What is the margin on a new car?

[jimb]

Inspired by the thread in how would you build a new Defender ( cannot find it now) in terms of using other vehicles parts.

How much does the car cost to manufacture you think?

Realise economies of scale might go against the defender v patrol et al, but curious. If we buy a 110 for say $54k, what's the dealer pay and what is it costing LR?

[Ian1878]

You need to factor in Aussie prices versus LR UK prices. A 90 in the UK starts at £21500 ($36500) and 110 are approx £28000 ($47600).

Based on current exchange rate @ 1.7 $Au to £UK

Those figures would have been 10% different 6 months ago as the £UK pound has gained significantly recently.

Ian

[PhilipA]

Does that include the VAT of 20% ?
I thought there was also a "Special Car tax" of 8% but I may be wrong as I just tried to look it up. It was hard enough confirming that VAT was 20% , as I guess everyone in UK knows.LOL
Regards Philip A

[Psimpson7]

That starting price for a 90 in the UK inst a direct comparison as it will likely be for a very low spec pick up.

We only get one spec level here which appears to be somewhere between the county and XS levels in the UK.

Probably more likely to be about 26k in the UK.

There must be a pretty decent margin on new cars, but I would think with the hand built nature the Defender would have a lower % margin when compared to say an evoque.

Having just ordered a new 90 I am not sure I want to know exactly what the margin is!

[incisor]

Having just ordered a new 90 I am not sure I want to know exactly what the margin is!

:D

thanks for the smile!

[Ian1878]

The prices I quoted are "on the road, drive away price".

I agree specs may be basic but take I to consideration the 110 in the UK is a 7 seated as "standard" as opposed to the additional $2 to 3k here.


Ian

[Hoges]

Manufacturing costs, margins etc are closely guarded...
The competitive advantage of other countries in manufacturing cars is largely their lower wage costs, higher production rates and foreign currency exchange rate. It's basic economics.
According to a former Ford engineer who was interviewed on Bris. ABC radio a couple of months back, the cost of producing cars in Australia is several thousand dollars per unit higher than in the UK due to wages and lack of economies of scale... wages not only of the assembly workers but also of people employed by local component suppliers etc

An organisation I used to work for, bought cars outright then sold them off after 5 yrs or so. Then salary packaging came in and "everybody" got a car. Company policy was local produced cars only. The nearby dealers we had always dealt with started to supply the salary sacrifice lease cars. Instead of a margin of $2-3k per vehicle, the margin slipped to less than $250 on the same vehicle bought via a lease, such was the pricing dictated by the manufacturers and their leasing arms. Damned if I know how they make any money other than through servicing and after market add ons. One dealer confided that he relied on used car sales to maintain liquidity.

I suspect the margins on "prestige cars" are significantly higher... but a lot of that goes into maintaining the infrastructure needed to support a particular make... minimum supply of spare parts /special tools/ training etc.

We've priced ourselves out of the competition. The sad thing is that the skills it takes to build cars.. such as lean manufacturing, just in time inventories, supply chains, systems engineering, design etc etc provide capability far beyond the auto industry and the whole of industry benefits... As a nation is will be a sad day if we just become an import destination based on money we get from exporting iron ore, food and coal... end of rant!

BTW, the cost of building a new 110 from a spare parts catalogue is about 3.5-5 times the current showroom floor price!

[PhilipA]

I remember when Ford Australia introduced Just in Time.
Any Glitch in the system like a truck breaking down caused MAJOR headaches.
I can remember scheduling cars for production with transmissions on the road from Albury Borg Warner. If they didn't arrive you would have hundreds of "cripples" in the yard.
JIT really just transfers inventory cost from the car manufacturer to the component supplier.
I can recall reading stories about how badly treated the workers were in component manufacturers in Japan. There was a vast difference between conditions in the major car companies eg the Mitsubishi "Zaibatsu" and the wages and conditions in component manufacturers.
Ford Australia learned a lot from Japan like 1/2hour tooling changeovers which used to take a full day beforehand.
Very few Japanese plants were/are like Broadmeadows where there could be 7 variants going down the line simultaneously. Falcon sedan, wagon, ute , van, Fairlane, LTD , hardtop.
So JIT is great for a car plant making one variant, with component suppliers grouped closely around it but not so good with a plant making lots of different models with suppliers scattered over 3 states.

I recall being surprised when I joined BMW , how inflexible they were as the turnaround from order to production was 4 months , whereas in Ford I could have orders produced in a week. It hasn't hurt BMW noticeably.

Regards Philip A