QOTD: What's the Optimal Manufacturing Mix for Profitability?

Corey Lewis
by Corey Lewis
qotd what s the optimal manufacturing mix for profitability

In last Wednesday’s Question of the Day post, we asked you to build the perfect manufacturer lineup. As you responded and built your hodgepodge lists of desirable present day cars from various manufacturers, capitalist and commenter Dal20402 had something else on his mind: profitability.

Propulsion, platforms, and product planning are on the agenda today. What combination is the most profitable?

The basis of all vehicles is, of course, the platform residing underneath all the pretty (or ugly, if it’s a Toyota) metal. Companies like Volkswagen have perfected the art of the modular platform, which is easily scalable up or down depending on the required usage. How many platforms does a full-line manufacturer need these days?

With platforms established, thoughts turn to the metal rectangle under the hood; whether that means battery or engine is up to you. In this age of EVs, small displacements and turbocharging, how many different types of propulsion do you need? Or perhaps, what are the fewest number of engines a company can attach to the widest number of vehicles?

The final concern in today’s discussion is how the power established above gets to the road. Are CVTs worth the trouble, or should manufacturers stick to the established conventional automatic? For profit’s sake, is it necessary to offer a manual at all? Is all-wheel drive (or 4×4 real-quad-track whatever) the best way to add a couple grand to each and every vehicle on the lot?

Before we turn you loose in the comments, remember that today we’re talking maximum profits, which is very different to Internet Car Enthusiast appeal or reliability.

Thanks to Dal20402 for suggesting today’s question. If you’ve got your own QOTD to send me, forward it via electronic telegram to editors@ttac.com.

[Image: Shutterstock]

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  • Bill Bill on May 10, 2018

    Corey asked: "How many platforms does a full-line manufacturer need these days?" I understand how he arrived at this question, as a follow-up to yesterday's discussion; but it's the wrong question. Of course it's smart for manufacturers to use each platform for as many models as possible. The extent to which this can be done is a matter of the technology of building cars, which I know nothing about. The real way to make money is to use each platform for as many brands as possible. This is the key to VW's success. Everyone knows that a SEAT is built from VW's parts bin. Everyone knows that a Skoda copies last year's Audi technology. No doubt buyer see this as a good thing. If last year's technology was good enough for Audi, it's certainly good enough for a medium-priced Skoda. And VW doesn't cheap out on sheet metal. They maintain a distinctive brand identity for each by making the cars look different. I assume that PSA intends to follow the same pattern. They will use the same platforms for all their brands, but they will not build Peugeots in England and Germany. They will make a model that appears different to sell as a Vauxhall in England. They will build something *German* to sell as an Opel in Germany. As I understand it, even Toyota does the same thing, at least in Japan. We tend to think of Toyota as equivalent to Chevy, but we should think of it as equivalent to GM. The different Toyota stores in Japan are like different brands. I don't know how it works, but Toyota must feel they can sell more cars by appealing to different buyers in different ways. The Chinese certainly understand this. An article just above this one explains that Lotus will build a CUV using the Volvo platform (that Geely paid for.) Will it be the same as the Volvo, but with different grill and tail lights? Of course not. They will use it to build the Lotus brand identity. And Geely will use the platform for one, or several, brands in China. American manufacturers have had very few successes with this strategy. A rare example is the 1983 Ford Thunderbird/ Mercury Cougar. Using the same chassis and mostly the same body, they built two cars that did not cannibalize each other. People who liked the Thunderbird hated the Cougar; people who liked the Cougar didn't like the Thunderbird. But for the most part, American manufacturers have failed badly, trying to make a quick buck by skimping on the development of distinctive brands. One need only mention the Cadillac Cimarron for proof of this.

  • Erikstrawn Erikstrawn on May 10, 2018

    Like it or not, I think Ford's decision to cut most of its car lineup and their insistence on Ecoboosting everything fits this question.

  • Danddd Chicago at night is crazy traveling in and out from the 'burbs. Taking the Ike back home around midnight and you'll see racers swerving by at 100mph plus. Dangerous enough we rarely go down there anymore. I plan my city trips between 9:30AM and back out by 1PM to miss the worst traffic.
  • SCE to AUX Good summary, Matt.I like EVs, but not bans, subsidies, or carbon credits. Let them find their own level.PM Sunak has done a good thing, but I'm surprised at how sensibly early he made the call. Hopefully they'll ban the ban altogether.
  • SCE to AUX "Having spoken to plenty of suppliers over the years, many have told me they tried to adapt to EV production only to be confronted with inconsistent orders."Lofty sales predictions followed by reality.I once worked (very briefly) for a key supplier to Segway, back when "Ginger" was going to change the world. Many suppliers like us tooled up to support sales in the millions, only to sell thousands - and then went bankrupt.
  • SCE to AUX "all-electric vehicles, resulting in a scenario where automakers need fewer traditional suppliers"Is that really true? Fewer traditional suppliers, but they'll be replaced with other suppliers. You won't have the myriad of parts for an internal combustion engine and its accessories (exhaust, sensors), but you still have gear reducers (sometimes two or three), electric motors with lots of internal components, motor mounts, cooling systems, and switchgear.Battery packs aren't so simple, either, and the fire recalls show that quality control is paramount.The rest of the vehicle is pretty much the same - suspension, brakes, body, etc.
  • Theflyersfan As crazy as the NE/Mid-Atlantic I-95 corridor drivers can be, for the most part they pay attention and there aren't too many stupid games. I think at times it's just too crowded for that stuff. I've lived all over the US and the worst drivers are in parts of the Midwest. As I've mentioned before, Ohio drivers have ZERO lane discipline when it comes to cruising, merging, and exiting. And I've just seen it in this area (Louisville) where many drivers have literally no idea how to merge. I've never seen an area where drivers have no problems merging onto an interstate at 30 mph right in front of you. There are some gruesome wrecks at these merge points because it looks like drivers are just too timid to merge and speed up correctly. And the weaving and merging at cloverleaf exits (which in this day and age need to all go away) borders on comical in that no one has a bloody clue of let car merge in, you merge right to exit, and then someone repeats behind you. That way traffic moves. Not a chance here.And for all of the ragging LA drivers get, I found them just fine. It's actually kind of funny watching them rearrange themselves like after a NASCAR caution flag once traffic eases up and they line up, speed up to 80 mph for a few miles, only to come to a dead halt again. I think they are just so used to the mess of freeways and drivers that it's kind of a "we'll get there when we get there..." kind of attitude.