Automobiles

Just How Strapped Are the Big 2.5 Automakers?

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Earlier today, reason's Michael C. Moynihan pointed to arguably the GM, Ford, and Chrysler's biggest problem in being competitive in today's auto industry: Labor costs that are on average about 50 percent higher than competitors such as Toyota.

Here's some interesting news on that front. Last year, the Big 2.5 negotiated a contract with the United Auto Workers that radically changes its cost structure. Basically, the companies are no longer paying for health care and pension benefits for new workers (additionally, the companies will pay vastly reduced health care costs for existing workers going forward). They've done this by switching from defined-benefit pensions to 401(k)s, offloading health care costs to the UAW, and cutting wages into something more in line with their competitors.

Here's how CNNMoney.com calculates the difference for bleeding behemoth GM, which is offering buyouts of older workers (more on that in a second):

The current veteran UAW member at GM today has an average base wage of $28.12 an hour, but the cost of benefits, including pension and future retiree health care costs, nearly triples the cost to GM to $78.21, according to the Center for Automotive Research.

By comparison, new hires will be paid between $14 and $16.23 an hour. And even as they start to accumulate raises tied to seniority, the far less lucrative benefit package will limit GM's cost for those employees to $25.65 an hour.

More on those GM buyouts, which the company has used in the past:

To try to stem automotive losses that have dogged the company since 2005, the company is making a range of offers, up to cash payments of $140,000 to the remaining 74,000 GM workers represented by the United Auto Workers union.

The goal is not to reduce headcount but rather to bring in new workers at a lower cost.

About 46,000 of the GM employees are eligible to retire today and they can take pension incentives worth between $45,000 to $62,500 to retire.

Whole story here.

None of this is to suggest that GM, or Ford or Chrysler, is out of the woods. Beyond everything related to labor costs, they've got a real product problem that needs a-fixin' fast.

The sort of move above though, however, has made some auto industry watchers optimistic about the longer run. Here's Autoblog's John McElroy:

Another benefit of that new labor contract is that the Big Three are no longer pressured to keep building cars and trucks in the face of weak demand. Under the old labor contract it was cheaper to build cars and slap big incentives on them than it was to not build them in the first place. Now, they can build to actual demand, and they're running on much tighter inventory.

That means they'll be able to slash their incentives. Every $1,000 that General Motors cuts from incentives will drop roughly $4 billion to the bottom line. And GM has an average of $3,500 in incentives!

More from him here.

Unconvincingly, McElroy is in favor of an automaker bailout, likening it to the Chrysler deal back in 1979, after which its "stock shot from $3 a share to over $30, a 1,000% return in just a few years time." He figures if the taxpayers back GM, Ford, and Chrysler this time around, the same thing will happen. Whether the world, especially Chrysler customers, are better off than if the company had actually gone out of business, is not clear at all. (I say this as someone who has owned two Plymouths.)

So will a mere $25 billion now turn into bazillions of dollars later? Eh, mebbe, mebbe not. In any case, it's hardly the taxpayers' job to be guaranteeing companies that, assuming they are really worth a damn, will be bought up by investors with an eye toward undervalued and underperforming outfits. Indeed, to the extent that the Big 2.5 are reforming themselves, they will become attractive to investors.

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  1. The problem is that the lower-cost new hires are more theoretical than actual. Detroit has spent vast billions buying out high-cost workers with the expectation to be able to start bringing in low-cost workers to replace them, BUT their sales have been shrinking even faster than they’ve been able to buy out workers, so there basically ARE no new hires. And the billions they spent on buyouts are the billions they actually now need to ride out the economic downturn and avoid bankruptcy.

    What they need to be able to do now is reduce the cost of all their workers (new and existing) to match those of Honda & Toyota WITHOUT spending $100K or more per employee to buy them out. The only way I see that happening is Chapter 11.

  2. Ok their labor costs will get in line.

    What about having 8 distinct brands with badge engineered stuff?

    They need to cut brands, cut thousands of dealers. It cost 2.4 billion to kill Oldsmobile alone, and Olds dealers were selling around 3 Olds a month.

    And 25 billion ain’t going to get them through this storm. That’s the tide them over until they can arrange for the real bailout.

    GMs market share has been artificially inflated by constant super sales, fleet sales, and the loosest credit in the game. Their natural market share is somewhere way below where it is now. They can get the UAW in line (after paying 36 billion to the VEBA), but they won’t make a dime until they get down to their natural market share.

