Quote:
Originally Posted by Piotrsko
I need to point out that austere engines and basic interiors cost less. As a buyer, it was my job to get stuff as cheap as possible and I don't care about the low level user as long as I met the specs. If removing the heater would save a grand, then the user better have a good coat. Oddly, on new vehicles, having cold A/C was cheaper than deleting it.
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That doesn’t surprise me. There comes a point in a product mix were the “cheaper” base option becomes more expensive than the optional upgrade just due to economy of scale. What surprises me is how long companies can take to adjust product mix and pricing to reflect reality.
Manual transmissions are a good example of this. Volumes are so low now that even just the parts cost more than an automatics without even adding in the extra cost for development, logistics, manufacturing, and service. (For A/C is is likely still cheaper to delete just looking at part cost) You would think companies would logically react to that by making the automatic standard and offering the manual as an option with a cost increase. Eventually the ever increasing cost of the manual will kill it completely.
However, very few companies have gone that route. For vehicles still even offered with the manual some companies have offered automatics as standard and made the manual a no-cost option. The most common treatment is to offer the manual in a bare bones base trim with no options and then have the real trim that people will buy cost thousands more. This give the manufacturer and dealers a low base price to advertise but insures they won’t sell many of that low or even negative profit margin vehicle. Low advertising price is key – manufacturers and dealer know that it is easy to upsell customers once you get them into the dealership – especially if you can get them to shop based on monthly payments not purchase price. However you have to get them in the door and low priced base model + teaser ad can do that.