AD #1607 – BMW Slashes i3 Tooling Costs, Piech Calls It Quits, Uber vs. Leasing Cost Comparison
April 27th, 2015 at 11:57am
Runtime: 6:51
- Volkswagen’s Piech Calls It Quits
- Uber vs. Leasing Cost Comparison
- GM’s Mary Barra Makes Millions
- UAW-Ford Art Collaborative
- BMW Slashes i3 Tooling Costs
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On today’s show…Ferdinand Piech loses the biggest battle of his career at Volkswagen…..why it’s cheaper to lease a car than rely on Uber….and how BMW slashed the cost of the i3 even though it’s made out of one of the most expensive materials you can buy. All that and more coming right up on Autoline Daily.
This is Autoline Daily for April 27th, 2015.
PIECH CALLS IT QUITS
In a stunning and dramatic turn of events Ferdinand Piech resigned from Volkswagen’s board of supervisors over the weekend. So did his wife Ursula. It was only 2 weeks ago we first learned of the power struggle between Piech and the board of supervisors over the fate of CEO, Martin Winterkorn. Piech wanted him out, but the board backed Winterkorn to the hilt. So Piech did the honorable thing and said sayonara. The board picked a Deputy Chairman who will temporarily hold the position until a new chairman can be elected. And wouldn’t it be poetic justice if Winterkorn becomes that new chairman? Stay tuned.
LEASING IS CHEAPER
Paying for your mobility as you need it might be the wave of the future. But right now leasing a car is cheaper. It all depends on how much you drive. A recent article from Medium.com says you would pay about $12,700 using Uber if you drove 9,500 miles a year. But according to SwapALease.com, it would be much cheaper to lease a car, about $4,800 a year in lease payments, over $1,300 a year in fuel (assuming gas is $3.50 a gallon), around $1,300 for insurance and about $350 for maintenance. That brings the lease total to about $7,800. So if you drive 9,500 miles or more a year, you’d save nearly five grand if you lease your car instead of using Uber.
And we’ll be back with more right after this.
MARY MAKES MILLIONS
GM CEO Mary Barra made triple the compensation that she earned in 2013 when she was the company’s executive vice president. Barra was paid $16.2 million last year for her job as CEO. The majority of the money came from performance-based cash incentives and stock options. It could have been more, but Barra missed on some of the company goals as she and her team spent most of the year dealing with its ignition switch fiasco. And her compensation puts her right smack dab in the middle of what her male counterparts make.
HOURLY ART
The UAW-Ford department recently put together an art exhibit of artwork from UAW-Ford employees, and we’ve shown you a number of those entries. Here’s another one. It’s called Picasso Sepia and is an oil painting from Kenneth F. Zierau who works at Ford’s Product Development Center. This picture doesn’t give you an idea of the scale, because in real life this painting is 6 feet tall by 5 feet wide. The detail is incredible. And it shows the incredible talent of some of the hourly workers who are part of the automotive industry.
Be sure to join us for Autoline After Hours this Thursday. Our guest is Klaus Busse, the head of interior design at FCA North America. Join me and Gary Vasilash for some of the best insider insights into the automotive industry.
And speaking of After Hours, coming up next we’ll take a look how BMW slashed the cost of making the i3, even though it uses one of the most expensive materials you can buy.
BMW SLASHES TOOLING COSTS
On the last Autoline After Hours, Sandy Munro, whose company Munro & Associates does a lot of vehicle tear downs for benchmarking, took us through some of his findings on a tear down of the BMW i3. Munro thinks the car is so revolutionary, he calls it the Model T of our times. And that’s especially true when it comes to the construction of the carbon fiber body.
Carbon fiber is at least 25 times more expensive than steel. That’s why it’s mostly used on expensive performance cars. But Munro says the way BMW constructs the body of the i3 more than pays for a lot of carbon fiber.
Sandy says it typically costs about $420 million to pay for the tooling to make a car in steel. But by avoiding stamping dies, he figures BMW’s tooling cost was about $120 million. Let’s say BMW plans on making this version of the i3 for 4 years. Total production, based on today’s rate, would be about 80,000 cars. That means if BMW had made the i3 out of steel, it would have had to amortize tooling costs of $5,250 per car. But the actual tooling cost means it only has to amortize $1,500 per car, a savings of $3,750. That pays for a lot of carbon fiber. But it doesn’t pay for it all. And if you’d like to learn some of the other ways that BMW cut the cost of this car, we invite you to watch that entire episode of After Hours on our website, or on our YouTube channel–just look for the Autoline Network. And by the way, you can subscribe to that channel so that you don’t miss any of the coverage we provide.
