What does a car cost to build?

[nickg]

Lets take a fairly bog standard E class that retails at £30K.
Anyone know what it would cost MB to build this car ex-factory?
Ignore R&D etc - just parts and labour.

just interested............

 

[Howard]

Not sure , but i remember ages ago a car mag. priced up what it would cost to build a golf using parts ordered through the VW parts department ....

I think the price of the golf new was about £12k and the cost of building it out of parts was about £80k

Doesn't help with your question though Nick ..... sorry ...

 

[Gollom]

Soemone on here knew all about this kind of thing - was within the last 6 months? Just tried a search but can't find it - anybody?

 

[stats007]

Something like £3k IIRC.

 

[Bobby Dazzler]

As a production engineer I know that the UMC ('Unit Manufactured Cost' = cost to build and deliver to the factory gate, excluding transport and other costs of distribution) of a new W211 200K saloon with 'Classic' base spec is around £2650.

DaimlerChrysler will seek, typically, to reduce the UMC by around 4% per year, or by around £100 per car: they will do this by using bolts that rust, chrome trim that is nanometres thick or simply by squeezing suppliers. All manufacturers do it.

The perception that a Mercedes should be made of better quality materials is just that: a perception. Slick MB branding and marketing does not entitle you or I to expect the same in reality.

Source: http://www.mbclub.co.uk/forums/showthread.php?t=30374&highlight=factory+build+cost

 

[smartbrabus]

IIRC a Daewoo Matiz retailing at around £7k costs about £800 ex factory.

So would expect a £30k E class to "cost" no more than £4-5k to build.

 

[prprandall51]

Ha, ha! This thread reminds me of a famous story about Aston Martin.

One day, Errol Flynn (I think it was Errol Flynn) visited the factory and was being shown around by David Brown himself. Brown was acutely aware that Aston needed people like Flynn to be seen driving their cars to build the brand image. Flynn, on the other hand, wanted something for nothing.

At the end of the tour, Flynn turned to Brown and said: "I like your cars, Mr Brown, and I want one. But I won't pay a penny more than cost for one."

Brown replied: "That really is most generous, Mr Flynn. All our other customers pay substantially less for their cars than it costs us to build them".

Merry Xmas, by the way.

Philip

 

[glojo]

Ignore R&D etc - just parts and labour.

just interested............

Hi Nick,
It's an interesting question that will have those that specialise in statistics having a field day.

The answer although intersting is as you've already noted irrelevant.

Are you talking about the indivual cost of the parts, or are you talking about the cost of the materials, and then adding the labour?

If it is costs of material, then simply weigh the different steels, alloys etc and then add up all the indivual costs. When that is done work out the costs of blobs of plastic, strips of leather etc.

If we are looking at costs of individual parts, wings, bonnets engine, nuts, bolts screws etc, then as Howard states the cost of an E-class will be mind blowing.

What about labour rates, is this the labour rates of the lowest denominator, or are we taking into account management? How many hours are you allowing in the labour costs, for how many employee's?

What about shipment charges from Germany to the UK?

Are we considering any involvement of Mercedes-Benz UK at Milton Keynes? They build nothing but they are still employee's.

Sorry to be awkward and not answering your straight forward question

Good luck getting an answer,
Regards,
John

 

[Gollom]

And of course, there are always the hangers-on in Marketing......

(Ducks the flack from Lotusmark2)

 

[hawk20]

Most car makers lose money. Chrysler lost 1.5 billion dollars in one quarter --that is 1500 million dollars. Looking at tiny parts of the total cost, without giving any formal definition or any proof of sources is of no value to the normal punter. Car production is so competitive that virtually all cars are sold either at very small profits or more often at a loss.

 

[Satch]

Car makers do not really know with any degree of certainty how much a given car "costs" to make.

Could price out the individual parts in terms of cost and labour hours expended but that does not take them very far. It all only makes sense (and starts to get difficult) with the morass of overhead, R&D, warranty, finance and innumerable other cost allocations are factored in.

 

[Mactech]

Having worked with quite a few major car makers, I have been lead to understand that in very broad brush terms the costs are:
One third for the parts to build the car.
One third for the manufacturing including things like R&D, factories etc.
One third marketing inculding dealers, warranty etc.

