[HonkeyDorey]

we know the MSRP price...
and we have links to the dealer cost pricing...

but no one ever talks about how much the car actually costs BMW to make...

lets just say its MSRP $45,000
dealer cost $40,000
how much is that car for BMW to make?? their profit??

[BMdblU]

Good question.

[Technic]

I would say, net manufacturing cost of a $40,000 dealer cost of a vehicle would be around $11,000-$14000, give or take a thousand.

[canucklion]

you have to factor in the R&D cost, which most likely costs more than the actual manufacturing cost

e.g. drugs, pharm companies spend way more on R&D, while it takes pennies to make the pills/solution/tablets..etc

Originally Posted by Technic

I would say, net manufacturing cost of a $40,000 dealer cost of a vehicle would be around $11,000-$14000, give or take a thousand.

[Technic]

Originally Posted by canucklion

you have to factor in the R&D cost, which most likely costs more than the actual manufacturing cost

e.g. drugs, pharm companies spend way more on R&D, while it takes pennies to make the pills/solution/tablets..etc

That's the reason of my manufacturing cost estimate... labor and actual parts/fuel/oil/lubricants would be some $14,000. However, the $26,000 in difference not necessarily would be profit, as R&D, incentives/real state/retirement/insurance/taxes costs will eat a considerable chunk of those $26,000...

[TurboFan]

I think it's more than $14k. That was the number we used on a Honda Accord in 1998 rolling off the end of the line. I would put the number closer to $20k.

[DPritchett]

This is a good question .... the dollar has dropped about 80% (~.80 to 1.47) in relation to the Euro since 2000, but BMW is not passing along that cost to US consumers, but is apparently accepting a lower profit margin on each car. It's probably safe to assume that they will not start taking losses on each unit sold.

That must be some complex computer model they use ... because they produce vehicles outside Germany (including in the US), all of which would factor into the equation.

If someone (I'm NOT volunteering) has access to a financial statement for BMWUSA or BMW you could see their net profit from operations and divide by units sold to get an estimate though.

[BK]

Originally Posted by Technic

That's the reason of my manufacturing cost estimate... labor and actual parts/fuel/oil/lubricants would be some $14,000. However, the $26,000 in difference not necessarily would be profit, as R&D, incentives/real state/retirement/insurance/taxes costs will eat a considerable chunk of those $26,000...

Agreed. You cannot take some sort of simplistic view of "cost to produce" and think that everything else is gravy, or that BMW is making some kind of killing on their cars.

There are so many overhead expenses beyond the obvious direct costs of parts, or the salaries and benefits for employees. Besides those you listed, think of transportation, advertising, maintenance and repair of machinery, losses due to exchange rate fluctuation, utilities and insurance for plants and equipment, and so on.

BMW AG sets the cost for BMW NA, and BMW NA then presumably sets the cost for the dealers (unless there is some distributor step in there that I am missing). Given the low pricing in the U.S. compared to the rest of the world, I doubt BMW NA makes all that much on a 3-series sold in the U.S. I assume they figure they will make it up in volume. The higher end cars undoubtedly have greater margins.

[canucklion]

agreed

Originally Posted by Technic

That's the reason of my manufacturing cost estimate... labor and actual parts/fuel/oil/lubricants would be some $14,000. However, the $26,000 in difference not necessarily would be profit, as R&D, incentives/real state/retirement/insurance/taxes costs will eat a considerable chunk of those $26,000...

[raleedy]

You can see BMW's audited financial statements for 2005 at http://www.bmwgroup.com/bmwgroup_pro...005_gesamt.pdf. For that year, in which BMW sold about 1.33 million cars, the revenues from cars and motorcycles (i.e., excluding financing activities) was Eur 47,206,000,000, and the manufacturing cost was Eur 37,343,000 or almost 80%. Of course, BMW Group doesn't sell the product at retail; a dealer (typically) does. So, how much is the dealer markup? I'm guessing 12 - 15%. That would mean that at retail, the manufacturing cost is about 69%. So, a car that sells for $50,000 costs about $34,500 to produce. I believe that warranty expense would be included in that cost number. Obviously, R&D, selling and administration expense for BMW would not. Another little unknown is how much of BMW's revenues come from spare and replacement parts. Based on personal experience, I'm guessing that spares have a much lower manufacturing cost, so the vehicle cost is probably somewhat higher than these figures indicate.

[Maestro]

i was just about to suggest the same thing. Since they are a public company you can get most of the numbers you need to calculate an average over everything they makes.

In the report it will have Gross Sales, and Cost of Good Sold (materials) but you still have to factor in G&A, and realize sales are more than just cars, they sell replacement parts which usually brings them a much higher markup. Also in the report you should be able to find the gross margin which will allow you to back in to their cost per car.

