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Chevrolet Volt
GM isn't going to let a little thing like a lack of money prevent the Volt from coming to market in 2010

General Motors has been in a downward spiral all year with lagging sales and losses in the billions. GM and its cross town rival, Chrysler, asked Congress for monetary assistance to stave off bankruptcy by the end of the year. In the end, the Senate failed to hand over even $14 billion USD to the two struggling Detroit giants.

Now as the White House mulls what plan it will present to help GM and Chrysler stay in business during 2009, GM is stating that it will bring the Chevrolet Volt to market no matter what. This confidence in the Volt program comes despite that fact that GM announced yesterday that it would halt the production on a new engine assembly plant which will produce the 1.4-liter gasoline engine/generator for the vehicle.

Despite the setback with the engine assembly plant, billions of dollars in losses, and a production schedule that leaves little room for error, GM is still committed to bring the Volt -- and the Chevrolet Cruze -- to market by the end of 2010 as it has always stated.

If the engine assembly plant is unable to be completed in time to get the production Chevrolet Volt and Cruze out the door in 2010, GM will be forced to rely on one of its overseas facilities to produce the engine according to the Wall Street Journal. Interestingly enough, the Chevrolet Cruze is already available in overseas markets like South Korea albeit with a 1.6-liter four-cylinder engine -- two years ahead of the car’s North American launch.

"Everything that involves heavy cash outlays obviously is under review," said GM spokeswoman Sharon Basel on Wednesday. "Our intent is to still go forward with a new facility bringing that engine to Flint, Michigan."

"Although we are temporarily absolutely stopping all work on everything, the Volt will be out as originally scheduled," added one GM executive.

GM is banking on the Volt to bring it some of the same positive press that has been bestowed upon the Toyota Prius. However, the Prius and its rival, the Honda Insight, have base prices below the $24,000 mark. The Volt, however, will be priced near or will surpass the $40,000 mark before a $7,500 tax credit.

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RE: Price
By foolsgambit11 on 12/18/2008 6:35:15 PM , Rating: 0
Really? Even taking the worst numbers - $49/hr non-union vs. $71/hr union (which won't be the case the year after the Volt comes out and legacy costs are shifted off the manufacturers - then it will be more like $58/hr) - you have the 'union-associated cost bump' of 45%. So factory labor costs would have to be about 44.5% of the cost of the vehicle for the union to be 20% of the cost of the vehicle.

Now, labor costs per vehicle are (on currently produced cars) about $2400, and assuming that the Volt is similar - aw heck, I'm feeling generous, let's say it takes 25% more labor-hours to make it, giving us $3000 per vehicle. Since GM will be getting $40,000, or so it's projected, per vehicle, that makes labor costs 7.5% of the vehicle. If GM's labor costs were suddenly $49/hr, they could charge $929.58 less. That means that, in fact, at most, about 2.3% of the cost of the vehicle comes from unionized labor . You're an order of magnitude off. And, of course, in the second year of production, GM's labor costs are going to drop to around $58 - which will drop their labor costs per vehicle to $2450.70. Then, the union is only responsible for an increase in costs of $380.28. So, come 2011, unions will only increase the price of the vehicle 0.95% .

Sorry, I hate using bold, but I didn't want the point of all those calculations to be lost in that big paragraph of figures.

It's actually pretty amazing, though. I couldn't imagine the government being able to provide health care and retirement entirely on a 2% tax. (Apparently, Detroit can't do it, either.)

And as an aside, $5 of the $9 difference between union and non-union workers (after 2011) will be in overtime, holiday, and paid time off. Depending on how that breaks down, they could conceivably save a couple of dollars by forcing people to keep to 40 hours and not work holidays - in other words, that's not necessarily a union-labor cost, but more of a poor-management-labor cos.

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