    Also, if GM killed most of its brands and brought all the good cars under Chevy and Cadillac, they’d have a good lineup.

  3. Barack Obama will probably bail out the auto industry because if he doesn’t, then everybody will conclude that unions killed the economy.

  4. Barack Obama will probably bail out the auto industry because if he doesn’t, then everybody will conclude that unions killed the economy
    _______________________________________________
    No but they did kill the automakers. The Automakers bent and took it from the unions. If they had any real balls, the first time they were in trouble money wise, they would have killed the unions. EASY FIX. scap all workers effective now. then say there is no more union. we will hire you back at the indusrty avg of 15 to 20 per hour. if you want to work, great, if not there is the door, feel free to find anotyher job. it is a free market and a fre country. i am not obligated to provide for you, and you are not obligated to work for me, if you like what i offer great welcome aboard if not then bye bye. If i am too low on what i want to give workers, they will go eleswhere and i will close. let the free market correct, it is our only hope

  5. Of course what i said is just an example, not a real fix, but it would be a great starting point.

  6. “let the free market correct, it is our only hope.”

    I think we should let the Big 3 fail, and by extension, let the unions fail. I think we agree that unions have been a destructive force in that industry. But one nitpick: I was under the impression that unions were a free market tool.

  7. I’m not nearly as sanguine as this guy that another rebirth of the auto industry is right around the corner.

    Like I said in one of the other threads, China is going to be entering the U.S. auto market in the fairly near future.

  8. “Like I said in one of the other threads, China is going to be entering the U.S. auto market in the fairly near future.”

    The Chinese economy is about the go down into the shitter, hard, and all the hyperventilating the punditocracy has done about them for the last 15 years is going to look awful silly.

  9. I’ll have a steam engine and run on dirty coal!

  10. One basic fact is irrefutable- the market is charging GM anywhere from 21% to 35% as it takes on new debt and/or rolls over old debt. This is unsustainable for a household, much less a multinational conglomerate. Whether it’s bankruptcy or bailout (or some combo of both) something’s going to happen by next spring.

  11. The odd thing is Detroit is pitching this circumstance as a complete collapse: “Give us the money or we’ll vanish overnight!” Detroit is scaring everyone into thinking this is do or die for the domestic auto industry. That is complete bullshit.

    The reality is that they can just declare Chapter 11, restructure, and work their way out of the mess (they put THEMSELVES into!) This will not require a dime of taxpayer-bailout money.

    Quick, name a half-dozen domestic airlines that haven’t been in and out of C.11 in the past 30 years? We didn’t bail out Pan-Am, TWA, Continental, or Delta. Some lived through C.11, others died.

    If Detroit are *this close* to a major turnaround, then c.11 will help them get there. If not, then they’ll die a natural death and we won’t have to fund it.

    –chuck

  12. You guys are all wrong.The real fix is to bring the wages of toyota workers and the like up to what UAW workers earn. What a GM worker earns is just middle middle class.I am self employed and fight it out every day,every year. What you are saying are competitive wages of 10 to 20 dollars an hour is not enough to to support a middle class family.

  13. Now, they can build to actual demand, and they’re running on much tighter inventory.

    This guy has a different take.

    At the end of October, GM North America reported it has 799,000 vehicles in stock – consisting of both cars and light trucks. That’s about five months worth of inventory (when measured against the 166,000 sold in October), which is 15% below last year’s inventory, but it’s only getting worse.

    At current sales rates, inventory will start to grow. GM expects to produce an additional 567,000 (875,000 total for Q4 minus 318,000 October production) over the next two months. If the October sales rate holds up, despite rising unemployment and falling consumer disposable incomes, GM’s total inventory will increase to 1,234,000 vehicles.

  14. “what you are saying are competitive wages of 10 to 20 dollars an hour is not enough to to support a middle class family.”

    In a two wage earning household this would be exactly the national median household income. Incidentally, I lived on just that or less until I was 32. It’s far from unmanageable.

  15. Considering most union employees are public employees I look forward to any careers in union-busting during this depression.I’d love to crack AFSCME heads.

  16. You guys are all wrong.The real fix is to bring the wages of toyota workers and the like up to what UAW workers earn.

