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Old 21st November 2009, 11:01   #1
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Default What's the kind of profit/car car-makers make

Hi Everyone

I have always thought about this question and I havent been able to find an answer : What is the profit margin of a car-maker like a Maruti or Hyundai. In the sense, if a car-maker charges Rs X for a car, what is the profit the car-maker makes for one car (what percentage of X).

This profit/car seems to be a well guarded secret with all automobile companies. If anybody has any information on this, please share it with us.
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Old 21st November 2009, 16:27   #2
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this is a well guarded secret with any product not just cars

broadly if u want to know how much profit, u can check financials of listed cos in their websites and do some intuitive reasoning to figure out how much each model might be making
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Old 21st November 2009, 16:35   #3
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toyota inova 1.5 lakhs aprrox (differnence between dealer and showroom price)
toyota fortuner 3 lakhs approx (differnence between dealer and showroom price)

this is not guess work this is authentic data
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Old 21st November 2009, 16:40   #4
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That's a very tricky question to answer. With a small accounting sleight of hand you can make it whatever you want it to be, all within legal framework. There are so many financial and accounting techniques, different ways of accounting for losses and profits, within GAAP.

If you show too much profit, corporate taxes take it away. If you show very little profit or losses, your stock price will suffer. That is why corporates hire a gaggle of accountants and financial wizards to design the right strategy.
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Old 21st November 2009, 16:50   #5
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if you look at the balance sheet of the automotive companies you will come to know. most of the Auto companies are listed companies, hence finding data is easy.

i would say integral contribution margins over last 24 months are under pressure, might have dipped to <20%. Most of the auto-companies have announced losses after taking account depreciations, interest, writeoffs, resrtucturing costs etc.
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Old 21st November 2009, 17:49   #6
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This used to always cross my mind too.
As Narayan says it is a well guarded secret like any other business.

For a vague picture consider the discounts they offer on the product. Fex. An ex showroom Alto costs 3.10L, they offer the same for 2.85.
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Old 21st November 2009, 18:38   #7
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Apologise for the back to back post, my above post would show the profits a dealer makes and not the manufacturer.Thanks.
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Old 21st November 2009, 19:11   #8
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Quote:
Originally Posted by ms001 View Post
toyota inova 1.5 lakhs aprrox (differnence between dealer and showroom price)
toyota fortuner 3 lakhs approx (differnence between dealer and showroom price)

this is not guess work this is authentic data
So the dealer margin is 1.5 and 3.0 lac respectively ? Or is this the combined OEM+dealer margin ?
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Old 22nd November 2009, 00:55   #9
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shall we assume 10-12% at the start of the life cycle of a particular model? may be 15-20% towards the peak and 5-10% towards the end on the ex-factory price of the vehicle. I wish to know how much mahindra is making on the major? 50%?
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Old 22nd November 2009, 01:04   #10
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Quote:
Originally Posted by ms001 View Post
toyota inova 1.5 lakhs aprrox (differnence between dealer and showroom price)
toyota fortuner 3 lakhs approx (differnence between dealer and showroom price)

this is not guess work this is authentic data
You need to deduct sales tax, entry tax, octroi from this figure which is paid by dealer to respective state government.

So for a Toyota Innova costing 10L+, sales tax (12.5%) + Entry Tax (1% Raj.) would work out to be about 1.35L leaving only 15,000/- as profit to dealer.

We haven't yet collaborated operational costs here.
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Old 22nd November 2009, 10:11   #11
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Quote:
Originally Posted by high_octane View Post
What is the profit margin of a car-maker like a Maruti or Hyundai. In the sense, if a car-maker charges Rs X for a car, what is the profit the car-maker makes for one car (what percentage of X).

This profit/car seems to be a well guarded secret with all automobile companies. If anybody has any information on this, please share it with us.
high_octane:

Profit/car can always be found out by (Net Profit after Taxes for a fiscal year/ Total cars sold in that year). Both the numerator and denominator are public figures - so I do not think there is any secret here.

In fact vasudeva had circulated the Profit numbers for all key car makers a few months ago.

Cheers,
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Old 22nd November 2009, 11:09   #12
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Quote:
Originally Posted by diffsoft View Post
high_octane:

Profit/car can always be found out by (Net Profit after Taxes for a fiscal year/ Total cars sold in that year). Both the numerator and denominator are public figures - so I do not think there is any secret here.

In fact vasudeva had circulated the Profit numbers for all key car makers a few months ago.

Cheers,

If possible can you post the link to that thread/post? For the past few days/weeks, even i have been wondering about the how much profit do these car makers/dealers make.
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Old 22nd November 2009, 13:13   #13
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Quote:
Originally Posted by d3adlythegame View Post
If possible can you post the link to that thread/post? For the past few days/weeks, even i have been wondering about the how much profit do these car makers/dealers make.
http://www.team-bhp.com/forum/indian...ml#post1441793 (July 2009 Indian Car Sales Figures & Analysis)
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Old 22nd November 2009, 15:52   #14
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how does the published figures reveal profit per car? i am confused here. dont we need the services of a cost accountant here
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Old 22nd November 2009, 16:31   #15
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Cost of manufacturing a Toyota Innova if you consider just the cost of materials will not cross 5 lakhs.

Rest is all profit under various heads.
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