MarcR94v6

The question is, how much money do you think they will make per vehicle. It's difficult because as far as I know, there's almost no way to answer the question in such an early stage. But that doesn't stop us from discussing things that are years away, now does it? . Of course I'm not asking for a specific figure, just some discussion on the subject of profit margins of the new Camaro.

So, will it be a marginal profit for GM, or will it be a cash cow? And if it turned out that it just wasn't economically smart for them to make it (little or no profit), do you think they would make it anyway to bring more attention to Chevrolet? Them announcing it would be priced competitively with the Mustang is a confident thing to say. It almost suggests that either they already knew how much it would cost to produce, or, they just didn't care and are going to build it and sell it for whatever price they wanted. I raised this question because I remember reading about a year ago that GM was losing money on many of the vehicles sold. Many say the new Silverado is what will save GM, but maybe it will be the Camaro?

msgZ28

I think that GM will accept little profits to be able to price it competitively. It will still be profitable, and it will bring more customers to Chevrolet in general. Plus with 100,000+ models expected to be sold, even a little profit adds up. I think the only reason they were losing money on the vehicles sold was because of the huge incentives. Silverado can't save GM alone, Camaro will be a big help on the passenger vehicles side.

LandonElf

I was actually watching an recent episode of "auto line detroit" and they were interviewing Rick Wagner (CEO and chairman of GM duh) and the only vehicle that he mentioned by name in his response to "what is gonna turn GM around?" was the Camaro.

I know Silverado is probably there best selling vehicle period, but Camaro is going to generate the excitement and loyalty that the C6 did, just in higher profit margins.

Mustang Killer57

I'm sure the zeta cars as a whole will add to the profit margin. I just wish I could get a glimpse of what the impala is going to look like...

MarcR94v6

Oh yea, I forgot a few other cars may be on the same platform.

Chris 96 WS6

Camaro will bring people into Chevy showrooms in a way the Vette can't. The reason is that the Camaro is actually in the price range of the typical new car buyer. So, they may end up going home in a Tahoe or Impala, but they might have come in the first place to drive a Camaro.

I personally won't go drive a Vette, because I know I'll love it and I'll just be heart sick because I can't buy one. So I stay away rather than get hurt, LOL.

I doubt they will make much per-car on the Camaro, as this is going to be a content loaded car in a "value" brand in a "value" segment. But they should make it up in volume and with the chassis being shared by at least two other models to spread costs.

notgetleft

Of coursethey know how much it's going to cost to produce. NOTHING happens in (big) business before someone writes a proposal. The proposal doesn't just say "we want to build a camaro", it includes details about cost and schedules, as well as sales projections, etc. Without such details, there'd be no way for anyone to make a decision whether to do it or not. While corporate bureaucracy might seem ugly and inefficient (and in many ways it can be), without it, business wouldn't work because engineers and idea men would run the company into the ground chasing down unrealistic and unachievable goals. When people use terms like 'business case', they're not refering to whether something sounds like a good idea based on how cool it is. No, they're talking about whether it is even feasible and cost effective to do and whether they can sell enough to make it worthwhile, which will also be weighed against other potential uses for the money, facilities and resources.

Bearcat Steve

Given GM's cash flow issues and some outside distractions with the board and decision making, I seriously doubt that GM would build the Camaro if it was a break-even proposition or if the pro-forma P&L said that there would be marginal profit on the car. They simply can't produce anything right now that is not going to be a winner.

R377

So you think GM will never make a vehicle that they don't expect to turn a profit? Sorry, that's not the way it works. GM, as a full-line manufacturer, has to have entries in every market segment. Further, they have to be able to price the vehicle competitively in order to generate sales. But that competitive price will often not allow GM to make a profit. For example, I highly doubt there's any profit in a Cobalt, but GM has to make them so Chevy can be a full-line brand and draw in entry-level buyers.

Or look at it this way. It's speculated that GM makes about $10,000 per full size SUV they sell. At 350,000 per year, that's $3.5 billion. If pickup trucks average $5 k profit each, that's another $5 billion. So GMT-800/900 alone contributes $8.5 billion in profits each year. If your statement was true that every vehicle is supposed to be profitable, then their profits would only go up from there. Yet they don't. Fact is, there are plenty of money losing vehicle lines, but GM is able to balance them out by the higher profit lines and hopefully show an overall profit.

My guess on Camaro? If it starts out at around $22k then it'd be close. However it could be one of the car lines GM will accept a small loss on because it generates a lot of publicity and showroom traffic. It would also add additional volume that fixed costs can be spread out on.

STOCK1SC

Heck Acura produced the NSX for what 15 years? It actually lost money even after an $80k pricetag and was handbuilt in Japan. It did however give Acura the halo supercar they needed to draw attention to the company and is still probably the sexiest car to ever drive on the streets.

graham

I wonder how profitable the HHR is? I bet, for its pricing range, its been a nice item for GM.

Jacoz35thSS

GM would not put a vehicle on the street it would not anticipate bringing a positive return on investment. It's economies of scale that screw this up. If you anticipate utilizing X% of a plant (people, power, parts, etc) and sales are far below then your profit per vehicle diminishes. That's part of the reason some vehicles are better profit for the manufacturers. Also, if you have Cobalt or an Escalade where is it easier to hide a couple extra grand of profit? Simple. The Camaro is set out to make GM a good hunk of change at the Lutz mentioned 100K level. That's what made the business case.

Black_95Formula

With all the marketing that GM will need in order to make the new Camaro successful, I doubt they will make much profit from it. That said, the market-penetrating pricing strategy is just that -- it will help GM penetrate the market and hopefully take a large-enough chunk away from competition (namely the Mustang) to satisfy GM's stockholders. If this happens, then the Camaro will begin turning out a profit.

It looks so bad@ss that I am planning on buying it maybe in 2010, granted that it will look similar or even better than the concept does now.

MarcR94v6

I have a feeling it will look even better.

Bearcat Steve

Next time, read more carefully. I said at THIS time they can't afford to do it. Everyone has been focusing on their P&L. Have you looked at the Statement of Cash Flow? It is not a pretty picture.

Also, keep in mind that $10k "profit" on an SUV is gross profit -- it is in no way close to operating profit or GAAP profit. Currently, GM has much more of a cost problem than they do a sales problem. Retiree health-care is eating them alive along with amortization of diminished assets.

What I said is correct -- at this point in time (i.e., "right now"), GM cannot afford to sell a Camaro that doesn't make money. I am willing to bet that Scott would back me up on that -- along with every Wall Street analyst you could find.