This is spinoff of another thread where somebody suggetsed that GM may not make much profit in the first year or 2.
I know there are many things that factored into the cost to produce the zr-1, like leveraging off of c6r and z06, but let's attempt to put some figures down.
I dont have any inside knowledge or experince in the auto industry, but I'll throw some numbers out to get things rolling.
Of course, we dont know MSRP yet, so let's just assume 100k.
overhead = 10 million
R&D + tooling = $20 million
Materials cost to build 1 car = 70k
Dealer cost = 85k
4000 cars produced in 2 years
cost to cuild 4k cars = 4k*70k = 280 million
total cost = 10 mil + 20 mil + 280 million
revenue = 4k * 85k = 340 million
do companies ever make much money on halo cars... I can tell you the GTR is all Red for Nissan for a long time.. this is why they wont ever step up production to meet demand... thus the 65K price is bogus, but the dealerships love it!
any business that can only make a 10% to 20% return on any business investment is not one that is long for this world. As I have stated before, it is absolutely ridiculous to artificially limit production on your self proclaimed "super car" of which you might be so lucky as to have pent up demand and all the while offer unlimited runs of Cobalts that few want.
It is stupidity , plain and simple, and is just another reason why GM is failing.
This is spinoff of another thread where somebody suggetsed that GM may not make much profit in the first year or 2.
I know there are many things that factored into the cost to produce the zr-1, like leveraging off of c6r and z06, but let's attempt to put some figures down.
I dont have any inside knowledge or experience in the auto industry, but I'll throw some numbers out to get things rolling.
Of course, we dont know MSRP yet, so let's just assume 100k.
overhead = 10 million
R&D + tooling = $20 million
Materials cost to build 1 car = 70k
Dealer cost = 85k
4000 cars produced in 2 years
cost to cuild 4k cars = 4k*70k = 280 million
total cost = 10 mil + 20 mil + 280 million
revenue = 4k * 85k = 340 million
profit = 340 mil - 310 mil = 30 million
I really dont think the R&D is anywhere near $20 million, the R&D on this car was probably 1/4 of what they spent on the Z06. Remember aside from some new body panels the rest of the car is taken from the base model and the Z06, the motor aside with it being forged and blown is basically the base corvette motor, the frame Z06, Magna ride taken from the base just tweaked, I could go on, I'm not downplaying the car, I'm just saying it didn't cost GM as much to produce as you think, this is just another corvette variant, there is nothing new or groundbreaking on this car, from an engineering point.
What about advertising, promotional materials, autoshows and special appearances in addition to road tests models? Oh, and warranties, parts and labor?
i dont think so either, but i really didnt know and i figured I would guess high. whats your guess?
Quote:
Originally Posted by NytmereZ
I really dont think the R&D is anywhere near $20 million, the R&D on this car was probably 1/4 of what they spent on the Z06. Remember aside from some new body panels the rest of the car is taken from the base model and the Z06, the motor aside with it being forged and blown is basically the base corvette motor, the frame Z06, Magna ride taken from the base just tweaked, I could go on, I'm not downplaying the car, I'm just saying it didn't cost GM as much to produce as you think, this is just another corvette variant, there is nothing new or groundbreaking on this car, from an engineering point.
any business that can only make a 10% to 20% return on any business investment is not one that is long for this world. As I have stated before, it is absolutely ridiculous to artificially limit production on your self proclaimed "super car" of which you might be so lucky as to have pent up demand and all the while offer unlimited runs of Cobalts that few want.
It is stupidity , plain and simple, and is just another reason why GM is failing.
2ndVette
Sorry, I'll have to disagree with you. GM has a lot of variables that go into making decisions, and I surely do not have any of that info which helps me decide if they are doing something right or wrong.
I think they already know how many ZR1's will sell, more or less. They have the previous ZR1 to compare to. It sold like so:
any business that can only make a 10% to 20% return on any business investment is not one that is long for this world. As I have stated before, it is absolutely ridiculous to artificially limit production on your self proclaimed "super car" of which you might be so lucky as to have pent up demand and all the while offer unlimited runs of Cobalts that few want.
It is stupidity , plain and simple, and is just another reason why GM is failing.
2ndVette
Huge businesses, if they make 10% margin, are doing great.
I don't have any knowledge of specific numbers, but have read that Corvette is very profitable for Chevrolet. At the last ALMS race Corvette Corral I attended, an engineer told us that if Corvette was run as a separate company, it would be very profitable. Not that I think there is anything wrong with making a profit.
