Go Back   Team-BHP > BHP India > The Indian Car Scene


Reply
 
Thread Tools Search this Thread
Old 8th June 2010, 13:23   #31
BHPian
 
Join Date: Jan 2007
Location: Bangalore
Posts: 53
Thanked: 0 Times
Default

The return on sales on the dealer side is around 2 to 3% for C segment and above cars. This does vary from manufacturer to manufacturer. If the ex-showroom price (without consdering local taxes, registation etc) of a car is around 7L, then the dealer gets a flat margin of around 15 to 20K per car. This is not the profit. This being revenue, we need to deduct costs such as sales comissions, dealer discounts, freebies, delivery expenses, inventory holding costs, interest costs etc etc. Typically C and D segment cars get additonal support from the manufacturer based on sales volume or offtake
jacobgeorge is offline   Reply With Quote
Old 8th June 2010, 16:19   #32
Newbie
 
Join Date: Jul 2006
Location: Delhi
Posts: 19
Thanked: Once
Default

I agree that most companies make a profit from around 7-10% profit...but lets take maruti suzuki as in example. They sold 10,18,365 cars in the 09-10 financial year and the whole group made around 2,500 crores during the same time. That would mean around 25,000 rupees per car. Marutis over-all sale was 29,623 crores. That means almost an exact profit of 8.5% per vehicle sold by Maruti. That includes after sales and all that blah blah blah
nvdisdesi is offline   Reply With Quote
Old 9th June 2010, 19:12   #33
Senior - BHPian
 
recshenoy's Avatar
 
Join Date: Mar 2008
Location: Mangalore / Bangalore
Posts: 1,056
Thanked: 91 Times
Default

if profits are in range of around 10%, how does cars manufacturers with small market cap like Fiat ,HM n Mitsu, Logan etc survive
recshenoy is offline   Reply With Quote
Old 9th June 2010, 19:21   #34
BHPian
 
Brix's Avatar
 
Join Date: Dec 2008
Location: Chennai
Posts: 585
Thanked: 23 Times
Default

8-10% is the correct figure. Thats all they make. More cars sold, more money made and vice versa.

Its the accessories and spares where the company makes a killing. See the bill every time you give you car for the post-free services. If private garages were more professional, we could cut costs drastically.
Brix is offline   Reply With Quote
Old 10th June 2010, 14:21   #35
GTO
Team-BHP Support
 
GTO's Avatar
 
Join Date: Feb 2004
Location: Bombay
Posts: 47,749
Thanked: 89,404 Times
Default

Quote:
Originally Posted by recshenoy View Post
if profits are in range of around 10%, how does cars manufacturers with small market cap like Fiat ,HM n Mitsu, Logan etc survive
Fiat : Makes more money from selling engines than cars in India. If they sold only cars, they'd have wound up by now.

HM-Mitsubishi : Deep in trouble (Hindustan Motors sinking? To report to the BIFR)

MM-Renault : Massive losses on the Logan. Divorce (Mahindra goes solo with the Logan. Renault exits Mahindra-Renault JV)
GTO is offline   Reply With Quote
Old 10th June 2010, 16:48   #36
BHPian
 
Gooney's Avatar
 
Join Date: Oct 2008
Location: Guwahati
Posts: 347
Thanked: 65 Times
Default

Quote:
Originally Posted by ajmat View Post
I read an article recently on why the BMW 5 is crucial for the company success although the 3 is the big seller. Apparently, it costs only 15% more to manufacture but the margins are twice that of the 3. Considering the 7 and 5 share similar components - BMW are out to cut costs through commonality. They did have profitability issues over the past year
This is exactly the same for the Mercedes-Benz C- and E- Class.

Last edited by Gooney : 10th June 2010 at 16:51. Reason: typo
Gooney is offline   Reply With Quote
Old 10th June 2010, 17:39   #37
BHPian
 
Brix's Avatar
 
Join Date: Dec 2008
Location: Chennai
Posts: 585
Thanked: 23 Times
Default

Probably the loss making car companies should just put their money an an FD. Safer and guaranteed returns.
Brix is offline   Reply With Quote
Old 11th June 2010, 13:09   #38
Senior - BHPian
 
Join Date: Apr 2007
Location: Pune
Posts: 2,453
Thanked: 955 Times
Default

Well, look at the OPM and NPM of the listed companies, e.g. Maruti - OPM 15%, NPM 8% for FY2010. So that's roughly the earning margins for the manufacturers in this industry.

Also, net profit/no. vehicles sold should give an idea on their per unit margins.
e.g. Maruti - Net Profit = Rs. 2497 cr for FY2010, no. of units sold = 10,18,365.
So margin/unit = @Rs.24519.