Tooling Cost Comparison
Traditional Steel Car: $420 million/80,000 cars = $5,250
BMW i3: $120 million/80,000 cars = $1,500
Savings: $3,750
And that wraps up today’s report, thanks for watching and remember, we’ll be right back again here tomorrow.
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Comments (35)
April 27th, 2015 at 12:08 pm
So if leasing is cheaper than using UBER, how does all that compare to purchasing the vehicle?
April 27th, 2015 at 12:15 pm
Ferinand Putz got what he deserved,hope the door hit him in the butt on his way out.What a high paid maroon…
April 27th, 2015 at 12:21 pm
What the UBER Car versus Leasing comparison did not take into consideration are the Monthly parking fee in NYC for the leased vehicle. I think the lowest are $200.00 per month plus parking at your destinations around town during the day. John you saw how much hourly parking fee are around NYC when you were at the NY Auto Show earlier this month. If you get towed in NYC by the Traffic Enforcement Department you will pay in excess of $300.00 per incident to get your car back from impound.
April 27th, 2015 at 12:26 pm
Your comparison of uber vs leasing leaves out the cost of parking the vehicle. Many city dwellers have to pay for parking. The cost of parking at your home and destination should be included. I’m guessing city dwellers are the biggest users of uber and parking costs and hassles can be a big factor in the decision.
April 27th, 2015 at 12:28 pm
I’m thinking Piech, at his age, just said to himself: ‘I don’t need the aggravation, I’m out of here’. But obviously he did a pretty good job while there; the company is sound, not perfect, but sound.
April 27th, 2015 at 12:30 pm
@ Chuck: Didn’t Wintercorn have anything to do with VW’s growth?
April 27th, 2015 at 12:31 pm
He just gave up after his crack team of superior German engineers could not manage to make a clunk-free steering column adjustment mechanism. As Hyundai was able to do.
April 27th, 2015 at 12:40 pm
@ G.A.
Sure he did (Wintercorn had a big role in growth), but I’m not looking at the last couple of weeks; I’m talking about Piech’s career at VW. I don’t support Piech’s last tirade, just not throwing the ‘baby out with the bathwater’ either.
April 27th, 2015 at 12:42 pm
So, when race cars collide, there is an explosion of carbon fiber bits all over the track. Some of these are as sharp as razors. Will adopting more carbon fiber into conventional vehicles greatly increase the time and expense it takes to clear an accident from a major roadway? It already seems to take forever with steel cars.
April 27th, 2015 at 12:43 pm
While I don’t know Ferdinand Piech (or Martin Winterkorn) or any of their issues, if Herr Piech were really saying goodbye to VW it’s my bet that he wouldn’t want to say it in Japanese. So based completely on the context of your reporting I’ll bet he’s feeling pretty peevish. My version? He might actually say to his adversaries, “Tschüss Schwein,” and let it go. Just a thought and from afar.
April 27th, 2015 at 12:47 pm
If you drive 9500 miles a year, leasing (or, presumably buying) a car would be cheaper than using Uber. If you only go 5000 miles a year, and are in a location where they operate, Uber would almost certainly be cheaper. For now, though, I doubt if a a lot over people are ready to sell their cars, and rely entire on Uber, even if they don’t drive a lot of miles.
April 27th, 2015 at 12:48 pm
Piech goes Putsch
My question is if Porsche boss Mueller can survive now it’s known Piech asked him to replace Winterkorn.
This is the orgin of the German expression “Up the Creek”
—–
Fiber
How long before F1 claims they should be credited for BMW’s carbon fiber manufacturing process?
April 27th, 2015 at 12:51 pm
I wonder who in the World Automotive Management circles will be likely to call Piech and offer him his next gig? There must be an opening for someone who has his Resume. Even Inaki was able to find work after VW.
April 27th, 2015 at 1:02 pm
3 If I lived in NYC, I’d mostly use public transport, use taxis, or maybe Uber, but would want to have a driver’s license.
April 27th, 2015 at 1:47 pm
@ Chuck G: I agree,to a point.It was putz that made his personal attcks on Wintercorn public,and as John Mc said,he shouldn’t have.My take on this as I said before,it was a pissing contest between the two,and when the board sided with Wintercorn,putz suffered a huge humility thing and really left himself no other choice but to tuck his tail between his legs and boogie out of there.Am I wrong?
