Hope for GM: Quality sells

[NB2K]

From Bob Lutz:
Life Lessons From the Car Guy

Bob Lutz: Life Lesson From the Car Guy - WSJ.com

A Chevrolet Malibu's material cost is within a couple percent of that of a BMW 3-Series.

His comments about Chrysler are spot on. Still junk, and it shows.

[repo]

Read that this morning. Interesting.
Material cost the same and the car is half the price. Either BMW is making a killing or GM's labor is too expensive.

[78SA]

Originally Posted by repo

Read that this morning. Interesting.
Material cost the same and the car is half the price. Either BMW is making a killing or GM's labor is too expensive.

How would that make GM's labor too expensive?

[NB2K]

Originally Posted by repo

Read that this morning. Interesting.
Material cost the same and the car is half the price. Either BMW is making a killing or GM's labor is too expensive.

Can't imagine BMW's labor ( excluding SC) is less than GM.

I thought he was way off base about VW, though.

[Scissors]

Originally Posted by repo

Read that this morning. Interesting.
Material cost the same and the car is half the price. Either BMW is making a killing or GM's labor is too expensive.

Originally Posted by 78SA

How would that make GM's labor too expensive?

Math fight!

[DAB]

quality has always sold. you don't have to be the market leader (sales volume) to be a successful business. GM needs to figure out what they want to be. quantity (think wallymart), quality (think maytag many years ago), or great service (think fedex). pick one.

[Aerovette]

Originally Posted by 78SA

How would that make GM's labor too expensive?

Assuming the same profit margin for both cars and a LOWER material cost for GM, the only variables are labor and overhead costs.

[Scissors]

Originally Posted by aerovette

Assuming the same profit margin for both cars and a LOWER material cost for GM, the only variables are labor and overhead costs.

Except that it was noted that the materials cost is about the same.

Assuming the same profit margin is a terrible assumption.

[NB2K]

It would be a safe (and logical) assumption to assume that BMW's profit margin is greater on the the 3-Series than GM's is on the Malibu.

The point the author was making was that GM's quality of materials is improving.

[Aerovette]

Originally Posted by Scissors

Except that it was noted that the materials cost is about the same.

Assuming the same profit margin is a terrible assumption.

I was not making the assumption, merely explaining how labor "could" come in to play.

Material + Labor + Overhead + Margin = Price

I would guess import costs come in to play for BMW as well.

Also it said "within a couple of percent" and I did actually assume GM to be lower. Why? Because I drive one...it shows.

[BuckyThreadkiller]

Originally Posted by NB2K

It would be a safe (and logical) assumption to assume that BMW's profit margin is greater on the the 3-Series than GM's is on the Malibu.

The point the author was making was that GM's quality of materials is improving.

I disagree - he was saying that the cost of materials is about the same. But where BMW puts its dollars is into the design and engineering of an excellent vehicle - that's why a 3 series costs and performs at a level twice that of a Malibu.

There is more than cost of materials, labor and profit involved in building a car. Design and engineering make up the difference between models, makes and in the end - sales.


Fortunately, the WSJ has coaxed the reclusivly modest Maximum Bob to divulge how he invented the modern car business and reveal why he knows more about how it should be run than anyone since Henry Ford.

[78SA]

I just wonder how GM's labor cost can be higher than BMW's based on materials cost being close to the same while a BMW costs twice as much.

[Aerovette]

Originally Posted by 78SA

I just wonder how GM's labor cost can be higher than BMW's based on materials cost being close to the same while a BMW costs twice as much.

Say that again?

[78SA]

Originally Posted by aerovette

Say that again?

A BMW 3 series is 40k, right? A Malibu is $25k so not quite twice as much but if materials cost about the same, then how do those numbers equate to labor costs for GM being higher than BMW?

[NB2K]

Originally Posted by BuckyThreadkiller

I disagree - he was saying that the cost of materials is about the same. But where BMW puts its dollars is into the design and engineering of an excellent vehicle - that's why a 3 series costs and performs at a level twice that of a Malibu.

There is more than cost of materials, labor and profit involved in building a car. Design and engineering make up the difference between models, makes and in the end - sales.


Fortunately, the WSJ has coaxed the reclusivly modest Maximum Bob to divulge how he invented the modern car business and reveal why he knows more about how it should be run than anyone since Henry Ford.

They are diligent, aren't they?


I guess I misread it Bucky. I thought he was illustrating a quality point.

[Aerovette]

Originally Posted by 78SA

A BMW 3 series is 40k, right? A Malibu is $25k so not quite twice as much but if materials cost about the same, then how do those numbers equate to labor costs for GM being higher than BMW?

They don't. But it is "possible".

BMW may simply just have a higher profit margin and as I said, have to cover import fees.

[LATB]

Originally Posted by aerovette

They don't. But it is "possible".

BMW may simply just have a higher profit margin and as I said, have to cover import fees.

???

[carlton_fritz]

Originally Posted by aerovette

They don't. But it is "possible".

BMW may simply just have a higher profit margin and as I said, have to cover import fees.

GM has to deal with the mess with the union.

[VatorMan]

I'm pretty sure BMW's labor cost is significantly higher than GM. But Bucky is right-If you are spending the same amount of money as a 3 series-why isn't it similar to a 3 series.

German Engineer Powns American Engineer.

[LATB]

15K difference in labor & engineering between a BMW3 & a Malibu, per car?