    Which would be impossible, since Toyota and Honda would deep-six their U.S. plants and import their inventory from Japan again, rather than acquiesce to a corn-holing by the UAW.

    The Big Three are not viable companies unless they go through a Chapter 11. And maybe not even then, unless they also cease their idiotic management and design practices.

  17. Under the old labor contract it was cheaper to build cars and slap big incentives on them than it was to not build them in the first place.

    That odd whirring sound you hear is Alfred P Sloan, rotating in his mausoleum.

  18. Tata came out with a $2,500 car. Admittedly, the market for the Nano would be limited in the states, but it’s just one more nail in coffin of the big 2.5. Or it would be, if Obama wasn’t so keen on playing Richard Straker…

  19. Some good news:

    In addition, besides opposing the use of any of the $700 billion for the automakers, the administration has told top lawmakers it does not plan to ask for the second half of that huge fund that Congress approved this fall to aid the financial industry, congressional officials said Monday.

  20. Mopar or No Car!

  21. They say labor demands add $1,500 to the price tag of each GM car. But even if you take $1500 off the price of every car, you still have a poorly built, poorly designed piece of crap that still sells for the same or more than a comparable model from Toyota or Honda.

  22. Basic thesis is correct; the future of the Big Three depends primarily on controlling labor costs.

    FRESH & EASY is taking some of RALPHS and VONS market share here in L.A. Even without lots of customers, the labor costs are so much lower; you have to scan and bag your own stuff, but it’s cheap and catching on slowly.

    Remember back to the 50’s when an attendant pumped your gas, checked the oil, and washed the windshield?

    It’s the same pattern, you gotta get rid of the labor. Government regulations, min. wage, benefits, SS deductions, health care requirements make it too expensive.

    The future of the auto industry should look like this; you custom order online, and robots put your car together. Big show rooms, salesmen, assembly workers, all add too much to the cost. It’s outmoded. Bailouts will prolong the life of an inefficient model.

  23. Douglas Gray:
    Yeah. The important thing to remember is that automation should make the cars cheaper, so that you may be spending $2,000 on a car instead of $20,000.
    Unfortuantely, with the way the big three automakers are subsidized (by way of bailout, tax credits, etc.), the lack of competition makes it less likely that prices will be driven down to that level.

    Personally, it seems bizarre to me that there aren’t more small automobile manufacturers. Why is that? Cars aren’t really that complex. Is it the fuel efficiency standards, or safety regs keeping people from entering the market? Or what?

    It seems to me that the only new market entrants are coming from outside the US not because Americans aren’t capable of making good cars (think of all the car enthusiasts out there), but because something is stifling startups. Whatever it is doesn’t exist in Japan or the rest of the world, but they can still sell into the US market.

    And it’s not just wages. I can imagine someone starting a small custom car company using Mexican day laborers for cheap. (Heck, half the cars are assembled in Mexico anyway.) Are there laws requiring people to hire union workers?

    What is it that’s preventing someone from starting up a new US car company without being burdened by all the baggage the big three have?

  24. Here’s another observation … Why isn’t the car industry more like the PC market?
    There’s dozens of companies you can buy a custom computer from, built from hundreds of suppliers of graphics cards, motherboards, hard disks, monitors, you name it, all independent. No matter that not all systems are compatible, there’s enough different manufacturers that you just needs little knowledge to figure out what will fit togwether.

    Similarly, there’s tons of places you can buy auto parts from. Why aren’t there car companies out there assembling vehicles just from parts already available on the market?

  25. Because it really isn’t that simple, technology wise. Computers are designed to standards, agreed to by the hardware suppliers, between themselves.

    Or not agreed to, as the case may be. You can’t find many motherboards that will run Nvidia graphics cards in SLI mode, for example, because of an ongoing feud between Intel and Nvidia. If you want to run dual Nvidia cards you’ll probably have to run an AMD cpu.

    Automobile parts are not inter-changeable the way computer parts are. And if you’ve ever built your own PC, you probably know that PC parts are not always really compatible, even if they fit together. This is a big reason why people like Dell stay in business, because they solve the hardware compatibility problems for you. Usually, anyway.

    In fact, you could custom build cars. But your unit cost would be horrendous, unless you copied the design of an existing car (slightly illegal). The cost of fully designing an automobile is really, really high.

