Martin's World

The automotive business is a very tough market. The market is fragmented and dominated by a relative small amount of huge global players.The entry barriers are huge due to economy of scale.

Last time I was wondering how much the profit margin would be for a single vehicle sales and I found some interesting numbers.

The numbers are reflected for 2007 and the results were published by APA/DPA (Austrian/German press agency). Perhaps the real numbers might vary slightly and no guarantees can be givenHere comes the ranking of 2007. All amounts stated are  before tax.

1. Porsche 21.799 Euro/Car
2. BMW 2.475 Euro/Car
3. Toyota 1.684 Euro/Car
4. Audi 1580 Euro/Car
5. DaimlerCrysler 780 Euro/Car
6. Volkswagen 332 Euro/Car

These margins show that the business is very though, especially in he lower priced mass markets. Only really large margins can be ripped by premium vehicles like Porsche.

To be really competitive in this market on has huge first starter investment costs. Not only the investment into factories is needed and other hard assets but a substantial know how in how to optimize these processes how to assemble and build the vehicle cost efficient, attractive for the end customer and in such a way that the core intellectual property is kept in house.

If all demands for entering and succeeding in the market are satisfied, then the amount of sales can be huge:

Just to estimate the overall net profit and a feeling for the amounth of turnover, lets take at the end a look at the amount of sold vehicles in 2007.

Here is the hitlist:

1. Toyota       9 497 754 cars
2. GM           9 349 818 cars
3. Volkswagen   6 346 222 cars
4. Ford         6 247 506 cars
5. Honda        3 911 814 cars
6. PSA          3 457 385 cars
7. Nissan       3 431 398 cars
8. Fiat         2 679 451 cars
9. Renault      2 669 040 cars
10. Hyundai     2 617 725 cars
11. Suzuki      2 596 316 cars
12. Crysler     2 538 624 cars
13. Daimler     2 096 977 cars
14. BMW         1 541 503 cars
15. Mitsubishi  1 411 975 cars
16. Kia         1 369 330 cars
17. Mazda       1 286 730 cars
18. ….
19. ….

Porsche          107 170  cars
… others…

The sales volume is huge. Future prospect in new markets like Asia, India and South America will be definitely very profitable for the winner of the market.