Cost
Racer
Joined: Feb 2001
Posts: 448
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From: Fishers IN
Well lets se. First theres the cost of design. Then the cost of research to see if they can fit all the parts into the design. Then the coast of all the parts. Then the cost of retooling to put the parts in the car at the assembly line. Then then cost of assembly. then the cost of advertising to try to sell the end product. Then the cost of delivery.
Finial cost about 2cents per unit,which is about what anyone except GM's answer is worth.
Finial cost about 2cents per unit,which is about what anyone except GM's answer is worth.
Team Owner
Joined: Aug 2007
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Well lets se. First theres the cost of design. Then the cost of research to see if they can fit all the parts into the design. Then the coast of all the parts. Then the cost of retooling to put the parts in the car at the assembly line. Then then cost of assembly. then the cost of advertising to try to sell the end product. Then the cost of delivery.
Finial cost about 2cents per unit,which is about what anyone except GM's answer is worth.
Finial cost about 2cents per unit,which is about what anyone except GM's answer is worth.
(many people never consider the amortized costs that factor into the design/manufacture of a product. And a 100% markup from total manufacturing cost, which includes all amortized costs, is not uncommon in many sectors but I can't say for sure in the auto sector)
Le Mans Master
Joined: Dec 2012
Posts: 6,442
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From: New Jersey
I would bet that even GM could not give you a exact number based upon the numerous estimates, extropolations, ratios, etc. etc that go into calculating R&D, advertising, machinery, design, retooling, waste, and other such costs or whatever else is built into their mega cost accounting systems other than product supplies.
Safety Car
Joined: Nov 2000
Posts: 4,034
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From: Northern VA, USA
Finally, they have all the costs to run the business. I have never seen how automotive companies calculate a P&L on a specific vehicle, and I imagine they do not allocate those costs to specific vehicles, but if you want a true profit for any vehicle you would have to include it. Executives, customer care, offices, computers, postage, lobbyists, etc... If you don't account for those, you could have a bunch of profitable cars with a company losing money.
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Le Mans Master
Joined: Sep 2012
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For a product as complicated as the Corvette it will change by the day, but GM should have a VERY good idea of what that number is at any given time. They will also never tell you that number as it is likely a closely guarded trade secret.
However, people who work in similar industries or manufacturing operations should be able to throw down a pretty solid guess.
My only slightly educated guess would be somewhere around 1/3rd of msrp.
However, people who work in similar industries or manufacturing operations should be able to throw down a pretty solid guess.
My only slightly educated guess would be somewhere around 1/3rd of msrp.
Thread Starter
Melting Slicks
Joined: Nov 2013
Posts: 2,016
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From: Texas
Thought that there might have been someone on the forum who had worked for the Big 3 in the past and had some semblance of an answer. Don
Pro
Joined: Jun 2014
Posts: 722
Likes: 274
From: Colorado Springs, CO
A base Corvette that has an msrp of $54,995 has a manufacturing cost to GM of $61,495
This might not seem right to some of you, but I have been told by customer service that the Corvette division is a not profit operation.
If you buy the above I have the deed to the Brooklyn Bridge that I can offer at a very reasonable price.
This might not seem right to some of you, but I have been told by customer service that the Corvette division is a not profit operation.
If you buy the above I have the deed to the Brooklyn Bridge that I can offer at a very reasonable price.
I'm Batman..
Joined: Apr 2014
Posts: 6,142
Likes: 921
From: Lehigh Acres FL
Tech Contributor
A base Corvette that has an msrp of $54,995 has a manufacturing cost to GM of $61,495
This might not seem right to some of you, but I have been told by customer service that the Corvette division is a not profit operation.
If you buy the above I have the deed to the Brooklyn Bridge that I can offer at a very reasonable price.
This might not seem right to some of you, but I have been told by customer service that the Corvette division is a not profit operation.
If you buy the above I have the deed to the Brooklyn Bridge that I can offer at a very reasonable price.
Drifting
Joined: Apr 2008
Posts: 1,759
Likes: 4
From: Texas
This is a complicated equation depending on what you include in the costs. There's capital equipment, maintenance of the facilities, utilities, wages and salaries and benefits costs (line workers, design, procurement, quality, manufacturing, supervision and management) crash testing, R&D, supplied parts, recalls, dealer kick backs, advertisement etc. The whole thing carries out in what I would call a steady state flow rate equation. They have been building this car for over 60 years so the costs flatten over time so they basically work out the cost based on inflation, capital costs, cost of supplier parts and wages. If you ask about costs for the 1st year vs profit I say they are losing money but I imagine halfway into the 2nd year they are probably positive and making profit. So at this point in time I guess total costs would be about 90% or so of the MSRP. It will get alot less over the next 5 or 6 years as the initial overhead costs are spread out. I say I guess because you cannot really "know". No one at GM even knows because the number changes constantly...
Last edited by Pocket Aces; Sep 10, 2014 at 08:59 PM.
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GM knows how much parts and labor costs. Some other things like crash testing and certification as well. They also know how much they've allocated to Corvette, but the true costs are always a numbers game. For example, the LT1 will be used in other automobiles, so how much of the development cost for the motor are allocated to the Corvette, versus other vehicles it will use? I'm sure they've picked a percentage, but as time goes on and that motor is used more or less than planned, that may change. Also, they have factored in warranty costs, and they probably have a solid idea what they will be, but that is variable. On the $$ side, they have also probably factored accessories and merchandise licensing and such.
Finally, they have all the costs to run the business. I have never seen how automotive companies calculate a P&L on a specific vehicle, and I imagine they do not allocate those costs to specific vehicles, but if you want a true profit for any vehicle you would have to include it. Executives, customer care, offices, computers, postage, lobbyists, etc... If you don't account for those, you could have a bunch of profitable cars with a company losing money.
Finally, they have all the costs to run the business. I have never seen how automotive companies calculate a P&L on a specific vehicle, and I imagine they do not allocate those costs to specific vehicles, but if you want a true profit for any vehicle you would have to include it. Executives, customer care, offices, computers, postage, lobbyists, etc... If you don't account for those, you could have a bunch of profitable cars with a company losing money.
Would be interesting to know the cost, but doubt we'll find out.