I was the odd man out. A late flight meant there was no other journalist to share driving duties on this latest new vehicle launch. However, this turned out to be fortuitous, as my navigator was none other than the vehicle’s platform manager. Once he seemed assured that I wouldn’t toss it off the road, and I was comfortable that he wasn’t going to nanny me for the next few hours, the conversation turned interesting.

The prompt for this was my flat-footed observation that it was silly in this day and age to put fake wood into any vehicle with aspirations to being ‘premium’. I mean—really! How much can it really save on the bottom line?

I was correct about the cost of real arboreal enhancement: $200-300 per car. But just as my righteous outrage was sliding into overdrive, my erstwhile copilot started explaining to me what goes into the budgeting and development equations for a new platform.

In the 21st century, car development starts roughly five years prior to anticipated launch date. In there right at the beginning is a team of marketers and designers whose task is to figure out what real people will pay for that snazzy new ride that will roll down the line sixty months hence. A project manager’s remit is to be the voice of the future customer, and make sure that all the trade-offs that go into any vehicle (south of a Veyron, anyway) are justified. The sheer number of criteria is mesmerizing, and it becomes more and more clear as we talk why it so often seems to go awry.

Critical inputs to the process are the market segment and the transaction price curves, which tell these crystal-ball gazers where the volume and price points for the segment are currently. From there, they begin to fill in the ‘feature set’ and establish the base price, cost of the options, and ‘volume-seller’ transaction prices. To make the maths even more mind numbing, there are rebates, incentives, and sub vented lending (or leasing, in the U.S.) to consider. Oh—don’t forget exchange rates, the condition of the world economy, price of crude, and a plethora of other critical minutiae that grumbling auto scribes forget when they’re rapping their fists on a dash molding or near-sitedly measuring panel gaps.

Into the mix go production costs. It’s one of the areas where Toyota shows mastery of this whole process. As an example of correct allocation of resources—referred to as ‘Kosu’, they can build vehicles as seemingly disparate as the Sienna minivan, Sequoia SUV, and Tundra pickup on the same line. This helps insulate them from vagaries of market upturns and slowdowns, and keeps them running lean. Contrast that with General Motors just a few years ago, where the Chevy Malibu, Pontiac G6, and Saab 9-3—all developed off the same platform—couldn’t be built in the same factory because mounting points on the chassis rigs were mere centimeters apart.

Another critical area is material costs. This is based not only on the projected costs of steel and precious metals (for catalytic converters and the like), but the annual volumes and length of the vehicle’s production run. And if you can build many different variants off the same component set, such as the Nissan FM platform that spawned vehicles as seemingly distinct as the 350Z and Infiniti FX45, so much the better. Beyond those broad strokes is where it gets really interesting.

Cadillac’s William Mack, global product manager for the new CTS, gives an example of what he sees as a way to “Make certain that content that makes it into the vehicle is compelling to the target customer.”

On the previous CTS there were three different steering rack suppliers. On the new one he wanted only the best bits he could get. So instead of three low volume (but costlier on a per unit basis) racks, his team made a business case to use only ZF componentry. And because the costs would be spread over the whole lineup the numbers began to make sense. As an added benefit, the deal was good enough for both companies that ZF came up with three distinct setups, one for each of the CTS’s suspension options.

A recent and well reported poaching perhaps best illustrates the importance of this aspect of the automotive business. At the end of October, Ford hired Jim Farley away from his post as general manager of Lexus to be the new chief global marketer at the Blue Oval. He will report direct to CEO Alan Mulally, and his remit is not only to revitalize a stale marketing culture (he came up with the out-of-the-box solutions that helped make the boxy Scion xB and its siblings into one of the best selling import brands in America almost overnight) but to link it directly to the product development unit worldwide helping to insure Ford’s continued competitiveness.

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