I get the basics, the higher the cost, the higher the margin. However, taking a $50,000 car as an example and accounting for R&D, over-head costs, logistics, marketing, warranty claim reserves, etc how much did that car actually cost the manufacturer?
FOB factory direct production cost is definitely 25k on a 50k MSRP vehicle…
I am quite sure a manufacturer sets MSRP at a 100% gross profit margin.
This is then shipped and invoiced to the dealer at 35-38k.
The dealer then gets to play wit the numbers and hopefully clear 3-4k net on the car…
ON a leasehacker type deal, they are probably barely clearing invoice price of 38k… and probably rely on incentives such as hold backs, floor plan incentives etc …
ON a super luxury vehicle 100k MSRP, the gross margin is set higher probably 150%.
ON an econobox of 20k MSRP, the gross margin is lower, probably only 50%.
As a comparison point, the 1k iPhone X is estimated to cost Apple 300 in direct manufacturing costs.
2 Likes
Ford makes about $10k on each F150 with an average price of 47k - https://www.foxbusiness.com/markets/why-the-ford-f-150-is-a-profit-machine
It would be interesting to know if their average is selling a 50k f150 for 47k or they are selling a 58k model for 47k.
The first car loses millions. The next couple hundred thousand are hopefully more profitable so as to make up for the first one. If sales go through the roof then some real money can be made. If not then big losses can accrue.
that’s how it works