I was thinking yesterday after having some discussions with my dealer, what the true cost is to make the Mini. My thinking is as follows, let me know if I am way off here or don't know what I am talking about.

- Assume Base price is $20,000. I am not including options, since they include a lot of markup, and the base car is well equipped as is. I also rounded it slightly to start working with an easy number.

- I excluded destination charges, taxes and other fees, since these cover the cost of government fees, transportation of the vehicle and dealer's fees and are added to the MSRP of the vehicle.

-Edmunds list the Vehicle Invoice as being $17,587. This is most often not what the dealer pays for the car. There are incentives for the dealers and so on, but since demand is high, I am going to assume that the dealer at this point does not have incentives from the manufacturer.

-The manufacturer must make a profit on the car as well. I am going to assume the that the manufacturer makes at least a 20% profit on each car. Multiply this by the Invoice price and we are down to $14,070.

-The manufacturer must set aside money from each car sales to cover the cost of warranty work, maintenance, and Road Side Assistance, since this is included in the price of the car and I am sure that the manufacturer still will make a profit of 20% above these fixed costs. I am going to assume that they will take out $1,000 for each car sold. That is equivalent of having $30million set aside for each model year in the US to cover warranty work, maintenance and Roadside assistance. I don't think that is too much. That brings the car down to $13,070.

That brings the car down to $13,000 for a new Mini straight from the manufacturer at cost. Does this sound right? Are there other fees that the manufacturer must pay for? This may still be a little high, not sure. Seeing that you have to pay some dealers in California about $25,000 for a base Mini, you can see all the different markups that exist.

 

You may well be correct...but what's the point? Even if it cost BMW a $1.38 to make the car, the bottom line is that it will cost you at least $20,000 (and considerably more on the west coast). I'm sure that BMW would love to be able to get the cost closer to $0 while keeping the sales price as high as or higher than it is now....

It's like I don't really think it costs Kellogg's anywhere near the $4.50 it cost me to buy that big box of Special K...but if I want Special K, it's the price I pay.

 

I agree we are still stuck paying $20,000. It was more a curiosity question as to what the item costs the manufacturer to make. Just interesting to see the markup involved.

 

It's a far more complicated equation in real life. Now you're getting into some very complex manufacturing equations that need to take into account far more than just the most obvious costs.

First start with R&D, then modeling, prototyping, tooling, employees, facilities, management, marketing, etc. Then you have to look at profitability targets, debt service if any, etc. It generally takes about 3-4 years of production to break even on a large manufacturing project. That's why most manufacturers try there best to hold onto a car's basic design for 6-7 model years. It's those last two to four years where all the real profit is made.

In the case of the MINI, that may be shortened because of the popularity and not having to offer factory incentives like most of the US and some of the Japanese manufacturers have been doing.

It's and interesting thought though.

 

You should clarify that you're talking about the S. Cooper starts at $17,000, not $20,000. I consider my car very well-equipped (sunroof, sport seats, MFSW, cruise, fog lights), and I paid under $20k, even with taxes added in.

 

"The real cost of the MINI"? Your privacy, because
people just won't leave you alone!

Godspeed.

 

The MINI is a car with very little profit margin...about $1,500 per car. Given its "niche" nature, low production volume and thin profit margin are reasons why you will not see a new MINI being sold at incredible discounts any time soon.

 

I'am in Canada,so the number$$ are not the same,but I bought my BRG :smile: :smile: :smile: :smile: :smile:

 

I believe that BMW loses money on every single MINI sold. My general feeling is that BMW uses the MINI brand as a R&D department dedicated to converting expensive technologies into affordable ones.

We have some very high tech stuff on our MINI's, such as DSC, xenon HID lighting, etc that should drive up the cost of the vehicle significantly. They can use what they learn with the MINI's to make the BMW's more profitable. For instance, Xenon lighting is a $400 option on a MINI, but can cost several thousand on other cars. If you go try to buy a single replacement Xenon headlight for your MINI, it is about $600!

BMW also benefits from the MINI because car manufacturers are required by EPA to produce vehicles that average to a certain fuel efficiency. By making a bunch of small, relatively efficient Coopers, they are able to import more high performance gas guzzling BMW's.

