There are three major costs associated with the making of an automobile:
Labor - most of the assembling of a vehicle is done by machines and robot, but the biggest portion of the labor costs goes towards designing and engineering automobiles.
Materials - "Everything from steel, aluminum, dashboards, seats, tires, etc. are purchased from suppliers." (Industry, 1).
Advertising - car manufacturers spend billions on dollars to advertise each year. They also spend large amounts of money on consumer research in order to predict what the consumers will want in the future. Here are the money that some of the major companies spend on advertising in 2008:
- General Motors (GM) - $535 million for
- Toyota - $291million
- Ford - $292 million
- Chrysler - $186 million
That is a part of the article "The Industry Handbook: Automobiles":
The auto market is thought to be made primarily of automakers, but auto parts makes up another lucrative sector of the market. The major areas of auto parts manufacturing are:
- Original Equipment Manufacturers (OEMs) - The big auto manufacturers do produce some of their own parts, but they can't produce every part and component that goes into a new vehicle. Companies in this industry manufacture everything from door handles to seats.
- Replacement Parts Production and Distribution - These are the parts that are replaced after the purchase of a vehicle. Air filters, oil filers and replacement lights are examples of products from this area of the sector.
- Rubber Fabrication - This includes everything from tires, hoses, belts, etc.
I think they have more costs, such as wage, compensation if they face lawsuit, and much more. But do you know which part is the much expensive for auto companies. It's interesting that Toyota has less costs than Ford, I think those Japanese have an enhanced technology in producing cars.
ReplyDeleteAs I have pointed out the most expensive part of any industry is the advertising. It costs auto companies millions of dollars on advertising. Plus Toyota only has less costs in advertising. I am not sure who spends more money as a whole.
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