Production cost
 

We hear and read "Ford had $$$ profit in first quarter" Any idea on what the production cost is on a basic truck with no options ? This is probably a very secret number but someone knows it.

I'd like to know too, but the very few in the know aren't posting it here or anyplace else.
Many years ago, while i worked for FOMO, rumor had it that it cost 1 third of MSRP. I wouldn't know if that's even close today. We must consider the costs involved to get any vehicle on a dealer lot including engineering/manufacturing/maintenance and upkeep of facilities/ labor/etc.etc.etc. The list of expenses is long, so the profit per unit has to be substantial (before expenses)

I've read somewhere (sorry, memory isn't too good) that the average profit margin for pickups is around 40%

So for cost that puts it for a $25k truck at about $15k and a profit of $10k

Just an estimate obviously as incentives, dealers, locations, options, etc. will all sway that number by thousands of dollars +/-

That seems high. That would mean if trucks had an avg dealer cost of $40k, about $14.4 billion in profit just from F-series (900k trucks sold).

My guess is that number is more like 20%, or even a little less.

Even if the material and labor cost on the $25k truck was only $15k, there are lots of other costs involved. It's not just the vehicle, there are transportation, overhead, marketing, and warranty expenses.

The gross margin in their quarterly reports is going to put you in the ballpark. Granted, that can represent a blend of margins from different products. I doubt their margin on the F series is over 25%. 20% is generally considered a healthy margin in a manufacturing environment. From a competitive standpoint it would be better for them to reduce MSRP before letting the margins exceed the low 20% range. Every truck they sell is a lost sale for their competitors.

Don't forget the ten or more years of cost that went into the R&D side that we may or may not have seen in the end product. The reset of the assembly lines, the training of the employees to work the new processes, the new tooling etc...

I work in the medical field and R&D cost more then most people think. I have seen ideas then development come and go with out ever making a penny back on it.

20% is about right but that does not include the R&D side, at least in the medical field.

I bet most of their profit comes from service, you sell it once but service it for ever.

Ford Motor doesn't make much from service (they'll make something selling the dealers the parts) but it's the dealers that make money from service, not Ford.

Here's a CNBC discussion from 2016 that talks about profit margins: http://www.cnbc.com/2016/04/28/ford-...g-margins.html

That operating margin includes all R&D, overhead, shutting down, bringing up plants, and all costs recognized at that point, except for debt interest and taxes.

That's across all brands, vehicles and countries, but in the notes, Ford does talk about the higher markups and rates from the F150 as being a contributing factor. I don't know the details of their financing, but because Ford didn't take the government bailout, their debt is likely higher than GM's (which did, and had lots of their debt forgiven or restructured). That means that the end profit of Ford is a bit smaller than GMs, but it's a healthy number.

Ford makes nothing on service, except what they charge the dealership for parts.

Why? Were you lookin' to circumvent the Dealer and purchase direct from the factory to haggle down at $500.00 below production cost? :icon_lol:

I recently read somewhere that Ford enjoyed a 25% markup on the F Series so I concur with two other posters. But, this means diddly when it comes down to market share & revenues in any given year. Take 25% in a high volume year, Ford takes it to the bank and it's shareholders. During a sales slump, they have to make adjustments due to poor forecasting and provide more incentives to the Buyer & Dealer in order to move overproduction inventories. Ford needs to keep their Dealers solvent. Therefore, the 25% could easily go lower.