Why the C7 with the LT1 engine is important
06-23-2013, 07:02 PM
#1
Melting Slicks
Thread Starter
Why the C7 with the LT1 engine is important
Here are my thoughts…..
First, for the C7 to be successful, they have to sell a lot of them. By a lot, it has to be ~30,000 a year. GM has studied the market, they talked to their dealers and customers to determine what they want and just as important...what they can afford. Maybe this is news to some; it’s not the high-power Z06 or the ZR1. That is not to say they are bad cars. I love them. They are fantastic cars for some customer. But they are in the minority. They simply are too expensive for many and not everyone wants 500HP+. GM has to sell 30,000 cars. Combined, they won't sell enough to keep the plant open.
Second, do you believe GM just developed the C7 without a first creating targets for the size, weight, cost, quality, feel, fuel economy, and .... don't be shocked....engine power? Yes, everything in the C7 had a target from the start of the program. You may disagree but I am sure they have the facts to back up that strategy. I am sure their target for the LT1 power/torque was 450-470. Not 500hp, because they already know the LS7 will do that. The LT1 with 450-470 hp is a reasonable amount for the base 2014 car yet delivers great fuel economy. Its reasonable increase over the LS3 just like 430hp was for the LS3 over the LS2, and 50 hp for the LS2 over the LS1. So what’s to become of the LS7? Many think it will be the base for the C7 Z06, so we have that to look forward to.
Third, more than 50% of the potential customers clearly don't put engine power at the top of their priority list. By the last few years of sales of the Z06/ZR1 (and other sports cars for that matter), that %could possibly be much higher. The majority of Corvette customers will be content with LT1 if the price is kept in the $50,000 - $60,000 range. Once the price goes over that point, demand drops very quickly. The Grand Sports are priced in that range today. They are roughly 40% of the total production if memory serves. Not because they have more HP but because people liked the styling more than the base car and the cost of the Z06/ZR1 is more than they want to spend or afford. I like the Grand Sport styling. And many customers did, too, and bought the Grand Sports. Styling won out.
Fourth, since 2006, there have been 3 performance levels: Base C6, Z06, and ZR1. The 2014 C7 released for sale is the base car just like the 2005 C6 first released. The Z06 came out in 2006 and I am sure GM will make a C7 Z06 next year. But the base C7 base model will far out sell the C7 Z06 for 2 reasons: A large % of customers find the 460 hp enough, and the cost of the Z06 is over their budget. The Z06 and ZR1 will be added after the basic C7 platform design is frozen. The bottom line is GM needs the sales volume of the C7 base engine car to support the Z06 and ZR1.
Fifth, much of the engineering in the base engine trickles down to many other products including cars and trucks. There is much less in the Z06 and ZR1 that trickles down to other GM products. The exception is the Camaro ZL1 but that came from the CTS-V program. So, the base engine in the Corvette is a great development playground for other GM Products and a spring board into the Z06 and ZR1.
In conclusion, the C7 is an affordable high performance (or should I say “super car”) that has better performance than the C6 base car in EVERY area yet cost about the same. How can you beat that? That is not to say the C6 is a bad car. It’s a great car, but let’s face it…its 9 years old and technology has moved on….and is constantly moving forward. If you not moving technology foreward, you are going backwards.
First, for the C7 to be successful, they have to sell a lot of them. By a lot, it has to be ~30,000 a year. GM has studied the market, they talked to their dealers and customers to determine what they want and just as important...what they can afford. Maybe this is news to some; it’s not the high-power Z06 or the ZR1. That is not to say they are bad cars. I love them. They are fantastic cars for some customer. But they are in the minority. They simply are too expensive for many and not everyone wants 500HP+. GM has to sell 30,000 cars. Combined, they won't sell enough to keep the plant open.
Second, do you believe GM just developed the C7 without a first creating targets for the size, weight, cost, quality, feel, fuel economy, and .... don't be shocked....engine power? Yes, everything in the C7 had a target from the start of the program. You may disagree but I am sure they have the facts to back up that strategy. I am sure their target for the LT1 power/torque was 450-470. Not 500hp, because they already know the LS7 will do that. The LT1 with 450-470 hp is a reasonable amount for the base 2014 car yet delivers great fuel economy. Its reasonable increase over the LS3 just like 430hp was for the LS3 over the LS2, and 50 hp for the LS2 over the LS1. So what’s to become of the LS7? Many think it will be the base for the C7 Z06, so we have that to look forward to.
