£15 a month to keep your bum warm ...

[SFK]

I see what you're saying but surely that wouldn't be financially viable for them? e.g. every car leaves the production line with additional components fitted (for heated seats etc) but a % of them are never used. Cost of part/s fitted but no return revenue from it.

Car manufacturer will save money by only having one type of seat (all fitted with heater) as less stock and less stock control.
Car manufacturer will save money by only fitting one type of seat as will be faster for fitters and less paper work.
Car manufacturer can perhaps save money by only having to specify car on forecourt, not on production line ("you want that blue one with heated seats, of course you can sir/madam").

Therefore manufacturer can sell the cars a bit cheaper to compete with other brands.
Their profit margin will be (say) zero if you buy none of the addons.
Their profit margin will be (say) okay if you buy some of the addons.
Their profit margin will be (say) good if you buy all of the addons.
So their profit margin will on average be the same as before.

But because of easing production flow, manufacturer can make more cars, sell more cars and so increase turnover, and profits.

And (as an aside) their cars might look better as second hand cars because you can upgrade a basic car to a better car (note that they also suggest there will be one off payment options). So depreciation is recuced and brand value improved.

Or everyone will ideologically hate the idea and they wil fail to sell - but the software gaming industry suggests that this is not the case.

Finally, car manufacturers make the higher profit margins over the (prime) lifetime of the car on Serviceing and Spares, not on sales.
Volume of sales is key to a manufacturer as the more cars they sell the more Serviceing and Spares for the 4 years of the car.

SFK

 

[diy_fun_uk]

Car manufacturer will save money by only having one type of seat (all fitted with heater) as less stock and less stock control.
Car manufacturer will save money by only fitting one type of seat as will be faster for fitters and less paper work.
Car manufacturer can perhaps save money by only having to specify car on forecourt, not on production line ("you want that blue one with heated seats, of course you can sir/madam").

Therefore manufacturer can sell the cars a bit cheaper to compete with other brands.
Their profit margin will be (say) zero if you buy none of the addons.
Their profit margin will be (say) okay if you buy some of the addons.
Their profit margin will be (say) good if you buy all of the addons.
So their profit margin will on average be the same as before.

But because of easing production flow, manufacturer can make more cars, sell more cars and so increase turnover, and profits.

And (as an aside) their cars might look better as second hand cars because you can upgrade a basic car to a better car (note that they also suggest there will be one off payment options). So depreciation is recuced and brand value improved.

Or everyone will ideologically hate the idea and they wil fail to sell - but the software gaming industry suggests that this is not the case.

Finally, car manufacturers make the higher profit margins over the (prime) lifetime of the car on Serviceing and Spares, not on sales.
Volume of sales is key to a manufacturer as the more cars they sell the more Serviceing and Spares for the 4 years of the car.

SFK

Rubbish

 

[Deleted member 174758]

I see what you're saying but surely that wouldn't be financially viable for them? e.g. every car leaves the production line with additional components fitted (for heated seats etc) but a % of them are never used. Cost of part/s fitted but no return revenue from it.

What SFK says has a germ of sense. Quite a few years ago I recall a Ford exec admitting that whilst the top of the range Granada was about 3-1/2 to 4 times the price of a base Fiesta (I told you it was a while back), the actual difference in production costs was a lot less than 2:1 (or the Granada cost about twice the base Fiesta to build). No wonder dealers were so keen to sell you bigger and better models, and even on the base model they'd try and flog you a few "factory accessories". Ford didn't make a lot of profit on the base Fiestas

 

[Harry Bloomfield]

When my car was built, the options were a matter of the purchaser ticking boxes to decide what options they wanted including, thankfully all the boxes were ticked on the form. The only ongoing option needing a regular subscription was the maps for the built-in satnav, but there were work-arounds for that.

One thing I found was the price of the same absolutely identical parts, varied depending on what vehicle manufacturer the parts were needed for. The MAF sensor for my car when I needed a replacement, was £170 - but the absolutely identical part for a different manufacturers car was just £60 - guess which one I bought and fitted? Many parts are common to several car manufacturers and as above, the price depends not on the part, but the badge on the bonnet.

 

[Mottie]

I had a replacement A3 a few weeks ago while ours was being repaired. It had cruise control that worked but when I tried to use the active cruise control, I had a message come up on the screen saying that that option had not been paid for and to activate it, I was to call them and pay for it!

 

[Dork Lard]

You will own nothing, and you will be happy.

 

[diy_fun_uk]

What SFK says has a germ of sense. Quite a few years ago I recall a Ford exec admitting that whilst the top of the range Granada was about 3-1/2 to 4 times the price of a base Fiesta (I told you it was a while back), the actual difference in production costs was a lot less than 2:1 (or the Granada cost about twice the base Fiesta to build). No wonder dealers were so keen to sell you bigger and better models, and even on the base model they'd try and flog you a few "factory accessories". Ford didn't make a lot of profit on the base Fiestas

I get the premise and my 'rubbish' was perhaps harsh. I also get the rationale behind it from a business perspective for add-ons that are purely software driven and/or perhaps include only a small physical component. However to suggest manufacturers are going to roll cars off the production line loaded with all required components (with different functions/features then switched on or off accordingly) is stretching it somewhat. Then we have the aesthetic aspect. Folk buying a top of the range model want people to know (to varying degrees) that they have a top of the range and not base/near base model. So differentiators like trim, alloys, exclusive colours, sunroofs, bolt-on body parts etc are still required.

 

[SFK]

So differentiators like trim, alloys, exclusive colours, sunroofs, bolt-on body parts etc are still required

Completley agree - and engine size and paint will remain as class diffrentiaors that manufactueres will want to preserve.
My aregument is for 'bum warmer' price point items that by building at sub-contractor site (ie Visteon) reduce manufactuer stock numbers.
My examples would be eg Heads Up Display, Massage seats, Weird Interior Light colours, Lock onto car infront (forgot name), !impoved! Speedometer animation, radio telemetory to parents, valet mode (USA), etc
Noted that some of these are software and some hardware.

 

[Justin Passing]

I see what you're saying but surely that wouldn't be financially viable for them? e.g. every car leaves the production line with additional components fitted (for heated seats etc) but a % of them are never used. Cost of part/s fitted but no return revenue from it.

There's a cost saving if they're all the same, though. All the combinations would make loads of different versions.

Heated seat would be a bit of electronics - which is probably on the master module already, or only a couple quid if not, and some resistance wire in a pouch.
It's surprising how cheap things get in large volumes.

 

[SFK]

It's surprising how cheap things get in large volumes.

And how much manufacturers sell them for when they are spares & repairs.

 

[Deleted member 292770]

You will own nothing, and you will be happy.

They don’t understand. They sleep in blissfull ignorance.

 

[motorbiking]

Enormous numbers of cars are lease or contract hire these days. You'd be in default of contract, possibly committing fraud as soon as you 'jail-broke' the system.

Not Fraud, may be breach of license terms. Copyright design and patents act - maximum exposure 2 x the standard fee.

@SFK You forgot to add, that reoccurring revenues massively positively effect a companies valuation. They will normally be counted as a 4-5 times multiple.

 

[ellal]

Of course when you are essentially renting parts of the car you may have bought outright, then there is always the prospect of regular price hikes!