April 27th, 2015 at 1:56 pm
Another interesting comparison for the Uber vs. leasing comparison would have been if the labor costs for drivers was removed. Autonomous fleets might make the economics work.
April 27th, 2015 at 1:59 pm
The tooling cost comparison spot should have
included material cost comparison, which was briefly mentioned in today’s report.
April 27th, 2015 at 2:03 pm
Also , I3 wise, don’t understand why they used UGLY to attract attention.
April 27th, 2015 at 2:15 pm
that uaw ford art is uber cool
April 27th, 2015 at 2:27 pm
With the i3, they save tooling cost, and also made the car “cool” to a certain group of people.
In a similar way, to save tooling costs, Chevy made Corvettes with composite body panels 60 years ago, and by the time they might have considered using steel, the Corvette faithful wouldn’t allow it.
April 27th, 2015 at 3:07 pm
Of three i3s I’ve seen on the road, I’d say they all made an impression of ‘confidence’ upon me. The front facia also is very different in the flesh.
Of course I’ve got some pretty squirrely taste in cars.
April 27th, 2015 at 3:28 pm
@ HtG: Yup,me too.That’s one reason I want the promaster city wagon.It don’t look like anything else be it car or truck.
April 27th, 2015 at 4:41 pm
#22, G.A., Just watched Motorweek review the Promaster city wagon. Cool vehicle.
http://www.motorweek.org/reviews/road_tests/2015-ram-promaster-ram-promaster-city/
April 27th, 2015 at 5:09 pm
It is a very cool,and different vehicle,and very capable too.
As I posted yesterday,my dealer had a line on the exact PMCW that I wanted,right down to the color.He called this morning to tell me they,(the other dealer) WILL NOT DO A DEALER TRADE,lol.The reason is the other dealer actually has a bidding war going on for that very van.Can you believe it…
So,opening for the 2016 PMCW will begin around mid June,with a 4 month wait.I can do this.
April 27th, 2015 at 5:50 pm
24 Alright GA, I’ll fess up. I had to get into the Promaster at the NY show. There it was in the basement, all white and pokey looking. I got in the driver’s seat and it all came back to me, my days in SUVs, vans and pickups and box trucks. That’s a neat vehicle. I get why people want it.
April 27th, 2015 at 6:34 pm
Well HtG,yer one up on me.My dealer had ONE carego van.When I seen it ontheir website I called to take a test drive…..too damn late.It sold the same day it hit the lot.Even the gm midsize twins didn’t do that well.Whoda thunk it???
April 27th, 2015 at 6:35 pm
I meant Cargo….jeeezz.Hey Ben,send me an edit button please ;}>
April 27th, 2015 at 6:41 pm
It’s got a great seating position. You sit high, with a big windshield and side windows, there’s great vision. Stepping into and off the thing is well done. People behind me were walking around inside which is a little weird.
April 27th, 2015 at 8:10 pm
Those east of me are enjoying the hell out of their cargo vans and some wagons…grrrr.Only complaint so far,and it’s on the cargo van,it’s noisy in the back until they lay down a rubber mat,or foam backed industrial carpet,noise gone.
April 27th, 2015 at 8:13 pm
And,most of the cargo van owners are disgruntled transit connect,and the nissan nv 200 owners who in some cases had to bit the bullet on trading in their very new vans just to get out of them.Now that did surprise me about the TC,not the nv 200.
April 27th, 2015 at 10:45 pm
I haven’t seen a Promaster City wagon, but saw, and sat in the cargo version. It has a lot of room for its footprint, and the seating position seemed very good.
April 28th, 2015 at 8:25 am
So you have to drive 9500 miles to make leasing more attractive than Uber but go over 10,000 miles and your over your lease milage.. Pretty fine line to walk.
April 28th, 2015 at 10:51 am
@ Kit: The wagon is essentially the same,more sound insulation and of course the removeable back seat.In your opinion Kit,will it fit the bill for those long fuses we talked about?
April 28th, 2015 at 4:12 pm
33 The best thing to do, is just measure. If the front passenger seat comes out easily, you really have a lot of floor length, if you don’t have a passenger.
May 4th, 2015 at 11:48 pm
Is there a link to view the UAW
UAW-Ford Art Collaborative?