Adam Bruce

I've allready made my thoughts known on the price of the new Z06, so I don't feel it needs to be rehashed. I have seen a lot of people justify the $20K price increase though as a bargain based on the cost to upgrade a "regular" C6 LS2 to Z06 specs, not to mention some fairly crazy numbers thrown out for percieved cost (to GM) for the various parts (Engine, Frame, Brakes, etc).

So Let me explain some things here that I think a lot of people are missing. How much does it cost GM to make an LS7 over an LS2? Close to Zero Dollars *IF* all else was equal (Volume, manufacturing methods etc). Titanium costs are negligable, and it cost GM just as much money to forge a big piston as a little piston. That said, there is a reason why an LS7 would cost GM more money (which I touched on above, volume and manufacturing) The LS7 will be a much lower volume design, and as such it's R&D costs need to be spread over fewer units, thus higher cost. PLus GM is assembling this motor in a different plant, and that adds some overhead to the balance sheet that has to be soaked up in volume as well.

PLEASE STOP saying the motor costs more, the brakes cost more, yadda yadda yadda. Sure if you have an existing car and are adding new parts to it, then it costs more, but GM is not making a Z06 with a set of C6 brakes, chucking them off the car then upgrading them. No, they are installing this stuff from the factory.

The 99% of the reason there is higher cost is the volume of the car. If the Z06 was expected to sell at huge volumes the R&D for the Z06 could be spread over more units, and $7k-$10K might have been peeled off the price. GM decided (for good reason based on their current sales record) that the Z06 would not sell in high enough volumes to justify a lower price.

Is there some cost to the manufacturer for things like wider tires, or bigger brakes etc? Sure, but Manufacturing costs are a fraction of street aftermarket figures. The largest factor affecting their negotiated rates from their suppliers (like Googdyear) is what quantity (volume) they're going to contract for. Z06 tires could likely be sourced at less money than C6 tires if GM bought a large enough quantity.

Anyhow it's an accountants game when you start talking about pricing. In fact it's GM's large volume of Corvette Sales that is the reason it's not a $100,000 car to begin with (which it would be were GM to sell in Ferrari volumes).

So the price is what it is, and the reason has very little to do with the costs of upgrading a 6.0 Liter LS2 to LS7 specs but has everything to do with meeting the percieved demand of the car. GM feels the car is more profitable meeting a smaller demand at a higher price point than meeting a larger demand at a lower pricepoint. Given their current sales performance, I can't blame them for being a little pesimistic with a niche market car.

Never Forget, Gm doesn't make cars, GM makes money.

-Adam

1Day

the price will only reduce GMs volumes..i doubt they will be able to sell 5k-7k Z06s at this price starting next year, this year I have no question..they might be able to make it but still a lot will be going well below MSRP and even @ supplier discount in my opinion..

Bwright

Adam, the cost analysis is actually quite simple and comes down to knowing two simple but major data points.

This first is, what does it cost per pound to cut a pound of weight out of a car with the approximately 3,000 unit annual build volume targeted to the Z06. The second question is how much weight was taken out of the Z06. Be very careful on that last one. It is not as straightforward as some might think.

I know the answers to both of those questions and have fairly good quotable sources for both. It will be interesting to see some of the guesses as to what those two data points are.

Games afoot. Let's see who can actually play.

z06z06z06z06

adam bruce, i agree with alot of what you said. however, that being said, gm still would have made money at $56,000 to $59,000 and made alot of money & in turn alot of corvette loyalist happy.

Adam Bruce

GM learned a hard lesson with the ZR-1 and I don't think Team Corvette is gonna let that happen again. They're planning for lower volume over the years. Better that (from their perspective) than to underprice the car in anticipation of hgh volume that fails to materialize into years 3, 4 and 5.

FWIW this reminds me of a Story from my own experience way back in my college days working as a furniture salesman at Sears. Our Sealy beds came in three price levels (Good Better and Best they liked to say). The base bed was $400, the middle trim was $800 and the Top of the line was $2000. One day the Sealy rep comes buy and in the course of our conversation he says "if you want you can buy on Sear's paper and I can get you any bed at Sear's cost". Ends up Sears pays $300 per bed regardless of trim. As it ends up it costs Sealy just as much money to make a good bed as a crappy Bed, but Sears has to cover all three spectrums of the market. Sears actualyl makes about the same amount of Gross Net margin revenue on all three trims as the sales of the low end are high enough to off set the lower margin.

bernrex

Not enough recently it would seem. Even GM's sales people are bemoaning the fact that their cars suk ... and the company is going in the toilet.

The employee discount gimmick doesn't seem to be working too hot. Ford and others are matching them on price.

MitchAlsup

Sounds like sour grapes to me.......

Long live the Z06!

Adam Bruce

I would have have bought at the rumored $58K. At the $65K level, I'd rather spend more for a 911 or Aston Vantage....but thats just me. I have a Sport Bike for when folks start pulling out Qtr mile times.

Anyhow, I have no doubt that GM would have made good money on the New Z06 at $58K base, IF they could maintain first year volumes moving into the future. Given GM's whoes I think they thought better of that move. (And I can't say I blame them for that) Now the question is, will the decreased volumes at a higher price outweigh the higher per unit cost. Won't know the answer of that until year 3 or 4 I guess. C4-ZR1 failed that test, C5-Z06 passed that test. We'll have to see what C6-Z06 does.

