Common parts cut car costs

Common parts cut car costs
By Michelle Krebs
MOTOR MATTERS
Published October 27, 2006

Detroit automakers suffer a $2,400-per-vehicle profit disadvantage
compared to Japan's top automakers, according to a new study, but
contrary to what company officials say, it isn't solely the result of
uncontrollable health care costs.
Laurie Harbour-Felax, president of the newly formed Detroit-based
consulting firm Harbour-Felax Group, and her father, Jim Harbour, were
frustrated hearing that health care costs were to blame for Detroit's
woes.
What they found was, indeed, skyrocketing health care costs
accounted for the bulk -- $1,500 -- of the $2,400 profit gap. But the
remainder was made up of some items that the automakers could control.
They found the controllable portion falls into three major areas:
revenue per vehicle, labor issues, and product design and parts
commonality.
"Revenue per vehicle is a huge issue," said Mrs. Harbour-Felax in
an interview. "In 2005, Detroit automakers instituted employee pricing
programs and huge incentives that killed them."
She notes that when GM dropped employee pricing, lowered incentives
and shifted to value pricing, the profit picture turned around
dramatically.
The study examined labor issues, such as absenteeism, relief time
of workers, the number of job classifications, and quantified what
those factors cost automakers. It was several hundred dollars per
vehicle, depending on the manufacturer. The information in the study
certainly will be used by automakers to negotiate their national
contracts with the UAW, which expire in September 2007.
The third part of the profit gap is in product design and product
commonality, or the lack of commonality. "I believe that's the biggest
area of opportunity," said Mrs. Harbour-Felax, who visited 50 supplier
plants to get a sense of how well manufacturers are doing in
commonizing parts -- or not.
Detroit automakers have talked the commonizing game for 20 years,
but, she said, organizational structures, corporate cultures and
executive reward systems have restricted its expansion. The companies
have restructured and could enjoy significant savings. She said GM has
done the best job of commonizing globally. But one Detroit automaker
that she wouldn't name still has 81 different side-view mirrors. Some
are used in tiny quantities, whereas 10 different mirrors are used on
80 percent of the vehicles the manufacturer sells.
"We estimated $1,000 to $1,500 a car can be saved by Detroit
manufacturers. That's billions of dollars. And I actually think that's
conservative," Mrs. Harbour-Felax said.
By comparison, Mrs. Harbour-Felax learned by visiting supplier
plants for the study that Toyota saved $1,000 per car in the past five
years by commonizing platforms globally and commonizing parts that the
customer doesn't see. For instance, Toyota has only seven different
firewalls -- the insulation in the engine compartment that lines the
wall to the passenger compartment. They are identical in shape, all of
them. The only difference is in size. That means, the parts that hang
to the firewall are common as well.
"The savings through the supply chain can be exponential by
commonizing." She said. Can Detroit ever close the gap with the
Japanese?
"I'm cautiously optimistic," she said. "They've all put strategies
in place -- now they need to execute the strategy. They can't falter in
that or they'll struggle. And they've got to do it faster."
However, she added, the gap will never be closed entirely as long
as the U.S. government stays out of health care and exchange rates.
"The Big Three can do everything known to man, but the yen will still
drive the gap," she said. In September alone, she noted, the exchange
rate went from 113 yen to 118 yen to the U.S. dollar. "That five-point
change created $4 billion that went back to Japanese automakers. It was
money in their pocket that can go into new product."
Meanwhile, Mrs. Harbour-Felax's consulting firm will focus on
transforming small-to-middle-size suppliers and prepare them for the
future. "I see the next five to 10 years being make-or-break for the
supply base. I want to help them gain perspective and understanding on
how the automakers think, breathe and do things so they are prepared,"
she said.

 

Also I don't understand why Detroit doesn't examine Asian manufacturing
techniques. Look at car roofs for example. Every Toyota and Honda relies
on trim to hide joints at roof welds. Chrysler apparently goes to great
pains to avoid joints and provide the consumer with a seamless look. Does
the consumer care. Apparently not judging by sales. I wonder how much
those perfect welds cost Chrysler.

