On Board Computer Tech Now Accounts For 40% Of The Price Of A New Vehicle

Computing technology has made such a significant impact on the automotive industry through the last few decades. In a very simple explanation, it allowed us to have all the electronic safety and assist systems, plus the modern infotainment systems onboard our vehicles. It also made our cars safer, faster, more efficient, and even better looking, if you consider the current lighting technology.

A very comprehensive analysis from Deloitte, brought to our attention by Car and Driver, even estimates that electronics now account for approximately 40 percent of the price of a new car. For a comparison, just 20 years ago, when fuel injection systems, ABS, and ESP were already the norm, that portion was just 18 percent.

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atc98092 - 5/8/2020 12:33:01 PM

+5 Boost

I don't buy that. Yes, there are far more electronics in cars today. But 40% of the price? Nah, that just doesn't seem possible. The cost of electronics continue to decrease, along with being faster and more capable.

MDarringer - 5/8/2020 12:55:28 PM

0 Boost

Maybe 40% of retail but not 40% of cost

Agent009 - 5/8/2020 4:32:34 PM

0 Boost

Agreed

atc98092 - 5/8/2020 5:28:44 PM

+3 Boost

Why would the percentage differ between cost and retail? I recognize the retail price has a profit number that was added to the cost, but in the overall cost structure it should balance out. Sure, they have a higher profit margin on different parts of the build, but I still can't accept 40% of the retail cost.

If you read the article that 009 linked, they are stating the current component cost as $400 per vehicle today, and perhaps $600 by 2022. There's no way $400, plus design and install labor, accounts for $20,000 of a $50,000 MSRP. If that's true, every car should have a huge profit margin.

MDarringer - 5/8/2020 8:29:44 PM

-1 Boost

"Why would the percentage differ between cost and retail?"
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Tell me you were being facetious. Tell me that you couldn't possibly be that stupid.

The perceived value of the option governs its retail price, not solely the cost of the component.

Thus if the component costs me $10 but the perceived value is $100, that's how you build profit. If the cost is $10 but the perceived value is $15 I can't retail it for $100.

Cars could have the same components but different programming to give different functionality between a base car middle and high end. The cost of the computer coding would not be radically different but the perceived value of the car with greater functionality would allow it to be retailed for more because of the cost (to the consumer) of the options.

atc98092 - 5/8/2020 9:25:11 PM

+3 Boost

Matt, don't be rude. No, I'm not stupid, and I understand perceived value. I just don't see $400 in components reaching the level of 40% of the entire vehicle's MSRP. Sure, perhaps 10 times the component value, but that still only adds up to $4000 of the price, which is 10% of a $40k car. 10 is a long way from 40.

MDarringer - 5/9/2020 12:01:19 AM

-3 Boost

And demonstrating once again--by that response--that you just don't understand the obvious. It's pointless to get through to you.

SuperCarEnthusiast - 5/9/2020 12:16:40 PM

0 Boost

More electronics, more sensors -> more costly repairs down the line. Most of these components are hidden inside the dash, under engine components of cars. Some take 2 hours+ just to gain access to them.

MDarringer - 5/9/2020 2:50:11 PM

0 Boost

BUT what people don't realize is that in some cases all the "stuff" is there and the options are just turning things on in the code for people who paid for the options