When designing a car, you can’t just dream it; you have to find a way to maximize profit. Our group was able to create a large profit by creating the car as cheaply as possible, while still maintaining a high standard of quality. The majority of our demographic bought there last car from between 20,000 and 25,000 dollars, so we made the total cost of our car $23000 and the profit 16% therefore the cost of producing our car is $19,320. We will produce and sell 40,000 cars with our break even point at 33,600 cars.
Our car’s frame is made of aluminum, which is a great idea to save money because its price is expected to drop $770 annually (12). We will be using space frame aluminum which is lighter, stronger and cheaper than regular aluminum. Where aluminum would normally be, trusses are put in place which uses about 1/3 the amount of the aluminum. We used a hybrid electric-biodiesel engine which is very cost efficient. The price of hybrid engines is expected to drop which is ideal for us because of our interest to conserve energy and money. We have a higher procurement cost (50%) to increase safety options and still have a luxurious car. We have greatly reduced labor costs (5%) because we will be outsourcing to Mexico. Madeinmexico is a company that promises to reduce labor costs by 75% if production is in Mexico (11). There is a Chrysler factory in Toluca, Mexico already which means we don’t have to spend money building our own factory. Once the basic model of our car is built it is sent out to “finishing shops.” In these shops they add on the customs such as paint jobs and electronics. Since the cars are not being sold out of actual dealerships but straight out of the shops, we can cut out the retail/dealer cost (0%) completely, saving us a lot of money. With no dealer there will be no bargaining over prices. Delivery costs (4%) from Mexico seem like they would be high, but there are delivery companies who deliver for relatively cheap prices. By outsourcing from Mexico we save bundles of money from cheaper labor costs, no retail/dealer cost, and great delivery prices. Our car also has a lowered warranty (5%) which means that we have more money for our procurement cost (50%). All of these cost cuts makes our car one of the most effective in making a profit.
We will start developing a concept car right away in 2004 and by the year 2005 we will have a complete working model. Throughout 2005 our car design will be put into car shows where we will also pick up new technology to better improve the car. In 2006 we will still be trying to make our car better while still showing it off so that people start getting excited in anticipation for the cars release. In 2007 we will have our final working model that has been put through all of the tests and in 2008 production of the 25,000 cars will begin. Lastly in 2009 our car will be put on the market ready to be bought.
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