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Do we have some data on how thin the margin is for entry level subcompact cars? I was always under the impression that cars are sold at the "market price", rega
by d1zzy 9y ago
Do we have some data on how thin the margin is for entry level subcompact cars? I was always under the impression that cars are sold at the "market price", regardless of production costs which usually meant at much higher price than production costs.
- JBReefer 9y agoCars have huge costs besides just production - amortized R&D, depreciation/damage to the tooling, union benefits, rework, shipping, amortized cost of future recalls per vehicle, interest on debt payments. Also, it's one of, if not the most competitive market on the planet. There's a large number of incredibly well funded entrants, with competition in every segment. It's as close to a truly efficient market as you can get, and it's getting more efficient as Chinese and Indian brands mature.
- nradov 9y agoSome manufacturers sell their subcompact cars for little or no profit purely to drive up their corporate average fuel economy. This allows them to make large profits selling larger, less efficient vehicles that customers actually want.
- dingaling 9y agoI don't have hard figures but I remember Ford UK saying that the little Fiesta cost 90% as much to build as the big Mondeo ( Fusion in the USA ) but with much less pricing potential. They are basically loss-leaders for the brand.