Originally Posted by range96
(Post 1598687620)
You want this to go away, then stop feeding the fire. :)
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Say, I see the the moderator(s) closed the "Zerv02, THANK YOU" post/thread. I mean the first post was pretty ridiculous knowing what we know.
Anything stopping the closure of this one or has it not gone off-topic far enough yet? |
I think that lately this has turned into an intellectually interesting discussion of production, marketing, and pricing theories and strategies. That's quite a change from the pissing contest it turned into from time to time. Some of us enjoy these more sophisticated discussions. If you're not interested, just move on.
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Originally Posted by jcp911s
(Post 1598685340)
This thread has wandered into the arcane world of economics and pricing.
There is something economists call "Price elasticity" which is how markets respond to changes in price... as one economist famously said "everybody's a millionaire when buying a newspaper" The lobster and diamond industries and yes our friends at Porsche and Ferrari have made an art form from the manipulation of supply to maximize profits... and profits all all companies care about. For a niche product like Corvette, demand is limited at any price, so where is the "sweet-spot" ... .
Originally Posted by Foosh
(Post 1598690156)
I think that lately this has turned into an intellectually interesting discussion of production, marketing, and pricing theories and strategies. That's quite a change from the pissing contest it turned into from time to time. Some of us enjoy these more sophisticated discussions. If you're not interested, just move on.
We had a two part variable and fully burdened cost system and I knew those numbers well for that product. We had gained share by matching the price of the industry low cost producer so it was a slim even variable margin (less overhead labor etc) I went to the board and drew a graph showing variable margin at current and new suggested price versus volume and the possible “lose” in margin dollars with the expected volume loss! Did not convince them. Two months later, as I expected, the volume reduced about where I predicted. Boss was impressed with my prediction BUT the VP operations was about to lay some folks off on 2nd shift (costly in $'s and morale) and what could I do! Too late, as I told them, to rescind the price increase as the competitors were seeing blood! Instituted a “Bakers Dozen” promotion for large distributors with multiple stores to stop the bleeding, which it did but that cost about 8%! Fortunately made up losses on a new high margin product where we had solid patents and were in a position to set prices! Exceeded forecasted profit (and made bonuses) for the year! Never had folks 2nd guess prices after! :yesnod: |
So if you understand the market place, why mock a comment about 169k Vette if it can trash hyper cars costing twice as much?
Huracan Performante starts at 275k 488GTB starts at 255k Aventador starts at 415k 720S starts at 285k Ford GT is well over 400k Didn't the engineering team state that the ZR1 is at the limits of what their current platform can do? The margins at 169k will be gravy for GM and i think the plan is to keep selling the C7 alongside it. Risky? Yes, but everything about electing to go mid engine is. |
Originally Posted by TurboJunky
(Post 1598691321)
So if you understand the market place, why mock a comment about 169k Vette if it can trash hyper cars costing twice as much?
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Because if you understand the market place you'd understand there's no reason to mass produce a $169K 2-seat sports car because the demand isn't there. There's a reason most exotics mentioned above are largely hand-built and are produced in such low volumes.
Need I remind folks one more time, that only about 1400 $130K+ ZR1s have been ordered and sold to date, with an expected total number of sales at 2K annually? The only reason it makes economic sense to produce it is because it's basically just a C7 with high performance components bolted on as it move down the assembly line with all the base Stingrays. There is no credible indication that the C7 will continue production along side the ME. |
Originally Posted by mschuyler
(Post 1598691363)
Because volume would plummet. It's not about "trashing" more expensive cars. It's about building and selling the ones you produce.
Its all speculation but somewhere the numbers looked really good to GM and that is why they are moving in this direction. I hope 169k isn't the final price but I am not going to be shocked either. If it embarrasses cars costing way more on the track, the price is justified. Will it sell? Guess we will find out. |
Originally Posted by TurboJunky
(Post 1598691321)
So if you understand the market place, why mock a comment about 169k Vette if it can trash hyper cars costing twice as much
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Originally Posted by TurboJunky
(Post 1598691555)
Maybe they want to cut costs and increase margins?
Its all speculation but somewhere the numbers looked really good to GM and that is why they are moving in this direction. I hope 169k isn't the final price but I am not going to be shocked either. If it embarrasses cars costing way more on the track, the price is justified. Will it sell? Guess we will find out. Drastically raising the price and the resulting reduced demand is not often an effective way to reduce costs and increase margins. Mass production and volume sales are the normal ways of reducing price per unit and increasing margin. That's precisely how Corvette has been able to undercut the price of similar performing cars for so many years. By most accounts the Ford GT program is break-even at best, but most likely a money loser. It's written off in the name of marketing expense. Low volume almost always means high price, and generally that means much more than $169K in the world of high performance cars. They'll probably build a high-end version near that price, but they can only afford to do so if it's produced on the same platform as, and with 10s of thousands of lower-end ME models starting at half or less than that price. |
Originally Posted by TurboJunky
(Post 1598691555)
Maybe they want to cut costs and increase margins?
If it embarrasses cars costing way more on the track, the price is justified. Will it sell? Guess we will find out. |
Originally Posted by Foosh
(Post 1598691640)
I've seen contradictory sentences before, but the one in bold above is a masterpiece. You have no idea what direction they're moving in, but simple laws of supply and demand at various price points suggest they're not moving in the direction you seem to think they are.
