New Auto Manufacturer

[KSor]

I have a question for those of you far more familiar with the automotive industry than me: What would it take to start up a new auto manufacturer, from scratch? Would it take 10 years and a billion+ dollars? Is it even possible in this day and age?
I am wondering if it would be possible for a new company to enter the market now, especially with the North American manufacturers seeming to lose market share every day.

 

[BrianPetersen]

Many years and billions of dollars wouldn't be far from the truth, but it will depend on how much you are willing to "leverage" from existing designs and it will depend on how much you rely on existing parts manufacturers and suppliers. Even the major existing auto manufacturers all rely heavily on their suppliers, and many of these suppliers are supplying *everyone*. (Example, are you willing to engineer your own door latch, or do you want an existing supplier of door latches to design and build it for you, or do you want to grab an existing part number that's already in production for something else?)

Regulatory compliance is a nightmare.

I don't know the sort of vehicle you are proposing, but it might be worth considering building something that is not subject to such a heavy regulatory environment; e.g. something with two or three wheels such that it qualifies as a motorcycle. No collision standards and looser emission standards. Product liability can still be a nasty thorn in your side.

 

[GregLocock]

Check out the finances of Tesla and Aptera, as examples.

I think it would be difficult to do a first world car from the ground up, as the lead time particularly on engine design and development is so long.

But why would you want to - just buy Volve or Hummer or Saturn or Fiat.

Or buy parts in and become an assembler. Then design your own parts as necessary down the track. There are plenty of companies who will help you do this - you could buy an entire assembly line if you felt like it.



Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[Ataloss]

For the US market, look at the attempted comeback of Cunningham (was it Lutz or Iacocca who was involved in this - I can't remember), Shelby's Series 1 debacle, Qvale, and the myriad other failed small car companies and try to figure out why they failed and whether it was related to finances, lack of development, lack of market, etc.

For successes, look into how Saleen moved from a modifier of Fords into a small OEM, or how Factory Five went from manufacturing Cobra replicas into designing and selling their new supercar, the GTM. Sure, they're selling it as a kit car, but it could be another way to get started (possibly without the regulatory issues mentioned above). Since they're private companies, you will probably have trouble finding out info about their finances though.

For the European market there's Spyker, Koenigsegg, Ultima, Noble, and others, all started in the last 15-20 years.

It is possible, but you're probably not going to get an answer as to how and how much on this forum.
Bob

 

[swall]

Samsung set out to do this in the mid 1990's. The initial intent was to build a car to compete with Lexus.I think there may have also been some financial involvement with the Korean government. My former employer was selling then half shafts and CV joints. After a couple of years, the Korean government pulled the plug.

 

[KSor]

Ataloss, all those companies you mention build exotic sports cars. Are there any "new" companies that build regular road cars? I can't think of any. Is a possible reason for this that it would cost as much to set up and produce a regular car as it would a sports car, so might as well make the sports car and sell it for $100k+?

Would it be possible to build a 4 wheeled vehicle, but license it as a "motorcycle" so the regulatory standards are looser? Might this be a way to speed development with out working for years on those issues? I'm pretty sure that wouldn't fly, but lately I've been seeing a lot more 3 wheeled vehicles on the roads, lots of them more creative and interesting than most new cars. Does the looser regulatory environment for those vehicles encourage more creative development?

 

[Bribyk]

In Canada, if you sell a car as a "kit" you are not required to crash test it. I don't know about emissions regulations but I think you would get around those too. One guy here wanted an Ariel Atom and had to buy it from the manufacturer as a "kit" and assemble himself because Ariel hadn't done crash testing. Then it's only subject to a mechanical inspection. I don't know what qualifies as a kit car though, maybe if you shipped the car without wheels and left the new owner to put them on.

 

[Rob45]

Unlike Saleen and the plastic kit car companies, Panoz designed and built a car from scratch, but using a powertrain emissions-certified by Ford.
Don't know how they're doing now, though.

 

[Dave K]

Having worked at Mosler Automotive (

http://www.moslerauto.com

), I can tell you that it is not easy to get a car thru all of the NHTSA hoops, to sell it as a turnkey streetcar. With the costs involved, you might as well design an exotic, because you'll have to charge exotic prices to recoup. Panoz...I've heard rumor that the streetcar business isn't doing that great, having only sold a couple hundred cars, since the Esperante was unveiled. Saleen, even with the Mustang tuner business, hit hard times with the S7, thus the reason Steve had to bring in investors.

The kit car route would be a better option, since you circumvent the NHTSA reqts, and reduce your assembly costs.

-Dave
Everything should be designed as simple as possible, but not simpler.

