Quote:
Originally Posted by Sportstick
It's not BMWNA...they are just the US distributor. The program is managed and profitability is accounted for at BMWAG. The relevant number won't be the invoice. It would be the BMWAG margin for the incremental units built. When I ran a vehicle program, MSRPs in the range of the current 340i had margins of approximately $10,000-$12,000 to the manufacturer. If the total cost of a cert program for one engine family/powertrain (RWD M340i MT) is ~$3M, the breakeven is roughly 270-300 units, which is likely doable.
But, they will ask themselves why do they need to do this to keep the order bank and plant full? They have no doubt designed a program for a new vehicle which they believe will equal or slightly exceed the capacity of their plants. To do otherwise would results in a program manager finding a new career. If they found they had unused capacity over time for a few hundred, even a thousand, or so units, it is far easier for them to manage that with a small promotional/incentive program than to take on the system-wide burden of developing another powertrain program. (It might even be lower investment to bring back the station wagon to the US for a couple of thousand units of open capacity or discount some 330s to a corporate fleet if they were surprised with lower total demand than planned. It's about filling the line at the lowest cost.) So, those relative handful of MT units would be substitutional, not incremental, to the program. In my old days at another OEM, the variable cost of a manual transmission was actually higher than an automatic (despite that we and everyone else made money with a lower variable cost AT option and charged an option price of around $1000 to order an AT to boot!  Gotta love the car biz!), so it is possible substituting an MT for an AT actually loses per vehicle margin. This is not a plan a program manager would bring forward.
Further, aside from certifying the vehicle, there is impact at the plant for managing the addition of another powertrain combination...they are not small items and with their 4s, 6s, hybrid, diesels, with the existing combinations of transmissions for higher demand markets, adding yet another can add even more program investment. And, they will wonder, for what? They plan to sell every US bound AT vehicle as is, so what benefit accrues to them? We see the result of the answer to that question. They allow us the manual only where is has a major impact on a program...the M3 and M4 yet to come. |
And they have to train all the mechanics or at least provide good service materials and lifetime parts supplies for all markets.
A lot of complexity for a handful of customers that are mostly substituting. If it was incremental and/or conquest sales, there would be more justification - especially if your marketing could move them to automatics for their next purchase (so you don’t lose them to another brand with a manual)