Design Costs Weigh Down US Carmakers

Design Costs Weigh Down US Carmakers
Domestic automakers make an average of $2,400 less per vehicle than their Japanese rivals because of high labor benefit costs, less-efficient purchasing and manufacturing procedures, and a weak yen, a study released Monday said.

The report by the Harbour-Felax Group, a widely respected industry consulting firm based in suburban Detroit, paints a grave picture for General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group versus their Japanese automakers.

The domestic automakers must quickly reduce their labor and manufacturing costs or they may not be in business over the long term, said company president Laurie Harbour-Felax.

The key to making more money is common components and car underpinnings used on multiple models, similar to what Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. already are doing, said company founder Jim Harbour.

By using common platforms, body architectures and components, Toyota has saved approximately $1,000 per vehicle over the last five years, the report said.

In addition, when fewer unique parts are needed for each vehicle, quality improves, reducing warranty costs, it said.