Monday, December 22, 2008

The product comes first!

I just checked the Honda website and found that the 09 Civic has a 140 HP 1.8 liter engine. 1.8 liter equals about 110 cubic inches.

By that standard a 350 cubic inch engine from Chevy should pump out 445 HP. In fact the current (09) model puts out 315 HP. Gives you some idea about how much effort GM has put into improving the efficiency of their products.

I have not investigated to see if the processes used to get that much horse power from the smaller displacement will scale to give the same results in an engine three times the Honda’s size but, absent proof to the contrary, we should be able to get very close.

We could all have the performance we want with much smaller engines (and smaller fuel bills) if auto companies' focus was on building cars and not just on profit.

Yes, all business must make a profit and to get large investments they must make large profits, but as Warren Buffet said, “Take care of your business and your stock price will take care of itself”.

I suspect that most of the problems are caused by the difference between 6% profit and 6.1% and not between profit and loss.

Far too many American businesses have forgotten a fundamental principle of business - profit is a byproduct of a the product, not the sole goal of business. If you don’t believe me, explain why people are flocking to Honda, Toyota, and others when the US car makers have products at the same price point that aren’t selling nearly as well. Why is Apple computer’s share of the market growing in spite of their higher price?

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