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whats it really cost to build a new car/truck?

Discussion in 'General Automotive Discussion' started by dmaxx3500, Feb 21, 2011.

  1. dmaxx3500

    dmaxx3500 Formula 3

    Jul 19, 2008
    1,009
    what does it really cost gm/ford/cslr to build a new car/truck?,,ive heard some numbers thru the years,but i'd love to know it for real,,i just looked at a 2011 chevy 3500 crew cab dually duramax/allison ltz,,list was $57,000,dealer cost was $47,000,
     
  2. iamthesimpleone

    iamthesimpleone Formula 3

    Aug 23, 2005
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    Ben H
    i've read anywhere from 1,500 to 3,000 in the price of a car goes to paying for 'legacy costs' i.e. pensions and retiree health care........:(
     
  3. Pass

    Pass F1 Veteran
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    Feb 29, 2008
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    It seems like trucks especially are a ripoff since they dont really have all the extra doors and interior ammenities... The difference between a stripped down Chevy vs a Silverado is outragous.. My guess it is about 30% profit on a truck..
     
  4. JeremyJon

    JeremyJon F1 Veteran

    Jul 28, 2010
    7,263
    Calgary, Canada
    it depends, there are 2 ways to look at it....first is just a physical (materials & labor) per unit.....the second inclusive of all the overhead costs (research/development, benefits, administrative, etc.)......msrp has to factor in covering all of these, and something for profit too! :)


     
  5. normv

    normv Formula 3
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    Hello, from what I understand, when Ford brought out its new truck line they had a 1.5 Billion investment, now thats a lot of trucks.
     
  6. GuyIncognito

    GuyIncognito Six Time F1 World Champ
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    that's 20% profit to the dealer, that seems too high unless there are significant rebates/incentives to the dealer that they don't intend on passing on, or there were lots of dealer add-ons (running boards, brush guards, the infamous "undercoating", etc). dealer profit usually is 8-10%.
     
  7. Far Out

    Far Out F1 Veteran

    Feb 18, 2007
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    The actual manufacturing costs for a car ridiculously low. Single sensors usually low single figure sums, steering wheels low 2 figure, complete inline 4 cyl. petrol engines middle 3 figures... there's hardly a business with more cost pressure than the automotive industry...
     
  8. anunakki

    anunakki Five Time F1 World Champ
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    Oct 8, 2005
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    I have to imagine development/tooling amounts to a lot more than the actual cost of building each car.
     
  9. El Wayne

    El Wayne Global Moderator
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    Aug 1, 2002
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    In addition to materials/labor, research/development/testing, tooling, pensions/health care/labor concessions, there are also marketing costs. Those Superbowl commercials are pretty damned expensive to produce and air.
     
  10. Doctor7474

    Doctor7474 Formula Junior

    Jun 20, 2010
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    I worked for Ford for several years and my best friend is a GM at a Ford dealer.

    I don't know the actual cost it takes to make it but I know how much mark up between dealer cost and sticker.

    Most of the low end cars do not have that much mark up, say a Focus base model is in the hundreds not thousands, same way with pretty much any base car.

    Now I bought a 07 F150 Lariat Supercab black/black leather every option including sunroof. Sticker was about 34k$ on it, I paid employee pricing which is 500$ over dealer cost and paid a hair over 23k$.....

    They (dealer) makes the most money on trucks and big SUVs, and also on heavily optioned vehicles. This is why most dealers only order heavily optioned cars for the most part.
     
  11. JeremyJon

    JeremyJon F1 Veteran

    Jul 28, 2010
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    Calgary, Canada
    i read somewhere a few years ago, that Ford's SUV plant / sales, out did $$ profit of all it's other automotive sales combined......

     
  12. ScreaminRevs

    ScreaminRevs Formula Junior

    Apr 4, 2004
    346
    Chicago
    The invoices these days only tell you part of the story, no doubt due to their accessibility to anyone and everyone. I don't believe for one second that dealers' profits on the econo cars are limited to a few hundred (invoice to MSRP); there's more profit in $2000 TVs than what all the auto websites show. I'll bet that their pricing structure is tiered, such that: sell 20 Focuses a month, dealer gets back $2500 on each one; sell 35+, get back $3300. All the people walking in to the showroom and scoring an invoice deal is simply to trick them into thinking the dealer only made " 2 or 3 hundred on the holdback". Yeah, right.
     