And of course, very little profit....

 

[ddentrec]

Having worked with quite a few major car makers, I have been lead to understand that in very broad brush terms the costs are:
One third for the parts to build the car.
One third for the manufacturing including things like R&D, factories etc.
One third marketing inculding dealers, warranty etc.

And of course, very little profit....

The real profit comes in the optional extras such as sat nav and metallic paint (though in practice a base non-metallic colour is actually more expensive to purchase and apply).

The profit is in the options.

The average merc owner will spend, according to DaimlerChrysler, £3,450 on options in addition to the car's base spec. So if you purchase an avantgarde spec E-Class over a classic (~£2,500) and then add your extras then we are talking £6,000 extra revenue for DC.

 

[Rory]

It's easy to have a stab at this - at least for the Daimler Chrysler group.

Their gross profit margin for last quarter was 25.8%, so *on average* each DC car cost 74.2% of it's "factory price" to build. I say "factory price" because it then gets complicated - in the case of Mercedes the cars are (I presume) sold to DC-UK, then to dealers and then to customers.
Even allowing for all the other people in the chain, DC's build cost is (on average) probably too high - maybe Smart is in there and messing up the figures? I used to work in the car industry and the rough rule of thumb was that it should cost about half of a car's pre-tax price to build it.


For those who aren't business people, a gross profit margin of 25.8% is terrible for any company that manufacturers things. Porsche's GPM is almost 60% - a real money making machine.

 

[grober]

the tax man manoeuvre????????

Most car makers lose money. Chrysler lost 1.5 billion dollars in one quarter --that is 1500 million dollars. Looking at tiny parts of the total cost, without giving any formal definition or any proof of sources is of no value to the normal punter. Car production is so competitive that virtually all cars are sold either at very small profits or more often at a loss.

I'm afraid I don't understand those statements In my world companies that don't make profits rapidly go out of business or lose their investors. Don't you just love "creative accountancy"

 

[nick mercedes]

I'm afraid I don't understand those statements In my world companies that don't make profits rapidly go out of business or lose their investors. Don't you just love "creative accountancy"

Plenty of car companies only make a profit from their car finance businesses...

 

[nickg]

I'm afraid I don't understand those statements In my world companies that don't make profits rapidly go out of business or lose their investors. Don't you just love "creative accountancy"

Very true.
But if a company has cash reserves of £2billion, access to debt of £10billion and assets of £50billion then losing £1.5billion will not, on its own, cause it to go bust
(I have picked these numbers to illustrate the point, they are not absed on any particular company).

 

[nickg]

Having worked with quite a few major car makers, I have been lead to understand that in very broad brush terms the costs are:
One third for the parts to build the car.
One third for the manufacturing including things like R&D, factories etc.
One third marketing inculding dealers, warranty etc.

And of course, very little profit....

Thanks Mac

A very sensible reply. Short, factual, based on knowledge.

 

[MichaelE211]

Cost

Lets take a fairly bog standard E class that retails at £30K.
Anyone know what it would cost MB to build this car ex-factory?
Ignore R&D etc - just parts and labour.

just interested............

Well, some time back when MG-Rover went tits up, I was looking into things like this, then the MGF, manufactured in UK cost the company £6350 all in to produce, remembering this is relatively simple car to make in fairly small numbers.
An eclass by comparision must be quite a lot more, despite the high level of productising that would have gone into this at the project stage.

I guess that my own £38k eclass would be approaching £14k cost to MB, that no margin, warranty, distribution costs, profit for group of dealer margins etc.

I'm sure someone will be along in a while to shoot holes through that.

 

[grober]

Very true.
But if a company has cash reserves of £2billion, access to debt of £10billion and assets of £50billion then losing £1.5billion will not, on its own, cause it to go bust
(I have picked these numbers to illustrate the point, they are not absed on any particular company).

So with assets of £50 billion presumably in production plant/ research facilities/ dealer premises/ transport etc associated with car manufacture ?? they must have made a profit on the cars they sold at some point in time or are they really estate agents in disguise? theoretically