How much would an ASTON-MARTIN car (if made in China) cost? I belive that labor accounts for about65-70% of the cost of a new car, and ASTON-MARTIN is a special case-it is produced in such small volumes (it ain’t a Chevy Malibu), that most of the assembly line is not highly automated-most of the operations that would be performed by robots(on a high-volume assembly line) are done by hand at A-M.
So, suppose we have an ASTON-MARTIN that retails for $200,000. Dealer profit/margin is probably 20%, so the dealer might pay $160,000 for such a car. Assuming (English) labor plus overhead is about $70.00/hour, we have about 1600 hours of labor to assemble this car. In China, labor is considerably less than in England, so assuming a labor rate of $7.00/hour, would a Chinese-made A-M sell for about $71,000 (assuming the same material costs in China (as in England)?
If these calculations are correct, luxury car mfgs. would save a bundle having these cars made in China. Of course, the cachet of M_B, A-M, or Jaguar would be gone-all that stuff about “old World craftsmanship” would go out the window.
But seriously-would rich people disdain these brands, if these cars were made in China, along with cheap Chevy Aveos, and Daewoo Leganzas? 
First off, you’re making some very generous assumptions. The Uited States is still the world’s largest manufacturing economy because, though we can’t keep up with our own demand at given costs, we still make a lot of stuff. Different economie have different skill levels and different education levels, work customs, habits, and so forth.
China in this case would probably be a bad investment. Sure, the labor’s cheaper. However, the top luxury car makers probably want to keep their facilities close to management. They don’t want to start a factory service on the other side of the planet, where they can’t even call people except at unusual hours. Keeping things close has a lot of benefits, and with few facilities in total, it’s probably better. And in China, you’d have to want to run the factory virtually all the time, not customize it to order.
Aside from which, let’s say Aston-Martin did make a cheaper car? How would this benefit them? Their cache’ is built on having expensive automobiles - the kind you dream about owning (and some lucky people do). Dropping the price might well destroy their brand image.
Mercedes already assembles cars in China using CKD kits for the Chinese market. The most expensive parts of the car, i.e. the engine, are still capital intensive items and there would be no point in making them in China. As for the hand-crafted parts, again, the cost to train and organize such a highly specialized workforce in China when you already have one in Britain (or Germany) would make for a poor business case.
Perhaps American busybody leaders should not have been so gung-ho about moving China toward capitalism. The unintended consequences, I mean. Now a gargantuan middle class is emerging, and they all want petroleum products — which their government subsidizes. If they decide to go heavily into manufacturing cars, there might likely be no nation that could compete with them. The costs, however high, would be recouped quickly.
Methinks the gentleman doth know very little about economics, especially car manufacturing, which already uses Chinese labor. The very same forces which propel the Chinese to wealth also increase their costs. Companies have been leaving China for yet other emerging economies.
Not according to the editors at Business Week. Of course, it may be that they are as stupid as I am.
The fact that the government-controlled car industry is pumping out more autos does not mean they are simply going to crush all opposition, which you seem to be imagining. Industries come and go on scales which sometimes exceed whole nations, often with little obvious external logic.
That wasn’t my premise at all, and I don’t know how you derived it. My premise is that if the Chinese economy continues to expand it will have enormous capacity to subsidize its automotive industry. I’m not sure you can just dismiss that point with arbitrary statements about my intelligence or lack thereof.
BW is following the trend of chinese manufacturing if nothing changes in the future. For our purposes , I would say that the future is about 5 years or so. The company that I work for, sources a variety of things from China and India as sub components in our brakes , both E and primary and our hinges.
This keeps our costs down and gives the developing nations some business. That means that there is a fair balance in trade and means jobs for both sides of the pacific.
The moment that they try and export whole vehicles into NAFTA territory under the big three badges and add made in ______
stamp on the vehicle , thats another matter altogether, then you will see a grass roots movement to add tarriffs to these vehicles .
If they want to sell them in North America , then they are built here.
Declan
You have a cite to go with that whine? The Chinese auto industry is protected through a variety of measures, not least of which is the Joint Venture structure that limits foreign ownership to 50%. However, the government does not set production, prices, etc.
Labor is not a huge component of the manufacturing cost of most mass market cars in China. Now admittedly, I don’t have experience with SAIC (the owner of Aston Martin and JV partner with VW and GM) and AstonMartin. I do have experience with SAIC, as well as BMW, Mercedes, Lexus, etc in China and had a meeting with Mazda China yesterday.
Chinese manufactured cars are still more expensive than comparable models in the US for example. Note I say for comparable models. Foreign OEM’s don’t find China made cars to be cheaper or address the quality/safety/recall issue versus manufacturing in the home country. Where the OEM’s make out is with parts sourcing.
Back to the OP, watch how the world views Jaguar now that the owners are Indian. I don’t see how the new ownership will increase the cachet or quality. Or take a page from history and view the Lotus brand since Malaysia’s Proton took over the brand.