2001 AE

Is all of our money going into the pockets of upper management or what? Manpower is not used as much as it was in the past but car prices have not decreased or even stayed the same. They (auto manufacturers) need raises just like we do but they have not passed on their savings to the consumer in my opinion.

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speediva

I tend to agree in some manner. Which manner, I haven't decided yet, but some manner

I do think that cars are still too outrageously priced, and the lenders are charging an arm and a leg to finance....

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Jay!

I always thought the big numbers came from R&D and engineering costs more than materials. Is that true?

Also, there must be a mention of economies of scale, which say that each additional unit produced would cost less per unit, up to a point. That point is usually the production capacity. So, when Ferrari produces way less cars than Ford, the R&D and engineering costs are spread over fewer units, increasing the price per car.

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Psman32@af

i agree with jay. For the most part, when americans design a new car, we must get a new chasis, body engine, and most of the drivetrain, suspension etc., while for the most part, japenses companies use the same chasis and suspenion but just refine it to their purposes. Also Ford makes more on SUV's than any other car. I believe they make 8000 per explorer bout only 1000 or so on a focus. most of teh profits come from fianacing, which is why no one is making anymoney this quater, because they all offered 0.0% finanacing.

Twist

Well some of what you're paying for in a car is the robotics and the factory itself. They aren't cheap, especially if they're well built. Henry Ford wanted to make the cheapest car possible. To do this he wanted to have a monopoly so that he could massproduce a car that every one would buy and that way the cost of the factory would be spread out over a large number of cars. With Ferrari's, few cars=less cars to spread the cost over=higher prices.

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MBTN

Yes, but Ferrari also uses a lot of aluminum, which is more difficult to work with than steel, hence higehr prices. That, and they have to sell for a lot of money so Ferrari has enough to pay for racing. That's the way it's always been.

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blatch

well.... ya, you pay for the robots. and as for the SUVs, and expedition (i have one) it's just a ford F-150 with a back and (in my case) a custom leather interior (eddie bauer). and for just that (that's it) they jack up the price a shitpot. the thing costs like, 36k new

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Heep

...and so that they maintain a certain aura, not like Porsches which tend to fall into the "blah, don't want it" category because everyone has one...

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Twist

Of course, some of it is pure profit. I know that Ford makes $13,000 in PROFIT for each Explorer they sell. They actually lose money on the Ford Focus. All this to try to keep up with the Hondayota Sharolla, I mean Civic.

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Jimster

also there is the expensive upkeep of the bots

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Jay!

Moving to Engineering/Technical, BTW.

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kris

The ever expanding customer demands far outweighs the decrease in production costs. Year after year, new safety standards are met, and the car makers have no choice but to adapt. Remember when front airbags where only available on higher end cars? Now a subcompact is out of the game if it only has front driver and passenger ones and no laterals. New gadgets and features keep on poping up all the time, and if one manufacturer does not want to loose face, it must have it as well. Cars are becoming more and more reliable, and more and more technologically advanced, such things cost money. Today's compact is yesterday's luxury car, with smooth ride, cd player, air conditionning and power everything, even leather in some cases.

So no, don't expect to pay less for your car anytime soon. Car makers are not making more money than before, and even less. You can always opt for some companies like Kia and Daewoo that try and enter the scene by selling cars with 2 or 3 year old technology at lower cost, but remember, once they make it onto the market, they start making "real" cars (Hyundai is a good exemple), you'll just have to hope that for your next car, someone else is gonna try and break in the market.

enginerd

Ford "makes" 13000$ profit on an explorer because people are falling over to pay those prices. Ford "loses" money on the Focus because of CAFE. Combined Average Fuel Economy is a rating by the gov that automakers are required to achieve an average mpg from all the cars they sell. If Ford sells too many exploders, they take a huge tax hit from uncle sam. Ford really doesn't lose money on a Focus long term, if they can avoid a huge fine from uncle sam. Isn't America grand?

Hudson

I don't know where all of these numbers came from, but many of them are incorrect.

Ford does NOT make $13,000 on Explorers. Trucks make money for all car companies, but only the most expensive/most luxurious trucks make over $10k. I believe the Suburban has traditionally been one of the most profitable trucks on the market.

The point is correctly made that Ford (and other companies) lose money on the high gas mileage models so that they can make money on the large gas guzzlers (that, for some reason, people will pay extra for). Ford may not make any money on the Focus so that they can sell more Crown Victorias and Mustangs, which do make money. By the same token, four-cylinder Rangers and Escapes are produced to allow Ford to produce 5.4L Navigators and Expeditions (Excursions and F-SuperDuty trucks don't fall into this group).

In addition to labor (there are 100s of thousands of people on car and truck assembly lines in North America), buildings, R&D, advertising and marketing, sales personnel, regulations, and executives, car companies need to make money in good times because the automotive business is quite cyclical. Every good economy (where billions of dollars are made) is followed by a bad one (where billions of dollars are lost).

FlamePaintn

Don't forget the role the UAW plays in keeping car costs high. Even though robots are utilized, the manufacturers are still beholden to the employees that are displaced. Because jobs are contractual, rarely are these personnel eliminated. Often, they report to work for a non-existent job every day and get paid an extrodinary amount when compared to similar job classifications at non-UAW manufacturers. Until they retire, they continue to get paid...and don't forget the high value pension plans. US auto manufactures must hire according to local union contractual negotiations. In the facility I work at, there are several minimally skilled persons earning over 6 figures due to overtime. Skilled personnel frequently earn in excess of $200K, because management cannot hire only x number under contracts. Recent #'s were released, and Honda averages nearly double per car in profits as domestics...they just don't have the Union issues. While there is a push to get greater productivity from both the Union and management, the reality is it is a slow process...US cars won't ever get cheaper, but foreign cars will catch up because the market has proven repeatedly that they will pay the exorbitant prices demanded. When the consumer is willing to pay 40k for a gas guzzling behemoth at record numbers, why think of selling them cheaper?