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Old 02-20-2016, 06:47 PM
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How much does it cost to build a jgc?

Just curious.


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Old 02-20-2016, 09:53 PM
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Re: How much does it cost to build a jgc?

I will play along....
$29,995 to $75,355.
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Old 02-20-2016, 11:12 PM
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Re: How much does it cost to build a jgc?

Im curious as to how much profit jeep makes on a vehicle.


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Old 02-21-2016, 06:17 AM
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Re: How much does it cost to build a jgc?

I think you'd be shocked to find out what it actually costs to produce a vehicle.

I remember reading something on that a few years ago. Across the auto industry in general, it was something like 50% or less of the actual MSRP. So yeah, there's a pretty decent profit margin for the manufacturer. And of course, the dealer has to get a cut as well.

That would be a good question to ask Marlon.
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Old 02-21-2016, 06:32 AM
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Re: How much does it cost to build a jgc?

It's a lot less today, now that a lot of the overpriced, fat, lazy union labor has been busted out of the box. They milked the auto industry dry, much like the steel makers did to that industry. That, along with widespread use of robotics and computerized welding, painting, and assembly. These were big initial investments, but they've paid off big time with faster assembly times and much better overall quality. It's much more efficient to build with modern technology, than it was with overpriced fat, that got paid 80% of their take home pay to stay home "sick", or play pool. A Grand Cherokee assembled today with 1960's methods and people would cost more than your house, and be nothing but a rattletrap that would wear a path to and from the dealer.
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Old 02-21-2016, 06:53 AM
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Re: How much does it cost to build a jgc?

Quote:
Originally Posted by MDBones View Post
I think you'd be shocked to find out what it actually costs to produce a vehicle.

I remember reading something on that a few years ago. Across the auto industry in general, it was something like 50% or less of the actual MSRP. So yeah, there's a pretty decent profit margin for the manufacturer. And of course, the dealer has to get a cut as well.

That would be a good question to ask Marlon.
I've seen various numbers thrown around over the years with vast variances. It seemed to depend on the attitude of the author, but none gave specifics. The total cost of each car, when determining profit, has to include the cost of selling it, such as advertising. Future warranty costs have to be included, as do the costs of the office personnel who handle all the paperwork, plus the cost of real estate, and every pen, pencil and paper clip. There are all sorts of expenses, and I imagine all the numbers are available since these are public corporations.



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Old 02-21-2016, 07:00 AM
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Re: How much does it cost to build a jgc?

Quote:
Originally Posted by billt View Post
It's a lot less today, now that a lot of the overpriced, fat, lazy union labor has been busted out of the box. They milked the auto industry dry, much like the steel makers did to that industry. That, along with widespread use of robotics and computerized welding, painting, and assembly. These were big initial investments, but they've paid off big time with faster assembly times and much better overall quality. It's much more efficient to build with modern technology, than it was with overpriced fat, that got paid 80% of their take home pay to stay home "sick", or play pool. A Grand Cherokee assembled today with 1960's methods and people would cost more than your house, and be nothing but a rattletrap that would wear a path to and from the dealer.
Be that it may, costs are always passed onto the customer and profit margins are maintained. Overhead can be compensated in part by what you said above about robotics, as well as the lower cost of buying parts in quantity and by reducing assembly line time. Locating parts production and assembly outside the US is another method. It is what it is.

When I bought my first GC in 93 my parents asked what I paid for it. I wouldn't tell them because even back then it was about 2.5 times more than what they paid to build their house in 1965. LOL...
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Old 02-21-2016, 07:01 AM
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Re: How much does it cost to build a jgc?

Quote:
Originally Posted by bill_de View Post
I've seen various numbers thrown around over the years with vast variances. It seemed to depend on the attitude of the author, but none gave specifics. The total cost of each car, when determining profit, has to include the cost of selling it, such as advertising. Future warranty costs have to be included, as do the costs of the office personnel who handle all the paperwork, plus the cost of real estate, and every pen, pencil and paper clip. There are all sorts of expenses, and I imagine all the numbers are available since these are public corporations.
Yes, they have it all calculated right down to the penny.
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Old 02-21-2016, 07:04 AM
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Re: How much does it cost to build a jgc?

Another thing a lot of people don't realize is that profitability depends on sales acceptance. The more units they sell of a given model, the more profitable each one becomes. It's a lot like the drug industry in that regard. People like to talk about the huge profits the auto and pharmaceutical industries realize. But they forget just how much it costs to engineer and develop the product.

In the drug industry for example, that cost can amount to over $2.6 BILLION on average, before a single pill hits the drug stores for sale. That's a hell of a lot to make up before they see a dime in profits. If the drug is a smashing success like Viagra, then it's all well and good. But if it's a total bust like Redux and Fenfluramine were, then the company eats it.... Along with all the law suits that come from all of the ambulance chasers that drag them up and down the courthouse steps for an eternity.