-Adam

Adam Bruce

That's mainly because GM has been selling on Rebate for too long. They've had to artifically rase the price year after year on their cars to grow the rebates, and unfortunatly it's putting their vehicles into the wrong segments. Look at the GTO for instance Great Car, but it's *NOT* a $33K car. Go sit in an Acura TL, BMW 3-series or Infiniti G35, and suddenly the GTO feels about $10K too much. That said as they release fresh product that doesn't ahve to be sold on rebate (unlike the older fleet), they still have to slot the vehicles into the Price line up, and some of those prices are set artifically high.

Anyhow, GM has to ween itself off rebates, get healthcare costs under control, and get some good product into the market.

-Adam

Zivnuska

Do you really mean to state that only 1% ($200.00) of the price increase is related to the costs of the vehicle? I had no idea that titanium connecting rods were so cheap.

Perhaps you need to take Bwright up on his challenge?

Adam Bruce

Vehicle costs are driven by supplier negotiations, forecasted sales, and R&D costs. Material costs on a vehicle are negligable to "soft costs". Case in point, GM spends more money per unit (car) in HEALTH CARE COSTS than it does in STEEL.

Bwright's "challenge" just proves my point that sales volume drives unit cost.
"...what does it cost per pound to cut a pound of weight out of a car with the approximately 3,000 unit annual build volume targeted to the Z06..."

Go read "all Corvettes are Red" and you'll see the weight/cost issue came up on every componet on the car. But the componetry is largely sourced from suppliers. Supplier contracts are all volume based.

Ever stop and wonder why a Dell Computer is cheaper than a set of Stainless Steel Headers? It's not because Steel is so expensive, It's because of business plan efficiencies in the computer industry.

-Adam

z06z06z06z06

come on people... pay attention.

vetterlatethannever

Wow, never thought of it that way.

rgregory

I have never read about anyone complaining about the cost of a 911 vs a turbo 911 it is way more than a $20k difference. I have never read about anyone complaining about the price difference of an M3 vs a standard 3 series and it is a $20k difference (with less change between vehicles too), not to mention the M5 which is way over $20k difference.

If you modified a standard C6 to be like a Z06 it would cost you more than $20k. Getting a brake system alone front and rear would cost $5k, the engine from a tuner would very expensive and would be no where near as reliable. The carbon fiber panels well over a thousand. Bigger wheels and tires another grand+. The dry sump system and trans/rear end coolers another $1k+. A beefed up trans/rearend.

$65k for a reliable car with a warranty with everything integrated properly. If I had a stock C6 modified it to 500hp I probably would no longer have the feeling that I could drive the car on road trips. One track day I was at a guy with an '02 Z06 that he had a tuner bump it up to around 550hp his first motor from that tuner died within the first 30 minutes of being on the track and he spent way more than $20k in mods between motor, suspension, brakes on top of the $52k Z06.

Adam Bruce

Becuase the 911 is a lower volume car and per unit cost are much more.What % of 3-series sales are M3? M3 is a fraction of 3-series sales, Were it a higher % volume, BMW could justify a lower priceHardly And an entirely different Engine Architecture and again a much lower % of total units.Again this logic is faulted. You cannot compare the costs to replace existing componetry with post mark-up retail prices, as compared to original equipment and manufactured cost.Read the first post, this thread isn't to debate the "VALUE" of the car, it's to explain (to people like you apparently) why there is a difference in cost. Doesn't matter if the car has "higher performance" brakes etc. It's the fact it has DIFFERENT brakes that require their own R&D cycle, supplier agreements, etc. Your line of logic is one of a consumer used to modifying cars, rather than that of a car company building them.

-Adam

Gary2KC5

You make some good points but started to get into the weeds a little.

Wilwood 6 piston calipers frt and 4 piston back wouldn't be close to $5k, closer to $2k. I've mod'd my LS1 to about 480hp and it's a daily driver, I've run about 4k track miles (in 20-30 minutes seqments).

You could mod a C6 Z51 for less than $20k but back to your good points..it wouldn't have a nose2tail warranty, with an integrated engineered package and you would have to do without the dry sump, and exotic materials.

Michael A

I'm going to go along with Adam, and add to this discussion with another issue. $57K would have been a good price point. $66K just seems too high. That's over a 50% increase over the base car. The problem is you are getting into a price area where people expect some exclusivity. I drove 20 minutes Friday and saw four C5's. I walked 15 minutes Saturday and saw two C6's (both yellow with polished wheels) and one C5. I pulled to the side of the road to take a cell phone call Thursday, and lo and behold, came in right behind a parked C5 that looked EXACTLY like mine. Here is So. Cal. Corvettes are EVERYWHERE. They are a dime a dozen, as the saying goes. I think if GM intended to make the Z06 that expensive, they should have made it look much different from the standard C6, rather than just the scoops, small spoiler, and slightly wider stance that it has.

The other problem with pricing it so high, is if they find out they made a mistake, they can't lower the price without admitting a failure. They could have always raised the price later if demand was high enough, which would reinforce a success.

Just my $.02.

Michael

Steve2000SS

So why did a 2002 C5 vette cost more than a SS Camaro??

Titanium costs are negligable???


I swear.. some of you guys are a riot....

rgregory

So you don't believe hand building an engine is more expensive than assembling them on an assembly line?

So you don't think an Aluminum frame costs more than Steel, aluminum is not more expensive than steel?

So you don't think Titanium is much more expensive/difficult to machine than aluminum or steel?

So you don't think a 6 piston brake caliper costs more than a floating 2 piston caliper?

So you don't think carbon fiber cost more than plastic?

911 sales are more than half of Corvettes sales so why is the 911 twice as much with less performance?


GM wants the standard Vette to be affordable so they do not use all these components which cost more regardless of volume. Yes anything can be cheaper with volume but where is GM's alternate source for this volume? There isn't there is only the Z06.

z06z06z06z06

good points...