Sample slides from lecture on cost calculation for the Automotive Industry, its relevance and how it is used.

1. Cost Calculating in the Automotive
Industry
Its relevance and how it is used
H. Ehlhardt,
January 2009

2. Following slides are an excerpt from a lecture I give on cost in Manufacturing in general
and cost reduction in Automotive specifically.
Interested? Please contact me: huub.ehlhardt@paconsulting.com
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3. Content
1. General introduction
2. Cost Calculation
3. Generic Picture of the Automotive Industry Supply Chain
4. Trends in Industry
5. Examples
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4. Generic Picture of the Automotive Industry Supply Chain
The is automotive industry is very complex and (one of) the leading
manufacturing industries
OEM
Tier1
Tier2
Tier3
• Car most complex consumption good, average car about 1000 kg, 15.000 components.
• Automotive OEMs govern complex supply chain
• Suppliers lower in the chain also have other industries as customers
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5. Trends in Industry
Trends in the Automotive Industry
1. Evolving Automotive Industry
due to increasing complexity, shorter life span, changing roles, legislation
2. Globalisation
driven by wage level differences, improving communication and transport, political
changes
3. Cost pressure
due to increasing competition, increasing complexity, increasing material & energy
prices, increasing wages, improved access to information
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6. Trends in Industry
3.3 Cost pressure
- Material Cost Price development for Metals: HIGH VOLATILITY
• Steel prices spiked mid 2008.
Steel (indexed) 864 $/ton – consolidation in steel industry
– demand increased due to Chinese building
boom
– Demand drop due to financial crises cause
prices to collapse
• Aluminium went up by 175% fro 2001 to mid
2008. Prices now back to old level.
• Copper quadrupled between 2002 and 2006.
Now price back to 2004 level.
– Copper supply limited
Aluminium ($/ton)
Copper ($/ton)
source: www.lme.co.uk source: www.lme.co.uk
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