Cost per Car of Ads...

i know that you're pretty damned reliable posting here 9-5 m-f. complete with your diligently interned stats and "research".

my own ed.

not in office hours ed.

weasel words ed - i'm actually not "pro" toyota. but i sure am anti g.m. exporting american jobs at taxpayer expense.

no ed, you're the one that needs to look out - you'll get burned alive in your own trojan horse.

ah yes, the list of american companies living on ±$30bn american taxpayer bailouts and exporting their jobs to japan, the philippines, thailand and brazil is long and illustrious. oh, wait, it's not. and none of those countries are despotic regimes that sell missiles to our enemies or steal our intellectual property. unlike g.m. exporting jobs to china at taxpayer expense.

if we want to throw money about, we should use it to fund automation investment, keep all production stateside, and keep all our technology/industrial muscle at home. if you have a shred of integrity left, go see your beltway buddies and make it happen ed.

the end.

And as mentioned earlier, MUCH lower pension and health care costs for retired workers.

that doesn't explain it. g.m. have been making profits on their well managed and well run european operations, and european pension/health care costs [along with virtually every other cost too] are /way/ higher than here.

Consumers go to the Web to get information on cars now, advertisement costs could be better spent making better vehicles.

-- Ron

Except, without advertising, people won't know about the cars. Advertising is part of selling the cars. It's a cost of doing business.

Jeff

At the cost stated, it is about 1/25th of the cost of the average vehicle. A friend of mine works for a major cosmetics company and he says 40% of their revenue goes to advertising.

"jim beam" wrote

Costs have little affect on profitability. Selling price does. You have to know both to do a comparison between US and Europe

So a car that costs $100,000 to build will be real profitable at $25,000? Both costs and selling price are part of profitability. In fact, profit = selling price - costs.

Jeff

Don't have one, but I bet it'll be obsolete in a year.

No, I didn't say that, you are just using a dumb analogy. A car that costs $100,000 to build is profitable at $100,001 though.

But if you can get the right selling price, it does not matter what the cost is. If the marketplace in Europe allows for a higher selling price, GM can make a profit even with higher cost.

By obsolete, I mean no longer useful or being way too old. I have an iPhone 3G. It's been out for almost 2 years already. Although there is a new model out for about 9 months, it's not obselete. Nor is my iPod touch, which I think has been out for about 2 1/2 years. I doubt the iPad will be obselete in a year, even if there is a newer model. Just like my old Ford Contour is not obsolete, even if they haven't made them for about 10 years.

Certainly, I can update my iPhone 3G and get the 3GS, but I am fine with the 3G and the extra $500 in my pocket (that's would it would cost for an upgrade). I had planned on doing that when the iPhone 4G comes out in the late spring or early summer, but I may be better off keeping the iPhone and get the iPad or just getting nothing and using what I have.

Jeff

Yet, GM is not making a ton of money in Europe, either. IIRC, around

In Europe, there is plenty of competition, including from Asian brands. And more to come.

Jeff

accounting practices for things like this are somewhat "elastic". i.e. you can load a foreign operation with a bunch of your domestic expenses to "help" the reported profits and tax burden, etc. bottom line, g.m.'s [better managed - better product, more competitive] foreign operations have been carrying the company for years, the european one particularly, even though the european is a very high [real] cost environment.

I don't agree that GM's European operation have been carrying the company for years. In fact, I suspect the opposite is true recently. Opel has been struggling for decades. Saab is gone. GM does actually sell a significant number of "Chevrolets" (mostly rebadged Daewoos) and Cadillacs in Europe which is surprsing (at least to me). As you say, interantional companies can and do manipulate earning transfers between countries mostly to try and minimize taxes.

Your comment about Europe being a very high cost environement is true but you ignore the fact that the playing field is much more level in Europe. European countries all have government run health care programs, so GM is not saddled with paying for deluxe health care for workers while some competitors with younger non-union work forces don't have the same high health care benefit costs. Western European countries all have strict pension rules, so while GM may have high pension costs in Europe, so do all the competitors.

Ed

"recently" being the last couple of years. prior to that, it was solid blackline. and don't forget the accounting flexibility - internationals have considerable latitude in how they report these days and right now, to attract more of the bailout ?'s the germans have been throwing about, you can bet that g.m.'s euro ops are "losing money".

not true. they have enjoyed significant profits, and have been ranked #

saab was already gone. g.m. should never have bought it. but they sure did hasten saab's demise.

and whine for subsidy ?'s.

you've been suckered in by too much propaganda. european employers get charged directly by the state for health care. as do employees. when i was last there, it was ~10% employee, with an additional ~10% employer. that's a 20% total wage burden, which of course is effectively all paid by the employer. [this is in addition to income tax of course. it all amounts to the same thing, but i guess differentiation is one of those deceits that makes it more acceptable to an electorate.] then there are all the other local and state taxes they pay, which also have public health components. the only thing that keeps this whole thing manageable is that through their centralized systems, inefficient though it may appear, their percentage of gdp spent on health care is roughly half that of what we spend.

and massive union burdens too. you cannot fire underperformers in germany.

indeed, they have significantly higher costs, but can still make a profit. whereas they say they can't here. what is wrong with this picture?

I did not say GM doesn't have higher costs in Europe. They do. I said the playing field was more level in Europe. It is. In the US, GM has to go head to head with Asian car makers that have much lower benefit and pension costs. In Eurpoe, all automakers work under the similar constraints (even Nissan, Toyota, and Honda). Eurpoeans restrict imports to a degree unknow in the US. Despite years of trying Toyta has never passed a 6% market share in Europe.

While I agree that in the past Opel made moeny and much of the profit was shifted to GM in the US (mostly for tax reasons), I don't see how you are assuming Opel is making money now and GM is hiding it. Opel's European market share has recently been below 7%. This way down compared to the past. GM is closing at least one Opel factory and others cuts are planned. GM would have sold Opel, except they realized with all the US cuts, they needed Opel's engineering to help with smaller cars. Opel is in just about the same state as is GM in the US. Here are some references: