Advisor


HIGH VOLUME:
DaimlerChrysle
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In April of 2000, DailmerChrysler began selling the new PT Cruiser: an under-$20,000 car with a catchy 1930's styling.  Throughout the early part of 2000, buyers lined up to put down deposits on this exciting new hybrid vehicle.  The retro-styled vehicle is taller than a standard compact car, and has back seats that come out easily for roomy hauling space.

DaimlerChrysler was delighted at the high volume of sales.  The company expects demand to exceed the 185,000 unit production capacity of the DaimlerChrysler plant in Taluca, Mexica.  As a result of the huge volume, the company expects to earn $2500 on each PT Cruiser, a dramatic increase over the usual loss the company takes on production of most compact cars.  Dealers are placing huge orders for new PT Cruisers.  As Fresno, California dealer Tim Finegan claims: "I've been selling Chryslers since 1973 and I've never seen this much interest." 

The DaimlerChrysler is an example of volume exceeding expectations of the company's predictions.  As a result of high volume, the company is able to increase the profit margin of each vehicle.
 


MEDIUM VOLUME:
Morgan Motor Co.

The Morgan Motor Company was formed in 1912 with the Reverend H.G. Morgan as Chairman and his son as Managing Director. The company's Pickersleigh Road Factory, was opened in 1918. 

The company began production of the first Morgan sports car in 1937.  This wood-framed two-passenger sports car was an instant hit with road rally enthusiasts.  The vehicle's light weight and sleek low-slung appearance has not changed significantly since 1947.  The Morgan built today is technically superior to the early versions, but retains the same look and feel as the original 1947 auto.

Morgan Motor Company produces 11 vehicles per week: a total of 561 vehicles per year.  While prospective buyers have to line up to purchase a new Morgan, the company has never felt that the total volume of sales was strong enough to warrant investment in a new plant.

Morgan Motor Company is an example of volume being sufficient for the goals of this conservative company, each Morgan which is built today is built in the original 1918 Pickersleigh Road Factory in much the same way the company built the original Morgan sports car.  The volume gives the company sufficient profit for its needs, but not enough to expand or diversify.
 


LOW VOLUME:
Studebaker Corporation

In 1962, Studebaker Corporation introduced a sleek, stylish sports car named the Avanti.   The car, designed by Studebaker's Raymond Loewy featured a squared off front end and sweeping fenders, a fiberglass body and leather interior.  A year later, Studebaker went out of business. 

A group of enthusiasts purchased the tooling for the Avanti and formed the Avanti Motor Corporation in 1964.  Production continued until 1985, when this company went bankrupt.  The following year, New Avanti Motor Corp was formed, and produced cars until 1991, when this company closed.  In total about 8100 Avantis have been made by the three corporations. 

The Avanti is an example of volume not sufficient to sustain the goals of the venture.
 

©Copyright 1998-2003 Ron K. Mitchell under license to Wayne Brown Institute