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"CARMAKERS’ ANNUAL PROFIT: $400 billion" This seems hard to believe. Revenue, maybe?

by myroon5 9y ago

cma 9y ago
$400 billion / ~80 million passenger cars per year would be $5000 per car.
- reacweb 9y ago
  A large part of the profit is made on spare parts.
  - tonyedgecombe 9y ago
    and finance.
    - Dylan16807 9y ago
      Do car makers get involved in that?
      - tonyedgecombe 9y ago
        They certainly do: https://en.wikipedia.org/wiki/GM_Financial https://en.wikipedia.org/wiki/GM_Financial
  - cma 9y ago
    Yeah, I just meant to say that it was implausible that that number was revenue, which should be much higher than an average of $5,000 per car.
leereeves 9y ago
Gross profit, maybe. Toyota alone reported $43 billion gross profit on $247 billion revenue.
- FabHK 9y ago
  You probably mean billion. Daimler made EUR 9 billion profit on EUR 160 billion revenue, so that's the right ball park.
  - leereeves 9y ago
    Yep, thanks. Silly mistake.
MrKristopher 9y ago
"According to the consulting firm PwC, the global automotive industry generates about $400 billion a year in profits; about 41 percent of that — or about $164 billion — comes from new vehicle sales." From another NYT article -- https://www.nytimes.com/2016/12/22/business/automakers-prepare-america-fewer-cars.html https://www.nytimes.com/2016/12/22/business/automakers-prepa...
curun1r 9y ago
I doubt it's revenue. A little Googling leads to estimates of the total global number of new cars sold annually being between 75 million and 90 million. Divide 400 billion by the more conservative estimate and it still gives you a bit over $5k per vehicle, which seems way too low to be an average sales price. So revenue has to be quite a bit higher. Also, Google lists the size of the US auto loan industry (i.e. money owed by buyers) as $1.1 trillion. Since auto loans average around 5 years, that would mean that the US alone spends at least $200 billion per year on automobiles (more probably, since that wouldn't count people who buy their cars outright or pay their loans off early), and we're nowhere near half the world market. IIRC, our auto market is only slightly larger than Europe's.
Cthulhu_ 9y ago
The car industry is one of the biggest industries of the world, so I'm not surprised. That + the oil industry.

"CARMAKERS’ ANNUAL PROFIT: $400 billion" This seems hard to believe. Revenue, maybe?

cma 9y ago

$400 billion / ~80 million passenger cars per year would be $5000 per car.

reacweb 9y ago
A large part of the profit is made on spare parts.
- tonyedgecombe 9y ago
  and finance.
  - Dylan16807 9y ago
    Do car makers get involved in that?
    - tonyedgecombe 9y ago
      They certainly do: https://en.wikipedia.org/wiki/GM_Financial https://en.wikipedia.org/wiki/GM_Financial
- cma 9y ago
  Yeah, I just meant to say that it was implausible that that number was revenue, which should be much higher than an average of $5,000 per car.

leereeves 9y ago

Gross profit, maybe. Toyota alone reported $43 billion gross profit on $247 billion revenue.

FabHK 9y ago
You probably mean billion. Daimler made EUR 9 billion profit on EUR 160 billion revenue, so that's the right ball park.
- leereeves 9y ago
  Yep, thanks. Silly mistake.

MrKristopher 9y ago

"According to the consulting firm PwC, the global automotive industry generates about $400 billion a year in profits; about 41 percent of that — or about $164 billion — comes from new vehicle sales." From another NYT article -- https://www.nytimes.com/2016/12/22/business/automakers-prepare-america-fewer-cars.html https://www.nytimes.com/2016/12/22/business/automakers-prepa...

curun1r 9y ago

I doubt it's revenue. A little Googling leads to estimates of the total global number of new cars sold annually being between 75 million and 90 million. Divide 400 billion by the more conservative estimate and it still gives you a bit over $5k per vehicle, which seems way too low to be an average sales price. So revenue has to be quite a bit higher. Also, Google lists the size of the US auto loan industry (i.e. money owed by buyers) as $1.1 trillion. Since auto loans average around 5 years, that would mean that the US alone spends at least $200 billion per year on automobiles (more probably, since that wouldn't count people who buy their cars outright or pay their loans off early), and we're nowhere near half the world market. IIRC, our auto market is only slightly larger than Europe's.

Cthulhu_ 9y ago

The car industry is one of the biggest industries of the world, so I'm not surprised. That + the oil industry.