremendous growth of micro-loans (funded by UN, World Bank, etc) for Third World countries will help enable small businesses to purchase vehicles.
In vehicle product development, a clean slate design is very costly.
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Companies question the payback and are reluctant to exert the necessary engineering effort. IAT however, utilizes students, who thrive on the clean slate approach, and their engineering effort is widely available and inexpensive.
Large corporations have a short-term perspective due to pressures from the investment community.
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This endeavor requires a long term perspective. After six years of research, IAT is more convinced than ever that an ultra affordable vehicle can be profitably sold in Africa.
Foreign governments fear that multinationals will take advantage of them and repatriate profits. Consequently, governments erect barriers or skim profits which increases vehicle prices.
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As a non-profit, IAT wants all competition to thrive, including local entrepreneurs.
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Local companies will continually gain market share from the large players.
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Foreign governments are learning that the IAT exists to help, not exploit people.
The "car" paradigm places a high emphasis on appearance (first world perspective).
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The BUV focuses on maximum function at a minimum price.
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To radically reduce costs, one must discard the “traditional” car configuration.
No company wants the risk of entering into a new country with an “unproven” product. Third world countries usually receive "proven" products that are "de-contented".
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Catch 22: A company cannot prove the product by serving the first world because it is not needed in the first world. It must be proven in the third world (new market + new product = high risk).
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IAT will facilitate alliances to reduce risks and help negotiate agreements between host governments and companies. The integrity, professionalism and purpose of IAT will gradually build trust with foreign governments.
Governments in developing countries are less sensitive to the needs of women and children and may not encourage a vehicle that specifically helps them.
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International research on developing countries underscores the need for women and children's access to education, jobs, and freedom.
Auto suppliers believe that vehicle assembly is too complex and outside their core competency.
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An ultra-simple vehicle represents the best way to experiment with final assembly of vehicles (relatively low risk/investment and significant payoff potential).
Multi-nationals tend to see the red tape and consequences.
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Local companies are often not subject to the same rules and restraints as multinationals.
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Local companies see past the tape and discover ways to bypass or eliminate the obstacles.
Auto companies are stymied by the feeling that they cannot compete in the low-end market.
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Auto companies need to reinvent themselves to serve this market.
Vehicle manufacturers want to avoid the liability issues associated with an ultra affordable vehicle.
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An element of “buyer responsibility” is accepted in developing countries. Local manufacturers experience it to a greater extent than foreign companies. Student designers will look out for the buyers' safety interests when designing the vehicle. Since students work voluntarily for the betterment of society, there will inherently be some liability limitations. In addition, manufacturers will include legal wording to limit liability as a condition of sale. Universities have the option to let IAT own the student designs for further liability protection.
Auto companies do not want this vehicle to diminish their brand equity and are reluctant to develop new brands
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The reliability of this vehicle (likely a first car) could enhance the brand equity and loyalty.
Multi-nationals generally see opportunities through first world lenses.
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Local entrepreneurs know the market best, can react fast, and will undertake significant risks.
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Inventors dilemma…companies drift up the value chain and overlook "disruptive technologies".
Auto companies see revenue potential in the large cities of developing countries and often ignore the rural markets.
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IAT focuses solely on rural areas and sustainable economic development.
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Entrepreneurs try anything. The best ideas will succeed and spread quickly.
Why have major motorcycle manufacturers not pursued this market? Afterall, they already manufacture similar components and have assembly plants in numerous Third World countries.
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Motorcycles are generally designed in first world countries. The Japanese have the dominant manufacturing foot-print in developing countries. At first glance, this product does not challenge the engineering community, the dominant organization within the Japanese motorcycle manufacturers. Unlike a motorcycle, the BUV has few uniquely engineered parts. Furthermore, a BUV could cannibalize motorcycle sales. For many motorcycle manufacturers, a complete corporate mind-shift is necessary to manufacture a "car". Undoubtedly, the manufacturers have briefly considered BUV-type concepts. At first glance, it is easy to shoot the BUV concept down, but a thorough, objective analysis suggests true potential.