“Chrysler says its financial troubles are caused, in part, by safety and emissions laws that penalize it more than GM or Ford. It costs Chrysler ‘almost twice as much as it will cost GM’ to meet these regulations on an individual, car-for-car basis, according to a Chrysler report. Since all companies have to develop engines and exhaust systems to meet the same regulations, GM’s higher sales volume cuts its costs per car substantially. The Chrysler line does make sense — until you compare costs for foreign car makers. Their volume is tiny in comparison to Chrysler’s, yet they continue to operate at a profit.”
— Jim Dunne (1980, p. 62)
RE:SOURCES
- Dunne, Jim; 1980. “Chrysler’s explanation.” Popular Science. January issue: p. 62.
Also see ‘It’s too bad that the late-70s big Chrysler didn’t become a stretched Volare’
Chrysler’s argument made sense in that the foreign automakers already produced vehicles and engines that made the 27.5 MPG CAFE required for 1985, and the foreign automakers didn’t have to spend billions on radical new programs that Ford, GM, and Chrysler did in the late 70’s through the mid 80’s. As far as emission controls and safety, I wouldn’t know the answer.
l think Jim Dunne’s comment about foreign manufacturers being profitable on volumes less than Chryslers was too simplistic. Mr. Dunne had to be talking about a time no later than about 1977 or so since he would not have had data to back up his claims if he wrote then in 1980. So, did the manufacturers have to submit engineering papers for the safety regulations on all engine and transmission combinations (for emissions), and body styles (for safety)? that would have cost Chrysler a LOT more than any foreign car maker doing business in the US.
Economy of scale is a very important consideration and very consequential. The property taxes and upkeep on a Chrysler plant is the about same on a comparable Ford or GM plant. It cost just as much to develop and produce a die for a Studebaker fender as a GM fender. l read that the advertising cost, at one time, on a GM car was about $23.00 per unit, whereas it was close to $70.00 on a Studebaker because an ad in the Saturday Evening Post, developing ad campaigns, etc. was near the same for both companies.