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A quote from an industry analyst in the article: "No car company can live off 20,000 to 30,000 sales a year and be profitable in the long term." Is this true?
by motbob 13y ago
A quote from an industry analyst in the article: "No car company can live off 20,000 to 30,000 sales a year and be profitable in the long term."
Is this true?
- jblow 13y agoFerrari sells under 8000 cars a year. Lamborghini sells under 2500 a year. Chalk this article up to careless punditry, i.e. what you get from an ad-driven internet news model. Edit: just for kicks, I looked up Rolls Royce, which is kind of the canonical "luxury car". Under 4000 cars a year.
- curiousDog 13y agoAll of these are owned by bigger brands (Fiat, Volkswagen and BMW) that probably provide the necessary logistics and financial cushion when needed.
- sz4kerto 13y agoFerrari is owned by Fiat (and it has an exceptional history). Lamborghini is owned by VW. RR is owned by BMW. All of these cars use technologies funded by or borrowed from their parent. Lamborghini was seriously behind the cutting-edge when VW bought it, now they are catching up (last independently made Lambos had tubular frames). One of the smallest independent automaker is Mazda, it produces around 1.2M cars per year, they can afford this because they're really innovative. Tesla has some leeway for now as electric engines are significantly simpler than modern combustion engines, as the latter are extremely difficult to design because of environmental regulations (especially European ones). Designing a nice interior or rigid chassis is simpler than operating a naturally aspirated V10 in the E90 M5 that has an Euro5 cert..
- ams6110 13y agoFord has had varying degrees of ownership in Mazda. For most of the 1990s and early 2000s they had controlling interest. There has been a lot of technology and design sharing. I don't follow it closely, but I think in recent years Ford as sold off a good chunk of their Mazda investment and no longer has a controlling share.
- skyebook 13y agoYeah, I gawked when I saw the Mazda comment too. A bunch of Mazda's in those years, especially the 90's were rebadged Fords. Compare the Mazda Navajo to Ford Explorer Sport's of the same vintage [1] [1] http://en.m.wikipedia.org/wiki/Mazda_Navajo http://en.m.wikipedia.org/wiki/Mazda_Navajo
- chad_c 13y agoThe E60 M5 has an NA v10 ;-)
- mpweiher 13y agoFerrari belongs to Fiat. Lamborghini belongs to Volkswagen (as do Bentley, Bugatti and Porsche). Rolls Royce belongs to BMW. None of these except for Porsche were viable on their own. At the very least, they need R&D for engines and other components from their parent, but usually much more. In many cases, they are viewed more as a branding exercise by their parent companies, somewhat like luxury brands like the Phaeton (VW) or Maybach (Mercedes), which are also usually not profitable.
- sz4kerto 13y agoAnd both the Phaeton and the Maybach brands were failures, latter is already gone.
- peterjancelis 13y agoLamborghini is owned by the Volkswagen, Rolls Royce by BMW and Ferrari (for 90%) by Fiat.
- MPetitt 13y agoThe difference with those brands is that most of them are owned by bigger profitable automobile companies. They kind of serve as R
- fludlight 13y agoFerrari, Lamborghini, and RR are owned by Fiat, VW, and BMW, respectively.
- michaelt 13y agoAccording to Wikipedia [1] in 2011 Bentley made €1.1 billion in revenue and €8 million in profit on sales of 7500 vehicles (but lost €245 million the year before). The FT says McLaren[2] expected to break even in 2013 on sales of 1,500 vehicles (but lost £10.9 million the year before). Of course, making profit one year having made a loss the last doesn't exactly prove long term profitability. [1] https://en.wikipedia.org/wiki/Bentley https://en.wikipedia.org/wiki/Bentley [2] http://www.ft.com/cms/s/0/e6074856-2776-11e3-ae16-00144feab7de.html http://www.ft.com/cms/s/0/e6074856-2776-11e3-ae16-00144feab7...
- arethuza 13y agoIn the case of McLaren, I guess having no difficulty selling 375 P1s at a sale price of ~$1.6 million each probably helps a bit :-) http://en.wikipedia.org/wiki/McLaren_P1 http://en.wikipedia.org/wiki/McLaren_P1 Interesting that all of the latest hypercars (P1, 918 and LaFerrari) are all hybrids.
- InclinedPlane 13y agoNo, it's not true. There are many luxury car makers who are plenty profitable. If you make a huge profit on each vehicle and you can cover your fixed/development costs then you're golden, regardless of volume. At low volume that typically means higher profit margins, but that's nothing new. Companies like Maserati, Aston Martin, and Lambourghini have sales volumes in the 1-2k per year range. Companies like Bugatti are lucky if they break 100 car sales a year. Obviously Tesla isn't quite in the same market as those companies but that still demonstrates the point. If you have a sub-$100k car then you generally do want higher sales volume in a fleet. If you look at, for example, Audi they have a mix of cars at a variety of price-points, which enables them to amortize development costs of shared components. That effectively raises the profit margin on their luxury margins (since the development of stuff like the frame, most of the engine, etc. is payed for by sales of the down market models).
- pbreit 13y agoI was surprised that Porsche makes as much profit on 150k cars as VW on 4.7m cars (2.6-2.9b euros).
- sliverstorm 13y agoYou just can't take the same margins on a Jetta as a GT3
- dhughes 13y agoPorsche (pour-sha damn it!) executives were pretty smart back in 2008, but I guess VW owns them now. http://www.nytimes.com/2008/10/31/business/worldbusiness/31norris.html?pagewanted=all&_r=0 http://www.nytimes.com/2008/10/31/business/worldbusiness/31n...
- sliverstorm 13y agoIt's certainly something we could figure out. Work out the rough gross margins required to operate on that low volume, given their opex.
- dublinben 13y agoPagani "has made about 130 cars in the past 10 years", and has been profitable since day one. It is absolutely possible to thrive in the highest of the high end niche and sell only a few cars a year.
- gutnor 13y agoA lot of comment answer that. However, they miss the point. Tesla cannot survive with 30K car. The reason is that they are betting big on infrastructure: supercharger network, new superfactory. Those kind of investments both enable and require Tesla to sell a much more mainstream cars than the Porsche of electric cars.