Contracting Out Vehicle Development and Production...

If Saturn gets sold..we might see this happen..and I think it might work. Imagine if Saturn said..we need a new small car...here are the parameters and specs..and then put it out to bid. Any automakers with could then bid to design and make the car and Saturn could then pick the best one. Nissan for instance could offer a proposal to rebadge the Sentra for Saturn and make it. They might not make as much money making cars for someone else...but they are making something and increasing economies of scale. Whoever ends up owning Saturn has the leverage of a dealer network that is already in place. So for a company like Nissan..it is like adding the capacity of another brand without the overhead.

Contracting of course has it's pit falls and potential for corruption...however I don't think a small company like Saturn has enough room for that. When done right it does speed things up, and increase efficiancy.

There are actually companies that specialize in it:

http://www.valmet-automotive.com/automotive/cms.nsf

http://wot.motortrend.com/6345620/auto-news/fisker-finalizes-karma-production-contract-with-valmet/index.html

I think that's going to be the future.

We'll have a few global car super-companies, but the trend seems to be alliences.

to take the Nissan example, aren't they effectively creating their own competition for the Sentra by selling Saturn a rebadge? How is this different than the Saturn Aura and Pontiac G6 competing with the Chevy Malibu?

to take the Nissan example, aren't they effectively creating their own competition for the Sentra by selling Saturn a rebadge? How is this different than the Saturn Aura and Pontiac G6 competing with the Chevy Malibu?

Nissan is in the business of selling cars to dealerships. So while the nissan dealerships migth not be happy about having to compete with a saturn sentra, nissan corporate will build in at least as much profit (if not more) to the sub-ed out saturn sentra as the nissan sentra.

Where they might make it up to the dealers is, restricting some content / technology into the sub-ed cars, or making it more expensive in order to maintain better pricing for the nissan versions.

If Saturn gets sold..we might see this happen..and I think it might work. Imagine if Saturn said..we need a new small car...here are the parameters and specs..and then put it out to bid. Any automakers with could then bid to design and make the car and Saturn could then pick the best one. Nissan for instance could offer a proposal to rebadge the Sentra for Saturn and make it. They might not make as much money making cars for someone else...but they are making something and increasing economies of scale. Whoever ends up owning Saturn has the leverage of a dealer network that is already in place. So for a company like Nissan..it is like adding the capacity of another brand without the overhead.

Contracting of course has it's pit falls and potential for corruption...however I don't think a small company like Saturn has enough room for that. When done right it does speed things up, and increase efficiancy.

From what I gather, if Penske buys Saturn the dealer network remains intact in some form, the vehicle will be built overseas, likely China or Korea. Probably China. If that happens, the U.S. get's another foreign competitor for jobs. Overcapacity is a real issue in this market. For lack of a better description, too many cars, too few buyers.

I don't have an issue with import cars being here. That's not my point. If Roger can make a go of it, great.

However, it doesn't do much for keeping jobs here other than dealership personel. Labor cost advantage will come with the deal. Otherwise it wouldn't work. I don't think Penske has interest in picking up organized labor issues, or healthcare costs, or government regulations associated with manufacturing here.