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[STEMO]

I read about the old scrappage scheme yesterday, some folk think it may be re-introduced to start getting rid of old oil burners, and it got me thinking about the actual economics of car production. The last scrappage scheme was something like £2000 off a new car.
So let's a take a middle of the road car that retails at, say, £18000. £3000 of that is VAT, so the cost of the car is only £15,000. The part that interests me is what it actually costs to make. So there's the cost of all the parts, then the assembly costs, labour costs, transport costs, fuel costs for the factory, dealer profit margin.....any more? I would love to know how much it costs to build a car without all of the above and how the hell the manufacturer can make a half decent profit.
To make any sort of profit from the above figures, surely it can't cost any more than, say, five grand?

[STEMO]

Import taxes.

[dave the builder]

I'd be more interested in how much of a carbon footprint making a new car is ,including all raw material processing, transport, running the factory, staff, materials etc to get to the factory, delivery of new car, recycling the old scrapped car
I bet a new car isn't all that GREEN when you take all that into account 

what is the cost to the environment should be the question perhaps 
if a new car is so much better carbon footprint wise  taking all the above into account ....
then surely all car manufacturers would be screaming the figures from the rooftops

[STEMO]

I'd be more interested in how much of a carbon footprint making a new car is ,including all raw material processing, transport, running the factory, staff, materials etc to get to the factory, delivery of new car, recycling the old scrapped car
I bet a new car isn't all that GREEN when you take all that into account 

what is the cost to the environment should be the question perhaps 
if a new car is so much better carbon footprint wise  taking all the above into account ....
then surely all car manufacturers would be screaming the figures from the rooftops

No, not interested in it's green credentials, just the cold, hard cash aspect. 

[STEMO]

Watched a programme the other day about how Lamborghini built a brand new plant to make the Urus. That must have cost a few million bob, and I can't see them selling that many.

[Nick W]

Your big assumption is that car manufacturers make a decent profit. A lot of money passes through them, but as you say they have enormous costs. This is why the remaining small manufacturers are still fading away; they can no longer be propped up by rich benefactors playing at being industrialists. Aston Martin is  a good example of this, and Jaguar is teetering on the edge of it.


Remember the American auto industry bailout from 10 years ago? It made General Motors realise they were a finance company pissing away millions building cars. Which is one of the reasons it off loaded their European operations to the French government that is prepared to spend the money for other reasons.

[STEMO]

Hmmmm....how the fluck can they afford the R&D on new technology as well? Curiouser and curiouser. 

[STEMO]

I feel awful now, all that haggling down at the poor dealers. Think I'll offer a grand over screen price next time. 

[STEMO]

Your big assumption is that car manufacturers make a decent profit. A lot of money passes through them, but as you say they have enormous costs. This is why the remaining small manufacturers are still fading away; they can no longer be propped up by rich benefactors playing at being industrialists. Aston Martin is  a good example of this, and Jaguar is teetering on the edge of it.


Remember the American auto industry bailout from 10 years ago? It made General Motors realise they were a finance company pissing away millions building cars. Which is one of the reasons it off loaded their European operations to the French government that is prepared to spend the money for other reasons.

I'm not surprised Jaguar is in trouble, all the money they must be giving to that DTM fella. 

[Field Marshal Dr. Opti]

'Leccy Jags' will hasten their demise.

[Varche]

Yes and think of the cries of foul in twenty years time when the governments have scrappage schemes to get the currently being produced EV's off the road to make way for the latest fad. Those batteries are not going to recycle themselves.

Maybe the car companies make money from parts?

[Nick W]

'Leccy Jags' will hasten their demise.

Building cars that don't sell is already doing that. You cant survive when everything you make is a loss-leader.

[deviator]

Those batteries are not going to recycle themselves.

The thing is, a battery pack is made of thousands of individual cells. If a few cells fail, they can be replaced and the pack put back in to use in a different environment where the 80% of battery left is more than enough. I think it was Toyota who were using old battery packs in the vehicles they use to transport stuff around the factory. Or more likely, the pack can be repaired and then used in a solar installation where the a secondhand pack will cause less problems.

With regards the cost of cars, R&D is massive. I seem to remember a figure into millions to certify a new Audi headlight. Then there are crash tests, test driving of the vehicle is all types of conditions (very hot, very cold). Of course you have to maintain your dealer network, you've also got advertising, fines (dieselgate), press cars. The costs are epic.

Are we getting to the point that a car is a loss leader? And they make the real profit from extras/servicing etc;

[Nick W]

Are we getting to the point that a car is a loss leader? And they make the real profit from extras/servicing etc;

That has been the Main Dealer's business model for a very long time. As they're usually franchises, how is the manufacturer going to benefit?


Consider how a well-funded company like Dyson couldn't make a good business case for putting into production a design - of a Range Rover competitor - that had already cost them £2billion to develop. VW quote their recently released EV range cost £7billion, yet they already know how to build cars, and have the infrastructure and supply chains in place.


Tesla is the only one to manage to start from nothing and take a worthwhile slice of the market. But they did that by relentless marketing and constant cash injections - the classic techniques of manufacturing Ponzi schemes.

[Sir Tigger KC]

Tesla stay afloat by selling their carbon credits to other industrials and recently trading bitcoin. 

[Marks DTM Calib]

Tesla stay afloat thanks to big cash input from China 

Dev costs are huge, as an example the new line needed for XJ would have been half a billion, plus the dev costs (which get capitalised), certification (in every country of sale), crash testing, component tooling etc etc.....and then on-going costs.

