By Andrew Ganz
Friday, Apr 13th, 2012 @ 11:30 am
 
Unless you shop NASA surplus auctions, your car is almost certainly the most complex consumer good you have ever owned, and while you'll probably pay more for your next vehicle than you did for your last one, the world's automakers are doing their best to keep prices down.

Don't think that they're just trying to do you a favor; anyone who slept through a college economics class knows that there's certain point where demand for a product pays for its development and distribution, thereby realizing a profit for its producer. The trouble, of course, is getting to that point. For years, many automakers listened to shortsighted accountants, who told them to keep cutting costs regardless of the final outcome. While they initially made some money, their products suffered and consumers eventually caught on.

Today, automakers are much better at hiding the demands of the bean counters and their balance sheets in order to produce vehicles that buyers actually want to own. They're learning to reduce the costs of building and developing vehicles that are increasingly complex thanks to a myriad of safety and emissions requirements and combined with consumer demands.

Keeping car prices in check
The average cost of a new car today is around $30,000 in the United States, and while that's up about $10,000 compared to what it was a decade ago, individual vehicle pricing hasn't skyrocketed like you might think.

Here's an example: 15 years ago, a Jeep Grand Cherokee's base price was about $26,500. Today, a base Grand Cherokee, one of the most universally praised new cars to hit the market in recent years, runs less than $28,000 and it brings with it a vastly more modern powertrain, four more airbags, stability control and a number of additional comfort and convenience features.

The Grand Cherokee is hardly alone, although it is a particularly poignant example of how an automaker has carefully trimmed the costs involved in developing, building and selling a new car. Grand Cherokee shares its platform with Mercedes-Benz's M-Class, its engines with everything from Chrysler 200 sedans to 2013 Ram pickups and it boasts the kind of carefully hidden cost cutting seen on virtually every new car today.

The Leftlane staff put our heads together to come up with a list of 10 hidden ways automakers are keeping cars (relatively) affordable. Read on.


10 (mostly) invisible tricks automakers use to keep new car prices down



1. Streamlined powertrain choices. Back in Detroit's heyday, nearly every division of each big automaker had its own engines, which meant that every product truly had a unique flavor. Fast forward to the 21st century and you'll find that the 3.6-liter V6 in your sporty Chevrolet Camaro also powers the sedate Buick LaCrosse and the family-oriented GMC Acadia, among others models. Unique computer and exhaust tuning can make engines feel a little different depending on their application, so many buyers might be fooled - if they even care.
Amount saved per car? It's hard to put an exact number on this one, but powertrain development is incredibly expensive, so we can safely say that automakers save thousands of dollars per vehicle.

2. Deleting trunk lid liners. Volkswagen has taken to removing trunk liners from most of its new cars in this market in hopes that buyers will look the other way. While black felt-like liners are attractive, they don't serve much sound deadening purpose in most new cars, so this is a relatively easy place for VW to trim costs without losing functionality, although the practice does make for cheap-looking trunk panels.
Amount saved per car? Perhaps $10-15.

3. Learning to work with enemies. In the early days of the auto industry, it was hardly uncommon for car manufacturers to look to their rivals for parts and expertise. After their ranks dwindled, those relationship became obsolete as the surviving brands were big enough to develop just about everything in house. But the days of independence are long gone: Every automaker has no shortage of partnerships with even their most bitter rivals to help defray the costs of developing everything from batteries to engines to entire vehicle platforms to manufacturing facilities.
Amount saved per car? It pays to get along with your rivals; automakers save billions annually by sharing development of everything from switchgear (think a few bucks per car) to platforms (think thousands per car).

4. Goodbye fog lights. For decades, fog lights have been a de rigueur fashion accessory for vehicle fascias, but their ranks are rapidly declining in favor of trendy LED strips. While fog lights certainly serve a purpose, we're willing to bet that only a handful of owners actually flip them on for their intended use - and that use is most certainly not to blind oncoming traffic.
Amount saved per car? Around $15-20.

5. Careful interior material selection. Non-premium cars are getting better interior materials with each redesign while high-end car builders are learning how to carefully hide budget-grade plastics. A few decades ago, a Mercedes-Benz was built with durable but immensely heavy vinyl covering every interior surface. Now, the German brand keeps an upscale appearance and feel but turns to cheaper, lighter weight trim where buyers might not notice it. Look at the lower half of most dashboards and doors and you'll find hard plastics where most buyers' hands will never venture.
Amount saved per car? $50-500, depending on the segment and the automaker. Some are stingier than others.

6. Simplifying lineups. In 2008, a Ford Fusion shopper could select from one of nearly 3,000 possible option configurations. Just two years later, about 100 were available. Consumers bent on getting the "perfect" combination of features lose out, but everyone else wins. Manufacturers can simplify their production processes, dealers don't get stuck with "odd duck" combinations and buyers don't have to settle for something over or under-equipped.
Amount saved per car? Easily $1,000 when amortized across a lineup.

7. Trimming the fat. Automakers have used the recession to drastically cut their ranks. While most of the big news has come from the Detroit Three's unionized assembly force, every automaker has scaled back its white collar operations as well. Chrysler exemplifies the "do more with less" lean and mean mantra; the company has less than a third the workforce of cross-town rival Ford but it posted about 40 percent of the Blue Oval's revenue last year.
Amount saved per car? It varies by automaker, but fewer salaries paid mean more savings.

8. Deleting spare tires. Dropping spare tires saves both costs and a small amount of weight, both of which have obvious benefits... except when you're sitting by the side of the road with a shredded tire and an inflator. Nearly every car can be retrofitted with at least a compact spare, but most automakers charge upwards of $100 for a feature that you might not realize is missing until you need it. The good news is that tires are better than ever at resisting small punctures, so it might be worth the gamble to go without a spare.
Amount saved per car? $40-50 since automakers buy spares at wholesale prices.

9. Dropping trunk hinges and hood support rods. Gas struts that keep hoods and trunks open are convenient space savers, but they're expensive and they are guaranteed to fail after a few years. The solution is a step backwards: Hinges that carve into trunk space and prop rods that require an extra step to deploy. Automakers hide hinges behind carpeted panels to prevent buyers from smashing their groceries (pictured is a Mercedes-Benz S-Class), and they're betting that most owners won't ever open their own hoods to discover a prop rod (for the record, the S-Class' hood is held up by struts).
Amount saved per car? $50-75, depending on how complex the hinge structure is.

10. Sharing platforms. Every automaker with more than one model shares certain architecture elements, but nobody is better at it than Renault-Nissan. A new modular platform set to debut in a production model next year will underpin nearly every front or all-wheel-drive Nissan, Renault or Infiniti product sold anywhere in the world. That means Joe America will be able to buy a "rugged" Nissan Pathfinder that shares some of its underpinnings with Pierre France's "refined" Renault sedan.
Amount saved per car? Another tough one to estimate, but the savings-per-car is well into four figures.