What about advertising, promotional materials, autoshows and special appearances in addition to road tests models? Oh, and warranties, parts and labor?
That isn't R&D, and all of the above is small potatoes, compared to actually building a car from the ground up, the C6Z06 was is development long before the C5's were done being produced. This ZR1 came together within two years.
WAY too LOW for R & D. sorry guys.. in a corporate structure they spent a lot more then that on developing this car. It wasn't three guys in a back lot...
This is spinoff of another thread where somebody suggetsed that GM may not make much profit in the first year or 2.
I know there are many things that factored into the cost to produce the zr-1, like leveraging off of c6r and z06, but let's attempt to put some figures down.
I dont have any inside knowledge or experince in the auto industry, but I'll throw some numbers out to get things rolling.
Of course, we dont know MSRP yet, so let's just assume 100k.
overhead = 10 million
R&D + tooling = $20 million
Materials cost to build 1 car = 70k
Dealer cost = 85k
4000 cars produced in 2 years
cost to cuild 4k cars = 4k*70k = 280 million
total cost = 10 mil + 20 mil + 280 million
revenue = 4k * 85k = 340 million
That isn't R&D, and all of the above is small potatoes, compared to actually building a car from the ground up, the C6Z06 was is development long before the C5's were done being produced. This ZR1 came together within two years.
I agree that it's not R&D but we're talking about profitability. Advertising and warranties are small potatoes but they are ongoing expenses in the millions for the production life of the vehicle and beyond. Not totally insignificant. Marketing and advertising is a large expense for almost any business and can't be ignored.
Since the zr-1 is largely leveraged off of the c6z06, then your statement implies that the zr-1 was not a 2 year effort.
Quote:
Originally Posted by NytmereZ
That isn't R&D, and all of the above is small potatoes, compared to actually building a car from the ground up, the C6Z06 was is development long before the C5's were done being produced. This ZR1 came together within two years.
WAY too LOW for R & D. sorry guys.. in a corporate structure they spent a lot more then that on developing this car. It wasn't three guys in a back lot...
Agreed, they spent how many years on this? 3 years? Probably +- 100 people working full time on this project. $50K per person times 100 people times 3 years is $15 million in salary alone. Never mind the overhead, infrastructure, advertising, materials, etc.
any business that can only make a 10% to 20% return on any business investment is not one that is long for this world.
Large corporations only make 12% to 15% overall profit margin when they are doing well ... for example large aerospace companies, etc. I would venture large car manufacture's aren't far off from that. Sure, some models make more than that, some less ... but the overall margin isn't huge.
You really think that the core group of developers were 100 people full-time? I dont have any evidence that proves otherwise, but I would guess that there were 5 integrated product teams with 5 people each team, 1 lead per group + 1 engineering program manager to oversee... so maybe around 30 full-time heads.
I know this is not a simple product, but it's not like they're buidling a space shuttle...
what do you guys think?
Quote:
Originally Posted by flight23
Agreed, they spent how many years on this? 3 years? Probably +- 100 people working full time on this project. $50K per person times 100 people times 3 years is $15 million in salary alone. Never mind the overhead, infrastructure, advertising, materials, etc.
You really think that the core group of developers were 100 people full-time? I dont have any evidence that proves otherwise, but I would guess that there were 5 integrated product teams with 5 people each team, 1 lead per group + 1 engineering program manager to oversee... so maybe around 30 full-time heads.
I know this is not a simple product, but it's not like they're buidling a space shuttle...
Since the zr-1 is largely leveraged off of the c6z06, then your statement implies that the zr-1 was not a 2 year effort.
I think part of the 2 years was GM deciding if they even wanted to produce this car,not at all R&D, there is nothing on this car that hasn't been used before, why do you think the base model engine was changed so fast?, that was part of the development of the ZR1, in which they killed two birds with one stone. Regardless this thing will perform at a world class level. I Still think the car would be much more lusted over if they forged the LS7, and slapped a Maggie on that, I don't think there would be a production car on this planet, that would hang with that thing, and people would easily pay a 150G sticker. Bigger is always better when it comes to FI, why do you think I bought a forged year Viper? 10g's gets me 1000hp, without even cracking open the motor, this is the direction the ZR1 should have went, and a big reason people are disappointed, you will always get more out of more cubes.
Corvette Store
ZR-1: GM profit... 1st 2 years
At the last ALMS race Corvette Corral I attended, an engineer told us that if Corvette was run as a separate company, it would be very profitable.
Not that I think there is anything wrong with making a profit. 
no new technology used in this car
