Honda, Toyota make $3,100 profit on each hybrid sold

There is plenty of blame to go around with both management and labor at the big 3. I see GM's looming bankruptcy as a good opportunity to get a fresh start on both sides. Hopefully, there will significant downsizing (beyond the current cuts) and an entire corporate mindset change on the the side of management. On the labor side I see this as a great opportunity to bust the stranglehold the UAW has had on the big 3. $39.68/hour not including benefits for unskilled factory work? Give me break. No wonder this industry is almost gone in the US between shortsighted, arrogant, self-serving, greedy management and shortsighted, arrogant, self-serving, greedy
labor base it surprising they have made it this far.

 

Good for Toyota with a car as environmentally friendly and ground breaking as the prius they deserve to make a profit on each and every one.

 

Consumers are is not blameless either.

 

Overtime? Why are they or have they been paying overtime? This isn't a decision of the worker or the union, it is a decision of the employer not to employ an additional worker. Management fail!

Health care? Why the hell didn't they offer a pay increase large enough that an employer could pay for their own bloody health care? Then they wouldn't be paying the health care costs of a heap of retired workers would they? Oh, because it was cheaper in the short term, management fail!

Notice who was also in the negotiations for wages and conditions, it wasn't just the unions. Management fail!

Here is the guts of the issue in a nutshell. What CEO on a 6 figure or 7 figure salary can sleep at night knowing he has an employee working 40 hours a week for $320 a week? Yet this is what they would pay if it wasn't for unions protecting wages and conditions. I would assume there isn't one member of Prius Chat who is working full time and earning $320 a week. If it wasn't for minimum wage provisions employers would pay unskilled workers even less. A CEO seems to not care at all whether a person earns enough to live on. What is obscene is there would be people in upper management who have a car included in their package which costs more than $320 a week for the lease and they leave it parked all day in a paid for parking space. When you are willing to pay a worker $8.00 an hour that is obscene! Unions only got a grip because employers were unfair. Management fail!

Unions don't break companies, management or a lack of it breaks companies. A company which fails to adapt to changing markets will fail. GM has done just that.

 

Unions are obsolete.

 

The blame should be attributed to anyone causing the expenses and liabilities to blow out.

 

More employees equals more pension expenses. Legacy pension expenses plays a large part of that.

UAW jobs bank program's unproductive worker is a burden to the company i.e. not a core business. Economics 101 failure for stakeholders involved.

The union has blackmail leverage.

Greed applies to both sides and everybody involved loses in the end.

 

This would make a bunch of sense to me. While specific profit margins are a highly guarded secret, I've always contended that automakers are making $4k profit on small to mid-sized cars. Here is how I've approached it:

MSRP is the 'suggested' price. A good dealer will always drop below this number
Invoice is supposedly the price the dealer pays for the car... and likely is very close. Dealers get a number of kickbacks from the manufacturer for things like volume sales, incentives, promotions, etc. What this all boils down to is about a manufacturers retail price of $8k or so below MSRP.
Now, working from there, the manufacturers retail MUST include a profit margin. So, considering a typical price bump from manufacturers retail to consumer retail in the business world of around 100%, then that tells me Toyota's manufacturing retail must be around $12k to $19k - depending on options. Most manufacturers aim for a profit margin of 10% to 30%.....

Okay, cut to the chase time. What I'm trying to say is that I've always pegged a manufacturers profit of $3k to $5k per vehicle. Guess I was very close!

 

If it is a short-term period of unemployment, the jobs bank is advantageous to the company, as the cost of making someone redundant and then hiring someone else is greater than a few months' wages for the employee. This is a case where the union is protecting the employer from their own idiocy.

I do agree there have to be considerations where it is self-evident that there will not be a job available for the worker for a long period of time. At that point the union should be considering what's good for the rest of the workers; it doesn't do any good keeping all the staff on if that means there's no capital or credit to buy the materials for ongoing production.

 

How much does the individual delaership make on a prius out of curiosity?

 

U.S. corporate management is obsolete. They've effectively destroyed just about every company out there in the name of "financial innovation" and maximizing short term returns on unsustainable models. It's really "short term thinking" and poor risk analysis. From the perspective of an investor there is nothing compelling about U.S. companies anymore. The U.S. model is effectively pump and dump. And they blow off all responsibility or accountability with caveat emptor. Good luck doing "due diligence" in an environment where most of the debt is now kept off the books and it is routine for massive restatements to turn years of "profits" into actual losses.

But folks in secessionist states miss all this and point at the unions. Meanwhile, companies keep two sets of books, one that they use to mislead shareholders, and another for Uncle Sam at tax time.

You know why we have unions, right? We have them because the industrial giants in times past had way too much power and abused it accordingly. Getting rid of the unions doesn't solve anything unless management practices are reformed, accountability improves, transparency improves (especially financially), and companies are actually run for the LONG TERM benefit of shareholders rather than as incestuous profit skimming schemes by boards and execs that leave behind an empty, debt-ridden husk.

I'm not actually a fan of unions, but it's obvious that the unions aren't the source of the problem, just a convenient scapegoat for the real thieves.

