Gross Profit? - Mercedes-Benz Forum

 
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post #1 of 8 (permalink) Old 08-01-2006, 08:57 AM Thread Starter
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Gross Profit?

Does any one know how much gross profit Mercedes makes for each e-class that they sell ?

For example, since E-class starts at 50K, how much of that is their profit ? E.G. 45K in profit and it takes only 5 K to make the car for example...

any one know ?
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post #2 of 8 (permalink) Old 08-01-2006, 10:16 AM
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I believe you can get the dealer invoice sheet from mercedes. I got mine from then. The dealership paid $59,000 for my w126 in 1990, but I dont have the sticker.

Mike
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post #3 of 8 (permalink) Old 08-01-2006, 10:49 AM
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You will never get a manufacturer to state it's true costs. The cost to manufacture a vehicle include things such as parts, labor, R&D, factory costs, shipping, insurance, advertising, accounting, support staff, security, and this list goes on. It’s like trying to get a motion picture company to admit when they “thought” they might turn a profit on a movie. You “might” be able to determine what the dealer paid, but that’s tricky too. They get kickbacks, which the invoice doesn’t reflect, but they also are forced to pay regional advertising, which you also don’t see listed on the invoice.
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post #4 of 8 (permalink) Old 08-01-2006, 11:22 AM Thread Starter
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thats what i am asking how much do they make per car to pay for r and d , accounting...salary
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post #5 of 8 (permalink) Old 08-01-2006, 02:21 PM
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If I were to do a guestimate, a $50,000 car would have about $10,000 in material and labor. You have to remember R&D, overhead like non production salaries, facilities (factories-offices), not to mention management salaries, racing efforts, sponsorships, benefits like (retirement-govement social securtiy or what ever is assessed). The other items like stock dividends, bank note repayments, warranty costs, advertising and profit.
I use this as a comparison on my experience in manufacturing, sales, on the products that we sold thru dealerships 20% final profit might be on the high side but not uncommon.
The pricing to dealers is covoluted, there are things like financing, dealers do not toally pay for a car when it hits the lotits more like a constantly changing note, the numbers move around, as new models are introduced the factory starts adjusting, why would any dealer acquire cars within 90 days of a model change, the word "hold back comes in".

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post #6 of 8 (permalink) Old 08-01-2006, 03:48 PM
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Quote:
Originally Posted by Peter Guenther
If I were to do a guestimate, a $50,000 car would have about $10,000 in material and labor. You have to remember R&D, overhead like non production salaries, facilities (factories-offices), not to mention management salaries, racing efforts, sponsorships, benefits like (retirement-govement social securtiy or what ever is assessed). The other items like stock dividends, bank note repayments, warranty costs, advertising and profit.
I use this as a comparison on my experience in manufacturing, sales, on the products that we sold thru dealerships 20% final profit might be on the high side but not uncommon.
The pricing to dealers is covoluted, there are things like financing, dealers do not toally pay for a car when it hits the lotits more like a constantly changing note, the numbers move around, as new models are introduced the factory starts adjusting, why would any dealer acquire cars within 90 days of a model change, the word "hold back comes in".
I agree - one of my friends works at the Mercury division of the Ford group and
he once told me it would cost US 7,500 to manufacture a Grand Marquis sedan.
(you know, a Crown Vic with some more bells and whistles). This is a US 35 K car.

“One who conquers himself is greater than another who conquers a thousand times a thousand on the battlefield.”
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post #7 of 8 (permalink) Old 08-01-2006, 07:35 PM
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Quote:
Originally Posted by Ruudje
I agree - one of my friends works at the Mercury division of the Ford group and
he once told me it would cost US 7,500 to manufacture a Grand Marquis sedan.
(you know, a Crown Vic with some more bells and whistles). This is a US 35 K car.
No you really cannot do that. Ford Motor Company loses money. You buy their cars below cost. Lots and lots of car makers world-wide lose money. Fiat and Renault often run up mega losses. Jaguar Cars have been sold at a loss for years -and a big loss too so in the end they had to be bought out by Ford. You need to take all the costs involved in making the cars, including R&D, design, tooling (a vast expense), marketing, guarantees, customer care etc etc etc. When you do that, it is surprising how many lose money making cars. There is an excess of capacity all around the world, fierce competition, and new producers from low cost countries creating mega pressure on margins. Some big names will probably fold or have to merge over the next decade or so.

Mercedes do make a profit -though they have lost a bundle making Smart Cars.
I guess the easiest way to get a rough idea is to look up their total profit and divide by the number of cars they make. The profit per car cannot be more than that and, in fact, will be much less as they make other things, including vans and lorries, as well as supplying spares for all the older models.

BTW dealers don't make that much either (certainly not in the UK) not if you net out all the costs involved. It is a very competitive field. Although few will believe it, the more you study the figures across the industry the clearer it becomes that most new cars are sold with very little profit. Ask Ford.
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post #8 of 8 (permalink) Old 08-02-2006, 01:44 AM
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Several valid points have been made here, but I think the bottom line is that dealerships do not make their profits on new car sales - they make them on service.

As to the actual manufacturers, they make up some the competitive-pricing losses with their own financing branches - GMAC to name just one.

DCX is a huge conglomerate, but it was recently reported that their Daimler-Chrysler automobile division was responsible for a large part of their very profitable 2nd quarter earnings statement.

If any of you ever studied economics, you might remember that it is a complicated subject, at least it was for me. BUT, therein lies the answer to most of the world's problematic issues.

Last edited by Musikmann; 08-02-2006 at 01:55 AM.
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