In a previous article, we looked at the profit margins vehicle dealerships and vehicle manufacturers make on the sale of new vehicles. This article carries on from it. You can read this content here
How much profit do car dealerships make
What we did not address in that article is the possible profits within the same manufacturing company. After reports, we released in 2007 (granted its very dated research) carried out by R&B in Germany, Porsche cried dirty claiming that the research was bias and did not take all factors into account.
Of the research, we have uncovered there is little on the profits and price variations within one manufacturer. For the purposes of our argument, we will use Hyundai. We need to state that mechanically Hyundai is a very good vehicle and we do advise buying them. We are not singling out the one brand, rather just choosing one to make a point.
The research R&B carried out suggested that the brands selling family vehicles such as Toyota, Mazda and Hyundai were making as little as $500 profit per vehicle. It is assumed that this research looked at the entry-level models such as the Mazda 3 and the Hyundai i30.
What this research did not look at is the profits across one brand. So using Hyundai we will compare an i30 and I-load.
According to Hyundai an i30 build in 2018 and sold brand new would sell for $20,990 Driveaway (for the base model with no added on features.
The I-Load $42,987 Driveaway for the base model with no added features.
These are two very different vehicles, one is a small family compact vehicle and one a large commercial vehicle, Both have different engines, transmissions, and running gear so it’s acceptable that there is a price variation between these two vehicles. The question at hand is this.
The I load is just over twice the price, did it cost Hyundai twice as much to make the I-Load as it did to make the i30?
Both have an engine, steering system, braking system transmission, and safety features. it’s not exactly accurate but one could argue that whilst the running gear may be a little different the only real extra expense for the I-load is more sheet metal to make the body.
Of course, the I-load would cost Hyundai more to make then the i30 but its very unlikely it cost twice as much. The point, the profit margins in the bigger vehicles such as the ix35, the i-load , i40, and Santa Fe are going to be significantly greater than the profits on the smaller cheaper vehicles they sell.