Beyond Supplier Negotiations: The Strategic Role of Cost Engineering in Vehicle Benchmarking

In many organizations, the role of cost engineering is narrowly associated with supplier negotiations, purchase price analysis, and cost reduction workshops. While those responsibilities remain important, leading OEMs, especially within the automotive industry, have expanded the role significantly. Today, cost engineers are deeply involved in competitive benchmarking activities that help manufacturers understand where they stand in the marketplace, not only from a technical standpoint but also from a cost-competitiveness perspective.

Modern automotive programs are launched into an intensely competitive environment where even small cost disadvantages can have a major impact on profitability. Benchmarking competitor vehicles provides OEMs with critical intelligence regarding design choices, manufacturing methods, sourcing strategies, material utilization, and system integration approaches. Cost engineers play a central role in transforming this technical information into actionable business insight.

Organizations such as CareSoft Global, A2MAC1, and Munro & Associates have built entire business models around supporting this activity for OEMs and suppliers worldwide. Their work demonstrates how competitive benchmarking has become an essential part of product development strategy.

The Competitive Benchmarking Process

The process typically begins when an OEM initiates development of a new vehicle program. During the early phases of design, engineering, and product planning, teams identify the vehicles expected to compete directly in the target market segment. These may include vehicles from domestic competitors, international manufacturers, or emerging electric vehicle companies.

Representative vehicles are then purchased directly from the marketplace. This is a routine practice throughout the automotive industry. Manufacturers often buy multiple trim levels and regional variants to ensure a complete understanding of the competitive landscape.

Once acquired, the vehicles undergo detailed teardown analysis. Entire vehicles are disassembled down to the component level. The objective is not simply to observe how the competitor engineered the vehicle – rather, the goal is to understand why those design decisions were made and whether they created measurable advantages in cost, weight reduction, manufacturability, quality, and performance. This is where cost engineering becomes especially valuable.

The Role of Cost Engineers During Benchmarking

After teardown activities are completed, cost engineers analyze the components and systems in detail to develop should-cost estimates of the competitors’ products. These estimates represent what the component or system is expected to cost based on material content, manufacturing process selection, labor requirements, tooling assumptions, production volume, overhead, and sourcing strategies.

The cost engineer essentially reconstructs the financial model behind the competitor’s design.

For example, a stamped steel bracket may initially appear simple, but the cost engineer evaluates numerous variables beneath the surface. Material grade, steel thickness, die complexity, automation level, weld count, and cycle time all contribute to the final piece cost. Even small design decisions can create substantial cost differences once multiplied across hundreds of thousands of vehicles.

The same principle applies to electric vehicle systems. Battery pack architecture, cooling systems, casting technologies, and power electronics packaging are all heavily scrutinized during benchmarking activities because they represent major contributors to overall vehicle cost. A seemingly minor change in part consolidation or thermal management strategy can create hundreds of dollars in savings at the vehicle level.

Once individual component estimates are completed, the data is rolled up into subsystem and full vehicle comparisons. OEM leadership can then determine whether the proposed subject vehicle carries a competitive cost disadvantage relative to the marketplace.

If significant gaps are identified, corrective actions are initiated before production launch. In some cases, components may be redesigned to reduce material usage or simplify assembly. In other cases, manufacturers may reevaluate sourcing strategies, standardize designs across platforms, or adopt different manufacturing processes entirely.

This proactive approach is one of the biggest advantages of competitive benchmarking. Instead of reacting to cost problems after launch, OEMs can design competitiveness into the product from the beginning.

Benchmarking in Practice Across the Automotive Industry

Competitive teardown benchmarking has become standard practice across nearly every major automotive OEM.
Tesla’s rapid rise within the electric vehicle market significantly accelerated the importance of benchmarking activities throughout the industry. Many automakers purchased Tesla vehicles specifically to understand how the company achieved lower part counts, simplified assemblies, and reduced manufacturing complexity.

One highly publicized example involved Tesla’s use of large aluminum giga-castings within vehicle body structures. Competitors analyzing these castings discovered that Tesla had eliminated numerous stamped and welded components through casting consolidation. This reduced tooling complexity, assembly labor, manufacturing variation, and overall part count simultaneously. As a result, several traditional OEMs began reevaluating their own body structure strategies and manufacturing investments.

