this could have something to do with the rebates

 

There's no denying that gas prices are higher than what they used to be. There is also no denying the fact that big truck/suv sales have suffered. Nissan is going to tell me that high gas prices, today, are causing it to limit production? Gas prices in my neighborhood are down about $0.85/gallon from their peak. Why could Nissan crank out trucks back then, but not today? This just doesn't smell right.

 

From the article:
that to me sounds like a more reasonable explenation.

 

Either you didn't live though the gas crisis of '73 or you've forgotten it but that relatively short period of "crisis" shaped the automotive industry into what it is today...that was when Detroit started loosing ground in a big way to imports to the extent that by the late 80's, the domestic big three had all but given the car market to the imports and started depending heavily on their trucks and SUVs for their profits.

Just because gas is not currently as high as it was a few months ago does not mean that everybody has gone back to buying full-sized trucks and SUVs

 

Spreading costs definitely decreases unit cost. If it costs you $1 billion to design a new truck and you can sell 5 million units over its life, that's only $200 in fixed costs that each truck has to pick up. But if you can sell only 500,000 units over its life, each truck carries $2,000 in fixed costs. Big difference.

Of course GM does have higher labour costs than Nissan, and higher legacy costs too (legacy costs are estimated at about $1500 for every vehicle GM sells). So with everything considered it's not hard to guess that GM probably has higher total costs in building trucks. After all, GM is the one losing a pile of money in North America whereas Nissan is very profitable.

 

I wonder if the Titan sales would be better if they offered the Frontier's VQ40 265hp V6 in it?

Of course then I think they need to put the Titan's 305hp 5.6L V8 in the Frontier too

I'm also wondering if not offering a regular cab option is hurting Nissan?

 

I agree with you to a point but I think you are forgetting that there are more costs to producing a vehicle than fixed costs...variable costs exist as well which attach to each unit produced. If the variable costs for a unit is $15,000 then it remains $15,000 per unit...they cannot be "spread".

It gets a little complicated of course but I believe you'll find that most costs in producing a vehicle can be classified as variable be they labor, steel, tires, fluids (oils, gassoline, etc), electricity to run the plant, and so on, and the point I was trying to make was that overall, Nissan can produce a full-sized pick-up that's comparable to a Ford/GM model for less costs overall than Ford or GM can do it.

Labor has a lot to do with that but it isn't only labor.

 

Of course, but the topic of 'spreading costs' that Z28x raised was to do with spreading the costs of a platform across a large production run, so it was the "platform costs" that I was addressing.

The interesting thing about GM is that their labour costs are more like a fixed costs than a variable cost: GM has to pay the folks on the line whether they're working or not, and no matter what their productivity is. When a company has a business model where a large portion of its costs are essentially fixed, the typical response is to produce and sell as many units as possible to spread out the fixed costs. That's kinda what GM's been trying to do over the last few years with all the rebates. Of course that has consequences in other areas and you can't sell above your natural market share rate forever, as GM is finding.

 

Nissans sales are down because Redzed isnt on the net to defend them anymore

 

There are certainly economies when multiple vehicles are produced on the same platform, whether that is a truck body on frame or a car and certainly, GM and Ford, given their large output, can spread those costs further than Nissan just on size alone. But such economies can only go so far.

Labor is much like a fixed cost but labor can be cut if necessary as GM and Ford are now doing...maintaining employees you truly don't need is a cost no manufacturer can afford for long.

The bottom line is, "costs" is a complicated subject...parts and supplies purchasing has a lot to do with it as does plant efficiency as does the ability to produce multiple vehicles from one plant...when Nissan doesn't sell as many Titans, Armadas or QX565s they turn around and produce more Altimas from the same plant, etc...I'm not an expect on GM or Ford but to the best of my knowledge they mostly lack that ability in that most of their plants are dedicated to single vehicles.

At any rate, as far as the rebates, I stand by my original explanation...Nissan, just as are Ford and GM are simply responding the the market decline for full-sized trucks and SUVs...everybody is hurting in that area. That market will, most likely, recover in the months ahead but it's not going to happen overnight.

As to overall costs, I was responding to the initial insuination that Nissan simply "undercut" Ford and GM - while it can't be setteled here, I still submit that for a variety of reasons, Nissan does produce it's full-sized trucks for less cost overall than can Ford or GM. Had Nissan not been able to charge a competative price, they may well have not moved forward with the Titan (Armada and QX56) in the first place.

 

that's just the thing. GM CAN'T get rid of its labor. it can't even start to do so until the union contract runs out in 2007. if a line worker is doing something or doing nothing they still get payed 100% to 80% of their yearly pay. so whether GM produces 5 trucks or 5 million trucks the labor cost to produce them will be essentially the same.

there's still a "work bank" of about 6k people who are payed for "just waiting" for a job. only 200 of which should be soon employed back at their unbelievable $30+/hr after GM's recent $500 mil investment in 5 plants in Detroit.

what GM is doing is essentially like, playing baseball with a huge lead weight around it's anckles while everyone else is uninhibited. even if GM does hit a home run, you have to watch it round the bases for an hour.