    But even if you copied an existing design, as some Asian countries have done, you’d still find it hard as a start up in this country to compete with Honda and Toyota. Because you won’t start out making 100,000 cars a month, so you won’t get the economies of scale that Honda and Toyota do.

    I started out as a design engineer, am now in R&D, but have always worked in capital intensive industries. Including auto for a couple of years, though I’m aerospace now.

    In capital intensive industries, the magic solution to getting unit costs down, is high production numbers. The plastic knobs for the door locks in your car, and all the plastic knobs all over the dash etc, for example — the molds to produce each of these, will cost in the range of $15k to $25k *each*. That’s before you actually make one little plastic knob.

    But if you’re the buyer of plastic knobs, you’ll have to specify exactly what you want. Where will the parting lines be, so it doesn’t break 3 months after your customer buys it? What kind of plastic are you going to make it out of? Higher quality plastics last longer, but cost more (and even then, you have to consider the environment the plastic knobs will have to survive in, not all high quality plastics are create equal). You’ll probably have to run experiments to find the right balance point between cost and quality.

    And we’re just talking plastic knobs. I assume you’re not an engineer so I won’t get into the problems of designing the engine, the power train, the electrical system, the brakes, the fuel handling system, etc.

    Trust me, designing a complete automobile is no small undertaking.

  26. Manufacturing an automobile is also no small venture. Building one or two custom vehicles for somebody is one thing. But when you start trying to put even 1,000 cars a month out the door, you’ll quickly find that this is a very different kind of problem.

    Maybe you’ve got a guy in Mexico who can machine a transmission part for you in his garage. If you only need one or two of them, well okay. He makes them for you, and maybe, he spends a little more time on them that he planned to (and he doesn’t charge you for it). Because he knows you’re a possible repeat customer and he wants to keep you happy.

    But if you order 1,000 of them, and he mis-judges and has to spend a few extra minutes on each of them — and trust me, this is not uncommon — then what you’re going to get is a bunch of parts that aren’t so good quality.

    People who know how to make you one or two of something, what we call “the mom and pop shops”, probably can’t make you thousands of them and keep the quality up. OTOH, if you tried to get one or two prototype parts from somebody who does make thousands per production run, they’d probably do a poor job of it.

    Manufacturing processes change drastically as production volumes change. Managing quality in this environment is extremely difficult.

    In fact, the more robots and automation you’ve got, the higher your potential quality is. Because people can and do have bad days, where they make parts that aren’t so good, or they put assemblies together and forget to check something. Then you the consumer find out when you buy it,and it doesn’t work right.

  27. Suppose you start a small car company. Another problem that bites you, is the fact that your customers are going to need repair parts. And they aren’t going to want to want 6 weeks for you to go machine the parts for them, when their car is sitting in the shop right now broke down.

    It’s a really, really expensive venture, putting automobiles out the door, getting them sold, and keeping them on the road after they’re sold.

  28. And yet Hazel, we know how to deal with all those big problems. US auto makers, like so much of America’s old-time core industries, are really failing for a different reason.

    The root of the problem is that the corporate structure in this country today is rotten to the core. And the rot has been brought on by an f***ing tidal wave of MBAs, who are idiots that think they’re really freaking smart. Here’s a typical MBD pronouncement:

    “If you really sharpen your pencil, it’s hard to justify that business practice…..”

    I can’t tell you how many thousands of times I’ve heard this. It almost always is the lead-in to corporate top management announcing that they’ve just decided to do away with yet another age-old “invest in the future of our business” practice. For example, training for technicians and engineers, or maintaining in-house test labs and facitilities, or R&D…….

    In fact, once you cut the MBAs loose, they will eventually figure out that the only corporate function you can really justify is the accounts receivable department, where clerks open the checks that people send us in the mail.

    There are finance types who post around here, that will probably froth at the mouth, but I’m really not kidding. MBAs don’t know what it means to *think* ahead, let alone spend money on tomorrow’s business needs. At least, that’s been the case in any kind of technology related business.

    I watched corporate attitudes in this country start going down hill 15 years ago. That’s when the last of what I’ll call the “Howard Hughes generation” of management started to retire. The generation that’s replaced them, are a bunch of short sighted MBAs.

    Howard Hughes and other one-man empire types, were in their businesses for the long haul. They made the long term investments in their products, manufacturing processes, and customer satisfaction. The MBAs who run our corporations today don’t give a shit as long as the bottom line looks good *right now*.