Third, more than 50% of the potential customers clearly don't put engine power at the top of their priority list. By the last few years of sales of the Z06/ZR1 (and other sports cars for that matter), that %could possibly be much higher. The majority of Corvette customers will be content with LT1 if the price is kept in the $50,000 - $60,000 range. Once the price goes over that point, demand drops very quickly. The Grand Sports are priced in that range today. They are roughly 40% of the total production if memory serves. Not because they have more HP but because people liked the styling more than the base car and the cost of the Z06/ZR1 is more than they want to spend or afford. I like the Grand Sport styling. And many customers did, too, and bought the Grand Sports. Styling won out.
Fourth, since 2006, there have been 3 performance levels: Base C6, Z06, and ZR1. The 2014 C7 released for sale is the base car just like the 2005 C6 first released. The Z06 came out in 2006 and I am sure GM will make a C7 Z06 next year. But the base C7 base model will far out sell the C7 Z06 for 2 reasons: A large % of customers find the 460 hp enough, and the cost of the Z06 is over their budget. The Z06 and ZR1 will be added after the basic C7 platform design is frozen. The bottom line is GM needs the sales volume of the C7 base engine car to support the Z06 and ZR1.
Fifth, much of the engineering in the base engine trickles down to many other products including cars and trucks. There is much less in the Z06 and ZR1 that trickles down to other GM products. The exception is the Camaro ZL1 but that came from the CTS-V program. So, the base engine in the Corvette is a great development playground for other GM Products and a spring board into the Z06 and ZR1.
In conclusion, the C7 is an affordable high performance (or should I say “super car”) that has better performance than the C6 base car in EVERY area yet cost about the same. How can you beat that? That is not to say the C6 is a bad car. It’s a great car, but let’s face it…its 9 years old and technology has moved on….and is constantly moving forward. If you not moving technology foreward, you are going backwards.
Last edited by RussM05; 06-23-2013 at 07:06 PM.
06-23-2013, 07:13 PM
#2
AFM not helping MPG
We need to figure out who you really are, that is, which previously banned member got a new account... 6 posts here and all like this... are you Petermj?
06-23-2013, 07:17 PM
#3
Melting Slicks
06-23-2013, 07:19 PM
#4
This will be entertaining 
06-23-2013, 07:44 PM
#6
Race Director
06-23-2013, 08:12 PM
#7
Scraping the splitter.
06-23-2013, 08:24 PM
#8
Team Owner
I dont disagree with your theories, its just another version of "singles and doubles win ballgames, home runs are great, but dont happen all of the time".
remember, the first ones out of the box create interest and pay for the tooling upgrades, so volume is good. as interest wanes, they can up the ante and bank lots of profits. if they claim it didnt do that with the c6, i call bullsheit. the longer production run had to see lower costs and higher margins, especially on the 427 vert. that car had to make money.
remember, the first ones out of the box create interest and pay for the tooling upgrades, so volume is good. as interest wanes, they can up the ante and bank lots of profits. if they claim it didnt do that with the c6, i call bullsheit. the longer production run had to see lower costs and higher margins, especially on the 427 vert. that car had to make money.
06-23-2013, 08:39 PM
#9
A troll has been reborn. Who could it be? Peter, Torch, who else is missing.
As far as the thread goes what is your basis for the 30,000 number, or is just a WAG? Interesting points I just wonder how much is based on something other than pure speculation.
As far as the thread goes what is your basis for the 30,000 number, or is just a WAG? Interesting points I just wonder how much is based on something other than pure speculation.
06-23-2013, 08:52 PM
#10
Team Owner
Not to get dragged down the rabbit hole but 7K increase is base price is not roughly the same price.
All cars are designed with targets in mind. They are driven by competitors, government regulations, and believe it or not for the most part the minority is customer feedback.
Usually 2-3 key things get addressed by customer feedback.
Here is the main ideal behind the Corvette or any other car. Build it as cheap as possible and charge as much as you can for it.
Some halo marque's do not go by that philosophy because their customers will buy it regardless of the price if it says Ferrari or Bugatti on it so they design with no expense spared.
The Corvette will probably be continued to be used as a development platform. The LT1 will become derivatives in trucks just like the LS series did.
The knuckle in wheel design, a first for the industry, is now standard practice in a lot of vehicles, first done on the C5 Corvette.
Hydroforming was first done in mass production on the C5.
It is a low volume platform for them to try new things out on and get feedback.
I know a lot of people view the Corvette as something special. In the end its a car, made with parts out of a part bin, made as cheap as possible to meet a target and charged as much money as they think the market will accept.
Here are some rough numbers.