Japanese automakers have also long been the subject of competitive benchmarking studies. For decades, manufacturers studied Japanese vehicles to better understand lean manufacturing principles, compact packaging techniques, and highly efficient assembly methods. Benchmarking often revealed that competitors achieved lower costs not necessarily through cheaper materials, but through reduced complexity and better system integration.
Today, electric vehicle benchmarking has become even more intense because of the rapid pace of technological evolution. OEMs routinely study competing battery packs, inverter designs, thermal management systems, and electronic architectures to determine where competitors may hold cost or performance advantages.

Companies such as CareSoft Global have become especially well known for comprehensive electric vehicle teardown benchmarking programs. Their studies frequently compare multiple EV platforms and quantify cost, weight, and manufacturing differences at both subsystem and total vehicle levels.

Similarly, A2MAC1 has developed extensive benchmarking databases that allow OEMs and suppliers to compare thousands of components and systems across global vehicle programs. These databases support faster analysis during concept development and sourcing activities.

Munro & Associates also focuses heavily on combining design analysis, manufacturing evaluation, and cost modeling to improve product competitiveness early in the development cycle.

Why Benchmarking Matters More Than Ever

Several major industry trends have increased the importance of benchmarking and cost engineering activities.
Vehicle technology is evolving at an unprecedented pace. Electrification, advanced electronics, autonomous systems, and software-defined architectures are dramatically changing vehicle content and cost structures. At the same time, global competition continues to intensify as traditional manufacturers compete against new EV companies and rapidly expanding international automakers.

Profitability pressures remain severe as well. Automotive margins are often thin, and even small cost disadvantages can significantly impact long-term program profitability.

Because of these pressures, OEMs can no longer rely solely on historical design practices or internal assumptions. They must understand exactly how competitors are achieving lower costs, lighter weight, faster assembly, or improved functionality. Benchmarking provides this visibility, while cost engineers convert that visibility into quantified financial understanding.

Cost Engineers as Strategic Contributors

The traditional perception of cost engineers as primarily supporting Purchasing negotiations understates the true strategic value of the discipline.

In reality, cost engineers operate at the intersection of engineering, manufacturing, finance, and supply chain management. During benchmarking activities, they help organizations determine whether competitors possess structural cost advantages, which systems create the largest competitive gaps, and where manufacturing complexity can be reduced without sacrificing functionality or quality.

These insights directly influence product strategy and investment decisions.

A well-executed benchmarking study may alter vehicle architecture, manufacturing strategy, sourcing plans, or capital investment priorities years before production begins. That level of influence extends far beyond traditional cost reduction support.

In many respects, cost engineers serve as translators between technical design decisions and financial business outcomes. Their analyses allow OEM leadership to make informed tradeoff decisions based on objective data rather than assumptions.

Conclusion

Competitive benchmarking has evolved into one of the automotive industry’s most important product development activities. By purchasing competitor vehicles, disassembling them, studying their systems, and developing detailed should-cost models, OEMs gain invaluable insight into market competitiveness. Cost engineers are central to this process.

Their ability to analyze manufacturing methods, estimate production costs, and identify key cost drivers transforms teardown observations into actionable strategic intelligence. More importantly, their work allows OEMs to identify competitive gaps early enough to influence product development before those disadvantages become permanently embedded within the vehicle program.

As the automotive industry continues to evolve through electrification, advanced manufacturing technologies, and increasing global competition, the strategic importance of cost engineering and competitive benchmarking will only continue to grow.

Jeff Miller Jeff Miller is President and Co-Founder of SPCEA and has 40 years of engineering, manufacturing, and commercial experience within the electronics and semiconductor industries. He has served in leadership and direct-contributor roles at General Motors, John Deere, Standard Motor Products, Ford Motor Company, Whirlpool Corporation, and Panasonic Automotive Systems. Jeff has been active within the cost engineering profession since 2002.   Copyright © 2026 – Society of Product Cost Engineering & Analytics. All rights reserved.