What is the actual cost of building a car?

[cchen]

You will never know the real numbers because its closely guarded, as previously stated. And it will take more than just simple analysis to find out a profit on each car, considering there a plethora of other costs involved such as advertising, contracts with dealerships, rebates, etc.

 

[ktehmok]

Material+Labor+Percentage Markup for Profit = Base Cost of Anything

Nobody builds something at a loss in hopes to gain "loyalty" that's just plain stupid. And those that suggest these ideas at board meetings are quickly replaced.

The big money comes from options, not higher level products.

 

[Colt45]

part of it depends on how long the run is, without much R&D. err. like total development cost divided by amount produced. Some cars run basically the same for 20 years, so obviously r&d was paid off a long time ago

eg. volkswagen beetle, 70's/80's impala, modernish crown vic, etc..

chevy trucks hardly ever change much either

 

[eelw]

Originally posted by: Vic

Originally posted by: eelw
Well I know Honda didn't make a profit on my Civic Hybrid.

Hybrids are very profitable for manufacturers. They can charge a premium over typical economy car costs and it bumps up their CAFE numbers considerably.

Not after taking account all the R&D costs. Insights are mostly hand assembled in a plant in Japan. So Honda is most definitely taking a lost for each hybrid sale, but more so with the Insight as compared to the Civic or Accord hybrids. The dealership on the other hand may make a profit with the higher demand with some paying over MSRP.

 

[Eli]

Nobody really knows, except maybe some top brass themselves...

 

[Zenmervolt]

The thing is, you really can't factor in costs like overhead and healthcare. There's a popular example that talks about how the pure materials and machining cost to make a CD is under $0.10. True enough. But that doesn't take into account the wages of the workers on the assembly line, the royalties paid by the company printing the CD's to the musicians (and to the artists who design the covers), the costs to license the right to make discs that are compatible with the CD-ROM standard (yes, the format itself is licensed), benefits for those assembly line workers, plant costs not directly associated with production, advertising and promotion, &c. Make more CD's and the per-CD cost of all these things drops, make fewer and it costs more.

Breaking the price of a car down into its parts will only yield the marginal cost, and not the true cost. Plus, with automobiles, there are huge amounts of research and development costs.

Another typical example are drug companies. People talk about how cheap it is for them to manufacture a high-priced prescription drug. But what people don't realise is that for every successful drug, there are well over 100 other "failures" that the successful drug has to pay for. Pharmaceutical companies spend billions, if not trillions, of dollars a year on drugs that never work and never get sold. Automotive companies spend billions on ideas that never reach production. All these costs get amortized into the goods that actually do reach the consumer.

ZV

 

[flashbacck]

This is probably the best you can do without actually working there. This is for Ford.

http://yahoo.brand.edgar-online.com/doc...formfilename=0000950124-05-001427&nad=


_______________________2004
Automotive
Sales (Note 2)_________$ 147,134 (millions)
Costs and Expenses (note 2)
Cost of sales__________$ 135,856
Selling, admin, etc______$ 11,455
Total costs/exp.________ $ 147,311
----------------------------------------------
Operating income/(loss)__$(177)

Note 2 says...

Freight costs are included in cost of sales. Advertising and engineering, research and development costs are expensed as incurred and were as follows (in billions)...

for 2004, advertising was $3.2b and R&D $7.4b.

Add back those costs and you get $10,423m income

$10,423/147,134 (sales) = .0708 = 7.08% margin

Something like that.

 

[funboy6942]

Originally posted by: flashbacck
This is probably the best you can do without actually working there. This is for Ford.

http://yahoo.brand.edgar-online.com/doc...formfilename=0000950124-05-001427&nad=


_______________________2004
Automotive
Sales (Note 2)_________$ 147,134 (millions)
Costs and Expenses (note 2)
Cost of sales__________$ 135,856
Selling, admin, etc______$ 11,455
Total costs/exp.________ $ 147,311
----------------------------------------------
Operating income/(loss)__$(177)

Note 2 says...

Freight costs are included in cost of sales. Advertising and engineering, research and development costs are expensed as incurred and were as follows (in billions)...

for 2004, advertising was $3.2b and R&D $7.4b.

Add back those costs and you get $10,423m income

$10,423/147,134 (sales) = .0708 = 7.08% margin

Something like that.

What about manufacture rebates?

 

[flashbacck]

Originally posted by: funboy42
What about manufacture rebates?

Good question. What I posted is strictly the automotive division. There's a financial division, which I'm guessing handles credit and rebates and things. You'd have to read all the footnotes in the statement to try to find out, but even then not all costs and expenses are itemized.

 

[sniperruff]

Originally posted by: eelw

Originally posted by: Vic

Originally posted by: eelw
Well I know Honda didn't make a profit on my Civic Hybrid.

Hybrids are very profitable for manufacturers. They can charge a premium over typical economy car costs and it bumps up their CAFE numbers considerably.

Not after taking account all the R&D costs. Insights are mostly hand assembled in a plant in Japan. So Honda is most definitely taking a lost for each hybrid sale, but more so with the Insight as compared to the Civic or Accord hybrids. The dealership on the other hand may make a profit with the higher demand with some paying over MSRP.

you'd have to give them your first born child if it ever breaks and want to fix it... *shrudders*