Originally Posted by raleedy

You can see BMW's audited financial statements for 2005 at http://www.bmwgroup.com/bmwgroup_pro...005_gesamt.pdf. For that year, in which BMW sold about 1.33 million cars, the revenues from cars and motorcycles (i.e., excluding financing activities) was Eur 47,206,000,000, and the manufacturing cost was Eur 37,343,000 or almost 80%. Of course, BMW Group doesn't sell the product at retail; a dealer (typically) does. So, how much is the dealer markup? I'm guessing 12 - 15%. That would mean that at retail, the manufacturing cost is about 69%. So, a car that sells for $50,000 costs about $34,500 to produce. I believe that warranty expense would be included in that cost number. Obviously, R&D, selling and administration expense for BMW would not. Another little unknown is how much of BMW's revenues come from spare and replacement parts. Based on personal experience, I'm guessing that spares have a much lower manufacturing cost, so the vehicle cost is probably somewhat higher than these figures indicate.

[TurboFan]

Originally Posted by raleedy

... Based on personal experience, I'm guessing that spares have a much lower manufacturing cost, so the vehicle cost is probably somewhat higher than these figures indicate.

The spare body parts are usually produced on the same line as the car itelf, while it is in production. When the car is out of production, the jigs and fixtures can be sent to another site, and run when inventory drops. Many car makers do this. It spreads R&D over a larger number of door, bonnets, boots, etc, and these also sell at a pretty high gross margin.

[Gort]

Wait a minute. You guys forgot to include paying Norbie...

[alexckma]

hey guys, Top Gear did recently state that Mercedes put in 1 million pounds per day in R&D. So I think they dont actually make that much off us. Especially for BMW making their cars 50/50 balanced, air dynamics and what not. Do remember that you are also paying the people who does the financial department/dealer.sales department/scientist/artist.... the list goes on

[flush01]

i'd say on 50k car, it costs them 25k to make it, so they take 15k and dealer marks it 10k more...

[Hankdoll]

For reference, my dad was an exec at Mazda many moons ago. When the B2000 pick-up truck was selling for $5,795 (sakes alive!), it was costing Mazda $700 to produce. I have no idea what standard was used to come up with this amount (if you've ever driven one of these trucks, probably not a whole lot of R&D $$ went into them).

[CALIF65GM]

You need to visit their plant and after that you'll see how much of a deal we're getting in the US.

It may sound like it doesn't cost them much, but IMO, we're getting every pennies worth on our cars.

That's my 2-pennies.

[martieg]

Please look at these interesting statistics from BMW Group's 2006 annual report (some I calculated):

Revenues was 49 billion euro
Capital Expenditures was 4.3 billion euro
Cars delivered - 1,374,000 (of those 1,185,000 were BMW)
Profit (before tax) - 4.1 billion euro
Net Profit - 2.9 billion euro
Return in Capital Employed (cars) - 21.7%
Gross Profit - 11.3 billion (about 23%)

By simple statistics, the gross profit per vehicle is 8,224 euro (about US$ 11,600), and the net profit would be 2,110 euro or US$ 2,976.

Please have in mind that this is average for all brands (BMW, Mini, Rolls, BMW motorcycles). Even within BMW individual series, numbers vary tremendously. The 3-series is probably BMW most profitable series (and the best value for us).

Other considerations are: FOB vs CIF prices, import taxes, etc.

I invite you to read the full report - it's a great read.

Please take a look at BMW Group's 2006 Annual Report (warning it's almost 3 MB):
http://www.bmwgroup.com/e/0_0_www_bm...006_gesamt.pdf

[MCS]

I don;t think R& D is included in the cost to manufacture (COGS).

Looking at the topline grossmargin - 23.1 percent. general rule - take the dealer invoice price and its costing BMW 76% of that figure to buy raw materials and build the car.

is my accounting fuzzy?

[Grumpa72]

So, without any way of proving or disproving your guesses, you want us to continue to guess how much it costs to make 1 BMW?

You have no background data, just random WAGs!

This thread is worthless!

[raleedy]

Originally Posted by Grumpa72

So, without any way of proving or disproving your guesses, you want us to continue to guess how much it costs to make 1 BMW?

You have no background data, just random WAGs!

This thread is worthless!

With all due respect, I think some of those reading and posting here are learning a little of what there is to know about the finances of a car manufacturer. I don't know what your goals are, but I find a little extra knowledge not entirely worthless.

[OC Guy]

My belief is most the money is made on service, not on the cars. At least for the dealers, not sure about BMW AG.