  13. El Wayne

    El Wayne Global Moderator
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    As someone who was a sales manager at a large-volume Ford dealer for many years (20 years in the business and currently a sales manager at an import brand dealership), I can assure you that there are couple of things wrong with this statement. True employee pricing through Ford ("D-plan") is below dealer cost, yet the dealer is reimbursed money on these specific deals so that they come out a few hundred dollars ahead. There has never been $11,000 built-in mark-up on any $34K Ford - period. You might have had rebates of up to $4K-$5K applied that you are figuring into your savings. This is incentive money from the factory to you and has nothing to do with dealer profit margins.
    Believe it; it's true.

    Some (but not all) manufacturers have "retro" programs similar to what you describe, but payments are nowhere near $2500 per car. More like $100-$300.

    By the way, it is true that the dealer's cost on each car (for most makes) is less than the invoice amount due to dealer "hold back." To figure how much this is, see the chart below (courtesy of edmunds.com):

    Make: Holdback
    Acura: 2% of the Base MSRP
    Audi: No holdback
    BMW: No holdback
    Buick: 3% of the Total MSRP
    Cadillac: 3% of the Total MSRP
    Chevrolet: 3% of the Total MSRP
    Chrysler: 3% of the Total MSRP
    Dodge: 3% of the Total MSRP
    Ford: 3% of the Total MSRP
    GMC: 3% of the Total MSRP
    Honda: 2% of the Base MSRP
    Hyundai: 3% of the Total MSRP
    Infiniti: 1.5% of the Base MSRP
    Jaguar: No Holdback
    Jeep: 3% of the Total MSRP
    Kia: 3% of the Base Invoice
    Land Rover: No Holdback
    Lexus: 2% of the Base MSRP
    Lincoln: 2% of the Total MSRP
    Mazda: 1% of the Base MSRP
    Mercedes: 3% of the Total MSRP
    MINI: No Holdback
    Mitsubishi: 2% of the Base MSRP
    Nissan: 2.8% of the Total Invoice
    Porsche: No Holdback
    Saab: 2.2% of the Base MSRP
    Scion: No Holdback
    Subaru: 2% of the Total MSRP (Amount may differ in Northeastern U.S.)
    Suzuki: 3% of the Base MSRP
    Toyota: 2% of the Base MSRP
    VW: 2% of the Base MSRP
    Volvo: 1% of the Base MSRP

    When calculating holdback, use the following guidelines.

    If a holdback is calculated from the:

    Total MSRP: consumers must include the MSRP price of all options before figuring the holdback.

    Base MSRP: consumers must figure the holdback before adding desired options.

    Total Invoice: consumers must include the invoice price of all options before figuring the holdback.

    Base Invoice: consumers must figure the holdback before adding desired options.
     
  14. jefffromcanada

    jefffromcanada Formula 3
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    Nov 2, 2006
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    I've always wondered how much it would cost to build a new vehicle using over the counter OEM replacement parts.

    Start with the frame and then buy everything brand new, essentially building a new vehicle. How much more would it be? 5 times, 10 times....who knows :)
     
  15. Doctor7474

    Doctor7474 Formula Junior

    Jun 20, 2010
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    I had A plan which is better than D plan. D plan is friends and non-direct family of employees X plan is related company programs.

    You are correct and that is what I meant the dealer made about 500$ off that deal. The truck had 4k$ rebate on top of the A plan that I also got plus minus shipping and dealer prep costs which is part of A plan. So A plan was 27k on a 34k truck, then again when isn't there 4-5k$ rebates on these trucks at any given time.
     
  16. El Wayne

    El Wayne Global Moderator
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    D-plan is the price given to dealership employees (and immediate family). A/Z plan pricing is for FoMoCo employees/retirees (and immediate family). A/Z plan prices are exactly $100 less than D plan prices.

    That's what I wanted to point out. Your initial post made it sound as though dealer cost on a vehicle with a $34,000 MSRP was about $22,500, leading people to believe that Ford dealers have over $12,000 of profit built into the MSRP of $34K trucks:

    I just wanted to clarify for everyone else here that this is not the case.
     
  17. doctor d

    doctor d Rookie

    Oct 23, 2012
    1
    I have been in the car biz for over 40 years, and seen a lot. You all have good points and information, but all you have to do is simple math to come up with a real close true cost. If you use some of the figures and percentages you all have used in your information and facts from GM's own web site it's easy. According to GM's own web site, in 2009 they spent an average of a little over $10,000.00 per vehicle, for cars/trucks sold in the USA, just on advertising alone. That is 32% of the average msrp of all there cars/trucks. So, a $57,000.00 truck less that 32% is $38,760.00. Subtract from that the average $5,000.00 incentive money and approximate $5,000.00 profit for the dealer and the same for the factory and the balance is only $23,760.00 or 41% of msrp. These same percentages can be used on all their cars and trucks to come up with an average base cost of manufacture. True, this is just an approximate average, but I don't think GM has ever been audited to find out where all there money really goes.
     