 

I duno ... Short answer: What ever the market can bear
What really BLOWS me away, is how this thread has grown big ol' hairy legs. My god ... did anyone EVER care that Silverados ... Explorers ... Range Rovers and other land barges had THOUSANDS more in mark ups / profit? The profit above break even ultimately goes back to pay for everything ... from factory electricity ... law suits ... stock dividends ... employee insurance ... ad nausium. Who among us, owning a business, doesn't get irked, when the customer 2nd guesses our markup numbers ... whether realty agent, roofing contractor, MD, attorney, or plumber. Sheez, even profits of land barges, back in the "good-ol'-days" are NOT worth the diatribe, because that's what folks were willing to pay.
end of exasperation rant
carry on

 

$3100 as an initial profit on each Prius sold is reasonable since unknown costs for unexpected warantees is not applied. the high reliability factor just insures that they get to keep more of that $3100...

 

To Picasso Moon & patsparks,

I totally agree that autoworkers (in general) are overpaid for the quality of work put out (at least in the past---I know a friend in my antique car club that once got a factory tour of a GM plant in Framingham, Mass & he said they had an immense "back lot" of cars that didn't pass inspection & went out the rear door to this lot with parts missing or just barely hanging onto the car. They had a special "fix it" team there to correct those errors to make those cars ready for shipment to the dealers). As I mentioned in another post either here or over at PriusOnLine, a co-worker of mine in the mid to late 1970's took delivery of a brand new Dodge truck that had the engine seize up on him a couple of miles from the dealership because somebody at the assembly plant forgot to put oil in the crankcase & the dealership also didn't catch that in their pre-delivery inspection (that we used to have to pay a separate charge for back in those days).

Maybe things are better now in the auto industry, but my point is that before my retirement in 2005 I worked as a machinist (at Pratt & Whitney Aircraft for 38 years) making quality jet engine parts that keep our military planes & our commercial airliners in the air. Any poor quality parts or assembly & the planes fall out of the sky [but not all crashes are the fault of the engines---there's human (piloting) error, faulty flght control computers (that sometimes fight the pilot's correct action for a certain condition), & short cuts or poor maintenance (with sometimes counterfeit P&WA parts being discovered) at the airlines' maintenance depots].

Anyways, I went through a 3-year machinist apprenticeship course (many other machinists there had at least a 6 month training period of a lot of the same stuff we learned in our 3-year course) and I was earning $23/hr (not including benefits) for making those quality parts (or $48,000 per year).That is the middle or average of the hourly wage scale. I was a grade 5 & the lower end was grade 11 (for unskilled) & worked up to grade 1 [for the highst skilled & seniority machinists (such as tool & die makers) who also had supervisory duties---I think they may have earned about $30/hr]. For ME that was $23 x 8 x 261 work days (we had paid holidays & 5 paid sick days per year). So, Picasso Moon's figure of $39.68/hr (NOT including benefits) or patsparks' post containing a quote from Texas911 about $26/hr or $60,000/yr seems ludicrous for producing things the quality of which, if they fail, GENERALLY only cause a breakdown at the side of the road & a tow to a garage. I know I'm not being fair to many of the good autoworkers out there who may be reading this, but I was just responding to the 2 posts discussing skill levels & compensation $$$.

Ken (in Bolton,Ct)

 

Oh, your saying all employers are fair and reasonable?

 

I didn't quote you whole post and it is late at night and I need to sleep so I'll keep this brief.

In the GM factory the workers are required to produce maybe 300 to 400 cars on the line a day, maybe more, I don't know. Each car going down that line is worked on by each worker, so each worker does the same job 300+ times a day. If any one of those worker makes a mistake there will be a car that isn't up to the required standard. How many workers were working on the production line? What time pressures were placed on each worker, who placed those pressures on the workers?

I have worked on an automotive production line at Mitsubishi Motors here in Adelaide for about a month so I have a little personal experience on automotive production lines and it is repetitive and you need to be quick. We were turning out 300 cars a day, 2 models and several trim levels. What kind of time pressures were you under as a machinist making aircraft parts? I don't know but I suspect it was less than a production worker in a car plant.

I never commented on skill levels, only that if unions were never needed they wouldn't exist.

 

Pat, no doubt assembly line work is tedious and so the actual number is a really a non issue, but the average worker actually only sees much less than that.

remember you are only as good as your weakest link. i watched a show on an auto assembly line, granted probably 5 years ago or more, but at that time, a car was built on 3 different lines and the line they portrayed moved the car once every 9 minutes, but any worker could hold up the line if they had not finished their task which did happen but rarely.

so you would have efficient workers having extra time, but also careless workers rushing their work only because they wanted the extra time to do nothing, etc...

but at that pace, each worker was only seeing less than 100 cars per day... now when talking repetition, when does it get tedious??

in GM;s heyday, they had a large factory in the Detroit area (River Rouge i THINK...) that could be seen from the freeway. they had a large neon sign that told us YTD figures for cars produced, the value of the car and the average time it took for each car to be built... obviously they had several lines running, but the plant as a whole produced one car like every 75 seconds

 

Man, talk about classic topic drift!

My only comment is -
How in the world do you think -anyone- knows that the profit is on each Toyota car, regardless of model? Even Toyota would have trouble figuring that out! They -do- try to estimate it of course, but an accurate calculation would be impossible, what with the cost of each part varying constantly, and the money collected from each sale also varying constantly!

 

Toyota knows almost exactly how much each car they make costs. Everything in the Toyota Production System is entered into a computer. They live by their data and efficiency is measured in fractions of a second and cost in factions of pennies.

Everyone else is just guessing.

BTW, part prices don't vary constantly, they are usually purchased in multi-year contracts. Selling price is also fixed to the dealer, it is only the dealer's price to you that is negotiable.