How much does it cost to build a Falcon

[ford man xf]

Was just curious does anybody know how much roughly it takes Ford Australia to make even just a base model Falcon, curious to know exactly how much money Ford makes off each car, it couldnt be that much really?

[flappist]

Well if they get all their parts of "Genuine Ford Spares" about $100,000,000.......

[Luke Plaizier]

I would take a guess that material costs and labour are probably around $7k to $8k per car, no matter what is made. With FPV the additional handling would make more of a difference.

Large cars don't cost that much more to R&D and build than small cars, which is why it is still only just financally viable to do so with such a small build run in Australia. Other costs not included in that estimate include R&D, Marketting (including motorsport, advertising, free cars in competitions etc), Administration and the like.

Then on top of that, I dare you to go to a dealer principle and ask what their markup is - my guess would be around 20 to 25%.


Lukeyson

[4Vman]

At the moment it costs them money to make each car...
As a guide a few years ago Toyota bragged they made about $2000 (on average) profit from each vehicle made..

[trippytaka]

Originally Posted by 4Vman

At the moment it costs them money to make each car...
As a guide a few years ago Toyota bragged they made about $2000 (on average) profit from each vehicle made..

Very true. Not sure if you remember, but when the big three were going under and getting bailed out, it came out that the Auto Workers Union in the US was responsible for GM cars costing about $4900 on average.

This difference in cost was all due to the ridiculous amount of benefits and the fact that the Auto Workers Union members get a lifetime pension after they leave! I'm pretty sure that part of the bail out was to eradicate that pension... I mean, really, talk about how unions can help strangle a company to death!

[Ohio XB]

Originally Posted by trippytaka

Very true. Not sure if you remember, but when the big three were going under and getting bailed out, it came out that the Auto Workers Union in the US was responsible for GM cars costing about $4900 on average.

This difference in cost was all due to the ridiculous amount of benefits and the fact that the Auto Workers Union members get a lifetime pension after they leave! I'm pretty sure that part of the bail out was to eradicate that pension... I mean, really, talk about how unions can help strangle a company to death!

When the pensions were negotiated the Big3 owned at least 85% of the US market. Japanese cars were considered trash as they started rusting when you got the car home. The Big3 had no fear of losing market share to rusting Japanese cars or "weird" looking European cars. The pensions were negotiated in contract talks and the companies never imagined that the pensions would be a problem since the US market was their's. Profits were great and getting even better. Ford sold 1 million Mustangs in 12 months alone. It was a different time (1960's). Alan Mulally will even tell you this.

The Big3 were not the only places a factory worker could get a lifetime pension, as the press would like to have you believe. There were other companies that offered a pension and it was considered a good thing if you could get it. Now people are demonized for having a pension if they are not an Executive. How times change.

The pensions are no longer available to new workers. They only have the 401K plans that are funded by the employee's voluntary payroll deduction, like many other companies. I imagine in another 25 -30 years people will complain that there is even this.

For accuracy, only 2 of the Big3 got bailed out.


A large reason for the disparity between the Japanese auto makers in the US and GM was the fact that GM had over 100,000 retirees who get paid healthcare, which is also offered to the Japanese employees when they retire, but the Japanese had less than 300 retired employees in the US, combined. Let's see how things go as Toyota's retiree roles grow, if they don't shut down plants before people have a chance to retire, that is, like in California.


I have been told by a plant manager and a manufacturing engineer that the biggest cost for actually assembling a vehicle (past R&D and such) is the parts. Also, in a Ford vehicle, there is about $1,300 - $1,800 in UAW labor in each vehicle, at least in my inside research. It could be more than this in some cases but not by much. Ford is the most efficient of the Big3 auto makers.

I know this is info for the US but I figure you may be able to use it to gauge what may be going on in Australia.