  18. David_S

    David_S F1 Veteran
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    Nov 1, 2003
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    So why couldn't they run just ONE big add campaign per year telling folks that they were cutting their advertising budget by 95% and passing the savings on to the consumer?

    If they then only spent an average of $500 per vehicle on advertising & lowered the price of the vehicles by an average of $8,000 - they could come out ahead (pocketing the avg $1500 difference), and I'd bet they'd actually sell more cars & trucks.
     
  19. jm2

    jm2 F1 World Champ
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    that's correct
    generally a "new" car program cost's @ $1-1.5 billion
    that's serious $$
    depends on the number of "new" tools/parts/#of bodystyles,etc.
     
  20. kverges

    kverges F1 Rookie

    Nov 18, 2003
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    Amazing level of detail and VERY informative. Thanks. My understanding is that dealers do not make the big money on new car sales. The bigger money is used cars (every trade-in has the potential to be more profitable than the car sold) and service.

    On the manufacturer side, cost is way too complex for me to comment in detail, but I can say that the marginal cost of labor and material to build one car on the assembly line haas to be a small fraction of what that car really costs. Ferraris are excellent examples. I doubt the material and labor cost for a 458 is all that much higher than, say, a very high end Audi. But since production numbers are so much lower on the 458, well it is goin to cost a lot more to build.
     
  21. ScreaminRevs

    ScreaminRevs Formula Junior

    Apr 4, 2004
    346
    Chicago
    That's pure propaganda from the dealers and from dealer-supported websites. Common sense would tell you that salesmen couldn't rake in their typical $30 to $100K +/yr, sales managers $150K-ish, GMs $200K+ if the true mark-up was only what the "invoice" & holdback published numbers were all there was. In addition to the above salaries most people would never guess how much the owner of a run-of-the-mill dealer profits.
     
  22. tervuren

    tervuren Formula 3

    Apr 30, 2006
    2,459
    The subject, and content of this thread seem to be in disarray with eachother.

    Cost to build a car vs what a dealer makes as profit on a car are two different subjects. :)
     
  23. tundraphile

    tundraphile F1 Rookie

    May 16, 2007
    4,162
    Missouri
    Of all industries, none squeezes their suppliers more than the auto industry. For a supplier (former design engineer for one) you can certainly have large volumes, but get it wrong and you will be bankrupt in a heartbeat.

    My current position is for a battery company that recently decided to venture into the SLI range also. There was a conscious decision NOT to go after the OEM business and instead have them be only aftermarket. No profit in OEM business.

    My father-in-law is retired Chrysler and told me once that there is only about $1500 labor in a car. If you think about it, it makes sense, big profits for Chrysler (the manufacturer, not dealers). There is not much more actual labor in making a loaded Grand Cherokee than there is a Dodge Dart.
     
  24. Nexxus21

    Nexxus21 Rookie

    Oct 24, 2013
    1
    Actual manufacturing costs--the actual cost to the company to produce the unit and get it out the door (this means no union costs, no retiree costs, no profits of any kind) is roughly 10% to 15% of MSRP. The companies disguise the real numbers very carefully, but I know that it only costs about $2,300 to make a $23,000 MSRP car, a $15,000 MSRP car (e.g. a Focus or Fiesta, maybe $1,600 to $2,000 per unit tops).

    There is no way the car makers could stay in business to cover the huge expense of advertising, marketing, union and labor costs, retiree benefit costs, and the dozens of other costs if the manufacturing cost exceeded say, 20% of the MSRP. There's just no way they could do it -- well, if they eliminated the fancy color brochures they give away (which costs over $15 each to print) and the $50,000 per second advertising costs.

    If people knew the actual numbers, nobody would shell out the comical MSRP's they are asking. Well, except for a Ferrari--that's totally different.
     
  25. Nativetroy

    Nativetroy F1 Veteran
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    Nov 29, 2010
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    You're saying that Ford can build a Focus for $2,300, but can't get a brochure printed for under $15?
    There is a profit made on every car for sure. Mass model at least, but most profit comes from higher line vehicles. A base F150 four door and a Platinum have the same body. Frame, often times the same engines. But there is a 20k+ price difference. The leather and other extras don't cost near that per truck. And every model has its cheap version and the premium.
     

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