    Howard Hughes told congress where the bear went in the woods, when necessary. But when government today comes up with asinine new regulations, our corporate boards say “You want me go do *what*? Oh, well, okay, we’ll do it.”

    Corporations, oddly enough, do not fight for their own good. This includes how they deal with unions. It includes affirmative action laws, which I’m watching in action. Corporations are promoting women and minorities way above their levels of competence, in fairly high tech fields, all in the name of “achieving equality”.

    Don’t get me wrong. I have no problem with women being engineers and scientists (my wife is an engineer). But when you lower job performance standards in order to promote women and minorities, I have a real beef with that. In the auto and aerospace industries, people’s lives depend on what we do.

    There are other problems, but the mentality of top management today is a huge problem in this country. Yet management doesn’t get beat up for it, because after all everybody else is doing the same thing…..so now it’s just accepted standard practice.

    What we really need, is to rewrite the terms and conditions for corporate managing boards. I’m not a lawyer so I don’t know how to do it, but somehow you’ve got to inject the long term perspective of people like Howard Hughes into the mix. Otherwise, corporations are not rational actors in the traditional sense of classical liberalism.

  29. Okay there, I got that all off my chest. 🙂

  30. In 1976, the U.S. took over the bankrupt Northeastern railroads and formed Conrail. Congress then poured billions into maintenance.
    Now that the taxpayers owned Conrail, Congress eased the ICC out of the way so excess lines could be easily abandoned. Still, until the Staggers Act in 1980 deregulated the transportation industry, all railroads were in a losing battle with trucks. Then, finally, in 1981, Conrail’s unions agreed to a three year deal with wages 12% below the wages paid on the non-bankrupt railroads. Conrail became profitable and went public in 1986 in the largest IPO to date. Taxpayers, however, only reaped $1.6 billion from the sale, far less than they had put in.
    Any bailout of the big 2.5 will require – immediately – consolidation of excess capacity, removal of anti-competitive regulations, and downward wage adjustments for all present employees to not more than the averages paid by Toyota, etc.
    None of which will guarantee survival of the big 2.5 or taxpayers getting their money back.
    Conrail, after all, provided the only rail lines in a large populous part of the country, wherease non big 2.5 dealers are everywhere ready to sell damn nice cars.

  31. Personally, it seems bizarre to me that there aren’t more small automobile manufacturers. Why is that? Cars aren’t really that complex. Is it the fuel efficiency standards, or safety regs keeping people from entering the market? Or what?

    There are significant barriers to entry into the automotive market, mostly those of fixed costs:

    1. Regulations are massive. A company must comply with emissions regulations, which vary from region-to-region and often country-to-country. For instance, I am quoting a job to develop a EU-emissions capable small diesel engine into two vehicle lines for the EU market. Mind you, this is an already existing production engine into two already existing production vehicles. It costs $12 million and will take 2 years. This is a low-volume vehicle.

    The same goes with complying with safety regulations and with on-board diagnostics. So, complying with regulations requires a massive fixed-cost investment.

    2. Intellectual information is strictly guarded. Companies are often spending massive capital on R&D in parallel with each other. There are institutions like SAE which try to foster information sharing, but development of new technologies is very proprietary. A company can hire consultants like myself to help them bridge those gaps, but we are extremely expensive ($150-200 per engineering hour).

    Economies of scale spread fixed costs like these, so any successful auto company is likely a very large one, else they must pay a higher fixed cost per unit.

    And yes, developing cars are fairly complex because the level of competition is high, regulations are becoming continually more strict, and technology advances steadily

  32. Similarly, there’s tons of places you can buy auto parts from. Why aren’t there car companies out there assembling vehicles just from parts already available on the market?

    I’m not sure what you mean in this statement? Auto parts are sold as a response to the parts designed from particular vehicles. They aren’t standardized the way that computer parts are because auto companies don’t want other companies using their parts in other vehicles. There are likely proprietary issues also preventing one from mass producing vehicles from parts that a company designed. Parts are generally deemed only for replacement and maintenance purposes.

    Plus, you have massive design considerations that interact with the whole system. You can’t just slap parts together and hope that everything works, and then complies with all the regulations. It just doesn’t work that way.

    Plus parts on the market are fucking expensive.