Take a 35K car and it costs 17.5k to build and is considered transportation, say a high dollar Malibu or 300.
Now take a 80k car like an S class. It only costs about another 12-13k to build that S class but they get twice for it.
Assuming GM dropped 50-60 percent of the 7K price increase into actual production improvements that tells you how throwing even a small amount of money at a car can bring big improvements.
All cars are designed with targets in mind. They are driven by competitors, government regulations, and believe it or not for the most part the minority is customer feedback.
Usually 2-3 key things get addressed by customer feedback.
Here is the main ideal behind the Corvette or any other car. Build it as cheap as possible and charge as much as you can for it.
Some halo marque's do not go by that philosophy because their customers will buy it regardless of the price if it says Ferrari or Bugatti on it so they design with no expense spared.
The Corvette will probably be continued to be used as a development platform. The LT1 will become derivatives in trucks just like the LS series did.
The knuckle in wheel design, a first for the industry, is now standard practice in a lot of vehicles, first done on the C5 Corvette.
Hydroforming was first done in mass production on the C5.
It is a low volume platform for them to try new things out on and get feedback.
I know a lot of people view the Corvette as something special. In the end its a car, made with parts out of a part bin, made as cheap as possible to meet a target and charged as much money as they think the market will accept.
Here are some rough numbers.
Take a 35K car and it costs 17.5k to build and is considered transportation, say a high dollar Malibu or 300.
Now take a 80k car like an S class. It only costs about another 12-13k to build that S class but they get twice for it.
Assuming GM dropped 50-60 percent of the 7K price increase into actual production improvements that tells you how throwing even a small amount of money at a car can bring big improvements.
06-23-2013, 08:54 PM
#11
AIR FORCE VETERAN
15 million cars are projected to sold in the US. 30,000 Corvettes is .002 percent. An easy mark. To many people make the goal way to complicated. Maybe we can divide 30,000 into 300 million people in the US, oh wish economics was taught in school. Then everyone would not use Fox or MSNBC do their economic theory.
06-23-2013, 09:21 PM
#13
Melting Slicks
Thread Starter
From 1998 to 2008, annual production ranged from a low of 31,000 in 1998 to a high of 40,000 in 2007 (sourced: Wikepedia). 2005 was 37,000. 30,000 in the 1st full year of production should be conservative target to say the C7 is successful. In any case, its in that area.
I don't know about what you mean about pure speculation. Everything about the future is speculation I suppose. But after being in high-tech manufacturing 39 years and CFO for a number of global manufacturing companies, I think I've learn a little bit about the thought process companies use to develop and market new products. I also am a consultant to an investment firm to analyze public companies to determine their market value potential.
I also would like to add that the strategy of making the profit on the options. I mean, what is the margin for the 2LT and 3LT interior options? The 3LT is $8005. Thats a lot for nice leather. I bet a small percentage of cars will be sold with the 1LT interior. Its only available in 3 colors...Black, Red, and grey if I recall correctly).
Last edited by RussM05; 06-23-2013 at 10:10 PM.
06-23-2013, 09:21 PM
#14
Instructor
Member Since: Jul 2011
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06-23-2013, 09:29 PM
#15
Team Owner
What do you believe is the number?
From 1998 to 2008, annual production ranged from a low of 31,000 in 1998 to a high of 40,000 in 2007 (sourced: Wikepedia). 2005 was 37,000. 30,000 in the 1st full year of production should be conservative target to say the C7 is successful. In any case, its in that area.
I don't know about what you mean about pure speculation. Everything about the future is speculation I suppose. But after being in high-tech manufacturing 39 years and CFO for a number of global manufacturing companies, I think I've learn a little bit about the thought process companies use to develop and market new products. I also am a consultant to an investment firms to analyze public companies to determine their market value potential.
I also would like to add that the strategy of making the profit on the options. I mean, what is the margin for the 2LT and 3LT interior options? The 3LT is $8005. Thats a lot for nice leather. I bet a small percentage of cars will be sold with the 1LT interior. Its only available in 3 colors...Black, Red, and grey if I recall correctly).
From 1998 to 2008, annual production ranged from a low of 31,000 in 1998 to a high of 40,000 in 2007 (sourced: Wikepedia). 2005 was 37,000. 30,000 in the 1st full year of production should be conservative target to say the C7 is successful. In any case, its in that area.
I don't know about what you mean about pure speculation. Everything about the future is speculation I suppose. But after being in high-tech manufacturing 39 years and CFO for a number of global manufacturing companies, I think I've learn a little bit about the thought process companies use to develop and market new products. I also am a consultant to an investment firms to analyze public companies to determine their market value potential.
