Cost Reduction for Automobile during Design Stage with Statistical Method and Tear Down Technique

Abstract

This research studies the Chinese automobile industry and proposes a cost reduction method for automobiles at the design stage. Since cost data are confidential in many companies, the research resorts to an indirect method to estimate the product cost. The automobile prices and specifications are collected from website. Then a panel of experts is invited to estimate product cost ratio using Delphi method with these data. Therefore, the automobiles’ costs can be calculated backward from the retail prices. These automobiles have design attributes with several possible values. For each attribute value, statistical method is employed to analyze the mean value, standard deviation and probability distribution of the product costs. The designer can then evaluate the potential cost consequences of these values and choose one attribute value which can better match the target cost. To achieve such target, Tear Down technique which is widely used in Japanese automobile industry is introduced. The application of the proposed method in a Chinese automobile company is also given.