Hence why a Dacia is cheap, the dev costs got covered under the original 2002 clit design, re-used tooling, lower cost build centre, low cost car (all be it 20 years out of date with terrible crash credentials).

The more cars you build the better, of course, as you amortise the bill over bigger numbers.

Raw material price is probably 50% of list, rough guess, that's probably higher than most commodities

[Marks DTM Calib]

Your big assumption is that car manufacturers make a decent profit. A lot of money passes through them, but as you say they have enormous costs. This is why the remaining small manufacturers are still fading away; they can no longer be propped up by rich benefactors playing at being industrialists. Aston Martin is  a good example of this, and Jaguar is teetering on the edge of it.


Remember the American auto industry bailout from 10 years ago? It made General Motors realise they were a finance company pissing away millions building cars. Which is one of the reasons it off loaded their European operations to the French government that is prepared to spend the money for other reasons.

I'm not surprised Jaguar is in trouble, all the money they must be giving to that DTM fella. 

I am worth every penny 

Jaguar are ok, with the exception of F-type, they are the same platforms as Land Rovers, the bigger challenge is nobody is buying saloons. 

[Kevin Wood]

Jaguar are ok, with the exception of F-type, they are the same platforms as Land Rovers, the bigger challenge is nobody is buying saloons. 

Yes, why everybody wants to drive ponderous SUVs these days beats me.

[STEMO]

Jaguar are ok, with the exception of F-type, they are the same platforms as Land Rovers, the bigger challenge is nobody is buying saloons. 

Yes, why everybody wants to drive ponderous SUVs these days beats me.

Everything will be ponderous when the new rules kick in, so you might as well travel in comfort 

[Doctor Gollum]

Manufacturers only produce cars to sell finance

[Kevin Wood]

Manufacturers only produce cars to sell finance

Good point. So the models have to appeal to the "Considerably richer than Youww" brigade.

[Doctor Gollum]

Zackly

[Rangie]

Cannot understand getting into debt for a car , paying interest on something that reduces in value every week definitely not for me.

[grifter]

Jaguar are ok, with the exception of F-type, they are the same platforms as Land Rovers, the bigger challenge is nobody is buying saloons. 

Yes, why everybody wants to drive ponderous SUVs these days beats me.

Image and ego, lording over you and looking down at you makes those owners feel superior. Doesn't chuffin bother me, as I said crying in my wee low omega with all the range rover owners looking down at me!

[Nick W]

Manufacturers only produce cars to sell finance

Good point. So the models have to appeal to the "Considerably richer than Youww" brigade.

That's also the reason for including the age of the car as part of the registration number.

[Kevin Wood]

Jaguar are ok, with the exception of F-type, they are the same platforms as Land Rovers, the bigger challenge is nobody is buying saloons. 

Yes, why everybody wants to drive ponderous SUVs these days beats me.

Image and ego, lording over you and looking down at you makes those owners feel superior. Doesn't chuffin bother me, as I said crying in my wee low omega with all the range rover owners looking down at me!

.. and outbraking them on the approach to a roundabout and then driving round the inside of them while being hugged tight in my bucket seat makes me feel superior, so we're even.

[Viral_Jim]

what is the cost to the environment should be the question perhaps 
if a new car is so much better carbon footprint wise  taking all the above into account ....
then surely all car manufacturers would be screaming the figures from the rooftops

I'm not so sure that's the relevant questions when it comes to EVs or other 'green' cars. People have been buying new cars (and lots of other products) that they don't need, since, well, someone invented money.

The real question is whether the new cars that would be made anyway are more or less damaging to the environment because they're powered by AA's, or fossil juice.

[Doctor Gollum]

There's the added issue of the raw materials for said AAs.

Fundamentally the rest of the car can be produced by recycling older cars.

And fossil fuels aren't wasted, their simply repurposed dinosaurs which are turned into carbon dioxide and water, which makes trees, which in turn can be processed into ethanol. Which is nice.

[Rangie]

Only ever bought three brand new cars the first one was in 1973, next in 1987 & the last in 2002 total cost of all 3 was £19,030 wouldn't buy me much of a new car now..

[New POD]

Having worked in the automotive parts world for much of my career, making switches, solenoid, brakes, turbos, for Lucas and Garrett, you'd be amazed at how cheap each of the bits are.

The major costs is sucked in through development and infrastructure and tooling. The one off costs. Having spent the money, they need to recoup it, but it's probably 35% of the cost over the first 2 years. After that, they could probably drop the price, but they need to use the profit on existing vehicles to pay for thier replacement.

If they stopped designing new cars and new technology and just produced the same car for the next 50 years, they could concentrate on just making it cheaper and more reliable.
Think Daewoo nexia...

[Nick W]

Having worked in the automotive parts world for much of my career, making switches, solenoid, brakes, turbos, for Lucas and Garrett, you'd be amazed at how cheap each of the bits are.

The major costs is sucked in through development and infrastructure and tooling. The one off costs. Having spent the money, they need to recoup it, but it's probably 35% of the cost over the first 2 years. After that, they could probably drop the price, but they need to use the profit on existing vehicles to pay for thier replacement.

If they stopped designing new cars and new technology and just produced the same car for the next 50 years, they could concentrate on just making it cheaper and more reliable.
Think Daewoo nexia...

Think Model T Ford, which over 16 years went from $825 to $260. The car didn't change much, but the manufacturing certainly did!