Lastly, BMW benefits from the MINI by getting younger people into BMW showrooms with the hope that we will continue to be BMW customers. When I had a VW, I would go to my local VW/Audi dealer and drool all over the TT's and S4's. Now I go to BMW showrooms and Drool on Z-4's and M3's

_________________

SE Regional, BAMA Club Moderator: PM me

 

>>I believe that BMW loses money on every single MINI sold. My general feeling is that BMW uses the MINI brand as a R&D department dedicated to converting expensive technologies into affordable ones.
>>
>>We have some very high tech stuff on our MINI's, such as DSC, xenon HID lighting, etc that should drive up the cost of the vehicle significantly.
>>
>>BMW benefits from the MINI because car manufacturers are required by EPA to produce vehicles that average to a certain fuel efficiency. By making a bunch of small, relatively efficient Coopers, they are able to import more high performance gas guzzling BMW's.
>>
>>They make their profit on the BMW's and the MINI ends up being a write-off
I must agree,or it would be a BMW Ehco

 

IMHO I think that of all the replys, guy99 and cooper4us are the only two that really hit the nail on the head. There isn't a new car dealer on the planet that is able to work on a 20% margin. Second, what difference does it make what it costs BMWNA to make a Mini? Like we wouldn't have bought one. The production cost is totally irrelevant. I hope the make $20,000 on each unit they produce, Which would be more than any other Auto they produce but would insure the future of probably the most fun auto I have ever owned!!
That's my 2 cents

 

" new car dealer on the planet that is able to work on a 20% margin."


I am not too sure how different the Mini line is compaired to other mfgs/dealers, but usually dealers get what's called a "hold-back" from the mfg, which is usually a couple hundred dollars after the car is sold. mini dealers may not get this.

remember the 20% mentioned in the original post was referring to the mfg markup, not the dealer. these are generally two separate entities, and often at odds with one another. in the car industry, the dealers usually hates the mfgs, but they have what they need to sell, cars... mfgs are often placing restriction, demands on the owners of dealerships, which the dealer usually has to pay for out of pocket, but if they don't comply, it will affect their future allocation.

20% for the mfg may be a bit high, but as mentioned, mini will still be paying for R&D, and don't forget about shipping engines from brazil or the exchange rate btw the dollar and the pound.

a common way a dealership is set up, is having the service department pay for all opperating cost, while the sale of the car and f&i become the profit for the store.

pound

 

From BMWs last financial report they said that they were making a profit on every mini sold. I bet it is not very much though. At the start they expected to make a loss, but increased volume and no discounting are pretty rare in todays modern auto world where overcapacity is the norm.

I wonder how much they have to pay for each engine?

 

OK, I thinks some of you didn't understand why I was posting this. I was not trying to rip on BMW or show how much we overpaid for the vehicle. We paid what we were willing to pay. Whoever said, BMW wasn't making a profit on these is wrong. They may not be making as high of a profit as on their 7-series, but they are still making a profit. Anyone who thinks that the single best selling model in the BMW lineup is a money loosing venture for BMW is dead wrong.

And whoever thinks the dealerships are loosing money is wrong as well. I highly doubt that they only have the Mini line to bring new customers to BMW, while loosing money. Of course this is a side benefit and I am sure that some people do purchase a BMW as a result of looking at Minis, but this is hardly a worthy cost venture to bring people into showrooms, by creating a whole brand and loose money at it. It would be far cheaper and less of a headache to give free vacations or 0% interest than to create a whole product line.

I also don't think it is for an R&D perspective as well. Most of the parts from the Mini are coming from other BMW models, not the other way around. The suspension has pieces from the 3-series, the nav is from the 5-series......

I was just curious what the different markups are on the car and what the car probably really costs the manufacturer. Just a knowledge endeavor. We really get a lot of features for our car for such a low price.

 

Sales of Harley Davidson related items far outpace the
annual dollar sales of the motorcycles. Could MINI
manage to accomplish this? Is the brand going to be
bigger than the car? (Is there a pun in that sentence?)


Godspeed.

 

There is no holdback money on each new MINI sold from an authorized dealer. $1500 profit is all the dealer gets on each one sold. There is no other money hidden elsewhere. No factory to customer or dealer cash either.

The MINI is not the norm of the auto industry. It is a low volume "Boutique" vehicle with a very thin profit margin. Wonder why there are only 70 MINI dealers for the entire country?

Not every BMW dealer jumped into the MINI bandwagon. Some of these dealers shied away of the risks and low profits of the new MINI range once they saw the "real" picture. The remaining 70 BMW dealers took on the offer.

MINI has been one of the most successful experiments in auto industry history and BMW is indeed making money on these cars, but profits are still very thin and will continue to be as long as the car remains a cult icon in the automotive world.

We, MINI owners, love to brag about our high resale values...guess what...thanks to a strict MSRP sales policy and low production numbers (Yes 30K a year is very low in a world where sales in the 200K units per year are all too common) we have the most sought after cars in the used market.

So, I don't want to see a MINI on every corner or one being offered at a discount. Our culture of rebates and special financing deals have impaired some into recognizing a good thing when it comes along...and that is a new MINI sold at MSRP = the bargain of the century.

'Nuff said.