You can argue all you want, however somewhere there are costs involved in reengineering the DEW platform to work for Mustang. My point is that without a price increase, Mustang won't be the major contributer to Ford's bottom line that it has been on the FOX chassis.

 

Well, you are most likely correct in that statement, but you'd have to say that about any new car...

Most 'new design' cars keep their price in line with the previous generation... so I don't think this will any different, especially since price point is so important to Mustang.

 

I cannot dispute your statement or your link, but if anyone really wants me to, I will take my digital camera and take a picture of a White '03 Cobra coupe, loaded, with tan/titanium frost leather, prepped and ready to go with the sticker reading $34,250 at Parkway Ford in Winston-Salem, NC. I just looked at it Monday when I was in there for some parts for my '93 vert. They had just received like 5 Cobras recently.Here is a link to their ad in the paper last Sunday... notice the Base Mustang for $14,499. Not $17K or $19K like some people think.

[edit]Funny how they never spend money on print ads for the Cobra, Lightning, T-bird, or Marauder type cars, isn't it? They just "sell themselves" I guess.

 

Branden, allow me to blow your view out of the water.

The C5 Corvette, unlike the new Mustang, was a ground up design, using new technology, and far more advanced engineering than the new Mustang, which is basically a parts bin car whose parts have been paid for already.

From an engineering standpoint, most of a new car's expense is the drivetrain & the suspension and floorpan. Shortening a floorpan is a simple process, so in the Mustang's case, the expense is the design & manufacturing. Much like Holden's Monaro, but a bit more extreme. The Lincoln LS has a low beltline & a very low cowl (unlike GM's CTS) so most of the expensive work is already done.

Going back to the Corvette, the C5 actually cost less to make and cost customers no more than a C4 to purchase. Corvette is currently such a money maker, that they are basically paying for their own redo, without really having to rely on GM. The Holden Monaro was made to be profitable on just 15,000 cars over a 3 year run (you can imagine the bank they'll make now producing at least 75,000 cars over a total of 4 years! ).

Using the position you are taking, we all should expect that GM's Espilon chassis cars should be far more expensive then the current cars they will replace, yet that won't be the case. The new Ions & Malibus are safe in their price ranges, and the Mustang will be as well. Engineering expense is built into the price of every car, and parts are spread over all products that use those parts.

Using the view that investing in the Mustang will send prices into the stratosphere, or not add to the bottom line is probally the exact same attitude our friends trying to get the next Camaro to market are up against.

You don't work for GM's Strategy Board, do you?

 

I am sure there is enough profit in a $50,000 car to pay for it's own redo easily. Wasn't the Vette almost axed because GM didn't wanna spend the money it would cost to make a new one? It may cost less to make a C5, but somewhere there was a huge investment to develop the new car. That hundreds of millions of dollars investment has to eb recouped somewhere. it is much easier witha $50,000 car than a $20,000 one. The Corvette team doen't have to worry about making an affordable version of thier car also which is an advantage.

What we are talking here with the Mustang is taking a luxury car, modifying it, and selling it as a high volume affordable car. There is much more financial wrangling that has to be done in there to make it happen than you might think. It is simple math really....

Ford spent almost no money (relatively speaking) on chasis work for the Mustang since 1979. That means that today there is very little (if any) engineering costs that has to be absorbed by the sale of each Mustang. Now in 05 they release the new car and it costs say roungly $500,000,000 to develop, retool, ect. If Ford wanted to recoup that $500,000,000 over 5 years they would have to recoupe $100,000,000 a year. If they say sell 100,000 cars, that is $1,000 a year per car of expense that didn't exist with the FOX based car. So by those figures, for the first 5 years, Ford is going to make $100,000,000 less per year on the Mustang than they currently are simply in engineering and tooling costs for the 05 model unless they raise the price. One other thing to consider is the advertising blitz that the new car will get....that alone will run into the millions. Also if there are issues with the launch and recalls that will eat into profit. Since Ford hasn't launced a car without a recall in years it's not radical to assume there will be some.

As for the $500,000,000 figure I am being conservative with that. The 05' Mustang has been a rocky program with alot of delays, and revisions. Also the DEW platform is a bit more modified than people think in the Mustang Application. Also retooling costs alot. GM recently announced it wasretooling the Orion, Michigan plant for the Epsilon Grand Am at a cost of $300 million!! There is no reason to belive the Mustang won't run on those lines.

As for GM's Epsilon platform, cost will be lowered through sharing among 13 different models...many of which are high volume. Also the cars themselves will cost more than the ones they replace. Lutz himself said in an article for the Detroit News earlier this year that it would be the case. Essentially, they wanna build cars with higher percieved quality, so they can charge more and rely less on rebates. He pointed out how VW can sell a Jetta which is the same size as say a Cavalier in terms of size and actual reliability for over $20K regularly because thier cars percieved quality leads customers to believe that they are worth more than they really are. If you think you will be able to buy a $16K Epsilon Grand Am you are sadly mistaken. But again the car is that much better


And before you go on about the Monaro Guion...and how it costs $30,000,000 to design.....lets remember somthing It is nothing more than a 2 door Commodore...There are like zero mehanical changes...and a bare minimum interior and exterior changes. I mean it's like if GM made a 2 door Malibu...Big freaking deal...you took 2 doors off the car and it cost $30,000,000. Comparing that to developing a new Mustang is ridiculous.

