# Cost to produce pickups



## WacoDustin (Aug 11, 2018)

I'm having a discussion with someone about the cost to make a pickup that a manufacturer like GM pays. Im thinking the markup to MSRP is 50% or close to it. Say a $80k Denali Duramax has $15k in rebates (per TV as) so 80-15=$65k . GM states they make on average $17k per truck profit. I see this truck costing $48k for GM to make. 
He thinks they(GM) only makes $4-5k profit per truck. So $80k-$15k (rebates )=$65k pre ttl and dealer fees, the truck costs $60k for GM to make.
Who is closer to being correct?
I always thought is was like the retail job I worked at in College. I worked at Sears, Washers and dryers could be marked down 40% and we still made a nice profit at the store level. My point was that most retail that I've seen was marked up 50% or so. Restaurants are the same way.. $10 for a burger, Fries and a drink cost about $5 at the root level, I know this because I have a family member that owns her own restraunt.
Dustin


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## 1Alpha1 (Aug 11, 2018)

I've seen car / truck commercials that state they are selling them under invoice. I'm not sure exactly what their definition of invoice is, but I seriously doubt that vehicles get sold for less than a dealer paid for them. 

I've always heard that there's more profit to be made selling used vehicles than new ones.


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## blades (Aug 12, 2018)

used - heck they are selling ten or more year old trucks for suggested msrp back when they were new. Dealer invoice- yes they sell less than dealer invoice but that invoice does not show kickbacks, quantity discounts, special pricing on a mix, extended payment terms and a few other tid bits that all reduce the dealers true cost. dealer financing is usually a rip as well ( yep they get a kickback there as well). 0% fiance is also a rip unless you are paying very strict attention. I was once told by a dealer that consumers have no idea what a used unit is actually worth- Best thing you can do is harrass your bank for the actual loan value ( this like pulling teeth without Novocain) of a unit that you are interested in, the other thing to get a hold of is the Red book - basically what the bank is referencing. Unless things have changed lending institutions do not generally like to do loans on anything more than 6 years old.


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## alleyyooper (Aug 15, 2018)

There a lot of things dealers do to make up for the below invoice price to make it up.
All the lazy people who let the dealer arrange the loan for them. Kick back from the lending instution to the dealer.
Extended warranty, another dealer kick back.
Special under coating. fabric seal and other dealer you just have to have. dealer kick back.

Think those chinzy running boards are free? Nope and the dealer makes money on every truck off the lot with them and other DODADS.

We belonged to a credit union for over 25 years. I went there to arrange a loan for a new truck I had ordered. First question they asked 
was if I was buying from a local dealer. When I said no they told me that would not give me a loan. said they support local businesses.
We promply filled out a with drawal slip to transfur our funds else where. All of a sudden they were not so hot on supporting the local dealer. 
To late we had a new truck off loading the carrier and didn't want to **** around with them. We have now been with a new credit union for 18 years and have no problem prearrangeing a car/truck loan.




 Al


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## blades (Aug 15, 2018)

Shenatagins like that also apply to the medical dianogstic side as well. example base MRI hospital apx $1800-2000 , Independant imaging service 1/2 or less - same equipment- sometimes better than Hosp. ah the rub because it wasn't done on their equipment they will tell you they can't read it - male bovine pasture paddies (that won't be censored vs the simple single word ).


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## Blue Oaks (Aug 15, 2018)

Al- I bought a new Ford Focus Electric in June and was hoping they had an agreement in place with my credit union. They didn't, so after haggling and walking out twice we came to a deal and the finance guy pinged the 5 or 6 credit unions they use for the best deal. Of course the moron at the dealer gave me the wrong credit union name, and the credit union my wrong address... signs of full employment I guess. I did not fall for the extended warranty or any coatings or anything else. MSRP was $31.5k and I was out the door with tax and registration for $29.2k. Federal tax credit is $7.5k and CA state cash rebate is $2500, so effective cost was $19.2. It's a fun little car for that much and it let's me play the BS game in CA of using the carpool lanes. That saves me over an hour a day in traffic. 