 

Probably nothing more than the trim costs the Asian manufacturers.

But in actuality, everyone is still dancing around the real issue. The
real issue is the Japanese automakers are able to make small cars
that stack up better than Detroit's small cars.

Take the GM/Chevy Aveo verses the Toyota Yaris.

Both of these cars are complete and utter pieces of shit that
nobody who had any real money would ever look at buying.

But, the majority of Americans don't have real money.

And, right now, the majority of American new car buyers are
worried about gas prices.

So they are buying cheap, disposable throwaway small cars.
Like the Chevy Aveo and the Toyota Yaris.

They look at the Aveo and see a 1.6L engine that gets
27 mpg city, and has a 100,000 mile rust-through warranty.

They look at the Yaris and see a 1.5L engine that gets
34 mpg city and has an unlimited rust-through warranty.

In most other respects, including price, the cars are the
same.

It is true that some things, like a cruise control, that are
not available on the Yaris are available as options on the
Aveo. But who the hell cares - people buying cheap
disposable commuter cars like this aren't going to spend
the money on frills like this. And a cruise control?!? Who
is kidding who? Raise your hand if your just dying to make
that cross-country 1000 mile trip in a Yaris or Aveo. It's
useless as teats on a boar.

Detroit still just doesen't get it and this is a perfect example.
The bozos at GM that designed the Aveo are just still
completely fixated on the idea that even people buying
cheap shit cars value performance more than economy.

If GM had made the base Aveo with a 1200 cc 85 HP
engine, and tuned it to get 40Mpg city, and 50Mpg highway,
both very doable with that small of an engine, even though
the thing would have a top speed of maybe 80Mph and
have been panned by all the auto critics as being
underpowered (who mostly have the same fixation on
power as Detroit) it would be ahead of Yaris. And, if
Detroit knocked down MSRP to $9,999 then it would
be kicking the shit out of the Yaris in sales.

When the Datsun was introduced it had a 1.2L engine,
30 some years ago and people loved it. The VW bug
was the same way - small fuel-sipping engine.

And I won't even get into the issue that GM loses money
on every Aveo sale since they can't make a profit on small
cars.

Ted

 

Wow, what a concept. I wonder why a manufacturer that's been in
business for a hundred years can't figure out that common parts save
money. I'm starting a business making harmonica amplifiers. I have
three different amplifiers, each available in three different speaker
cabinets. The metal chassis are all the same size, the only difference
being the placement of certain tubes and transformers. The three
speaker cabinets are designed to fit all three amplifiers. I'm glad I
didn't get an automotive engineer from Detroit to design my products or
nothing would fit. It really is mind boggling that a group of
experienced professionals could do something so stupid.

 

In fairness to the manufacturers (though I also am critical of them at
times - they do in fact do some very stupid things), if you had very
severe constraints on the size and weight of your amplifiers to the
degree that the automobile industry does, you would have to give up the
commonality. Having space designed into the common chassis for a
component that is not used on one of your configurations would be a
luxury you could not afford. Add in requirements for video, email,
satellite radio, GPS to the design of your amplifiers in the same volume
they occupy now, and you start to see what I mean.

Commonality across different applications and absolute compactness/low
weight/tightness of integration are conflicting design requirements.
Market pressures (consumer demands) have dictated compactness and light
weight and high degree of integration and the addition of new gadgets
every year - and the consumer can't even spell commonality (checking -
let's see - yes - I did spell it right).

This is why repairs that used to cost on the order of $50-100 are now on
the order of $600-1500 and people don't even blink at that. Of coursre
the consumer does not understand or realize the unintended consequences
of their demands. What's important to them is having everything at
their fingertips right now, and feeling like they're saving the earth at
the same time. Never mind that it now takes 6 hours to do a 1 hour job
and the entire vehicle has to be scrapped before its time because the
complexity that fails after 6 years makes it worth less than the repairs
to get everything working again in order to sell it. But that's not
factored in to the "save the earth " feel-good aspects of the whole thing.

