sklasse

Does any one know how much gross profit Mercedes makes for each e-class that they sell ?

For example, since E-class starts at 50K, how much of that is their profit ? E.G. 45K in profit and it takes only 5 K to make the car for example...

any one know ?

sgaar

I don't know the number but a local dealer just sold me an '06 E500 MSRP of $63735 for $52100 and I am sure that they still made a profit.

DWP

DCX surely computes their profit margin on each of their line of cars, but it's unlikely that anyone outside DCX knows that highly proprietary information. Anyway, their computation of profit-by-line would have to include allocations of corporate overhead and other accounting devices that would make the number somewhat arbitrary. I'm pretty sure that they aren't making a 900% profit on the E-Class, though.

The real profit for car makers is in luxury SUVs. General Motors, for instance, can take a $20,000 GMC pickup, put a roof on it and some leather and wood in it, call it a Cadillac Escalade and sell it to a dealer for $45,000, who will in turn sell it to some discerning buyer for $55,000. Sweet.

Flash Gordon

Based on your example of the SUV, MB should be making at least 25K on the E because the markup is surely higher than the GM' SUV. As for the S model, the markup should be sustantially higher. Don't forget guys, many of the MB options are standard on other makes! Therefore the cost is a lot lower.

Talbot

You can see the company financials (overall) by looking at: http://finance.google.com/finance?q=DCX&hl=en
That suggests a net profit margin of 2.59%.

I agree with DWP... you can't just look at the cost of (assembled) parts to determine the cost to make a car. As with any business, there are enormous costs associated with running the business that most people don't think about. There's: R&D, advertising/marketing, costs of buildings/facilities, utilities, HUGE personnel costs, insurance.... I could go on all day. Some of those costs are specific to a division, and some are administratively "spread" across all divisions, e.g. Dr. Z's salary (I'm assuming). I've been to the plant that MB built in nearby Vance, AL - and I can't even IMAGINE how many vehicles must be sold JUST to pay for that facility and all of the equipment, machinery, people, land... again - a long list of costs.

Also, the dealer is pretty independent of DCX with regards to the financials. They buy the car from DCX and what they sell it for over that price is THEIR profit, not DCX's profit.

Oh, and I almost forgot... What's possibly the biggest factor in the equation is how MANY they sell. It isn't possible to know true profit margin without knowing that number - because the more they sell, the more those overhead costs get spread out to each unit.

Matt230K

If the dealer did still make a profit, it's only because of extra money back from Mercedes in order to help move the '06's off the lot. There isn't that much markup for the dealer.

Greg_S

I've always been told that they run at 6% before trunk money.

Cylinder Head

iTrader: (1)

I'm not sure of the exact numbers, but from what I understand the margin of profit is EXTREMELY slim on most off-the-line cars like an E500. Performance cars have more of a markup and therefore more profit, which is at many times offset by R&D. Cost cutting measures keep these prices in check, such as with the standardization of engines and transmissions to ease production costs. You can bet that the bottom line is somewhere between 2% and 4% on average. The real money is in service departments, accessories and options.

kiwi163

I recently read that the E is the most popular MB and that over 1 million had been produced and sold world wide.

Flash Gordon

Many high-end products are priced not based on cost, but what the market can bear. There are many example of high-end products in many, many categories, such as Rolex, Porsche, MB, fashion products, the list goes on. More often, the cost of doing business has nothing to do with the pricing on products, especially on high-end products.

MBSLinger

Mercedes-Benz use to have thirteen percent markup, then one day, a person whom I will not mention because he is my boss, came up with a great idea to cut it in half and give it to design and the manufacturer.

Service is the main contributor to profits. Mostly warranty work.

MBSLinger

By the way, to all. Mercedes does not pay on volume. If it did I would be banking!!!

BudC

There is currently the follow cash to dealer on 2006's:

• E350 - $5,000
• E320 CDI - $3,500
• E500 - $7,000

The normal markup on a W211 is 7%, add to that a 3% holdback of which a dealer can get the total amount or less depending on how fast he sells the car.

Finally, some dealers can get 1% to 2% back if they have high customer satisfaction ratings (why do you think that salesman offered you a bottle of wine for a good review?).

So the bottom line on a 2006 E500 is that the dealer could sell you the car for Invoice less that $7K and still make up to 5%.

I wouldn't even talk to a dealer now who doesn't offer you a 2006 for Invoice minus the trunk money without any debate. They still have from 0 to 5% to play with.

I just had my car serviced and the dealer didn't have many 2006 E350's and E500's but he had a ton of E320 CDI's.

A CDI costs more than an E350 and has less trunk money so I suspect you aren't going to get one for as good a deal as you would an E350 or even an E500.

vtec26

The original question was about "gross profit" of DCX right? The answer to that is (price - cost of goods sold) / price. And to further clarify, the price in that euqation has nothing to do with what you or I pay for the car, it has only to do with what the dealer pays for the car.

If the question were, "what is the gross profit of the dealer" then the price that we as consumers see factors into the answer.

The link provided for DCX's financials is a good place to get a feel for what DCX's gross profit is (however the net profit posted earlier is a different number that includes selling, general, admin costs along with any interest income or expense and depreciation expense), but as DWP mentioned there are so many accounting treatments that whatever you see might not have anything to do with the real gross profit.