An Analysis of Auto Profitability
The newest study by German economics professor, Ferdinand Dudenhoeffer, shows us that there is very little correlation between large production numbers and profitability in the automotive markets. Basically, it completely depends on the brands business strategy. But, one manufacturer stands out from the rest… Ferrari.
Ferrari is Making Bank!
Dudenhoeffer’s study for, the Center for Automotive Research (CAR), reveals that the most profitable brand at the moment is Ferrari. For the first six months of the year, the Italian supercar company reported an operating profit of €69,000. That’s approximately $80,000, for every new car sold.
If you take into account other revenue streams like accessories, then the profit per car rises to a staggering $90,000. For a company that only produces about 7,000 vehicles per year, they have proven that brand identity has a lot to do with profitability in the automotive industry.
So, just how impressive is that $80,000 figure?
- Jaguar nets approximately $927 per car.
- Daimler AG gets about $5,000 in profit for each of their vehicles.
- Maserati comes in at $5800.
- Porsche collects $17,250 per vehicle, making it one of the highest of the European brands.
As you can see, Ferrari makes more than quadruple what the others do.
Even though Ferrari outstrips their competition, Porsche is nearly twice as profitable as their rivals Mercedes-Benz, BMW, or Audi. Both Maserati and Volvo are also about half as profitable as Porsche and twelve times less than Ferrari.
Profit and Sales
The Ferrari brand has built its success on exclusivity and luxury. If they mass-produced their cars, they would not have a balance between demand and supply and they could not command their higher prices. Conversely, if Volvo doubled their prices to increase profitability, they would see a decrease in sales because their markets would not support the move.
In the end, profitability per car is interesting and in the case of Ferrari, just a bit mind-boggling. However, this manufacturer sells about 7000 cars per year for a rough estimate of $560 million dollars and Porsche sells somewhere around 245,000 cars for about $4.2 billion dollars. In the end, it’s all about the bottom line.