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Discussion Starter #1
http://www.pontiac.com/fuelingzone/index.jsp?deepLink=solstice&brand=home&pagename=home

I found it interesting that Pontiac's website shows the Solstice as an upcoming vehicle with a number of its highlights including this one.

"Estimated Starting MSRP Around $20,000"

I know we have been debating the base MSRP a lot on here, and I have continually said that I believed GM would come in right under $20K. This certainly sounds like they worded it to leave the door open to price this car just over $20K. "Around" certainly doesn't necessarily mean "Under." Maybe this car will be $20.5K, $21K or so. Still a good deal, but they appear ready to backtrack a little on Mr. Lutz's declaration that it would sell for under $20K.
 

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They will definately keep thier options open until they know exactly how much it is really going to cost to make and support this car. Lutz may have said under 20k, but I doubt they are going to stick to that if it turns out they're losing money. I still think it's ambitious to make only 20k units and sell them so cheap and hope to make enough profit to make it worth their investment.

The original plan seemed to be to have other Kappa cars to help shoulder the R&D costs and production costs. So far the other Kappa projects don't seem to be panning out as well as hoped. This leaves Solstice with the entire startup burden, so I can see how there might be alot of pressure from accounting to raise the MSRP. We can only hope for more successful Kappas to keep Solstice alive and affordable.

Lutz has taken the company out into risky terrirtory, and if these "nitch" and "halo" cars don't drive customers to the showrooms, then Solstice will get the axe fast. GM responds quickly to Wall Street. The anylists on Wall Street like to see early profits on every investment. If the overall profits are down, and they see these new projects as risky, and a bad investment, they will down grade the stocks. The board will respond by sacking Lutz and changing direction. I dream about the days when car companies were privately owned and run by people who only wanted to make great cars.
 

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I still think the multi-Kappa strategy will appear to spread the load...it's just taking a little longer to make the right choices. Solstice will forge the trail and others will follow :D
 

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Discussion Starter #4
They will get the Kappa architecture going over time. Its just taking them a little while to decide on how to approach it.

I wish I could find it on the net, and I cannot, but I saw an article in a magazine yesterday at the bookstore about the Kappa architecture, and Caddilacs interest in it. They want a miniature XLR roadster to go after high end BMW/Mercedes roadster sales, and think they can pull it off with a Kappa based roadster wearing the Art and Science design theme, and get this, a V6 engine! :thumbs It didn't indicate what V6 might be used, but I wouldn't mind a Kappa roadster with the Caddy 3.6L DOHC motor under the hood!

The $20K Solstice will be a loss leader, and probably won't last for too many years. Its more a marketing ploy to get people talking about the car, and get them onto the roads. The base car doesn't really have to make money. Still, they don't want to lose too much on each one either.
 

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Depending on how much of a 'parts bin' car the Solstice is, I really don't think they would be loosing that much money on the car. Actually I think this car could have a decent profit margin for them.

If you look at the ION Red Line and the SS Cobalt, you're talking $20k for the SuperCharged versions. The Solstice will use the same 2.4L Ecotect as the non SuperCharged SS Cobalt. The hydro-formed panels supposedly cost less then the plastic ones used on Saturns. There's nothing very exotic parts wise about this car to cause it to cost that much. It doesn't have AWD, there's no mention of LSD, it deosn't have a state-of-the-art transmission, there's no Turbo, there's no SuperCharger, no exotic paneling materials. Yes it is sitting on a new design platform, but so is the Cobalt. Also this design platform is known for being pretty much one of the quickest and cheapest ever to reach production.
 

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brentil said:
Depending on how much of a 'parts bin' car the Solstice is, I really don't think they would be loosing that much money on the car. Actually I think this car could have a decent profit margin for them.

If you look at the ION Red Line and the SS Cobalt, you're talking $20k for the SuperCharged versions. The Solstice will use the same 2.4L Ecotect as the non SuperCharged SS Cobalt. The hydro-formed panels supposedly cost less then the plastic ones used on Saturns. There's nothing very exotic parts wise about this car to cause it to cost that much. It doesn't have AWD, there's no mention of LSD, it deosn't have a state-of-the-art transmission, there's no Turbo, there's no SuperCharger, no exotic paneling materials. Yes it is sitting on a new design platform, but so is the Cobalt. Also this design platform is known for being pretty much one of the quickest and cheapest ever to reach production.
You can't compare the Solstice with the Cobalt. They are expecting to sell at least 5x the amount of Cobalts than Solstice. Economy of scale. The costs of development, production, support and promotion gets divided up into much smaller chunks with each car sold. That's a great factor that allowed Henry Ford to sell Model Ts for about $270 while everyone else was having to charge at least double. The Cobalt will be in almost every rental car fleet in America. Automotively speaking, 20k units for the Solstice is nothing. Porshe, Audi, Mercedes, etc. can do production numbers like that because they can charge more for each unit.

Even though the Solstice will use many off the shelf components, it will end up having more unique parts than not. All these parts have to be designed, tested and cataloged. Then they have to be made in enough quanity to meet the demand for cars to be sold, but also provide for spares that have to be inventoried. On parts that require GM to go to outside OEMs, they will not get as good of a price break as they would with either the Ion or Cobalt. For instance when they go to Dayon Wheel to get 80k wheels for the Solstice, they are not going to get the same price structure as the 400k wheels for the Cobalt.

Keeping the car simple is going to help the profit ratio, but until there are more Kappas to share the cost burdens, the Solstice will have a marginal profit at best, and if the car is too simple, it will drive potential buyers away. I'm not thier accountant, and I could be totally wrong, but historicaly, low cost and low volume don't make for great profits. At GM, if a product doesn't make money in the first three years, it gets the axe.

I'm not saying that Pontiac can't sell the Solstice for 20k and still make a profit. Maybe they can, obviously Mazda is doing something right. I'm just saying that when the hard cold facts to actual production costs are considered, it wouldn't suprise me if Pontiac bumps the price up a little. That's why they are now saying "around 20k" instead of under 20k. The good new is it looks like they're going to at least make enough for us to buy at close to 20k!
:party
 

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Discussion Starter #7
Comparing Solstice with the Delta cars (Cobalt and Ion) are like comparing apples to oranges.

The Solstice is a ground up redesign, where as a S/C version of the Delta car is just some changes on an existing platform. Say GM spends $1 Billion dollars on the development of the Kappa platform and the Solstice, and getting the factory up and running, and on a mid life styling update and making engineering improvements. If they sell 100,000 of them over 5 years, that means the first $10,000 of profit for every car sold has already been spent. If they sell for $20,000, that means they have only $10,000 of value left in the car to pay for marketing, precious metals, parts, factory labor, other overhead, etc. Whatever is left is what they actually make on the car. That is what makes it so difficult to make money on a low volume car at that price, and is why they need other Kappa cars to defray the cost. If they have just one other Kappa car at 100K units, that alone drops the development cost for each car from $10,000 to roughly $5000 (although it will be a little higher since the second car will add to the 1 billion design cost) Yet, it won't cost anothe billion since the platform design costs will only be paid once. If they get production up to 80K combined units a year across a few Kappa cars, then the initial engineering costs will drop down to $2500+ some extra per unit. That is why Ions and Cobalts are cheap. They spread the design costs out over a couple hundred thousand units a year, so they can have low MSRP's. Yet, GM small cars have also traditionally lost money even with the low volume. That is why it will be difficult to make money on Solstice at $20K. Its not impossible, but its not easy and GM needs Kappa sales in other divisions to help.
 
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