I also would like to add that the strategy of making the profit on the options. I mean, what is the margin for the 2LT and 3LT interior options? The 3LT is $8005. Thats a lot for nice leather. I bet a small percentage of cars will be sold with the 1LT interior. Its only available in 3 colors...Black, Red, and grey if I recall correctly).
06-23-2013, 09:35 PM
#16
Melting Slicks
Thread Starter
I forget how much it cost to retool the plant and create the chassis production line which was outsourced on the C6.
It is incredibly expensive to retool the factory and you have to include in the sell price the recovery of that tooling.
Then there is development cost over the past years. So that 70% "profit" is really the margin (sell minus direct cost = margin) so you need that to cover all the sunk costs for the tooling and years of engineering.
It is incredibly expensive to retool the factory and you have to include in the sell price the recovery of that tooling.
Then there is development cost over the past years. So that 70% "profit" is really the margin (sell minus direct cost = margin) so you need that to cover all the sunk costs for the tooling and years of engineering.
06-23-2013, 09:38 PM
#17
Racer
15 million cars are projected to sold in the US. 30,000 Corvettes is .002 percent. An easy mark. To many people make the goal way to complicated. Maybe we can divide 30,000 into 300 million people in the US, oh wish economics was taught in school. Then everyone would not use Fox or MSNBC do their economic theory.
06-23-2013, 09:44 PM
#18
Racer
Here are my thoughts…..
First, for the C7 to be successful, they have to sell a lot of them. By a lot, it has to be ~30,000 a year. GM has studied the market, they talked to their dealers and customers to determine what they want and just as important...what they can afford. Maybe this is news to some; it’s not the high-power Z06 or the ZR1. That is not to say they are bad cars. I love them. They are fantastic cars for some customer. But they are in the minority. They simply are too expensive for many and not everyone wants 500HP+. GM has to sell 30,000 cars. Combined, they won't sell enough to keep the plant open.
Second, do you believe GM just developed the C7 without a first creating targets for the size, weight, cost, quality, feel, fuel economy, and .... don't be shocked....engine power? Yes, everything in the C7 had a target from the start of the program. You may disagree but I am sure they have the facts to back up that strategy. I am sure their target for the LT1 power/torque was 450-470. Not 500hp, because they already know the LS7 will do that. The LT1 with 450-470 hp is a reasonable amount for the base 2014 car yet delivers great fuel economy. Its reasonable increase over the LS3 just like 430hp was for the LS3 over the LS2, and 50 hp for the LS2 over the LS1. So what’s to become of the LS7? Many think it will be the base for the C7 Z06, so we have that to look forward to.
Third, more than 50% of the potential customers clearly don't put engine power at the top of their priority list. By the last few years of sales of the Z06/ZR1 (and other sports cars for that matter), that %could possibly be much higher. The majority of Corvette customers will be content with LT1 if the price is kept in the $50,000 - $60,000 range. Once the price goes over that point, demand drops very quickly. The Grand Sports are priced in that range today. They are roughly 40% of the total production if memory serves. Not because they have more HP but because people liked the styling more than the base car and the cost of the Z06/ZR1 is more than they want to spend or afford. I like the Grand Sport styling. And many customers did, too, and bought the Grand Sports. Styling won out.
Fourth, since 2006, there have been 3 performance levels: Base C6, Z06, and ZR1. The 2014 C7 released for sale is the base car just like the 2005 C6 first released. The Z06 came out in 2006 and I am sure GM will make a C7 Z06 next year. But the base C7 base model will far out sell the C7 Z06 for 2 reasons: A large % of customers find the 460 hp enough, and the cost of the Z06 is over their budget. The Z06 and ZR1 will be added after the basic C7 platform design is frozen. The bottom line is GM needs the sales volume of the C7 base engine car to support the Z06 and ZR1.
Fifth, much of the engineering in the base engine trickles down to many other products including cars and trucks. There is much less in the Z06 and ZR1 that trickles down to other GM products. The exception is the Camaro ZL1 but that came from the CTS-V program. So, the base engine in the Corvette is a great development playground for other GM Products and a spring board into the Z06 and ZR1.
In conclusion, the C7 is an affordable high performance (or should I say “super car”) that has better performance than the C6 base car in EVERY area yet cost about the same. How can you beat that? That is not to say the C6 is a bad car. It’s a great car, but let’s face it…its 9 years old and technology has moved on….and is constantly moving forward. If you not moving technology foreward, you are going backwards.
