There are so many obvious reasons why cars cost so much that I thought it would be a good idea to start a thread about it.

I got a good one to start off with and it has to do with the cost of plating nothing.
Copper terminals used in automobiles are tin plated to help prevent corrosion. Some material is plated before it's processed leaving the base metal exposed and this is acceptable. Some plating thickness requirements are beyond conventional plating and require special treatment. This comes at higher cost and people in the automotive industry pay this higher price everyday.
Now let's recap. A higher price is paid for a plating thickness spec on an item which is only plated to protect itself but is not completely plated.
Amazing.

If you want to see what expensive cars are, you must come to Europe...:mg:

Rotation of inexperienced engineers who never get to know the details of what they are placing on the drawings for suppliers to comply with. Obsolete specification standards, way too tight tolerances which increase tooling and piece prices. They seem to only pass along the specificatons and tolerances that have been previously listed before. Poor information never gets deleted or updated. By the time they get to understand what is really needed, they are reassigned again.

This is a good subject. Being a Tier 1 to the Automotive Industry, I've seen a lot of things that waste money on their end, causing our car prices to go up. I really want to list everything here, but it would be too long. :eek: I come home daily with stories that upset me on how much is wasted.

I agree: Definitely a good subject. So good in fact, that I moved it to the Misc. Quality Assurance and Business Systems Related Topics forum, where I think it will get the attention it deserves.

/Claes

Besides any costs due to poor engineering/design/quality, a significant part of the increasing costs is the increasing level of features expected by buyers.

We love gadgets - power windows, remote control locks, intermittant wipers, lights that stay one for a minute after you exit the car, computers to diagnose problems, seats that fold out of view, ....

Would many Americans seriously consider a new car without AC, stereo, power steering, or automatic transmission?

I'm sure a perfectly reasonable new car could be sold for $5000, but we have been sold on the idea that we need all the cool/elegant/macho/sexy features.

Tim F

Would many Americans seriously consider a new car without AC, stereo, power steering, or automatic transmission?

Tim F

I hate power steering and wish I could buy a new car without it. :mad: Also, I hate that standard transmissions are an "option" now instead of well, standard.

Maybe cars cost so much because some T1 suppliers use different part #'s for the same part because it goes in different customers' products. Then they have to give up the volume discount, or carry twice as much inventory to get it. :nope:

Everyone knows that the big 2.5 are attempting to reduce there supplier base and have been for a while now. The reasons for doing this are many but saving money is not one of them. My organization supplies product that other suppliers are trying to divest but fail to do so because of this. We manufacture and ship the part direct yet we bill the last supplier who can't scrap the job off even when they're loosing money on it due to customers not wanting to add any new suppliers.
Now, in cooperation with our customer, have approached the big boys and offered a price reduction by cutting out the middle man. Yes, we will save them money in the long run guaranteed.
Guess what happened...
...and yet another reason cars cost so much.

There are 3 reasons:

Unions

Unions

hmmm...let me think....oh yeah

Unions

Besides any costs due to poor engineering/design/quality, a significant part of the increasing costs is the increasing level of features expected by buyers.

We love gadgets - power windows, remote control locks, intermittant wipers, lights that stay one for a minute after you exit the car, computers to diagnose problems, seats that fold out of view, ....

Would many Americans seriously consider a new car without AC, stereo, power steering, or automatic transmission?

I'm sure a perfectly reasonable new car could be sold for $5000, but we have been sold on the idea that we need all the cool/elegant/macho/sexy features.

Tim F
So true, but I wouldn't call power steering, AC, stereo or automatic transmission cool/elegant/macho/sexy features! For someone who spends a couple of hours a day in the car at least, these are the minimum.

The new Dodge Caliber has, among other features, a glove box that refrigirates four cans/bottles of soda. Now that's very cool! (no pun intended)

One reason the cars cost so much is the cost of all those warranty recalls. My husband used to be a mechanic at a dealership. Knowing as we do how costs for a single recall can stack up through attention by various people at all these levels, we can appreciate that the repair is just the tip of the cost iceberg!

I expect advertising is also a big drain, just as it is with cosmetics and fashion.

In relative terms ($$$), I feel that cars are in fact cheaper and better equipped today than say...in the 70's...there was no power anything and everything was an optional extra, if in fact it even existed! A car is certainly less than a yearly salary as compared to the 70s..unless of course you want to go overboard and spend zillions on something that costs more than your house ~grin~

The common cost of a car has not changed since 1993.

Adjust dollars to the level in 1993 and you will find the same prices, even though automakers have added plenty of creature comforts and refinements.

I question the idea that a car could be sold fairly for $5000. $8000, perhaps. Of course, you would have to adjust down for the bloat factor of fat lazy American antics and the finnick factor of the high quality specialists and adjust up for the absolute slave wage 3rd world horror show factor of Chinese manufacturing.

But why isn't it done? Daewoo and Kia seem like they don't want to stoop THAT low, at least not often. Probably they don't need to stoop low to make money any more and are starting to compete.

Therefore, a base Chinese auto, fiasco that it would be, would probably sell for $7000. Americans could absolutely give them **** with a base auto for $9000. But, it won't happen because nobody has a taste for sustainability and utility.