So that's the ballpark - considering accounting frreedom, product mix, market segments, etc.
anandpadhye is offline   (1) Thanks Reply With Quote
Old 11th June 2010, 13:21   #39
BHPian
 
Join Date: Nov 2009
Location: Bangalore
Posts: 910
Thanked: 297 Times
Default

Long time ago sbasak said that taxes constitute 35%. Is this ex-showroom or on road?
wildsdi5530 is offline   Reply With Quote
Old 11th June 2010, 13:50   #40
Senior - BHPian
 
aniketi's Avatar
 
Join Date: Sep 2009
Location: Pune
Posts: 1,270
Thanked: 711 Times
Default

Dealer never gets huge margins like 8 %. The dealer margin is around 3% is what i have heard. Factory cost or production cost (inclusive of all) is something which is important for a manufacturer as all taxes will be applied on that value. They have to think of the profit margins before they start selling it. Generally car makers consider around 10-15% profits on the car. It can vary as well. On some things they can make even more as well like in case of Dzire or Manza where not much amount is invested in the r&d. They have to consider volume also as it is one of most important factor. The more the volume the more profit you make. Companies also has to bear losses incurred from other own vehicles as well. Like Maruti has to bear some amount they are getting from alto, Swift, Dzire etc on other models like estilo, a-star, sx4 etc as they are not selling good now. So ad cost is more. They consider profits as a whole for a company & not just for a single model.
aniketi is offline   Reply With Quote
Old 11th June 2010, 14:06   #41
Senior - BHPian
 
Join Date: Apr 2007
Location: Pune
Posts: 2,453
Thanked: 955 Times
Default

8% NPM in case of Maruti I mentioned above is the company's NPM and not the dealers.
Dealers are not listed on stock markets and hence their data is not published.

So as I said, the figures indicate manufacturer's (i.e. company's) numbers.

Last edited by anandpadhye : 11th June 2010 at 14:07.
anandpadhye is offline   Reply With Quote
Old 16th June 2010, 13:42   #42
Newbie
 
Join Date: Jan 2009
Location: Kochi
Posts: 20
Thanked: 2 Times
Default

When I used to work at American Honda Motors, My manager used to tell me that they made less than 500 Dollars profit on each Civic sold (at 20k USD OTR roughly).. And this was the reason why Honda(Manufacturing) rarely offered incentives. The money came in from financing.. That too mostly Lease..
Honda had over 4 million active finance accounts as of 3 years back.
devakj is offline   Reply With Quote
Old 16th June 2010, 21:51   #43
BHPian
 
aditya116's Avatar
 
Join Date: Feb 2010
Location: calicut
Posts: 315
Thanked: 48 Times
Default

Quote:
@ GTO Fiat : Makes more money from selling engines than cars in India. If they sold only cars, they'd have wound up by now.
I thought the agreement was between fiat italy and suzuki.so how does fiat india get the money?If so,any idea on the amount made on every engine sold?
aditya116 is offline   Reply With Quote
Old 17th June 2010, 03:42   #44
BHPian
 
Join Date: Sep 2009
Location: Bombay
Posts: 609
Thanked: 654 Times
Default

There is something called "economies of scale". The bottom line is you make money off volume sales. Take the Maruti 800 - it is a largely unchanged model being sold for the last 25 years coming off the same assembly line. The sheer scale of Maruti 800s sold means that the product has paid for itself and recovered costs f R&D and investment. Now the variable costs are labor, overhead and material - so as far as they cover these costs they still make a profit. Compare this to say - you want to buy a Morgan Aero. Considering these cars are hand crafted and there is a 2 year wait if you are lucky - you will be paying a major premium because it is not mass produced. Parts of a car too come under this "economies of scale". A few years ago - Power Steering was only available in few cars that too in the top variant - now it is standard across all variants - you will be hard pressed to find a car without one. As more power steerings were sold - it brought the owning costs for the end consumer down and it made economic sense of the supplier to supply Power Steerings at a lower cost to the manufacturer since he/she was now making them in bulk.

Last edited by invidious : 17th June 2010 at 03:44.
invidious is offline   Reply With Quote
Old 17th June 2010, 10:15   #45
BHPian
 
echo77's Avatar
 
Join Date: May 2010
Location: goa
Posts: 325
Thanked: 33 Times
Default

Quote:
Originally Posted by aditya116 View Post
I thought the agreement was between fiat italy and suzuki.so how does fiat india get the money?If so,any idea on the amount made on every engine sold?
This was discussed in another thread (can't find it right now)

It is not exactly Fiat's MJD engine. It was a collab between Fiat, GM & Bosch(?). Suzuki has a stake in GM, so Suzuki got licence to manufacture the engine. Of course, Fiat gets some royalty.

The engines manufactured at Ranjangaon are for Fiat and Tata, under the JV. IMO, Fiat makes more money from these.
echo77 is offline   Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
"Facelifts" - Do they strike a chord? Do they make THE difference? libranof1987 The Indian Car Scene 24 21st November 2011 15:23
What's the kind of profit/car car-makers make high_octane The Indian Car Scene 24 23rd November 2009 15:56
2009 make car - Registered as 2010 make? MAS Indian Car Dealerships 16 5th November 2009 10:48
Power valves - What are they / how do they work? chetanhanda Technical Stuff 10 9th June 2009 16:51
Economic Bubbles - Why they form and why they burst ? DCEite Shifting gears 49 20th October 2008 16:04


All times are GMT +5.5. The time now is 02:44.

Copyright 2000 - 2017, Team-BHP.com
Proudly powered by E2E Networks