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

Your comments in the cruise control section don't take into account your own
comments about the people who have to buy cheap cars.

They buy them because, as you point out, they don't have enough money to buy
something more expensive -- or they're just economy-minded people who just
want decent trasnportation.

Those people DO take long trips in the same cheap cars for the same reasons.
Having a cheap car doesn't eliminate the need for long trips. People who
don't have much money will look at their cheap car as a cheap way to get
them through that long trip cheaply. Those people tend to rack up a lot of
miles on those cars -- well past 100K.

Cruise control is far from useless and, in and of itself, is a cheap
accessory. It usually gives better fuel economy (except perhaps in very
hilly areas), certainly reduces driver fatigue, reduces the odds of getting
a speeding ticket, and generally makes the drive more enjoyable. If you
can't get it without having to buy some expensive package bundle, you can
usually have the dealer add it later or install it yourself.

You might not use cruise control except on long journeys, but I use cruise
control even near home when I hit a long road or the freeway and know that I
have five or ten minutes of steady cruising to do. Why not tap the cruise
button and ignore the speedometer for those five or ten minutes?

 

Hi...

I respectfully suggest that common parts would cost them a great
deal of money...

Imagine for example, if all (similar sized) Chryslers used the
same headlamp system, and further that the same system was
carried forward over several years.

The junkyards would be full of an adequate supply of them for
all of us, so that virtually no one would pay Chrysler 300 bucks
or more for a new one, and the dealership 100 bucks to install it.

It would also give sufficient lead time and incentive for the
3rd party makers to come on line with better and much, much
cheaper units.

Know I'm getting older, hoped I'd get mellow, but apparently
I'm getting ever more cynical

Take care.

Ken

 

Exactly. Not everyone buys a car as a "prick extension" or as a show
of ostentatiousness. Some of actually use them as basic
transportation devices. I take medium length trips in my ancient
Honda a lot, for the gas mileage, and to save wear and tear on the
M-body. For long hauls, I'd take the M-body and enjoy the leather
seats, the quiet, and still get good economy. After reading this
group for some time now, my basic question as to whether I should
consider buying either new or a recent LH II car has been answer...an
emphatic "no." These cars appear to be more trouble than they're
worth, and I'm quite satisfied with what I have.

That being said, I have predicted that parts scarcity will probably
retire the Honda next year sometime. Already, ignition parts are hard
to get, and a cracked bushing for the primary lead on the distributor
forced me to make my own out of a chunk of nylon. All good things
must come to an end, and I must commend Honda on supplying basic
mechanical parts for a stunning 30 years. But, to pass emissions,
certain parts availability is necessary, so it'll probably be retired
if I 1.) can't pass the California SmogChekII dyno test next time AND
2.) can't get the carburetor parts to make it do so. Still, with cold
AC and everything working, if I can get a full kit for the Keihin 3
bbl., I may rebuild it anyway. The problem is that weather stripping
is starting to fail, necessitating "haywire" repairs, and this
situation will continue to get worse at time progresses.

With the M-body, one crucial part to passing emissions tests, the
mixture control solenoid, is virtually "unobtainium" from any source,
and used ones tend to be just as bad as what's being replaced. Mine
works perfectly so far, and I know that these can be field serviced to
a certain extent by removing the jet and plunger for cleaning.
However, the rubber tip of the armature is simply not available, and
if the winding goes open, that's that. Fortunately, I managed to buy
a spare still in the plastic bag, so that's not a problem, and my
recent engine and AC work make this car perform as it did new, or
better.

I don't need to impress anyone with what I drive. I just want it to
start, run, provide all its built-in services, and yield economical
operation. With all the money I've saved over my contemporaries from
NOT being addicted to cars and trucks, I've paid off a house and have
sizable stock positions.

What's that old one about the squirrel and the grasshopper?

