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Take one Honda CRV, mix in increased utility, stir until fully mixed, then cut the cost on a systems, not parts, basis. Cook for 18 months, cool and eat. Serves four.

ELEMENTARY COST REDUCTION

Though developed from the CRV, Honda's Element demanded concurrent design and development, as well as a different way of managing cost.

After reciting many of the differences between Honda's Element and the CRV on which it's based, Garrett Evert, principle engineer/manager, Body Design, Honda R&D Americas, Inc. seemingly answers the question about how the company kept costs in line: "Since the CRV isn't built here in the U.S."–it's built at Honda's plant at Swindon in England–"and the Element is, we'd have had to spend money to copy CRV structure and components. So we took the amount allocated for that and used it to create the unique pieces we needed to make the Element the vehicle we promised it would be," he says. Which means there is little difference in cost between the two vehicles, correct? "Now there is," Evert says with a wry smile. "Early on, the Element cost, um, a bit more than the CRV. More than our pricing target would allow."

It's only when you look at the details that you begin to see just how different the two vehicles really are, and how thin the margins on the Element might be without strict cost control. According to Evert and his colleagues, the only structure carried over intact from the CRV to the Element stretches from the A-pillar posts to the front bumper. Element has a 1.7-in. shorter wheelbase; no B-pillar; a flat floor behind the front seats (there's no rear foot well); a wider front and rear track (the rear uses the CRV suspension pieces mounted on a wider subframe, while the front has longer suspension arms); a three-stage front door hinge; a forged rear door hinge; a unique interior; a two-piece tailgate…and the list goes on. In addition, 1.8-mm steel rated at 440 mega-Pascals is used as a stiffener in the doors where the B-pillar normally would be found. Hooks at the bottom of each door fit into a 3.2-mm thick, 590 mega-Pascal steel "catcher" that transmits side crush forces from the doors to an underbody beam. And the Element has three door latches: a conventional mid-door latch, a top latch, and a button latch that locks the doors together. Sure, Honda expects the Element to receive government 5-star safety ratings, but safety has a price–especially on a program that moved from clay freeze (mid-2000) to Job One in about 18 months. As Evert is quick to point out, there was no time to waste following industry cost convention when nearly everything on the project was happening concurrently.

"We held a company-wide Value Added event to get the cost down to the price point we had set," he says. "Everyone in the company was invited to participate in it, and a running tally was kept of the cost reductions." Some of the ideas adopted by the MX team (for Model X, the codename for the vehicle it's based on) included: eliminating paint on unseen parts that didn't need the coating for corrosion protection, replacing the CRV's English window regulators with locally sourced Accord pieces, adopting a windshield wiper motor that would become common to all U.S.-built Hondas, and using this process to reduce the number of hood locks used in Hondas built in North America to two. "The key to the success of the VA event," says Evert, "was that we analyzed system cost, not piece cost. By comparing the system cost of one unit versus another, we were able to get a picture of our true overall costs. Piece cost never tells you anything of true value because you can have an inexpensive piece that is more expensive to assemble and install than a slightly more expensive part."

The Element goes on sale this December with an expected price range of $16,000 to $21,000. Though all of the features that make it unique from its CRV cousin are designed to appeal to first-time buyers in the 16-29 age group, it's the systems approach to cost control that will determine whether or not they can afford to own one.