How car companies really make money #212

The Intercooler

Dan Prosser and Andrew Frankel

Cars, The Intercooler, Car, Motorsport, Supercar, Leisure, Automotive, Intercooler, Driving

4.8 • 868 Ratings

🗓️ 20 May 2024

⏱️ 45 minutes

🔗️ Recording | iTunes | RSS

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Summary

Dan Prosser and Andrew Frankel discuss the ways in which car manufacturers really make money. Very often the profit margin on the car itself will be very small, but the profit on optional extras can be significant. At the top end of the market, the likes of Ferrari, Bentley and Aston Martin are generating huge revenues by offering ever greater levels of personalisation, from bespoke colours and finishes to entire one-off builds. Indeed, those high-end manufacturers now have whole departments dedicated to optional extras and personalisation.

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Transcript

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0:00.0	Welcome to the Intercooler Podcast.
0:05.0	Hello everybody welcome back to the Intercooler Podcast with me Dan Prosser
0:11.0	Andrew Frankel sitting opposite me here in our studio.
0:15.0	This is episode 212 and we're talking about how car companies really make money.
0:20.4	And actually I just thought, is the answer to that actually finance?
0:24.0	It's partly that.
0:26.0	That's part of it, isn't it?
0:28.0	It's probably a big part of it.
0:29.0	But the key point here is that a very important way that manufacturers do make money these days is through
0:36.8	options and personalization. It's become a huge thing, isn't it?
0:42.0	Yeah, particularly towards the top end.
0:44.5	Oh, massively.
0:46.1	It is enormous up at the top end.
0:49.1	Actually, down at the sort of bottom end,
0:51.4	the margin on a small very small city car might be nothing.
0:57.0	It's or certainly very, very small.
1:00.0	They're almost lost leaders, those sort of entry-level models, designed to get you in the showroom,
1:05.8	get you into the mark and hopefully you graduate over the years into more profitable models.
1:10.7	And there'll be a bit of profit in the finance as you say.
1:15.0	But as you say, they are the cars that, you know, it's what the Ford Fiesta did so well for
1:21.3	so long, isn't it?
1:22.3	You know, people bought a Fiesta, loved it and stayed with Ford for the rest of their lives.
	...

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