[Shotimes] Re: (OT) How to avoid the pitfalls of pricing Former Porsche boss: There's no 'right price' for a car

[Donald Mallinson]

Ron,

Whether you call it "cost Plus" or something else, the manufacturer 
still has to total what the car will cost and add a profit margin.  OR 
they set a price and build it down to that price including a margin.  
They still have to have a cost and a selling price.  I don't see where 
it makes any real difference in this discussion.  For purposes of 
getting you off that point and onto what we really are discussing I will 
say that yea, cost plus sucks.  Can we move to the more important stuff now?

If they had set the price $4000 less and then built the car, what would 
have happened is just what I mentioned long ago....they would have had a 
warmed over duratech of about 160 hp (20 more than stock in 1989) and 
probably an interior not much different.  I doubt that car would have 
been as successful as the SHO.  Many feel the SHO was at least a little 
comparable to the 3 series BMW, and that car was priced many thousands 
more than the SHO for similar performance. 

And lest we forget, the SHO wasn't a dismal failure.  The SHO had an 
Eleven year production run, longer than many highly thought of cars, 
longer than many early car manufacturers in general and the SAME as the 
GTO, considered one of the most successful and well thought of muscle 
cars of the 60's.  Yea, they stuffed a big engine in the same body and 
priced it nice, and they sold a lot more of the GTO than the SHO 
eventually sold.  Total SHO sales about 120,000, total GTO sales right 
at 500,000.  But at the end, the GTO was down to 5000 or less for the 
last few years, and the car had deteriorated to a hollow shell of its 
original self (the entire industry was putting out awful stuff anyway, 
the GTO was just doing the best it could basically).  Pretty much what 
happened to the SHO, but at least the SHO remained a decent car and 
didn't have the emissions and other safety crap to go through.

Point is, the SHO wasn't a failure, and if some ford execs are not proud 
of it, virtually everyone here is, and many Ford people and dealers 
still think highly of the car (OK, maybe just a few Ford dealers!).

As I have stated before, yes it would have sold better if cheaper, but 
if they had to reduce the quality of the car, or put in a "normal" 
engine, that would have killed it off much sooner.  I doubt if someone 
in Ford just said "heck we built this really awesome car and can just 
tack on 4 grand for the heck of it!"  There were plenty of other cars 
more expensive and the SHO wasn't in the stratosphere as far as pricing 
was concerned for a premium American car.  All I ask is you not try to 
re-write history in your quest to keep putting down the SHO.

Don Mallinson

Ron Porter wrote:

>Don, and that's where I feel that your point totally missed the point of the
>Schutz excerpt.
>
>It doesn't matter what it actually cost Ford for the SHO bits & pieces. The
>car needed to be priced where it would sell. It appears that Ford tried a
>"cost-plus" model, and that doesn't work.
>
>During the time that it was in production, its price far exceeded
>"comparable" (and I know that we feel that nothing in the US market was
>comparable to the SHO, but others think otherwise) sport sedans. There were
>discussions on the SHO list about Gen 3s with stickers over $30K, and one
>lister priced a GTP sedan at $23K out-the door, and the Impala SS was
>mid-20s at best. Plus, the SHO price delta was compared to a loaded SLO in
>more than one article, along with the question of "Is it worth $4K over a
>Taurus??". Yes, I know that we think so, but it's obvious that not enough
>other people felt that way.
>
>A long time ago (late '70s), I worked for GM in the Argonaut Building
>(behind the GM Building) in the Corporate IT dept (in what became GMISCA,
>for anyone who cares). IT security in those days was almost nonexistent (I
>had production card decks kept in my desk!!). There was an area on our floor
>that had glass walls, and a security entry (VERY RARE in those days). I
>didn't even recognize anyone who worked in there. After nosing around for a
>good 6 months, I fond out that was the corporate group that worked on the IT
>systems that determined what any vehicle "really" cost GM. They even had
>their own IBM mainframe and computer room!! For as independent as the GM
>divisions were in that day, GM didn't even give the divisions that info!!
>What it costs GM (or any other mfr) is one of the most closely guarded
>secrets in the auto industry (next to the future-model styling studios).
>Frankly, it is really not relevant when it comes to how they price the cars.
>
>Ron Porter