Chart Of The Day: The Price-Volume Frontier

Edward Niedermeyer
by Edward Niedermeyer
chart of the day the price volume frontier

Throughout the month, TTAC tries to go back to recent sales numbers in hopes of providing greater context for the industry’s day-to-day decisions. On the first of each month, however, we get so overwhelmed with volume numbers, we thought we’d take this opportunity to explore the price-volume frontier. Inspired by recent rumors of a 120k unit production goal for the $41k Volt and the ensuing discussion of the BMW 3 Series’ unique position on the price-volume frontier, we thought we’d feel around the data for this mythical plateau. Sadly our unsophisticated graphing software (and overworked editor) didn’t allow for a more full exploration of high-priced vehicles reaching near-mass-market volumes, so we put together a “basket” of higher-priced, strong-selling models. And though we obviously cherry-picked a little, we did use four manufacturers to indicate an approximate “delta” between price (base MSRP) and volume (2010 numbers). Are there outliers to our “price-volume frontier”? Possibly. Did we leave out the most interesting area of the graph (the mass-market vehicles) Definitely. But in the process we have hopefully proved that selling over 100k units of a vehicle costing $40k or more is not a goal to be taken lightly.

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13 of 18 comments
  • Dean Trombetta Dean Trombetta on Feb 01, 2011

    Brilliant, Never thought of car sales this way. The 3 series is not a surprise, the T&C and E Class are big surprises. I would like to see the Porsche Panamera on this chart. (I guess that you would have to make the price line go over 80 though)

  • Tallnikita Tallnikita on Feb 01, 2011

    Go the Camaro! I thought Mustang would've had it beat.

  • CJinSD CJinSD on Feb 01, 2011

    I can't believe Cadillac sells 45,656 CTSs. Every time I look at pricing on Cadillac's website, I am stunned. I recall being in a Cadillac showroom around 2005. It was during 'employee pricing,' and the invoices were taped to the walls of Colonial Auto Center. Invoices don't mean anything, but at the time they raised an interesting question. If one were supposed to believe that dealers were paying over $40K in 2005 for gen1 CTSs, why didn't the dealer go accross town and buy a bunch of 330i BMWs for retail and try to mark them up instead? They would still have been a better value and an easier sale. Looking at CTS build and price now, things that are standard on sub-30K Hondas are still optional on a $40K CTS. BMW has been building 3 series brand equity since 1968. You can't jump on their option price gouging plan with the Cimarron MK3. When Acura was hitting on all cylinders in 7 years ago, they sold a bunch of cars by making everything standard for a price that compared with stripped BMWs. Acura only messed things up by trying to out ugly BMW. If anyone wants to pick up the ball they dropped, they should do it by adopting a similar pricing model.

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    • Krhodes1 Krhodes1 on Feb 02, 2011

      I think BMW is a bit of a different case than Acura. Honda can afford to make relatively little money on each Acura they sell - the costs are amortised over a huge number of other models that they sell tons of. BMW does not have this luxury. 100K cars sounds like a lot, but it is a drop in the bucket compared to true mass-market cars. And BMW uses some very expensive technology across the board in thier cars. I would bet that there was relatively little profit in the fairly stripped 3-series wagon I just ordered. The options are where the real profit is! For example the sport package is $2050. This gets you different seats, different suspension bits, different wheels and tires. But the base car already comes with all that stuff, the added cost of the Sport versions is very close to nothing. Probably more cost in having to inventory them than in the actual bits. This model works for me - I don't want all that extra crap anyway. I bought the car to drive, not to be a toybox. One lesson Cadillac has simply not learned-you don't talk price of a "luxury" good. Advertising $29995 CTS did them no good in the long run. BMW is much smarter about this. They also do thier discounting through the back door. The free "Value pkg" they currently offer is essentially a $2500 incentive, and they subvent thier leases.

  • SCE to AUX SCE to AUX on Feb 01, 2011

    Very interesting - keep collecting more data. The subsidies and rebates will make a big difference on some vehicles.