[jacobgeorge]

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

[nvdisdesi]

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

[recshenoy]

if profits are in range of around 10%, how does cars manufacturers with small market cap like Fiat ,HM n Mitsu, Logan etc survive

[Brix]

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.

[GTO]

Originally Posted by recshenoy

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

MM-Renault : Massive losses on the Logan. Divorce

[Gooney]

Originally Posted by ajmat

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.

[Brix]

Probably the loss making car companies should just put their money an an FD. Safer and guaranteed returns.

[anandpadhye]

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.

[wildsdi5530]

Long time ago sbasak said that taxes constitute 35%. Is this ex-showroom or on road?

[aniketi]

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.

[anandpadhye]

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.

[devakj]

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.

[aditya116]

@ 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?

[invidious]

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.

[echo77]

Originally Posted by aditya116

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.