Start off with the basics. Price and cost arent related. You hope that your price covers your cost and is acceptable, but if you can change £5k for an extra that costs £1 and still sell, then thats what you do.
And thats what Morgan do. Speccing up a new trad you are unlikely to end up much less than £45k, which is pretty expensive compared to the range of much more sophisticated, better engineered cars you can buy for £15k. Nevertheless MMC are selling mainly in the £50k to £100k range for coach built special interest cars. They arent competing with Hyundai.
Regulations and standards come into the equation. I dont know the details of the motor industry ones but you can be pretty sure that MMC wont be allowed to continue selling cars built to completely outdated safety standards. Nor will the public accept it.
As for costs, no way can the cost of a solid rear axle with drum brakes be any less than an independant disc braked system. All the modern parts can be cannibalised from the mass manufacturer ranges. The cost issue is much more likely to be one of tooling up and to a large degree thats been bought already with the Plus 8.
I would have thought that MMC would only win from taking the Plus 8 structure and fitting it with the 3 cylinder Ford Eco engine at the bottom of the Range, and with a 2 litre 4 pot in the middle. The Plus 8 will have to lose its 8 sometime soon so you could end up with a 4 car range - the 3cyl, the 4 pot, the plus 8 and the Aero.
It would make an awful lot of business sense and since you still have a "Trad looking" range, I cant see that MMC would lose their niche. And it would give an opportunity for MMC to modernise a currently laughable production process and quality standards.
I accept the validity of your argument from a theoretical point of view, but if it were truly the case that Morgan production costs are way less than their revenues, why aren't they making more profit?
750 cars per year at an average of say £40k is a gross income of £30m a year. I know the employees are well paid, and quite right too, but there's only 150 or so of them. I'm sure the shareholders aren't bleeding the company dry, quite the reverse, and I realise that fixed costs and R&D are high.
Notwithstanding this the 2013 reported accounts show Revenue of a smidgeon over £23m (which implies that sales are biased very heavily towards the lower end of the price range rather than your £50+ estimate) against Cost of Sales of £19m. I'm no accountant, but this hardly seems to me to be a picture of a company which can turn out their product as cheap as chips but is charging whatever the market will bear.
Don't get me wrong, I think the idea of a smaller Aero platform is a great idea, I'm just worried they won't be able to do it cheaply enough.