If a car was really designed well so that it could be produced for decades with a minimum of design changes, the common cost of a base auto would probably be very low. It would probably be very profitable, as well. The car could be designed for maintainability and the service around it designed for cost effective maintenance.

A non-disposable automobile.

But this will never happen. In 1993, people said everything would be robotic by 2010. Instead, the exact same machines are going slower because of safety devices, and the design of machines doesn't change unless you change it yourself.

So maybe in 2250 we'll see some intelligent work done across the board in manufacturing, but it probably won't be in automobiles. Automobiles will still be disposable crap--Except for Hondas and Toyotas.

Interesting, It almost seems that there are those who beleive that it's O.K. to waist money processing cars.
It's O.K. to waist money because we should expect to pay more for power steering and air conditioning anyways.
It's O.K. to waist money because that's nothing compared to the cost of recalls.
It's ok to waist money because cars are are better priced per income than years ago.
Anybody working for Toyota or Honda want to help me out here?

Short answer: because people suck, ****it.

I hate power steering and wish I could buy a new car without it. :mad:

I agree on this. Cars of today are OVER-ASSISTED! There is NO feedback to the driver, NO feel, etc.

The VW Beetle was a good car. The design lasted forever and it was simple and easy to maintain.

Learning from the problems had with it and the problem of keeping people interested, what prevents someone from building a modern non-disposable automobile?

Perhaps being somewhere at the start of on the cusp of a major shift in power source and power management, how would you handle this? Maybe a fuel cell can fit where the engine had to be in the hybrid design?

+

For the cost of servicing this industry, the price of cars should be higher...
WHAT ??? :mg:

The reason I say this it requires huge capital investment, has low returns and litigeousness associated with end consumer makes this business sector extremely unattractive. This in turn stiffles innovation and makes the car manufacturers an overly conservative industry.

Big 3 have their own problems associated with the 1960's way of managing HR but that is adequately covered elsewhere. The big 3 would have hit the fan much earlier if it wasn't for it's finance house: Refinancing mortgages after 2001 helped prop up big 3 sales of new cars (GM owned Dietech). With rates going North, it is no longer going to help them.

The natural scheme of things would be for 2 manufacturers to go out business and for prices to revert to natural levels. Toyota and Honda may be making money now but they will find it harder to grow: Their products are boring ! Quality is a hygene factor not a competitive advantage. Soon quality will be a given where even Big 3 are playing catch up (Afterall they use similar suppliers to japanese. For example :Braking. There aren't that many suppliers in the world). However, the political costs of letting a big manufacturer go under are something to consider. No politician likes to see a major employer go under as they impact things like GDP numbers and employment statistics.

To come back to Automotive industry itself and my experiences with it: I work for an electronic supplier who sells to multiple industry groups. We should be delighted with additional electronics going into the cars but Automotive is the highest cost of service.

Yes they have supposidly stable volumes but for the same piece part that we can sell elsewhere, they demand far more servicing and management attention than others like communications or consumer.

Having worked with others and now automotive again, Automotive industry wants their cake and eat it:

* They want military level quality at commercial pricing.
* They want leading edge technology but out of the shoot zero defects: For my industry the complexity is such that if they need zero defects, it should only taking mature technology.
* They bully their suppliers into very negative commercial contracts Penalties for exceeding quality, logistic requirements that are born by supplier Leadtimes much less that time it takes to manufacture it.

Nobody has mentioned it but has TS16949 been a factor ? Japanese customers don't require this but are doing better than US. When we deal with automotive parts, we add probably 5% just in dealing with "the Systems". We've actually told certain customers not to buy our parts for automotive application. We would be ok supplying them under normal T&C's but not under straight jacket of TS16949.

I am sure our top management would love to get out of this sector: It is inverse pareto :80% of their time spent on issues are associated with less than 20% of our business.

The reason I say this it requires huge capital investment, has low returns and litigeousness associated with end consumer makes this business sector extremely unattractive. This in turn stiffles innovation and makes the car manufacturers an overly conservative industry.

Yes, I agree 100% and even though you get into more detail, I would like to hear about actual events. I think you have some good stories and I would enjoy them very much.

They want military level quality at commercial pricing.

I've been involved with military applications. Mainly the AMG Hummer. Yes, the real one. I love military standards because it deals with "real quality" instead of how much documentation there is to support it. I've found out that the automotive industry is more concerned of "who supplied it" rather than the actual form, fit, and function. Military is black and white, whereas automotive is up to interpretation of the standard.

GM spends $860 per car if you include all costs associated with drug testing, lost time and rehab costs. This number does not include opportunity costs or cost of health insurance due to associated illnesses

i think the current prices are very very cheap, when you consider how expensive it is to service them..... when i started working in 1989, it would have costed me about 70+% of my annual salary to buy a car but it now only cost about 50%...:)...and no, i have not moved up the corp ladder to make more $$$...

i think the current prices are very very cheap, when you consider how expensive it is to service them..... when i started working in 1989, it would have costed me about 70+% of my annual salary to buy a car but it now only cost about 50%...:)...and no, i have not moved up the corp ladder to make more $$$...

Thanks for letting everyone know that your salary has increased more than the price of cars over the last 17 years. We are all so proud of you. :ca: Keep up the adequate work.