13 replies to this topic

[mab01uk]

According to this recent news report below it wasn't just the classic Mini that was sold at a loss for many years......legend has it that rivals Ford bought and stripped a 1959 Mini down to its component parts, costed it out and then informed BMC that they must be making a loss on every Mini sold. (I think Ford calculated about £30 per Mini at the time, when compared with their own Ford Anglia).

 

Quote:

"Analyst Sanford C. Bernstein, according to a report in Indian AutosBlog, wrote that the Smart ForTwo alone was responsible for losing $5 billion. This loss was, according to Mr. Bernstein, the largest financial disaster in the European motor industry. They also pointed to the older Mercedes A-Class, which lost a total of $2.5 billion (and came in at #5 in the top ten European losers).
The list also included the Fiat Stilo, losing $3 billion from 2001-09; the Volkswagen Phaeton, losing $2.9 billion; the Peugeot 1007, Bugatti Veyron, Jaguar X-Type, Renault Laguna, Audi A2, and Renault Vel Satis. On a per-car basis, nothing comes even close to the Bugatti Veyron, with an estimated $6.7 million loss per car; the Volkswagen Phaeton (a close relative of the Touareg) comes in at a distant second, with $40,800 lost per car. Smart ForTwo (1997-2006) lost $6,500 per car while the A Class (1997-2004) lost $2,100 each."
http://www.allpar.co...nds-went-part-3

 

 

[Mini-Mad-Craig]

It is no secret that the Veyron was purely an exercise to show what the VW group/Buggati could achieve. What could be done, it was never developed or designed with the intentions of making money.

[jamesmpi]

The reason why Smart lost so much money was because they build a brand new factory purely to built smart cars but didn't setup independent dealerships. They just stuck them at the back on existing Mercedes dealerships.....so who in their right mind would walk into a Mercedes dealership to buy a cheap plastic smart when surrounded by large and luxurious Mercedes???

[muddd001]

Yep, one day the head of VW said do this! I don't care what it costs.

Literally just because they could.

[mini13]

never heard of a "loss leader" then.

[Dan]

didn't setup independent dealerships. They just stuck them at the back on existing Mercedes dealerships

 

  Not originally.  In the beginning Mercedes wouldn't even admit they owned Smart and they were sold under another parent company name.  There were Smart dealers to begin with, but more so in other European countries than in the UK.  They used to look kind of like giant vending machines with all the Smarts in a glass tower.  They were moved back in the Merc garages when they realised the brand did actually have some value and the cars were desirable, and moving them to the main dealers saved money.  Smarts lose money because they are priced too high so the sales volumes are too low, when they were originally announced they were supposed to be just a few thousand pounds (around ⅔ the price of a Saxo at the time) and the volumes would have been much higher.  Their body structure is expensive but the price of the plastic panels is very volume dependant.  Much the same as the problems at Rover towards the end, the company have an idea that their brand is seen as luxurious, desirable and high end and so price their product accordingly.  The public however have a different view.

 

 

 

  And yes, surely everyone knows the Veyron loses money.  Have you seen the ludicrous factory it's built in?  That's why they were only ever going to make a strictly limited number.

 

  The point about Ford's investigation into the price of Mini was that they concluded FORD couldn't build it for that price.  Longbridge was a far more efficient plant than Dagenham.

Edited by Dan, 14 December 2013 - 12:37 AM.

[M J W J]

I highly doubt that the veyron costs 5 million to produce. Its a publicity stunt to make people think they are getting good value for money.

 

When I was at Coventry we had a guest lecturer for about 3 weeks, who was working for an independent car company. The car they were developing was able to hit 230 mph and only cost about £500,000 to produce their latest prototype. I can't see it taking another 4.5 million to do an extra 20 mph.

 

In a project that I did developing safety seats, each prototype was working out at around £10,000 and we had some really exotic materials , more so than what is in a veyron. Our materials required EDM and chemi milling to manufacture which is what drove the cost up.

 

Buggatti said they were only going to build 40 cars. They keep on bringing out newer, slightly more tuned up versions. Surely they couldn't do this if they were still making a loss.

Edited by M J W J, 14 December 2013 - 01:14 AM.

[Ethel]

Is it like Ferrari, where the cars are worth more as marketing for perfume & sunglasses? I can't see that VW gain much from an over complicated super car that they couldn't get a better return spending the R & D money on their own badged motors.

[greenwheels]

According to this recent news report below it wasn't just the classic Mini that was sold at a loss for many years......legend has it that rivals Ford bought and stripped a 1959 Mini down to its component parts, costed it out and then informed BMC that they must be making a loss on every Mini sold. (I think Ford calculated about £30 per Mini at the time, when compared with their own Ford Anglia).

It's time this idea was clarified. Speaking as someone who was working in BMH/Leyland/ Rover for many years, I can tell you that we and undoubtedly all other car manufacturers did strip downs of competitors cars and costed them, as well as to get a few ideas for our own models. We could  never get figures that could show how the manufacturer made a profit. Truth is you never know the resources are spread over a competitors model range so it's an impossible task trying to work out how they make a profit. Fords range at the time was still antiquated, the Mini was a huge technological step so they had to spread some form of Fear, Uncertainty and Despair into the Mini image. Needless to say 41 years of production proved it was a major winner. and revolutionised car design.

Edited by greenwheels, 14 December 2013 - 08:52 AM.

[Cooperman]

Probably the thing which Ford would have had a problem deciding was how to apportion the design & development costs for the revolutionary Mini technology.

The Mini was the forerunner for an entire range of front-wheel drive BMC cars with integral gearboxes so the initial design/dev't costs per car sold would appear to be high. However, if these costs are spread through the 1100/1300/Metro/etc., right up until 2000, then the cost per unit for the original 850 will be very small. Then again, BMC always required their supplier chain to work on lower margins than Ford, which accounts for some of the QC issues later on.

At the time, Ford's comparisons were with their then-new 105E Anglia, an excellent car but older technology so design costs were low and the cost of the engine design was spread over a very wide model range almost immediately.

Cost engineers can make almost anything seem true  .

[mab01uk]

BMC Sows The Seeds Of It's Own Destruction With The Mini?

 

[Dan]

  The interviews with the guys who were actually there at the time in that are very informative, the main piece to camera from the presenter though is very poorly researched and clearly more concerned with making a point than explaining one!  He's talking about the car in the past tense too, in 1986!

[mab01uk]

  The interviews with the guys who were actually there at the time in that are very informative, the main piece to camera from the presenter though is very poorly researched and clearly more concerned with making a point than explaining one!  He's talking about the car in the past tense too, in 1986!

 

BL marketing of the Mini in much of the 1980's was very poor and concentrated mainly on the Metro, etc so that most people already thought the Mini was out of production and in the past tense.......

[Dan]

  I know what you mean!  I remember so many people thinking that the MPi launch, with all it's hype, was the car coming back into production after a gap.  I remember people at work saying things like that.