Anyway, after not getting a bill for anything I got suspicious and straightened things out. But, it wasn't with my usual credit union that I already have direct deposit set up. This week I went to my regular credit union and refinanced it with them. I got 1% back, or about $290 put into my account. Dumb luck I guess.

BTW- they work with you on out of area vehicles, but not out of state due to concerns about getting it smogged/reg'd. When I bought my Shelby used from the east coast, I had to take a personal loan at 10% to buy it, then refinanced it once it was registered in my name in CA.


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## 1Alpha1 (Aug 15, 2018)

Although I'm not in the market for a new car or truck, I'm done with financing. I tend to keep my vehicles for a long time once I acquire one. I'm very careful when choosing what I'm going to buy. 

I very rarely buy new. The last time I did, was 1974. Our current car and truck has lots of life left in them, and I maintain them very well. If I should decide to buy new in the future, it will be cash and an off the lot price.


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## CentaurG2 (Aug 15, 2018)

The cost of and vehicle is more than the sum of its parts. Companies need to pay both the salaries and the benefits of everyone involved in producing a vehicle as well as buildings, utilities etc. They also have a lot of “legacy cost” paying benefits from retired employees. How much does GM make on a truck?? Probably a lot less than you think.

Will dealers sell for less than invoice?? Almost never. A deal gets a holdback from the manufacture for selling a vehicle. On domestic stuff it is usually 3% of the selling price and 2% on foreign stuff. So, they can sell below invoice and still make money but they will never do it unless they get an added incentive from the manufacture. Dealers need to make money to keep their lights on too and most need to finance the inventory they are trying to sell to you.

Do dealers make a lot of money selling new cars? No. Do dealers make a lot of money financing new car sales? Yes. Dealers will usually quote you 2 different prices on a new vehicle. One for finance, one for cash. When I purchased my last car, I actually walked out of 2 dealerships because both insisted I finance at least a portion of the car.


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## alleyyooper (Aug 15, 2018)

Don't for get the CEO's of companies like GM. 
How many hourly line workers do you thing you could hire with her wages?

*"Barra's compensation slid 2.8% to $22 million in 2017. General Motors CEO Mary Barra earned about $22 million in 2017, a slight decline from the previous year due to higher performance targets. Her total pay for 2017 fell 2.8 percent, or $624,011, from the nearly $22.6 million she was awarded for 2016.Apr 27, 2018"*
*

"Ford CEO Mark Fields got a 19% pay hike to earn $22.1 million in 2016"

"Chrysler (FCAU) CEO Sergio Marchionne received €9.9 million, or $10.6 million at current exchange rates."
*
Don't for get all the presidents of districts, Vice presidents and district managers and so forth till you get to the so called over paid workers on the line that do the boreing crappy work.

Also with GM don't for get all the stock holders tyhat got screwed when GM went bankrupt. All those shares of stock they were holding are worth less now.

 Al


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## CentaurG2 (Aug 15, 2018)

There is a lot of bureaucracy in a large company. GM was the largest private health care insurance provider in the US, prior to bankruptcy. From what I remember, the Legacy costs alone on a single vehicle sold was $3000 per unit. CEOs of major companies make massive salaries but have a huge amount of responsibility and most don’t last more than a few years. Without massive salaries and golden parachutes, you would never get anyone qualified to attempt the job and yes they do answer to the shareholders. Love em or hate em, if you drive a car/truck, you *need* both the dealership and the car company. Otherwise, you are back to a horse or your feet.


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## WacoDustin (Aug 15, 2018)

Based on the CEO's salary and the number of vehicles sold by Ford or GM, I'd say markup is indeed 45% or more. If hourly wages and parts cost $48,000 for the factory to make the $80,000 truck sale, I'd say they are making a profit


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