In another thread, I wrote about two adverts I saw today in the local newspaper. One a Nissan dealer was advertising that if you buy a a new Nissan Titan pickup, they will throw in free, a new Nissan Versa, which is a nice little economy car.
The other ad was for a used 2008 Ford XLT Ext. F250, with 6.4 Power stroke diesel, 4WD, etc., for under 27K Cdn. New something like this would be probably around $ 45K cdn. How many miles can be on a 2008 ? Considering how heavy duty the build quality and the fact that it has a diesel engine, a truck like this F250 should really have a lot of life left in it. BTW, I don't have a clue what the miles or the shape is on this vehicle.
I don't know anything more about these deals, vehicles, etc., than what I read in the adverts.
But it makes me wonder....what is the actual cost....I mean the actual cost of building a very good pickup like the Nissan or the Ford, or a car like the Versa?
I know when you buy a vehicle, particularly a new vehicle, you never really skin the dealer. They know their costs, etc., you can wheel and deal, but you're never really hosing them and anyways it's not so much the dealers, what does it cost to make a vehicle?
To wit....these prices and deals I mentioned at the beginning of my post.
I wonder how much profit, I mean the real profit, not what the manufacturers say they make on different vehicles happens to be?
Sep. 20--At the close of a week that left Wall Street battered by the collapse of a major investment bank and government intervention to halt systemic bleeding in the financial markets, three of the nation's big automakers are waving white flags, too.
Top executives of the "Big Three" carmakers in Detroit -- General Motors Corp., Ford Motor Co. and Chrysler LLC -- sent a letter to U.S. House Speaker Nancy Pelosi, D-Calif., this week asking Congress to release $25 billion in low-interest loans it authorized last year.
I have worked in the Detroit auto industry forever. The amount of profit made on a light duty truck, like the F series, is about $10,000 IF the manufacturer can make 800,000 units per year. Otherwise, the multibillion dollar costs of developing the vehicle are spread over fewer vehicles, which contribute to the red ink Skipnchar mentioned above.
Typically, the "buy one, get one" offer involves incentives the manufacturer pays to the dealer to move undesirable vehicles. Currently, that's anything that gets under 30 mpg.
Mike Butts
DW+DD+DS
’07 Kodiak 23TT, 2004 Ford Expedition 5.4L with H.D. Tow Package
Les, I used to work in a large computer company ($7 billion in
revenues per year) as a program manager. Chaired product teams...what
amounts to a small company within Sun Micro and had P&L responsibilities.
GM/Ford/etc are way bigger but similar in structure (BOMs and the
financial DB).
ROI is tough to figure and here is an example.
Got a special assignment to run an embedded product team. Just the
mother board so to speak and no monitor/keyboard/enclosure/HDD/etc/etc.
But the controller's report was always off by too big a number.
Digging (got into lot's of trouble on that one) and found that the DB
automaticly embedded into my cost structure the overhead for monitors/
keyboards/HDD/enclosure/etc.
The directors/VPs/GMs didn't understand what the heck I was talking
about, nor did they care.
Finally got a small group in the east coast to listen and they under
stood what the heck was talking about. After about 3 months, that
controller found that Oracle program had what I needed/wanted, but it
was turned off.
Once I got that guy to turn it on for a test, the numbers came out as
I expected (really dead nuts on). He got a huge at'a'boy and 1,000
stock options. I got a reprimand for messing around stuff.
What I'm saying is that in a very large organization, they really
don't know. The FASB accrual allows credits, transfers, etc that
factor an already very complex picture. Like how I've played that
game by donating some servers (obsolete to us) to non-profits and got
credits that I then traded to another educational group who had the
DB check points.
Like that freebie car is written off as a marketing/sales expense, which
is rolled up into their op budget.
Did you know that the 'typical' auto today has over 20,000 individual
parts? Just adding a 'new' component requires the product team to pull
a PNR (part number request), which has to go through a whole process.
Engineering writes a spec sheet, coordinators run it through the DB.
Components reviews against existing stock. Purchasing goes out to bid.
Production, quality, service, etc all write up their own specs and
processes. Proto's or samples are purchased. Receiving must have the
new part on their DB, else they will reject it and not receive it.
Regulatory certification folks will then test it to spec. Finally it
will go to CCB (change control board...aka ECO group) for a review
and all assigned approvers either approve or reject and the whole
process repeats till it passes.
This is all buried in the 'over head' for all product teams, no matter
whether they use the part or not.
If the new part is complex, this whole process is more complex and
expensive.
So what is the true cost of that vehicle?
Only one controller kept two books for me. For the others, I had my
project coordinators keep that second set of books. They thought I
was going to cheat, but I wanted cash accounting vs their FASB
accrual methods. Always had a much larger margin position and shorter
ROI than other program managers....
-Ben Picture of my rig
1996 GMC SLT Suburban 3/4 ton K3500/7.4L/4:1/+150Kmiles orig owner...
1980 Chevy Silverado C10/long bed/"BUILT" 5.7L/3:73/1 ton helper springs/+329Kmiles, bought it from dad...
1998 Mazda B2500 (1/2 ton) pickup, 2nd owner...
Praise Dyno Brake equiped and all have "nose bleed" braking!
Previous trucks/offroaders: 40's Jeep restored in mid 60's / 69 DuneBuggy (approx +1K lb: VW pan/200hpCorvair: eng, cam, dual carb'w velocity stacks'n 18" runners, 4spd transaxle) made myself from ground up / 1970 Toyota FJ40 / 1973 K5 Blazer (2dr Tahoe, 1 ton axles front/rear, +255K miles when sold it)...
Sold the boat (looking for another): Trophy with twin 150's...
51 cylinders in household, what's yours?...
Cost accounting can be very creative. Remember the coffee pots and toilet seats?
Some of the cost of the medical benefits for retired workers is paid for from the income form cars sold today. Take the total cost of benefits for retirees, subtract income from investments that fund that and if that is not enough get the rest of the money from current sales.
A friend of my father in laws retired at 65, in a different industry. As a benefit he locked in medical insurance for himself and his wife until the day they died at no cost to him. He is now in his 90s. The cost of covering his medical bills is covered by the sales of new product today, even though it has nothing to do with the cost of building something today.
Wayne in San Jose
TV1:2002 Chevy 1500HD 4wd Crew Cab,Valley Odyssey brake ctlr,McKesh mirrors
TV2:2008 GMC 2500HD long bed 4wd Crew Cab,GMC brake ctlr,GMC mirrors
TT:Trailmanor 2720
Honda 2000
Yamaha WR250R,Polaris Sportsman 700 X2,Polaris Scrambler 500
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