Profit on each Model T

[jiminbartow]

As you know, at one point, some Model T’s sold for less than $300.00 apiece. Bottom line…with labor and materials, how much did it cost to make a Model T and how much profit was made on each one? I know it would vary per style and year of manufacture so what would be the average. With such a low selling price it is hard to see how Ford could become such a profitable Corporation even with the volume of Model T’s that were manufactured. Jim Patrick

[signsup]

One would think you could obtain Ford earnings statements from various years and divide by the number of cars produced that year, but that does not take into account any other sources of revenue such as dealerships, spare parts, and the internal vertical inagration by producing their own steel, rubber, wooden wheels, etc.

I know the WWII jeeps had a profit margin of $50 on them...but they made 620,000 of them in 4 years.

[BE_ZERO_BE]

I seem to recall that I read somewhere that after all was said and done the average net profit on each Model T was about $2.00.
That's $30 million dollars over the 18 year run of the Model T.
Pretty big money for that time.

[Bryant]

I have also heard the “Dollar” profit quote.
From my understanding Henry was trying to put the “world on wheels” and sacrificed his profit margin to do so. One might think other early car manufacturers bottom line prices would not be much different during the “one at a time” period of automobile production. The difference in profit may have been an economic status at the time, separating the rich from the poor. As T production ramped up I would assume his profit margin decreased with the final cost but stayed the same percentage as earlier models. But again I am assuming. To me it’s just one more thing to the folklore that attracted me to the car in the first place and from what I can tell it worked.
Bryant

[KWTownsend]

I heard on the radio the other day that Ford takes a loss of $60,000 on each new electric pickup truck.

That $2 profit per vehicle doesn't looks so bad now.

: ^ )

[TXGOAT2]

Ford made money on cars by making every effort to sell each of a great many cars for a little more than they cost him to produce.
Successful car dealers followed a similar formula: High sales volume with low mark-up per unit.

In recent decades, government has far more to say about what motor vehicles consist of, and what they cost consumers, than in Henry Ford's time. (Not to mention wage and income taxes, etc, and the rise of credit purchasing and related costs)

Ford was at liberty to produce a basic, practical car at an attractive price, and that's what he did, to the great benefit of his family, his business partners, and to the USA and the world.

[signsup]

Kinda related to the thread...I get a kick out of watching the old sales training films from the 40's and 50's that the sales manager would show to his car dealership sales force. Explaining the benefit of every feature and knowing the competitions features inside and out. Also, a neat training film by Ford starring Hugh Beaumont from Leave It To Beaver fame taking a new trainee under his wing and showing how he drives around the city every day stopping and asking people washing their cars about trading it in on a new car, having mechanics be bird dogs for him and bribing them with gifts to provide leads, putting his business card under wiper blades at the supermarket, etc.
Today, they sit around the showroom and take orders. Make a little money on the car and try to make all the profit on the additional BS, financing, fees, etc.

[TXGOAT2]

Packard used to put out a lot of material for salesmen and dealers and mechanics. It makes good reading, and the principles expounded are still valid today. www.packardinfo.com offers access to a huge library of this material, and similar Ford material is available on this and other sites.

[havnfun]

Some quick searches and I found the following:
In 1916, the Ford Motor Company produced 500,000 Model T Fords at a price of $440. The company made a profit of $60,000,000 that year. Henry Ford told a newspaper reporter that he intended to reduce the price of the Model T to $360, and he expected to be able to sell 800,000 cars at that price.

In 1923, Henrys personal profit was $75,000,000