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Car Sale Price / Profit Margin
Posted:
Tue Oct 13, 2015 6:39 pmby kalsylum
What is a generally accepted car sale price or profit margin? I know there is a difference of profit margin between high quantity mainstream cars and say cars like hypercars or super luxury cars. But how do you set yours?
Re: Car Sale Price / Profit Margin
Posted:
Tue Oct 13, 2015 7:13 pmby utopian201
It depends, is your car a mainstream one or a high end one?
I generally go 2-3x production cost for a mainstream car, 3-4+ for a high end one. But there is no rule. Some members price their cars only a few thousand more than the production cost.
Perhaps once you have settled on a multiple, look at what other cars are available.
For example if Porsche sell a 275hp Cayman for around $50,000, is it realistic for you to sell your 500hp luxury coupe for $45,000? Or if your brand is a high end one, and you price your full size sedan for $60,000, when a Hyundai Equss goes for $65,000 and an Audi A8 for $100,000, is your brand really a high end one?
Re: Car Sale Price / Profit Margin
Posted:
Tue Oct 13, 2015 7:35 pmby kalsylum
utopian201 wrote:It depends, is your car a mainstream one or a high end one?
I generally go 2-3x production cost for a mainstream car, 3-4+ for a high end one. But there is no rule. Some members price their cars only a few thousand more than the production cost.
Perhaps once you have settled on a multiple, look at what other cars are available.
For example if Porsche sell a 275hp Cayman for around $50,000, is it realistic for you to sell your 500hp luxury coupe for $45,000? Or if your brand is a high end one, and you price your full size sedan for $60,000, when a Hyundai Equss goes for $65,000 and an Audi A8 for $100,000, is your brand really a high end one?
The brand I'm working on now is a mainstream brand. I am setting my super mainstream (real life equivalent of cars like Honda Civic Toyota Camry, Ford Focus, etc) cars at 4-7% margin, and the nicer cars (real life equivalent of cars like Toyota Avalon, Chevrolet Impala, Chevrolet Camaro, etc) at 7-10% cost to remain competitive. But is that a realistic & sustainable amount?
Re: Car Sale Price / Profit Margin
Posted:
Tue Oct 13, 2015 8:55 pmby utopian201
kalsylum wrote:utopian201 wrote:It depends, is your car a mainstream one or a high end one?
I generally go 2-3x production cost for a mainstream car, 3-4+ for a high end one. But there is no rule. Some members price their cars only a few thousand more than the production cost.
Perhaps once you have settled on a multiple, look at what other cars are available.
For example if Porsche sell a 275hp Cayman for around $50,000, is it realistic for you to sell your 500hp luxury coupe for $45,000? Or if your brand is a high end one, and you price your full size sedan for $60,000, when a Hyundai Equss goes for $65,000 and an Audi A8 for $100,000, is your brand really a high end one?
The brand I'm working on now is a mainstream brand. I am setting my super mainstream (real life equivalent of cars like Honda Civic Toyota Camry, Ford Focus, etc) cars at 4-7% margin, and the nicer cars (real life equivalent of cars like Toyota Avalon, Chevrolet Impala, Chevrolet Camaro, etc) at 7-10% cost to remain competitive. But is that a realistic & sustainable amount?
Remember the production cost is only the materials cost. Doesn't include things like marketing, research and development, distribution etc.
Re: Car Sale Price / Profit Margin
Posted:
Wed Oct 14, 2015 5:34 amby Leonardo9613
Utopian, he's using the price on the markets section, probably.
Kalsylum, profit margins for mainstream cars are usually around the 4%-7% you mentioned, while premium brands can charge 10-15% more. Luxury brands have even higher mark-ups though. However, keep in mind that that price is just a rough estimate for now, as R&D and tooling costs aren't calculated yet.
Re: Car Sale Price / Profit Margin
Posted:
Wed Oct 14, 2015 6:11 amby kalsylum
Leonardo9613 wrote:Utopian, he's using the price on the markets section, probably.
Kalsylum, profit margins for mainstream cars are usually around the 4%-7% you mentioned, while premium brands can charge 10-15% more. Luxury brands have even higher mark-ups though. However, keep in mind that that price is just a rough estimate for now, as R&D and tooling costs aren't calculated yet.
This. I forgot to tell him I use the price on the markets section. I'm excited to see how the pricing will be when tooling costs and R&D is factored in!
Re: Car Sale Price / Profit Margin
Posted:
Wed Oct 14, 2015 11:54 pmby 8bs
Leonardo9613 wrote:Utopian, he's using the price on the markets section, probably.
Kalsylum, profit margins for mainstream cars are usually around the 4%-7% you mentioned, while premium brands can charge 10-15% more. Luxury brands have even higher mark-ups though. However, keep in mind that that price is just a rough estimate for now, as R&D and tooling costs aren't calculated yet.
That's the EBITDA margin? If so, the game estimates (even roughly) fixed costs also...
Re: Car Sale Price / Profit Margin
Posted:
Thu Oct 15, 2015 6:34 amby Tycondero
Leonardo9613 wrote:Utopian, he's using the price on the markets section, probably.
Kalsylum, profit margins for mainstream cars are usually around the 4%-7% you mentioned, while premium brands can charge 10-15% more. Luxury brands have even higher mark-ups though. However, keep in mind that that price is just a rough estimate for now, as R&D and tooling costs aren't calculated yet.
Does it mean that 0% margin is like no-profit? I consider 0% to be viable for mainstream cars currently. The prices are already much higher than production costs warrant.
Re: Car Sale Price / Profit Margin
Posted:
Thu Oct 15, 2015 7:30 amby nialloftara
Production, r&d, factory upkeep, politician bribing, the general stuff that makes up car company overhead.
Unless you're Tesla or Bugatti you've got to make a profit on each car so 5-15% is reasonable depending on car class.
Re: Car Sale Price / Profit Margin
Posted:
Thu Oct 15, 2015 7:31 amby Leonardo9613
Don't forget that the current number is just a rough estimate, since there is no r&d and toolingcosts. Also, there are no sales numbers, which would affect how those costs are diluted on the price of the car. Considering all that, 0% would mean, right now, that there was no profit at all, nor any losses.
Re: Car Sale Price / Profit Margin
Posted:
Sun Oct 18, 2015 9:40 amby ArnRno
I noticed that I can't currently price a vehicle at a "loss," meaning below it's actual worth, less than the cost of parts and labor.
I hope that's something that is "fixed" once the tycoon game is actually up and going - it might sound like a bad/strange idea, but this is a strategy game after all, and selling at a loss could actually end up useful in certain situations.
Re: Car Sale Price / Profit Margin
Posted:
Sun Oct 18, 2015 10:43 amby Killrob
That definitely is a viable strategy when you are trying to conquer new markets. It will be possible once the tycoon part is more fleshed out, yes.
Re: Car Sale Price / Profit Margin
Posted:
Thu Oct 29, 2015 11:30 pmby Razyx
That could be interesting..., and another scenario might be that let's say that you have done crap cars for some years (above all, cars with looow reliability), your brand image should be damaged, then to recover the customer trust you'd have to 'break' the market prices (and make reliable cars).