Oh yes...I have cruise control on both the Honda and the Chrysler.
Despite being panned by Consumer's Union when new, the Chrysler unit
functions quite well...as long as you keep the cable from the vacuum
unit to the throttle bell crank lubed with graphite! The one on the
Honda is an aftermarket Dana unit that I've had for over 20 years, and
it works fine, as well.

 

Funny...Al Sloan figured that out in the '30s, as did Cadillac in the
'20s. It was Cadillac who made standarization of engine parts part of
the GM engineering mantra before being absorbed into Durant's
fledgling GM in the '20s.

 

I've driven non-stop from Portland OR to San Francisco in my 1981 Datsun
210, no cruise control, and am very familar with this issue.

The fact is that it is HEALTHEIR to buy an older large car that gets
less gas mileage and make these kinds of long trips than to buy a
new small car and take the depreciation hit to get the better gas mileage.

People that think otherwise and do things like take daily non-stop
trips between Portland and San Francisco in Datsun 210's end up paying
large medical bills to chiropractors.

I think your implication that people wihout a lot of money buy cheap cars
to make a lot of long trips is absurd.

The vast majority of people without a lot of money that buy new cheap cars
may take an occassional long trip like this, possibly once every 6 months,
but
that's it. They can live without a factory installed cruise, or like you
say,
go aftermarket. That isn't an incentive to the manufacturer to add cruise,
which
is why Toyota doesen't.

Because it's unsafe in a semi-congested freeway. The only safe way out of
cruise
control in an emergency
situation is to step on the brakes. While that may be OK for the majority
of highway potential accident situations, it is not OK for all of them.
Swerving
is much better for some situations and if you do that the cruise control
will
accellerate the engine at completely the wrong time.

Don't get me wrong, I use cruise control in short trips too - but I'm fullly
cognisant of the dangers of doing so and I take precautions to avoid
them - such as turning off the cruise control in certain situations - that
help to mitigate a lot of the danger. You, apparently, are completely
clueless about it, I just hope you don't drive on the freeways anywhere
near me.

Ted

 

The auto industry builds to what the majority of customers want, not
to what "some of actually use them" for. The original post was a claim
that the automakers could save money by using common parts. Well,
how can they do this when the majority of their customers do, in fact,
buy cars as shows of ostentatiousness, and prick extensions, as your
just stating here?

Right, meaning that as a used car buyer, your not a customer that
the automakers are building for.

Can we just all take it as a given here that the typical person buying
cars as a basic transportation device isn't going to be a new car buyer?
Or do I have to bring out the mathmatics and depreciation tables
to prove it one more time? It really gets tiring.

NAPA has a large selection of these, you can order. Also, any
carburetor rebuild house is going to have a source for them. I also
own a computer controlled carbureted engine and have gone through
this. You can also put a non-computer controlled carb on it and
just tune the carb.

Ted

 

Whatever gave you the idea that I'm clueless about it?

It sounds like I do the same thing you do -- use cruise control in certain
situations even on short trips. That's why I qualified statement with the
example of "when I hit a long road or the freeway and know that I have five
or ten minutes of steady cruising to do."

My daily commute is less than 13 miles each way, yet most of it includes a
lot of those steady-cruising situations with very sparse traffic which
frequently feature hidden radar traps -- perfect cruise control territory.
Which is why I can average nearly 20mpg on my daily commute in my V8 Grand
Cherokee.

I would never use it with traffic nearby and maintain a very significant
following distance when I do use it. (Besides the safety issue, even trying
to use cruise control in heavy traffic is just an exercise in annoyance
since you'd be constantly cancelling it.)

 

Depreciation means nothing; it's accounting smoke and mirrors. An
item is "fully depreciated" when it can no longer provide its basic
function to the owner economically. Anything other than that is just
sharp pencil games.

Illegal, and if you lean it down to pass smog on cruise, it'll run
like crap in traffic. Been there, done that. My MCV works fine and I
have a spare.

