Building vehicles to order

Logistical obstacles continue to limit true build-to-order, but manufacturers pursue alternatives.

A decade ago Dell Corp. was turning the computer industry upside down by selling computers directly to customers. Dell trimmed extraneous costs by building only computers that customers ordered, exactly as they wanted them, giving it a price and profit advantage over competitors. Skeptics dismissed Dell's approach as a fad, or as a niche service that appealed to only a limited portion of computer customers. After all, PCs were a costly purchase, and customers wanted the emotional reward of taking one home right away, rather than waiting, went the thinking. And they would want to test-drive the latest models before choosing one, which was impossible when phoning in an order. Both are the same arguments made against the potential success of the model in the automotive industry. Today, Dell is the world's largest PC company.

Eyeing this success, participants in more mature industries began to wonder if Dell's build-to-order model could be applied elsewhere. So even the car industry began to consider the potential of build-to-order, despite state franchising laws that prevented automakers from selling their wares directly to customers. The idea could be adapted to work with dealers serving as the order and delivery point.