Jump to content

Recommended Posts

Facebook advt: "The number crunchers at Buick found it was costing $80,000 per car to build, Buick lost $50,000 per car for every car sold , it almost put Buick motor division into bankruptcy. " Right. Anyone have others ?

Link to post
Share on other sites

What car was that? Such cases are not unknown. I can think of a few examples.

In the fifties David Brown of Aston Martin had a friend who asked if he could buy a car at cost price. Brown readily agreed, when the car was delivered the bill was twice the list price. When the customer complained he said "that is what it costs me to build each car".

The Porsche 914 was originally meant to be a VW but VW decided not to produce it because they could not sell it for what it cost them. So Porsche took over the project. One problem was that VW assigned all development costs to the model while Porsche spread them over the whole product line.

Kaiser Frazer made some unusual models like the Virginian  that took a lot of hand work. Have heard it said that they would not turn down an order for a $3000 car even if it cost them $5000 to fill it.

Have also heard that Cadillac nearly went under during the depression, the only thing that kept them afloat was being subsidized by  Chevrolet and other GM divisions. Some well thought of luxury makes that did not have such support went broke.

  • Like 2
Link to post
Share on other sites

I suspect that overall profitability is a lot more important than individual profitability. How much was lost on models that were great draws to get people into a showroom where practicality made them buy something else.  

Link to post
Share on other sites

"BMC lost $100 on every Austin/Morris Mini they ever made. " BLMC  ? Innocenti ?

Link to post
Share on other sites

In 1906/'07, Sears Roebuck and company paid an automotive engineer to design a high-wheel automobile suitable for farmers and back country folks to drive on the trails they called roads there. He wanted something familiar, comfortable, and easy for them to use. Late in 1908 (just about when Henry Ford put the model T on the market), their first ads began to appear in the Sears and Roebuck catalog. The car was an instant hit with the target market in 1909, and several variations were offered in following years. Along about 1910 or '11, the company had some auditors go over the sales and cost records. They discovered that in spite of the popularity of the car, Sears and Roebuck lost money (somewhere near $50 per car if I recall correctly?) on every car they sold. That coupled with the fact they were aware of the new Ford's success, and understood that the market would change drastically in the coming years, they almost immediately suspended production. For 1912, the catalog reduced the Sears automobile section in their catalog from about eight pages, to one. In 1912, Sears basically sold off the remaining 1911 automobiles already produced and awaiting sale. 

Sears and Roebuck sold off the patents, rights, factory leases and equipment to others interested in manufacturing automobiles. The "Sears" automobile itself got basically one more year in the market place, with only minor changes and sold under the name of "Lincoln" (no relation the Henry Leland's later efforts).

There were connections to several other automotive concerns, but that is a story for another day.

Link to post
Share on other sites

I've read that the smallest American compacts of the post oil crisis 1970's - e.g., Vega and Pinto - were cars that GM and Ford lost money on. They still had to make them because of some gov't. mandate, however.

Link to post
Share on other sites
1 hour ago, JamesR said:

I've read that the smallest American compacts of the post oil crisis 1970's - e.g., Vega and Pinto - were cars that GM and Ford lost money on. They still had to make them because of some gov't. mandate, however.

No way is this true. When the Vega was introduced in 1970 it had a base price of $1999. Whether you could actually buy one for that is questionable. I do know that in 1974 I went shopping for a new car, the local Chevy dealer had a lineup of a dozen Vegas, all well optioned and all $5000 to $6000.  At the same time I saw a full size Bel Air sedan, or whatever the base model full size car was at the time, for only $200 more than a Vega. The difference was, in the meantime there was an energy crisis and gas shortages and everyone wanted a small car. The car dealers took full advantage to soak the public.

  • Thanks 1
Link to post
Share on other sites
On 7/25/2020 at 12:53 PM, dictator27 said:

BMC lost $100 on every Austin/Morris Mini they ever made.

