For Every Toyota Fortuner Sold, Govt Gets Rs 18 Lakh! Toyota Earns Only Rs 40,000, Dealer Gets Rs 1 Lakh

For Every Toyota Fortuner Sold, Govt Gets Rs 18 Lakh! Toyota Earns Only Rs 40,000, Dealer Gets Rs 1 Lakh
For Every Toyota Fortuner Sold, Govt Gets Rs 18 Lakh! Toyota Earns Only Rs 40,000, Dealer Gets Rs 1 Lakh

In the past few years, it won’t be an exaggeration to say that the prices of the vehicles has literally skyrocketed. Increasing at an unprecedented rate, the prices of their models are increased almost every quarter.

This is particularly true for the passenger vehicle segments as the cost of ownership of the same has increased substantially in the past few years.

It is while the actual purchase of the car that an average buyer understands and feels the difference between the ex-showroom price of a car and the actual cost of the vehicle.

As the ex-showroom prices increase, the difference between the two prices is arbitrary and goes higher.

However, when it comes to the earning of a manufacturer, there’s hardly any question.

How Much The Manufacturer, Dealer & Government Make?

Before shedding light on how much the manufacturer makes, lets see where does the money go. So, the money is broadly divided into three sections- manufacturer, dealer and the government (both State and Central).

What is appalling is the fact that it is manufacturer only who makes the leat amount of money.

For more details, one can refer more details from a video on YouTube channel Taxation with CA Sahil Jain.

Lets take an example of Toyota Fortuner. The ex showroom price of the same is Rs 39.28 lakh whereas the on-road price is approximately Rs 47.35 lakh.

Now, imagine a car as premium as Fortuner and then try to digest the fact that the company only earns Rs 35,000-40,000 per vehicle. One would imagine that the manufacturer makes a lot on the premium car, but that is not true.

Ideally it varies from company to company since each OEM offers different commissions to its dealership, but a dealership earns a commission of 2.5-5 percent on each car’s ex-showroom. In Fortuner’s case, the dealer would ideally make approximately Rs 1 lakh on sale of each unit.

Now, moving on to the government. It is actually the government, both State and Central, which takes the majority of the proceeds through various tax components.

A stunning 13 lakh, out of the ex-showroom price of Fortuner, goes to the government.

There are two GST components : GST at 28 percent and GST compensation cess at 22 percent, amounting to Rs 5.72 lakh and Rs 7.28 lakh respectively in case of the D-segment SUV.

When it comes to the on road component, it is through the charges for Registration, road tax, green cess (for diesel vehicles) and fast tag that the majority proceeds go to the government.

It is approximately Rs 18 lakh that the government makes when a consumer purchases Fortuner.

Though the numbers are approximations, but one does get the big picture.

Automakers & Their Operating Profits

Since the bulk of the proceeds goes to the government, it is not a rocket science to figure out why the automakers are finding it difficult to churn out an operating profit per car.

At around Rs 70,000, Kia has the highest operating profit among the mass market segment.

Maruti and Tata have an operating profit of around Rs 40,000-45,000 per car whereas Hyundai earns a profit of around Rs 30,000 per car.

Above numbers are approximated on the bases of respective company’s operating annual report. Apart from car sales, profit figures also include sales of spare parts, etc.

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