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Technology Stocks : Automobile technology and business management
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From: Arthur Tang2/21/2007 9:09:10 PM
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Major cost reduction consideration in the automobile business is the tooling cost for a model. The tool and die is for car body parts. The frame and moving parts are not very expensive. The interior of the cabin is not very expensive.

So, there is a break even point for the amortization of body parts tool and die. The tool and die are amortized in three model years in the old days. And it means perhaps 135,000 cars off one set of tool and die, befor they are worn out. Which may be the reason to use trims to cover up the dimesional changes for the last model to be in production. Today Ford Taurus body parts were used pretty much for 10 years at 450,000 cars per year. So there are cost associated with tool and die repairs(worn out spots), each September; within the ten year model change period.

Steel body parts are much more expensive than plastic ABS parts due to tool and die costs.

With the new models that ford builds recently the cost of tool and die will have to be expensed off in ten years, to make cash profits(watch the cash flow).
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