Drastically raising the price and the resulting reduced demand is not often an effective way to reduce costs and increase margins. Mass production and volume sales are the normal ways of reducing price per unit and increasing margin. That's precisely how Corvette has been able to undercut the price of similar performing cars for so many years. By most accounts the Ford GT program is break-even at best, but most likely a money loser. It's written off in the name of marketing expense. Low volume almost always means high price, and generally that means much more than $169K in the world of high performance cars. They'll probably build a high-end version near that price, but they can only afford to do so if it's produced with a 10s of thousands of lower end ME models starting at half or less than that price. If anything, you guys are calming me down this price is real. |
Originally Posted by TurboJunky
(Post 1598691900)
If anything, you guys are calming me down this price is real.
I can only buy the notion of a $169k base price, and ME and FE being produced at the same time, IF this is a new car (a la the Ford GT), not a Corvette. It makes no sense to blow up your mass produced, affordable to most, profit making sports car to chase exotics business. |
Originally Posted by jefnvk
(Post 1598692061)
Serious question: had I created a thread that said the base price would be $130k, $89k, $240k, or any random number, and put confirmed next to it, would you believe it?
I can only buy the notion of a $169k base price, and ME and FE being produced at the same time, IF this is a new car (a la the Ford GT), not a Corvette. It makes no sense to blow up your mass produced, affordable to most, profit making sports car to chase exotics business. Game over . The next Corvette continues the legacy from the C7... The king is dead,long live the King. |
Originally Posted by TurboJunky
(Post 1598691555)
Maybe they want to cut costs and increase margins?
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The C7 setup is going to be rebirthed as a premium sport SUV (Cayenne, Urus, etc), the C8 the mid-engine sports car. That's where the market is - premium front engine sport SUV, and a mid engine sports car. Those are the two product lines Bowling Green will produce.
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Originally Posted by JerryU
(Post 1598691114)
:iagree: Reminded of a real world price elasticity example. It was ~June and at a senior staff meeting we discussed what could be done to get some additional margin dollars. Our CFO suggested raising the price 5% of our high volume welding machine that sold for ~$2000. Great guy but came from a service industry. My boss, the president, came from a division selling $500,000+ CNC cutting machines mostly direct and was not as familiar with the high volume products sold only through distributors.
We had a two part variable and fully burdened cost system and I knew those numbers well for that product. We had gained share by matching the price of the industry low cost producer so it was a slim even variable margin (less overhead labor etc) I went to the board and drew a graph showing variable margin at current and new suggested price versus volume and the possible “lose” in margin dollars with the expected volume loss! Did not convince them. Two months later, as I expected, the volume reduced about where I predicted. Boss was impressed with my prediction BUT the VP operations was about to lay some folks off on 2nd shift (costly in $'s and morale) and what could I do! Too late, as I told them, to rescind the price increase as the competitors were seeing blood! Instituted a “Bakers Dozen” promotion for large distributors with multiple stores to stop the bleeding, which it did but that cost about 8%! Fortunately made up losses on a new high margin product where we had solid patents and were in a position to set prices! Exceeded forecasted profit (and made bonuses) for the year! Never had folks 2nd guess prices after! :yesnod: The marketing concept is "segmentation" based on "differential advantage"... of the 20 things a buyer considers, what are the one or two factors that close the deal... and price is only one consideration... and often not the most important consideration. Is there one of these where my product has a clear advantage to a certain group of customers? How do we leverage that? You are really dealing with the psychology of the buyer... art not science. In competitive analysis, its called "market differentiation" or "competitive advantage". |
I have been under the impression the base will be the initial offering and will be under $100K. If the base starts at above that mark perhaps it could option up significantly more but I have a hard time believing this. I'm all in for a base C8 under the $100K mark. I might consider a higher price point even for a base model but depending just how capable the vehicle ends up being. I have considered used Italians but those cars at under $200K carry an ownership premium that keeps me from writing the check.
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's
Originally Posted by JEFFWC8
(Post 1598699184)
I have been under the impression the base will be the initial offering and will be under $100K. If the base starts at above that mark perhaps it could option up significantly more but I have a hard time believing this....
Looking at the pics of the cars in Germany, the brakes, the 305 rear tire size and the small rear spoiler- this is NOT a Ford GT killer. It will be priced closer to the C7, IMO. Now there could well be a "poor mans" Ford GT killer version with bigger carbon brakes, larger tires and a 650 hp engine. The larger size intercoolers needed, large rads (assuming one on each side,) bigger coolers for the trans and engine oil etc would require more room and probably larger rear fenders etc. That version could cost ~$150,000; but that is NOT the C8 that was in Germany. We'll soon see! |
Look at it from the perspective of a buyer. When i bought my 2016 Z51, I cross shopped a Porsche Cayman. I am a long-time Porsche owner (at the time I owned 3) and am a PCA Instructor. I retired my race car, and wanted something I could drive everyday, drive to the track, do some laps and drive home.
A Cayman S with all the good track stuff (PDK, PASM, seats, etc, etc) stickered at about $78K... with not a lot of discounts. My 1LT Z51 with A8 (concession to my wife), and Mag Shocks went out the door from Chriswell at $61K. Now I'm not a PhD, but as much as I love Porsches, and as nice as the Cayman is, thats close to $20K with sales tax, and the Corvette will kick a Cayman in the ass on the track. I love this car. No brainer. But for $5K difference, I'd still buy the Porsche all day long. Just how it goes. |
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