Steve

[mrbaxr6t]

it is very difficult to figure out how much ford is making "per car" as lots of money is spent on r&d and tooling and then it is used for a very long time - example the 250 xflow engine block - the cast one Ford used it for well over a decade, and the 4 litre EA ohc block - again same block used right up to AU III so the r&d on the engine and the tooling would be fractioned out over maybe a million plus engines in each case - and in the same way parts/panels would be the same, make the press which would cost a motherload then press out X units spreading the cost to r&d and tool over all the units "X" it is very complicated to work out what they cost if you factor in r&d and the like. Its a very difficult question to answer. I think it cannot be known until a given model has ceased production - can look back at the costs to r&d and everything else and then calculate how much each vehicle cost to produce.

[tranquilized]

Originally Posted by mrbaxr6t

it is very difficult to figure out how much ford is making "per car" as lots of money is spent on r&d and tooling and then it is used for a very long time - example the 250 xflow engine block - the cast one Ford used it for well over a decade, and the 4 litre EA ohc block - again same block used right up to AU III so the r&d on the engine and the tooling would be fractioned out over maybe a million plus engines in each case - and in the same way parts/panels would be the same, make the press which would cost a motherload then press out X units spreading the cost to r&d and tool over all the units "X" it is very complicated to work out what they cost if you factor in r&d and the like. Its a very difficult question to answer. I think it cannot be known until a given model has ceased production - can look back at the costs to r&d and everything else and then calculate how much each vehicle cost to produce.

This is exactly right.

In addition to R&D you also need to factor in spare parts support, technical support, vehicle/parts transportation, marketing, plant/factory maintenance, and no doubt plenty of other things I've forgotten/dont know about.

In terms of materials and labour only, theres no way a Falcon could cost FoA any more than $15,000 to build.

I heard from a friend who works at Toyota that a Camry cost about $8000 to build (materials and labour only) a few years ago.

[gtfpv]

Originally Posted by trippytaka

Very true. Not sure if you remember, but when the big three were going under and getting bailed out, it came out that the Auto Workers Union in the US was responsible for GM cars costing about $4900 on average.

This difference in cost was all due to the ridiculous amount of benefits and the fact that the Auto Workers Union members get a lifetime pension after they leave! I'm pretty sure that part of the bail out was to eradicate that pension... I mean, really, talk about how unions can help strangle a company to death!

ohhh c'mon . theres always a dill in the mix. !!!! and the executives in white suits jetsetting around the world attending tennis matches and golf tornaments really help out in car manufacturing :

[trippytaka]

Originally Posted by gtfpv

ohhh c'mon . theres always a dill in the mix. !!!! and the executives in white suits jetsetting around the world attending tennis matches and golf tornaments really help out in car manufacturing :

I'm not saying that executive pay or decisions have been a benefit, but I think getting a pension for working for a company is just as ridiculous.

[ford man xf]

Thanks for the info, so how does the sales all work then, Ford sells the cars to the dealership at a set price, then the dealerships add thier markup to that price, or does Ford only get money for the ones that the dealerships sell?

$7000 to $8000 just seems too cheap to me, the steel used in the car alone would cost at least $1000 on its own?

[4Vman]

Originally Posted by ford man xf

Thanks for the info, so how does the sales all work then, Ford sells the cars to the dealership at a set price, then the dealerships add thier markup to that price, or does Ford only get money for the ones that the dealerships sell?

$7000 to $8000 just seems too cheap to me, the steel used in the car alone would cost at least $1000 on its own?

Id say take 20% off the RRP to get to the total cost of manufacture.
So on a 35K Falcon at list price it probably cost Ford 28K to make it...

[ford man xf]

Originally Posted by 4Vman

Id say take 20% off the RRP to get to the total cost of manufacture.
So on a 35K Falcon at list price it probably cost Ford 28K to make it...

How on earth do car makers make money then, considering the millions spent just developing the car, for example the FG model (which is heavily based on the BA/BF) from memory cost $450-$500 to develop and the VE Commodore which was a clean sheet design supossedly cost $1 billion they would have to include a heavy development cost into the price.