Also, be wary of aftermarket EGRs! I got one with selectable orifices
from Standard that, although I used the correct one, was bypassing a
little too much exhaust gas into the intake vis à vis the Mopar
original. This will show up on the dyno as excessively low NOx and
higher than desireable HC and CO, but low enough to pass.. Bringing
it down to the next smallest size cured the problem and the dyno
showed it to be squeaky clean on HC and CO, and with better power.
Usually the EGR's working properly when you get a little "ping" on
accelleration that the ECS II box will retard for on a very dry day,
of which we get a lot of around here. Too much EGR and the ping goes
away, as does economy and emissions go up slightly.

This is why I hate new cars...I take the time to learn a car's systems
and behavior and can make it do what it's supposed to do, and then
they want me to chuck it and buy something new!

 

The later 210s weren't bad for comfort, really. Try it in a 1200! The
mid-'70s B-210s were...eh. The Japs hadn't yet learned that Americans
are TALL and need leg room, and the seats in the B-210 were marginal,
at best.

I can take any distance trip I care to in my old Accord...no seating
support or comfort problems there at all, other than the leg room's a
tad tight for me.

False. I remember selling Datsun back in the '70s. Guys forced to
commute long distances were lining up in droves for B-210 "el strippo"
Honey Bees to get that advertised 41 MPG, and they'd rack up 150K-200K
miles on them in about three years.

Exactly. If you're broke, you don't travel much anyway.

All true.

Also true.

Studies by NTSB and others prove cruise control is safe, and reduces
driver fatigue by a rather large factor.

Anyone coming up on a bad situation ahead will instinctively get their
foot on the service brake immediately, and just a tap releases cruise
control. This is hogwash.

You're (note proper usage here) not correct on this and have a homonym
misapplication problem.

 

You got a point there. Japanese interiors have always been sort of amusing
in that nothing is the same color, or the same texture. American copanies
tried for years (without success) to build monochromatic interiors out of 4
different materials with different fade characteristics. You can't complain
about something not matching when it wasn't supposed to match to begin with.

Now the American interiors just come in tan plus three shades of black, so I
guess they have learned something.

 

Very True - makes a huge difference in what cars are equipped with.

That's completely wrong. The majority of the human beings on this planet
are women. What on earth do you think they buy new cars for? To tow their
Harleys down to bike week? Or, if you'd prefer an example, what's the best
selling car in America? What was the one before that? How about the one
before that? What's the best selling car in the world? Any Corvettes or
Hummers on that list? Cadillacs? BMW's?

If you want to, you can claim that you don't think of a Ford Taurus as basic
transportation. But boy, I sure do. No doubt about it in my mind. Sure, a
Toyota Camry has got air conditioning, but it's still designed to be the
most boring car they can produce. It's a car for people who don't even like
any car. Those are always the most popular cars in the U.S.

 

Agreed. I took the post as a joke, but then maybe it wasn't. Not sure. I
think anybody who ever saw a 1940 Chevrolet and a 1940 Cadillac would kind
of figure it all out. 1940 Ford, Mercury, and Lincoln side-by-side would be
similarly telling.

Anyway, you can't take consultants too seriously.

 

True. The Big 3 spent more money every year on color and material
selection choices and sourcing matching materials, even in
"carry-over" years, than they usually spent on more critical
mechanical upgrades. They finally figured out that the Japs have
NEVER color coordinated interiors, ever. My Accord came in "Portland
Blue" interior, which meant a violet-purple dash pad, mottled blue
door panels, medium blue plastic panels, and ANOTHER color of blue for
the seat fabric. My M-body came in "Royal Blue" leather, and
everything matches fastideously, to the point where I had trouble
getting the correct color headliner material to redo the reveal
mouldings and "B" piller. The upholestery fabric guy showed me the
book...US cars have a myriad of choices, the Japs and Euros usually
have two or three...period.

 

Do we need to point out the correct spelling of "fastidious", or can we
just let the whole issue of grammar and spelling drop now?

 

I know they've been standardizing parts for a long time, but you have to
wonder about the company referred to in the article, but not by name,
that uses dozens of different side mirrors. That doesn't make a lot of
sense.