1、GETTING UNDER THE HOOD OF AUTOMOTIVE LABOR COST PER VEHICLEDaniel HirschJim SchmidtJennifer Wong Oliver Wyman2Getting Under The Hood Of Automotive Labor Cost Per VehicleThe global automotive industry is facing significant new challenges to growth and profitability from tariffs in the United States t

2、o increasingly aggressive Chinese car marketing outside of China and a simultaneous slowdown in sales of battery electric vehicles.The heightened competition and complicated economics are putting pressure on automakers worldwide to balance production,right-size capacity,and manage costs effectively

3、to stay competitive.The current environment is shining a new light on labor cost per vehicle,which considers both wages and productivity,and represents a key metric in determining an automakers competitiveness and profitability.Because of the measurements increasing importance,Oliver Wymans Harbour

4、Report team recently completed an in-depth look at labor cost per vehicle across more than 250 vehicle assembly plants worldwide,using publicly available data and third-party sources.The new analysis also considers sourcing strategies in calculating labor costs per vehicle.Beyond labor cost per vehi

5、cle,the report goes on to examine conversion cost,which is calculated by looking at direct and indirect labor costs,overhead including rent,energy consumption,equipment maintenance,and production supplies,and depreciation.The focus on labor cost and productivity provides a window into a plants compe

6、titiveness as labor typically represents 65%to 70%of the total conversion cost.Exhibit 1:Labor cost is a major component of conversion costsOther(Indirect Material,Depreciation,Energy)65%35%Labor CostSource:Oliver Wyman analysisBased on the data,we created four groupings of car companies with simila