First, for the C7 to be successful, they have to sell a lot of them. By a lot, it has to be ~30,000 a year. GM has studied the market, they talked to their dealers and customers to determine what they want and just as important...what they can afford. Maybe this is news to some; it’s not the high-power Z06 or the ZR1. That is not to say they are bad cars. I love them. They are fantastic cars for some customer. But they are in the minority. They simply are too expensive for many and not everyone wants 500HP+. GM has to sell 30,000 cars. Combined, they won't sell enough to keep the plant open.
Second, do you believe GM just developed the C7 without a first creating targets for the size, weight, cost, quality, feel, fuel economy, and .... don't be shocked....engine power? Yes, everything in the C7 had a target from the start of the program. You may disagree but I am sure they have the facts to back up that strategy. I am sure their target for the LT1 power/torque was 450-470. Not 500hp, because they already know the LS7 will do that. The LT1 with 450-470 hp is a reasonable amount for the base 2014 car yet delivers great fuel economy. Its reasonable increase over the LS3 just like 430hp was for the LS3 over the LS2, and 50 hp for the LS2 over the LS1. So what’s to become of the LS7? Many think it will be the base for the C7 Z06, so we have that to look forward to.
Third, more than 50% of the potential customers clearly don't put engine power at the top of their priority list. By the last few years of sales of the Z06/ZR1 (and other sports cars for that matter), that %could possibly be much higher. The majority of Corvette customers will be content with LT1 if the price is kept in the $50,000 - $60,000 range. Once the price goes over that point, demand drops very quickly. The Grand Sports are priced in that range today. They are roughly 40% of the total production if memory serves. Not because they have more HP but because people liked the styling more than the base car and the cost of the Z06/ZR1 is more than they want to spend or afford. I like the Grand Sport styling. And many customers did, too, and bought the Grand Sports. Styling won out.
Fourth, since 2006, there have been 3 performance levels: Base C6, Z06, and ZR1. The 2014 C7 released for sale is the base car just like the 2005 C6 first released. The Z06 came out in 2006 and I am sure GM will make a C7 Z06 next year. But the base C7 base model will far out sell the C7 Z06 for 2 reasons: A large % of customers find the 460 hp enough, and the cost of the Z06 is over their budget. The Z06 and ZR1 will be added after the basic C7 platform design is frozen. The bottom line is GM needs the sales volume of the C7 base engine car to support the Z06 and ZR1.
Fifth, much of the engineering in the base engine trickles down to many other products including cars and trucks. There is much less in the Z06 and ZR1 that trickles down to other GM products. The exception is the Camaro ZL1 but that came from the CTS-V program. So, the base engine in the Corvette is a great development playground for other GM Products and a spring board into the Z06 and ZR1.
In conclusion, the C7 is an affordable high performance (or should I say “super car”) that has better performance than the C6 base car in EVERY area yet cost about the same. How can you beat that? That is not to say the C6 is a bad car. It’s a great car, but let’s face it…its 9 years old and technology has moved on….and is constantly moving forward. If you not moving technology foreward, you are going backwards.
06-23-2013, 09:55 PM
#20
Here are my thoughts…..
First, for the C7 to be successful, they have to sell a lot of them. By a lot, it has to be ~30,000 a year. GM has studied the market, they talked to their dealers and customers to determine what they want and just as important...what they can afford. Maybe this is news to some; it’s not the high-power Z06 or the ZR1. That is not to say they are bad cars. I love them. They are fantastic cars for some customer. But they are in the minority. They simply are too expensive for many and not everyone wants 500HP+. GM has to sell 30,000 cars. Combined, they won't sell enough to keep the plant open.
First, for the C7 to be successful, they have to sell a lot of them. By a lot, it has to be ~30,000 a year. GM has studied the market, they talked to their dealers and customers to determine what they want and just as important...what they can afford. Maybe this is news to some; it’s not the high-power Z06 or the ZR1. That is not to say they are bad cars. I love them. They are fantastic cars for some customer. But they are in the minority. They simply are too expensive for many and not everyone wants 500HP+. GM has to sell 30,000 cars. Combined, they won't sell enough to keep the plant open.
GM obviously has an estimate as to what their sales expectations will be. I can only assume that during their due diligence on what to spend that it made sense from a business standpoint. In other words the future sales of the C7 would pay for the cost of the redesign and plant retool.
One other consideration is that the Corvette is Chevrolet's flagship and offers benefits other than just pure return on investment. Corvette gets a lot of free press. It helps promote a performance image for perspective Chevrolet buyers, etc..etc..