 

[BrianPetersen]

In Canada, if you want to pursue the "motorcycle" route, it has to have 2 or 3 wheels - definitely not 4 wheels.

The "low speed electric" vehicles also seem to circumvent the crash regulations (and the emission regulations) but their usage is severely restricted - to the point of being almost completely useless, even if they were allowed here (Ontario, Canada).

 

[Ataloss]

Ksor,
yeah, all those companies I mentioned are low-volume sports cars. I'm betting that the profit margin on a "normal" car would be too low to justify the investment to set up the company (not to mention establishing a dealer network, etc). Besides, I'm betting that 99.999% of the people who want to start an automotive company from scratch will be auto enthusiasts and will have dreams of making the world's greatest sports car, not the world's greatest grocery getter (no offense intended to those who build or have a passion for grocery getters).

Bob

 

[GregLocock]

Oh, and here's what you get for a billion dollars, in the world of grocery getters.

You get:

a new body outer, and interior.

carryover floorpan

Some chassis mods

substantial upgrade to an engine

a new trans

better crash

A new engine from scratch would be about 7 years of develoment.

KSor, are you thinking about the X prize?



Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[KSor]

GregLocock, I don't run my own auto manufacturer now, so please excuse my naive questions, but what is it that actually costs so much? All my information comes from the odd show on Discovery or National Geographic (btw, have you seen the show documenting the production of the Ferrari 599? That facility is amazing). A billion $$$ is a lot of money. Is it the massive investment needed to produce all the associated tooling needed for mass production?

Suppose I had a fully developed design for a car, and managed to produce a few. How long would it take to jump thru all the regulatory hoops? Are the regulations designed to keep new companies out of the market?

I will be interested to see how many companies actually pursue the X-Prize. Some of the requirements are pretty harsh, such as the 100 mpg, plus the min. acceleration and top speed requirements.

 

[Dave K]

The regulations aren't designed to keep new manufacturers out, but the occupants safe. Unless you get an airbag waiver, you're looking at a few million dollars to develop a smart system for your car. Plus the crash testing, which, depending on the car design, could consume 3+ cars. Then you have EPA/CARB testing, and even with an already certified OEM engine, isn't an easy task, when you repackage everything.

Having gone thru it once with a street car...I like race cars better

-Dave
Everything should be designed as simple as possible, but not simpler.

 

[dalcazar]

At least one company is pursuing the "X-prize" and that is aptera, there are others that are pursuing it as well but none of them have the financial backing of aptera, just as most companies that worked towards the actual x-prize had no real ambitions of ever winning it.

The Aptera qualifies as a motorcycle, so they don't have to pass crash testing, but that said the company is pursuing crash testing anyway for their own peace of mind and the safety of the customers. The upside is that they don't have a deadline to meet for it.

The regulations are intended as much to make sure that victims of a crash are well protected as much as they are for driver's protection. And this applies to pedestrians as well. You can't just design something radical and put it on the mass production market because it might cut pedestrian's legs off when you hit them or the like. So after designing to all their specifications you have to go thru crash testing, destroying quite a few of your cars to make sure that everything passes. The regs aren't there to keep startups out of the market, but the fact that they have evolved over time to where they are now (on the shoulders of crappy and dangerous startup cars from the 50s and 60s that lead to a lot of problems) pretty much insures that startups can't break into the market.

There are huge losses to incur in before you can start selling, and unless your car is the perfect vehicle then you may never sell enough to break even anyway.

 

[GregLocock]

There's a couple of books worth reading on this. The Machine that Changed the World is one, and "Car" by Mary Walton.


Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[drawoh]

How big was Honda back in the early seventies?

I suspect you need two primary things to start a new car company...

[ol]
[li]...lots of expertise building cars, which you can acquire by building motorcycles or limited production sports cars.[/li]
[li]...stupid competitors, unable to capitalize on their market share or technical expertise.[/li]
[/ol]

In the early seventies, the cheapest pieces of Japanese junk had front disc brakes and bucket seats long before the Americans installed this stuff even on mid-priced cars.

I also remember the Consumer Reports article explaining that compact cars have inadequate room for adults in the back seat, with the exception of the Dodge Dart, and all imports.

JHG

 

[BrianPetersen]

Honda got into the auto business when the regulatory environment was MUCH looser (and customer expectations were lower), and they had a fair bit of motorcycle experience first, and they started simple. Their N360 and N600 in the late 1960's were more-or-less copies of a BMC Mini, but with air-cooled engines that were rather closely related to Honda motorcycle engines of the time. They followed that up with the Life around 1970 (liquid cooling), and followed that up with the original Civic in 1973 (four cylinders instead of two, and a bigger bodyshell that would fit Americans), and that model ended up being a smash hit.