Quote:
Originally Posted by strangelove
Why does Chrysler think that big trucks, Mini Vans and big cars bring bigger profits. Why can't they build mid to small cars better and make the same profit. It would seem to me that if you made a mid size car better sold it at a higher price, one you would be putting lest material into making that car. I hope they don't go back to 80's bigger is better mantra. 90's was a little better, but where's the Hybrid's DAMNIT!!!  |
1- Because bigger cars allow more markups and moneymaking options per vehicle, thus bigger profit per car.
Making a big car vs a Small Car: yes, you use more raw materials, but about the same amount of labor, same or even less investment in engineering: it is easier to achieve passenger protection goals when you have a couple of extra feet of crush zone on each end of the car; it is easier to tuck away all of the components a modern car needs when you have all of that lovely extra space under the hood, etc.
So for a small increase in materials cost you can get a much higher selling price. And have more space for high-profit options.
(How come automakers are still getting away with charging 4 digit prices for GPS systems when you can buy a Garmin for about 300$ at Staples?)
2- Small cars are the future... unless oil prices drop to 30$ a barrel. But DC cut funding for Mitsubishi, who was the one partner who knows how to build high quality, economical, stylish Small Cars. (also FAST, as in Evo).
Cerberus will probably have a Chinese partner (Cheri) building small cars to sell under Dodge (and possibly Chrysler) nameplates, because they are clever capitalists and know that you don't get rich by making things that people don't want to buy.