Who knows.
I am sure Ineos is more financially-savvy than me; my guess is a split in Grenadier's execution levels could be beneficial.
At present, the Grenadier (baseline version, starting at $71.5k in the U.S.) is a really, really basic vehicle, lacking refinement many other 4x4s in the States have. Pushing the baseline price down to Wrangler- and Bronco-comparable levels could draw in a huge market. I don't see a bright future for the Quartermaster - tens of thousands of Gladiators are gathering dust at Jeep dealerships.
Ok, let's assume 80k for a Grenadier with a relative high margin of 15% (more than Tesla, Mercedes, BMW but less than Ferrari (24%)). That would mean 12k per car. Using this number they have to sell 125.000 cars to earn 1,5 billion, roughly the estimated development costs (while another car is developed and generates costs). However, costs continue to drop in....
The remaining 68k are for the production costs, supply, salaries, accruals (you have to build up accruals for warranty stuff and other things), marketing, dealer provision, etc. Parts of that have to be reinvested immediately to keep the cash flow up and to buy new supply parts.
We know that there are a lot of costs regarding warranty, I just need to think about the Ineos teams running around to swap gear boxes etc. and the bills the dealers write for their warranty work (and provisions etc). And if I look at Ineos's marketing, all these journeys all over the world, the high quality videos etc. I assume that will also cost some bucks.
And here we come to an important point. As the sales are far behind the expectation (at least in Europe) the following issues pop up. A car manufacturer backs up its production by contracts. If Ineos has signed contracts for far more units than sold, they still have to pay for the parts and get them delivered. Why? Because the suppliers, maybe except a few big ones like BMW, need to get bank credits for new tools, machines and their supply parts to get the production up and running and feed. Every part which is not a standard produced for other cars, as well, is an individual invest for the supplier.
I give a few examples:
Kayser: Fuel System
Eberspächer: Parts of the Exhhaust System
Cohline: Gearbox Cooling
IBS Filtran: Oil related parts for the gearbox
Edscha: Door parts
CIE Automotive: Sunroof
Gestamp: Ladder frame and more
And more, like Helag, Stocko, Delfingen, Recaro, Hirschmann....
Usually a car manufacturer ends up +/-15% of the expected sales numbers covered in a contract and the contract includes such variations. So all involved parties, suppliers, their banks and even the banks giving liquidity to Ineos look at the performance. To build what? Trust. And as the Chemical business, a big part of the financial backup for the project, I assume (as at least 2020 470 Millions were transferred from Chemical to Automotive) also this performance is closely monitored and as we know, that performance is lacking since 2023 because of the overall economy issues.
Two years ago I visted a mid size company doing metal work. They were in the process of installing three CNC milling machines, each one big as a living room which costs millions. These were bought for a big VW order. Both sides, of course, cover each other, so this company could be sure to sell as many parts to VW to get this invest payed. And why? because of trust in a big brand and a signed contract which is trustworthy. No one incl. the banks expect VW to fail and breach the contract.
So it is crucial to generate trust and trust comes from reliability (not of the car but regarding the acting and performance). If the numbers are right, everbody feels comfortable. Trust usually takes years to build up or you have good collaterals.
AWo
![[ Adam ]](https://ineosforum-data.community.forum/avatars/m/9046/9046040.jpg?1705937698){kind=avatar}
