Saturn Aura Hybrid $3k Price Bump. Huh?

Pch101 - $1B is not enough to get a new car to launch. You need many billions; not the hundred millions you bat around. A few hundred million lets you do a brand clone or upscale variant. Which explains why GM loves brand engineering. If you worked in auto then you'd know this. Many billions are spent to get a new design of a volume production program off the ground. Many more billions are spent to support the subsequent sales and marketing functions to put those cars into driveways and parking spaces. And these Billions (that's a plural) are for traditional vehicle programs (think GM Lambda or Ford C1). If you consider that hybrid is actually a new approach to car-building and design, the traditional investment levels no longer apply. Landcrusher - did you see the TTAC post with Jamie Lee Curtis and the subsequent comments? It looks more like you're seeking a way to ignore my argument than to actually acknowledge the valid points. I never said everybody criticized the vehicle. My intention was to point out that mass-market appeal cannot be attained unless the vehicle were priced competitively. And if the vehicle were not available to the average citizen it faces criticism and will likely struggle in the market place. If the Prius were priced at a point where the variable profitability were great, then the car would not sell in enough volume to make the program viable in the short term. New technologies are rarely affordable by the masses but yet Honda drew stiff criticism for promoting their new technology at those deemed wealthy enough to afford gasoline. Do you deny that the Prius makes 5% margin? If you accept a 5% margin then the program could not have a pay back on its investment as of today. If you believe the margin is higher than 5% then you are defying the analysis of the majority of real automotive business analysts. Do you deny that Toyota needs more then $1B of investment to launch a new product? Then you are denying their own financial statements showing their annual r&d and capital spending figures. The Prius will likely make money as the technology proliferates, which has been my point all along. Toyota is working to arrive at their strategic goal of a profitable hybrid system. But the other carmakers who have invested with hybrids are struggling.

Donut, In what way would you parse that sentence so that it does not give the impression that the folks here panned the car? I am certainly "curious", and often "sarcastic". Yet, IIRC, I defended their idea to do a pilot. I thought the location chosen was less than optimum, but there were folks who made a good case that it was chosen for good reasons. Regardless of your actual intention, it appeared to this reader that you intended to make, once again, an argument on terribly weak premises. As for the stuff that follows, it doesn't matter. You need to start with some correct premises before you run off trying to make your conclusions. RF doesn't call his readers the best and brightest for nothing. We aren't buying that gobbledy gook.

So you probably still feel like it's easier to ignore me than to read on. But please, for your own knowledge and understanding - you'll learn a lot if you do some due diligence and run the financial numbers against the R&D and investment figures contained within the annual reports of the automakers that make money (or go back in time and look at Ford's reports when they were profitable). Do some math on how many units that carmaker sold in total versus how much cash it spent on R&D and capital investment. This will point you in the general direction of how much money per unit is necessary on an average vehicle to break even on their average program investment dollars. FYI, I posted above that Toyota spent approx ¥2.2 trillion Yen on R&D and Capital Investments. At ¥108 per US dollar that is $22 Billion. They sold 9.34M units last year. That's about $2,400 per car. I've heard the argument that Toyota is fluffing their numbers by putting non-car related items in their numbers (such as shiny office space and F1 R&D). If you believe such fluff is over 25% of their reported spending, then we don't have much to discuss. I know you guys don't care about my other points - because if you did - did then the hybrid program wouldn't make money. And thus you find a convenient way to tune out what you wish to ignore. Guess which management culture in Detroit is guilty of doing the exact same thing. I didn't think it were possible - but it seems like the TTAC "best and brightest" will quickly tune out others who poke at their comments. Go figure... the site that touts its open candor is quick to dismiss others at the drop of a hat. ............ So let's play a game and pretend you ran an automaker. One day you're sitting in a meeting where you're discussing this new "hybrid" technology that is being investigated. Your groups come in and tell you they want to spend $3B over the next 3 years to execute a revolutionary new hybrid program with it's own powertrain and chassis. And when this car comes out, it will make about 5% margin. You run the numbers in your head... (and for the sake of making this fair - let's assume the vehicle gets a margin of $2,000 per unit). That doesn't compute to the program making very much money. It would require that program sell 250K units a year for 6 years just to break even. Unfortunately, the news gets even worse when you realize that very few vehicles achieve 250K units a year. Would you believe your workers and green light the project? Would you tell them that they could do a hybrid for $1B because you know better? Would you task them to innovate a new hybrid that is more profitable? Would you tell them profitability is no problem so long as they make the car well? Would you tell them it's probably better to just take some existing car so you need less investment dollars? Would you tell them to build a Volt? If you have another alternative, please share because Detroit really needs someone to come up with a good plan. The people making decisions now haven't been making enough good ones.