Topic: Mustang's actual cost to Ford?

[midlife]

I know the original Mustang's base sticker price was $2195 or thereabouts (MSRP) when it was first introduced, and I've seen what it cost the dealers (Dealer's Invoice).  How much profit did Ford make on the base model, or how much did it actually cost Ford to manufacture?  Does anyone know?

[CharlesTurner]

That would be a tough calculation.  Comparing cost of materials/parts would be a start I suppose.  Then add in overhead/operating costs of the assembly plant.  Then engineering costs, etc...

[69RavenConv]

I know the original Mustang's base sticker price was $2195 or thereabouts (MSRP) when it was first introduced, and I've seen what it cost the dealers (Dealer's Invoice).  How much profit did Ford make on the base model, or how much did it actually cost Ford to manufacture?  Does anyone know?

Having worked for a supplier to the auto industry for about 15 yrs in the 1990's and early 2000's, I know this is one of the most closely guarded secrets in the industry. The financial analysts usually compare the total number of vehicles sold to the reported revenue/profits on the SEC documents, but that doesn't differentiate between product lines. It's generally accepted that high-end cars have a higher margin, so early Mustangs probably didn't make a lot of money per unit, but made money on volume.  I'd be curious if it was ever made public.

[Paperback Writer]

We’ll probably never know the exact costs for sure, but I bet we can get a pretty good estimate...

I have some Ford Motor Company pricing tables for the 1967 model year (see the first three attachments), which show the Wholesale Price, Suggested List Price, and Suggested Retail Price for all three body styles, and all Regular Production Options as well.

I also have a background in manufacturing, and in a typical manufacturing scenario, the Wholesale Price is often somewhere around the halfway point between the actual Manufacturing Cost and the List Price (or sometimes it’s the halfway point between the actual Manufacturing Cost and the Retail Price).  Not saying this is exactly how Ford did it, but it's probably close.

Since we know the Wholesale, Suggested List, and Suggested Retail Prices from the Ford pricing tables, we can then calculate a few rough estimates of the actual Manufacturing Cost...

So for example (see my final attachment), if we look at the pricing for a nicely optioned 1967 Mustang Fastback, we see that the Suggested Retail Price was $3,863.96, the Suggest List Price was $3,641.20, and the Wholesale Price to Dealers was $2,901.86 (not including transportation costs.  BTW - this is based on a car I actually owned a long time ago).

If we assume that the Wholesale Price ($2,901.86) is the halfway point between the Suggested Retail Price ($3,863.96) and the Manufacturing Cost; then the Manufacturing Cost would be equal to: $2,901.86 - ($3,863.96 - $2,901.86) = $1,939.76

If we assume that the Wholesale Price ($2,901.86) is the halfway point between the Suggested List Price ($3,641.20) and the Manufacturing Cost; then the Manufacturing Cost would be equal to: $2,901.86 - ($3,641.20 - $2,901.86) = $2,162.52

And if we take the average of the highest estimate ($2,162.52) and the lowest estimate ($1,939.76), we end up at an average estimated Manufacturing Cost of $2,051.14.

So it probably only cost Ford about $2,000 to make that beautiful ’67 Mustang Fastback that was sold way back when at Lynn Kirby Ford in Portland, Oregon for $3,863.96 (plus another $135.20 in transportation charges for a grand total of $3,999.16)...

[midlife]

Good info!  So let's say that Ford made $850 on each Mustang.  For 1967, there were 472,207 Mustangs built, so Ford made about $401M just on that model alone.  I suspect in 65 and 66, a even $500M was made each year.  No wonder the Mustang was a significant contributor to Ford's bottom line...

[svo2scj]

I SO WANTED to post (days ago) that the most profitable companies (year ago) always tried to have at least a 50% Profit ratio !   You theory rings true with me as doubling their money is a good goal !

My guess is this is true for the "highest optioned" cars as they provided the most influx of cash, but often the added components were only substituted upgrades requiring only slight extra labor.

So while a stripped 6cyl coupe might sell at under a 50%PR , the loaded convertible might almost double it!

Mark