I know Toyota operate on a volume sales base, selling heaps of cars at near cost to make a small profit.

[Eaturbo]

Originally Posted by ford man xf

How on earth do car makers make money then, considering the millions spent just developing the car, for example the FG model (which is heavily based on the BA/BF) from memory cost $450-$500 to develop and the VE Commodore which was a clean sheet design supossedly cost $1 billion they would have to include a heavy development cost into the price.

I know Toyota operate on a volume sales base, selling heaps of cars at near cost to make a small profit.

Do you not read the paper or watch TV, There not making money they were all going Broke. Dealers make more than the manufacturer which is wrong but if you dont give the dealer incentive they won't sell your product. Have you ever seen a poor motor dealer, most are multi millionairs. Problem is that the manufacturers have not raised there prices in 10 years or more. Do you know anything else that has stayed the same price for 10 years or more.

[ford man xf]

Originally Posted by Eaturbo

Do you not read the paper or watch TV, There not making money they were all going Broke. Dealers make more than the manufacturer which is wrong but if you dont give the dealer incentive they won't sell your product. Have you ever seen a poor motor dealer, most are multi millionairs. Problem is that the manufacturers have not raised there prices in 10 years or more. Do you know anything else that has stayed the same price for 10 years or more.

I realise currently they are not making money, but in the good days of years gone by it costs so much to make the car and the development cost of even just upgrading an exisiting model is massive.

[naddis01]

Originally Posted by Eaturbo

Do you know anything else that has stayed the same price for 10 years or more.

You obviously have nothing to do with agriculture. The prices that farmers receive for many commodities are at the same levels that they were around 10 to 20 years ago.

[GT0132]

Originally Posted by Eaturbo

Do you know anything else that has stayed the same price for 10 years or more.

Hi Fi Equipment, TV's & Cameras

[JBomb3000]

Originally Posted by 4Vman

Id say take 20% off the RRP to get to the total cost of manufacture.
So on a 35K Falcon at list price it probably cost Ford 28K to make it...

The dealers would be buying them at least 20% of RRP if not cheaper depending on what incentives are being offered to the dealers at the time. Ford would have to be making a further 10% profit on that so i'd think the cost of manufacture would be around 30% - 35%

[Iggypoppin']

Buying steel in bulk obviously helps. Having the panel machines manufactured or altered for new panel designs would cost a bit I'd imagine?

[gtfpv]

i'm no economist , but my guess is that the cost of the car would depend on how many are made and sold . example to make one car only the cost would be enormous , to make 10 000 cheaper then 1 000 000 cheaper as differant setups would be made to suit output.and labour employment dividends would vary for example imagine, 100 people building the cars in said time versus 1000 people building the cars in said time . then of course a sales prediction run would have to be pretty accurate before hand .
that's a guess though with my limited knowledge on the matter, interesting topic though , i too would like a factual cost if anyone has any.

[Dave R]

I've read that a base Commodore costs in the mid to high teens to manufacture, I'd imagine this wouldn't be too different for Falcon. Then the manufacturer would sell them with a decent margin to the dealer network, who would then mark it up again for their own margins. Once you factor in the R&D costs, marketing etc etc the manufacturer's margin would drop severely!

[cool65]

Tooling for all the plastic parts cost plenty - from around 30k to well over 100k for injection molding dies- so payback needs to be amortized over the life of the vehicle (a plus for suppliers is the 10 years that OE spares needs to happen) and, if possible aftermarket, so the parts that wear, are the profitable parts.
For example a fanbelt for vn v6 was sold to holden at around $5.80, with holden spares selling them for $45.00 and different part number but same product sold in kmart for $36. The same belt went on to the VP,VR & VS V6 so it was a win for the supplier and holden by not changing parts on every model.
Also the aftermarket trade has to be taken into account after OE sales and before YOU the consumer, who in the end, takes it up the kyber pass so everyone else makes some money

[Eu-GenixX]

i wonder if Ford or Holden etc sold their parts cheaper.. would they sell more of them and make more money?

