What Does 'Economies Of Scale' Mean, And Why Is It Important To Cars?
Economies of scale is an aspect of economics that explains the way the cost of an individual product can be reduced by producing lots of it
Economies of scale is a fairly simple concept, but it’s a key player in how manufacturers build cars that don’t cost the consumer a small fortune to buy. The basic principle is that larger companies can reduce the cost of each individual unit it produces by spreading the cost across a larger output.
Economies of scale continues to be a vital aspect of vehicle manufacture, and modern car manufacturers’ use of platform sharing is a great example of that. By creating underpinnings that can be used across multiple cars, they save on the cost of building individual platforms with unique parts.
Probably the best known example of this is by Volkswagen Group, and in particular its MQB platform which underpins everything from the Skoda Octavia to the Volkswagen Touran and even the Audi TT. VAG has the added bonus of having this platform run across a number of different brands, allowing it to charge less for Skoda cars on the platform, while charging more for premium vehicles like the Audi TT, all without spending more on its platform. Cheeky. But clever.
(CarThrottle.com)
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