  33. Ebeneezer,

    RE: MBA’s

    You’ve taken the words right out of my head. Thanks for that.

  34. Interesting. Good answers, generally. I’m not convinced that the auto industry couldn’t set standards (like IEEE does) to govern parts compatibility.

    Plus, cars have to be less complex than computers these days, not to mention aircraft, and yet it seems like there are more small aircraft companies (selling ultralights and such) than there are small car companies. Then there’s Space Ship One, as an example of a small company designing and building a complex vehicle on a shoestring budget (relatively speaking).

    Mass production and economies of scale has to be the biggest barrier. Yet somehow startups in other industries overcome the same issues. How cheap is it to build a motherboard from scratch for just one computer? Comptuers have plastic buttons and knobs – they’re just standardized and bought bulk from knob-maker X, instead of custom designed for each new make of the computer.

    Seems like you might be able to start out making custom luxury vehicles and working up from there to get the capital to start a production line. But I’m betting that the Big Three would use their political influence to shut you down through some sort of regulatory excuse. Either that or the UAW would come in and use some kind of labor law to insist that you hire union workers, and then comply with a host of onerous labor and safety regulations.

  35. I’d say it’s theoretically possible that an entirely new automobile industry could and would develop along the lines of the PC industry, with component commonality and all that. But the existing industry has not done so and is not likely to.

    Plus, as has been pointed out, the regulatory atmosphere around automobiles is crazy now in all of the developed world. Back in the late ’70s, when the feds really got serious about safety regulations, they almost drove companies like Ferrari and Lamborghini out of the U.S. market entirely.

    To meet crash-safety standards, a company has to crash test a whole bunch of automobiles. That’s obviously not a problem for GM and Toyota. But imagine the problem for Ferrari, whose entire yearly production run of some models is 100 or less, and who doesn’t have the capital to do a redesign of the bumper systems just for the U.S. market. Now that the EU has regulated the gazoo out of the automobile market, it costs even more to produce and market cars, even if the standards between the U.S. and EU are more similar than they used to be.

    I believe that ultra-light planes are sort of in a regulatory ‘gray area’. But try and make and fly your own full-size airplane sometime. Those regulations make the automobile market look laissez-faire.

    Ultimately, Ebeneezer’s points about the economies of scale hold true, regardless of the regulatory climate. That’s ultimately what drove the remaining non-Big Three U.S. firms out of business starting in the ’50s.

  36. “Interesting. Good answers, generally. I’m not convinced that the auto industry couldn’t set standards (like IEEE does) to govern parts compatibility.

    Plus, cars have to be less complex than computers these days, not to mention aircraft, and yet it seems like there are more small aircraft companies (selling ultralights and such) than there are small car companies. Then there’s Space Ship One, as an example of a small company designing and building a complex vehicle on a shoestring budget (relatively speaking). ”

    Airplanes, especially small airplanes, are MUCH less complex than cars. At its simplest level, an airplane is a wing and a tail, with movable surfaces on each connected with pulleys and cables to a control stick. If it’s not a glider, you can add in an engine with a prop connected directly to the driveshaft and controlled with a simple throttle cable. The engine is generally cooled by air blowing past fins on the cylinders.

    Cars have complex suspensions, ABS, airbags, emissions controls, complicated transmissions, differential gears (limited slip and not), clutches or torque converters, radiators, water jackets, water pumps, electronic ignitions, electronic spark advance, computer-controlled engine timing, yada yada.

    Seriously, it’s not even close. And autos have to be engineered much more extensively for crash safety, they have to worry about road salt, they get vibrated to death on bumpy roads, receive poor maintenance, and still have to work reliably. Engineering a modern car is an enormous undertaking – it’s gotten so expensive that auto manufacturers are entering into partnerships to share the development costs of complex systems like the newer automatic transmissions. We’re talking hundreds of millions of dollars in R&D.

    As for standardization, that’s already happening – companies are building ‘platforms’ that underpin a number of very different vehicles. They have to, to keep costs down precisely because cars are getting so expensive to design and develop. There’s amazing complexity involved. The problem is that the right strength of a part for a small sedan may not be appropriate for an SUV. The result is that vehicles are getting heavier, which hurts gas mileage and has to be made up through even more complex engineering.

  37. I apologize for my ignorance.

    But why are we calling them the Big 2.5?

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