How far does a car have to depreciate before it's worth less than what it cost to make in the first place?
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Bugatti Veyron sold for £840,000, while the production costs of the car are approximately £5 million per vehicle.
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OK, fair enough!
Any real world examples. All the high-volume fleet stuff depreciates so quickly that it can't be long before they're hardly worth the value of the raw materials that they are made from.
It also amazes me how a manufacturer can manage to build and sell a brand new car for under £6k, the margins on these city cars must be tiny.
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Any real world examples.
As soon as you walk out of the showroom having registered a brand-new car in your name, its trade-in value is less than the dealer pays to get a new one from the manufacturer.
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"It also amazes me how a manufacturer can manage to build and sell a brand new car for under £6k, the margins on these city cars must be tiny."
They are - a few hundred per car, but revenue income from ongoing maintenance is also a factor for main dealers.
Many owners still go to dealers for servicing and don't shop around, or negotiate a good price. I read figures of almost £200 for a basic service on a C1 or 107, it takes no more than 30 minutes.
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"It also amazes me how a manufacturer can manage to build and sell a brand new car for under £6k the margins on these city cars must be tiny." They are - a few hundred per car but revenue income from ongoing maintenance is also a factor for main dealers.
This is the really stupid thing - dealers are not interested in older cars coming to their workshops - I know I have work in then for many years - take where I work at the moment, we only have one labour rate. well over £100 an hour, we have just laid off technicians due to lack of work.
The workshop is still empty by 2pm, we are all worried for our jobs....
The management when asked what they are going to do, just tell us 'we are looking into things'
looking does not keep us busy!
what we need to do is lower the labour rate, at least for older cars - but the management refuse point blank to do so.....
I feel its not rocket science that a car in a bay at say £90 ph is better than an empty bay at £120 ph...... after all the overheads are still the same!
BTW its my personal belief that after a car gets to 6 or 7 years old, it actually becomes more eco friendly, as it has probably balanced the 'costs' of production/design etc... up to that point I feel its in negative equity if you like... does anyone agree, or maybe even understand what Im trying to say? lol
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"It also amazes me how a manufacturer can manage to build and sell a brand new car for under £6k, the margins on these city cars must be tiny"
Looked at another way - the margins on dearer cars must be large. Same basic components (engine, body, wheels, seats, instruments); marginal increase in labour & material costs; same transport costs, overheads, marketing, etc.
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"same transport costs, overheads, marketing, etc"
There was something in Auto Express a few weeks back about the marketing budgets for some companies. You'd be surprised how much some pay out per annum and how little others do. I think BMW was one of the lowest. So they have a product at a premium price and need to spend less of their margin on advertising.
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My local indy charges £35 p/h and has 4 ramps, which are nearly always full, even now.
Also worthy of note is that my local Daihatsu/Ford dealer was able to do my main oil seal on the Kia at just 3 working days notice and that was only so I could have a loan car!
I note that many cars have recently been updated/revised with great emphasis on making them cheaper to build - seems common with german cars - why dont they just do these sums before launching them?
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As jbif says: as soon as there's a name on the V5 - the vehicle doesn't have to move a wheel.
(assuming that 'cost to make' all costs up to retail seller)
Slightly OT - I foresee the 'classic' stainless steel/glass/pot plant dealerships being a thing of the past soon (checkout the tenses in that!), with a new 'Aldi' type dealership (as distinct from the car-supermarket model) coming to the fore. Perhaps even a Skoda-risation of the entire industry.
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It also amazes me how a manufacturer can manage to build and sell a brand new car for under £6k
Well, it amazes me how many manufacturers can charge £50,000 for a car which is not 5 times better than a £10,000 car!
It's all about perception of the brands.
Remove the Jaguar emblem from an X-type and put elliptical Ford badge - price will immediately fall by 40%
Edited by movilogo on 18/11/2008 at 12:22
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