Didnt realise it had dropped so much

[Jesmol]

Let me add my $0.02

1: Steel has not gone up that much, certainly since 2006 the price today is almost the same as a final process coil (it went up seriously in 2008 but has dropped back). Better purchasing practices have in reality bought in lower prices than 2006.

2: Overhead costs - Not all overhead costs are fixed, approx 2/3 of overhead costs are classified as "variable" which means they get "flexed" to production. That's why both companies have severely reduced the number of indirect staff to cover the volume drops. (as with most of the supplier base). Also since 2006 Ford have been doing Dev work for OS Ford companies, allowing them to book off all of their Engineering resources to these projects taking a large chunk of cost of the AU books.

3: Outsourcing - Holden have done more outsourcing than Ford , but both still have major chunks of cost that can still be outsourced.

4: Supplier Profit - Both companies realise that they cannot survive without a viable supply base, so are doing a lot of development work with suppliers to bring in efficiencies. Most AU based suppliers a really a joke when it comes to efficiency and smart thinking. For example the front seats, there is only about 5% commonality in parts between red and blue including hardware. Vrtually no pressings are common, There would be significant gains from commonising the seat frames and structures.

5: Quality - Both Red & Blue are in continual phases of quality improvement, Holdens internal GCA audit target is around 80 , which equates to 1 warranty / customer complaint per car. Ford have always been the leader in quality system between the 2 companies, which has really shown in the FG . Previous models up to BF we really hampered by poor design and supplier constraints which did not drive improvements.