Ahh the fun of these debates

 

But Mustang sells 150,000+ units per year where Corvette is selling 40,000 units per year.... that makes up a lot, if not all of the difference.

When higher volume is expected, retail can be reduced to be competitive.

 

Actually, that is not true.
The SN95 project involved a major new design for the unibody. I have old mags with articles I need to find to quote actual figures, but guessing from memory the new platform cost $180 million to develop and the Mustang absorbed it all because it shared SN95 with NOTHING ELSE. Accomodations were made in the rear for IRS. Also, the body became 46% stiffer in torsion, and 42% stiffer in roll. The stiffness was gained in areas around the A- and B-pillars - stiffeners and inner-structure were added in the rear canopy since the real estate became available. (Thus the demise of the Notchback in '94 ) The SN95 was also the first TRUE convertible Mustang since the first gens of the '60's. All other Fox-bodied verts from '83 to '93 began life at Ford as notchbacks and were shipped to a contract shop for cutting and top installation. The SN95 verts are true verts made by Ford in their final configuration.

The goofy thing was that after spending all that time and money for a whole new unibody in '94, Ford kept the MacPherson strut and coil front suspension, and the basic quadra-link rear with the 8.8" traction-lok units?
I think keeping the suspension components is what has many people fooled into beleiving that the 2002 Mustang is "the same" as a '79 model, but aside from the bolted-on parts - they are alltogether different beasts.

 

Not neccisarily...

Less cars= Smaller plant, less labor hours, higher quality (Less warrenty work and recalls). Plus a Corvette is not in reality that techically advanced or expensive to make untill you get into the Z06 with it's Titanium exhaust and all..and you pay for that. All the C5's engine costs were picked up by the Truck division ..the interior is cheap looking for a car that price..I mean in all reality I say $10,000 of the Corvettes price is name more than anything...

 

SN95 IMO is the same as going from teh 3rd to 4th gen Camaro..just minimum change sto keep with the times..

 

I think it was FUTURE OF GM who said several months ago, on the subject of a CTS/Sigma based Camaro being too expensive for the intended buyer because the CTS was pricey, that the price of a car is much more market dictated than it is cost dictated.

Ford cannot afford to increase Mustang prices more than 5% max over current prices simply because of the laws of supply and demand. If they jack the price up too much demand will fall like a rock and the days of selling 125,000 Mustangs per year would be gone, then Ford sure as hell would not be able to recoup its costs.

I think the Mustang, as most cars are, is probably quite cheap to build in terms of actual costs. Which is why you have dealer invoice, dealer coupons and "haggling" and massive Manufacturers rebates and they still manage to make some money.

There's probably over $15K profit in one Vette, the price was set by the market GM wanted to cater to with the car, not how much it costs to build plus profit. Think about it. The vette is an affordable super car, but GM never wants it to be so affordable they become common place. They set a target of around 30,000 sales per year and set a price based on trying to generate that level of demand. This is why SUVS have the largest profit margin of any vehicles, because the demand is huge and people are willing to pay the prices.

For Ford, Mustang must remain relatively high-volume, which mandates a pretty stable price structure.

Think about it. Say Ford spends $200m on a new mustang. They are going to sell at least 100,000 of them for the next 8 years, that comes to a paltry $250 per car they have to recoup over the life of the chassis.

The C5 cost about $250m, and at 30,000 units per year over its 8 yr life span that comes to $1041 per car. C6 will be even cheaper per car because its not a total re-do, assuming the C6 has a similar lifespan.

 

Minimum changes from the 3rd to 4th gen F-bod?

All that carried over was the floor pan and the rear axle/suspension!

 

Yes. Exactly.

 

Think about how wildly profitable those numbers made the 4th gen. Couldn't have cost more than $200m to do the '93 cars, the engine was already done for the Vette and lots of the chassis was carryover from the 3rd gen. Over a 10 yr period GM sold around 800,000 F-bodies, that's right at the $250 per car, which makes me still question the logic of claiming you are cancelling a car for poor sales performance when the tooling was paid for years ago and you are still selling 70,000 combined units between the two nameplates per year...more than Monte Carlo, CTS, and some other newer GM models.

If you cancel it because its old and dated, and a new version no longer fits in the direction and plan you want to take the company, fine, I just wish GM would have told us that instead of baking up this sales excuse that I still refuse to believe.

 

BRANDEN!!! Come down off that ledge dude, it ain't worth it!

Those "minimal changes" brought the demise of the notchback for the first time in the cars 30-year HISTORY, a true covertible from a cut-kit, and a whole new platform-from headlamp to taillamp, roof to floorpan!!! And took 18 months to complete!

MINIMAL?!?!