I heard the same thing. Supposedly Leonard Lord, head of BMC insisted the Mini be priced 5 pounds less than the cheapest Ford Anglia even though the Anglia, a conventional rear wheel drive car, was much cheaper to build than the innovative front wheel drive Mini.

Link to post
Share on other sites
2 minutes ago, Rusty_OToole said:

No way is this true. When the Vega was introduced in 1970 it had a base price of $1999. Whether you could actually buy one for that is questionable. I do know that in 1974 I went shopping for a new car, the local Chevy dealer had a lineup of a dozen Vegas, all well optioned and all $5000 to $6000.  At the same time I saw a full size Bel Air sedan, or whatever the base model full size car was at the time, for only $200 more than a Vega. The difference was, in the meantime there was an energy crisis and gas shortages and everyone wanted a small car. The car dealers took full advantage to soak the public.

What is the phrase?  Oh yes”Whatever the Traffic will Bear”

Link to post
Share on other sites

I have heard that Ford lost money on every 1956 - 57 Lincoln Continental Mark II even though it was the most expensive American car at $10,000. They put so much hand work and so many extra cost touches into the car, and sold so few, that they could not recoup their costs. This is why they replaced it with a standard Lincoln with extra trim as the 1958 Continental Mark III, and brought out the 4 seater Thunderbird which was much like the Mark II at a far friendlier price. The Tbird sold like hot cakes even though luxury car sales were way down that year and made money.  Meanwhile the new Edsel which was supposed to cover the lucrative medium price field, never sold enough to make a profit. It goes to show the auto business is a gamble that makes Las Vegas look like a bunch of pikers.

Link to post
Share on other sites

Seems that no interesting (to me) car was every profitable or made for long. GTO was the longest lived though in several different forms. Most were expected to sell 20k units/year, few made it to 4k. Heard at one point that my SBC 4 speed positraction Sunbird was not available with AC because that would have put it into a different emissions class.

 

BTW the mandate was called CAFE and required a "Corporate Average Fuel Economy) of 27.5 mpg by 1975, the same year that catalytic converters appeared. There was also a complicated array of "credits" that only a lawyer could understand.

  • Like 1
Link to post
Share on other sites

One of my courses at GMI was "creative accounting". It is possible to lose money on anything. One favorite was to dump an entire plant's operating costs onto one line that was supposed to fail.

Link to post
Share on other sites
On 7/25/2020 at 11:06 AM, padgett said:

'80s Reatta

I can believe it, they were 'complicated', I have the original factory electrical manuals, it took 4 ringbinders that probably stack up a couple feet.  I'll bet that Chrysler 'Crosswind?' is the same way.

Link to post
Share on other sites
18 hours ago, Rusty_OToole said:

I heard the same thing. Supposedly Leonard Lord, head of BMC insisted the Mini be priced 5 pounds less than the cheapest Ford Anglia even though the Anglia, a conventional rear wheel drive car, was much cheaper to build than the innovative front wheel drive Mini.

It was Ford of England who took a Mini apart and did the cost analysis of it, and made it 'public' with their findings when they were designing the Cortina in 1962.  

 

In later years, BMC did get their production costs down, mostly through amortization of the development expenses as the Mini was such a good seller, but it was stated if they had to spend two extra hours labor fixing a defect on the assembly line, they lost money on that particular unit.

 

Craig

Link to post
Share on other sites

"Everything you read on the Internet is not true. " would be a lot simpler if so.

" they were 'complicated', I have the original factory electrical manuals, it took 4 ringbinders that probably stack up a couple feet." I do not find the Reatta any more complicated than any other period car. Difference is that I know how to reprogram GM ALDL cars (1981-1994) mostly to run 180-190F. Service manuals are normal sized, what are big are the full Buick line yearly TSBs.

Difference is that both the Reatta and the Allante have built in scan tools.

diagnostics.jpg

 

 

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...