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      12-17-2007, 08:51 PM   #118
Conspicuous consumption
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Originally Posted by swamp2 View Post
We can speculate a bit about the scales of cost, volumes of dollars involved here and potential for profit or loss. Take the closest competitor, the 997T. Porsche makes about 18% profit on its vehicles. Probably a bit more on the more expensive vehicles like the turbo, say 20%. This means the cost of that car is about .8 x $110k (approximate dealer invoice, not price to consumer) = $88k, which includes cost of parts, as well as marketing, etc. The GT-R is similar in technology but definitely a notch higher. Is it realistic to believe that Nissan can prioduce the GT-R for 20% less in way lower volumes than the Porsche? Keep in mind a lot of the regular 911 production lines can be used for Turbo production as well. My thought is for sure they can not. The 20% improvement would be required just to break even on the car. My bet is that the car will cost Nissan at least $85k to produce and market. Perhaps since the volume is so low the investment in the production facilities can be less, helping to control costs.

Let's look at some common and close to heart examples using similar numbers and figure out profits:

Camry: ~5x10^5 cars/yr, margin ~.05, $2x10^4/car, profit ~$500M/yr
M3: ~1.5x10^4 cars/yr, margin ~.2, $6X10^4/car ~$180M/yr
997 Turbo ~2.5x10^3 cars/yr. margin ~.2, $1x10^5 ~$50M
GT-R: ~1.5x10^3, margin ~-.3 ((85-65)/65), ~$6.5x10^4/car ~-$29M

Even if Nissan got the GT-R costs a whoping 15% better than the 911 it would still be a 15% loss per vehicle and about a $15M/yr loss.

We can agrue, estimate, speculate, etc. all day about labor costs in different parts of the world, currency exchange rates, prices of the vehicles in different countries, etc. but the above is simply an order of magnitude type of calculation. What I think it shows is that Nissan will lose money on the GT-R.
I know you are one the engineers the M Division has contracted with to develop M-DCT, but I didn't know you were also Ben Bernanke's right hand man.