[Yellow_Festiva]

Originally Posted by Eu-GenixX

i wonder if Ford or Holden etc sold their parts cheaper.. would they sell more of them and make more money?

Depends. If you sold more of an item at a lower price, you may end up making the same amount as less sales on a more costly item.

Like others have already said, what an item costs is relative to how many items are produced.

An exotic sports car prob costs the same in materials as a Falcon, but is priced at 10-15 times the cost caus perhaps they only sell 10% of the qty that the Falcon would sell over the life of the model.

If I were running a car company, I would be using as much 'off the shelf' or existing parts as possible without compromising the appeal of the car.

I think I read somewhere that the tooling and RD for the doors of the AU were around the $50 million mark (and thus why they were carried over to the BA). Don't know how true that is, but when you hear of cars like the Commodore costing a billion dollars to develop you start to wonder how many millions are wasted for minor changes.

[Donny]

back in the 90's when i worked for a holdon dealership all our staff could buy their new fullsize local cars for around 5k staff discount straight off rrp.
the principal was a pretty tight and shrewd operator, and i would guess he had another 2k or so profit margin in the base dunny doors, perhaps more as the models went up in fixture levels etc.

there isnt a lot in them margins wise from what i saw of my time at the dealership.

the biggest profits came from the service department that had 100 plus cars a day in and out of it every weekday (before workshops opened for weekends and nites).
spare parts allways does well, they sell to the retail public, to the trades as well, and also charge the service dept for all bits used in services, repairs etc, and the service dept bills the end customer full retail.
oh and dont forget the warranty dept was also a good avenue for money back too.

then add the used car lot, where a wily manager will wrangle every dollar out of a sale/trade, and the markups and GP amounts can be pretty impressive here too.

i noticed all that in the few years I worked at the dealerships.

And as someone said above, they make a killing on accessories like tow packs, mud flaps, louvers, shades, tinting etc etc, then add and warranties and finance.
Thats why they allways have a decent lookin chicks to sell all this stuff, suckers some men in nicely.

[1TUFFUTE]

yeah ive heard this for years an years. They seel them at a near loss and make the money up on pretty much the parts for the rest of the cars lifetime...more or less allowing for some other things aswell im sure...

[fordOwner]

Well if they get all their parts of "Genuine Ford Spares" about $100,000,000.......

I just wanna quickly say that is one of the funniest things i have read in a long time on here. On ya flappist! :hihi:

Carry on..

[RATT]

It seems we are lost here. I thought the original question was how much we think it costs to build a new car, not how much profit a dealership is making??

I would say there is no profit in manufacturing cars for anyone right now.

[Fordman1]

Originally Posted by RATT

It seems we are lost here. I thought the original question was how much we think it costs to build a new car, not how much profit a dealership is making??

I would say there is no profit in manufacturing cars for anyone right now.

Correct...

FoA are NOT making money right now......

So take the dealer markup off a $36,000 Falcon -- $4,000 ? = $32,000

Take 10 % GST off again = $28,000 ,

Then wholesale tax another $3,000 ? = $25,000.

I figure it's about $23,000 normally, at the moment ? I reckon $24,000 on a base Falcon - anyone else ?

The problem is that FoA have a huge dept in bank loans so until that is relieved with some big repayments the profit will be next to nothing...

[7apples]

i was with one of the first posts on here, id be saying about 8-10,000,

but yes the costs of r&D ect would push each car up maybe 2000 tops. if for sell 75000 cars, R&D tooling, upkeep on machinery ect. that 2000 x 75000 =$1500000000 to run fords plant for say 3 years.

they wouldnt be doing it for free so there must be some money in it.

right?