It's much the same in the auto industry. We as customers remember the big sales successes like the Grand Cherokee's and the Mustang's, because we see them all over the streets every day of the week. But forget the dogs with fleas that never caught on, costing the automakers hundreds of millions in lost development and engineering costs. Along with the law suit specials like the Pinto and Corvair. Just because a company has the ability to engineer and build product, is no guarantee they'll be able to sell it. Let alone sell it at a profit.
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Old 02-21-2016, 07:21 AM
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Re: How much does it cost to build a jgc?

Quote:
Originally Posted by MDBones View Post
Be that it may, costs are always passed onto the customer and profit margins are maintained.
It's not always that simple. They can't just jack up MSRP's of good selling models in order to make up for dogs they can't move. They wouldn't remain competitive with the best sellers, and people would move to other models from other manufacturers. Today's auto industry is far too competitive, especially with foreign manufacturers, then it was 40 years ago.

A bad car is a bad car, pure and simple. It ends up costing the manufacturers hundreds of millions, with no real way to recoup the loss. For example, Ford can't "make up" for what they lost on the Pinto, by jacking up the cost of the Mustang. Same with G.M. and the whole exploding side saddle gas tank fiasco. If they did people would have bought other competing models instead. Bottom line, mistakes in business cost money. In the case of the auto industry, a LOT of it.
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Old 02-21-2016, 07:48 AM
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Re: How much does it cost to build a jgc?

Quote:
Originally Posted by billt View Post
It's not always that simple. They can't just jack up MSRP's of good selling models in order to make up for dogs they can't move. They wouldn't remain competitive with the best sellers, and people would move to other models from other manufacturers. Today's auto industry is far too competitive, especially with foreign manufacturers, then it was 40 years ago.

A bad car is a bad car, pure and simple. It ends up costing the manufacturers hundreds of millions, with no real way to recoup the loss. For example, Ford can't "make up" for what they lost on the Pinto, by jacking up the cost of the Mustang. Same with G.M. and the whole exploding side saddle gas tank fiasco. If they did people would have bought other competing models instead. Bottom line, mistakes in business cost money. In the case of the auto industry, a LOT of it.
And despite all of this they still remain in business and still make a profit. They will always have a strategy to mitigate risks like this... up to and including bailouts by the taxpayer.

EDITED TO ADD:

From the Motley Fool (not sure what the date of this is)...

"Chrysler reportedly makes over $10,000 profit on each new Grand Cherokee it sells to its dealer franchisees."

"In the last couple of years, the domestic automakers routinely reported profits of more than $1.5 billion in a quarter. Think for a second how much money that represents, and remember these are profits. That translates into $12,000 per minute in profit, every minute of every day for the 90 days during the quarter. Mind-boggling!"
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Old 02-21-2016, 08:19 AM
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Re: How much does it cost to build a jgc?

Quote:
Originally Posted by MDBones View Post
And despite all of this they still remain in business and still make a profit. They will always have a strategy to mitigate risks like this... up to and including bailouts by the taxpayer.

From the Motley Fool...

"In the last couple of years, the domestic automakers routinely reported profits of more than $1.5 billion in a quarter. Think for a second how much money that represents, and remember these are profits. That translates into $12,000 per minute in profit, every minute of every day for the 90 days during the quarter. Mind-boggling!"
And if they were all so profitable all the time, they wouldn't have needed those taxpayer bailouts to begin with, would they? What happened to Pontiac? Or when Lee Iacocca went begging to the United States Congress for money to make payroll? Pontiac is gone forever because of a lack of ability to turn a profit on their models. They managed to make billions for G.M. in their day. No longer. Profit is never guaranteed. Even for companies that existed successfully for decades. It's no different today.

You, (like many others), like to point to the big profits, of which there are many. However the pendulum swings both ways. When there is a mistake, it's equally costly. Just look at what happened to their stock prices, along with their dividends, if you need a reminder.

If you doubt that, look at what "Dieselgate" is going to cost Volkswagen. Literally thousands of dollars to fix every violating diesel car, and make it compliant. At best they've lost the profit on most every diesel model they've sold in recent times. At worst, if it goes to a forced buy back, it could conceivably bankrupt them. Remember, Volkswagen's diesel cars were the mainstay of their company. Granted it was all their own fault, but that in itself doesn't mean $h!t if your a stockholder.

As the ability for these big automakers to turn big profits increase, so does their operating costs, along with the ability to lose their ass. Add in stiff foreign competition, that didn't exist 40 years ago when the "Big Three" ruled the roost, and it's not always Sunshine and rainbows. The coin always has 2 sides.
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