Profitability in the car market

[Guest]

I don't quite understand how to make a good profit in the car market. This is why!

A car requires:

912KG STEEL
45KG COTTON
40000 POWER
61 OIL
40KG RUBBER
130KG CHEMICALS
1.2KG SILICON
7.5KG QUARTZ

Sold in original components this would make the following profit in an average contract:

912 steel @ 126 = 115k
45kg cotton @ 3 = 135
40,000 power @ 0.04 = 1600
61 oil @ 20 = 1220
130kg chemicals @ 10 = 1300

TOTAL = 120k~

A car only sells for about 70k though, and it requires a lot of extra costs! (+ of course all the costs to produce the components that would sell for 120k themselves)

So the question I guess is, how do you profit in the car industry more than you would profit from selling the parts?

I'd probably need to sell a car for 180,000 to make a nice profit on it...what kind of quality would this require?

Sorry is the post is long and complex

[Guest]

well the prices for all the goods you have stated seem to be if you buy the goods i Believe the trick is to provide the goods yourselfdramatically reducing costs and build in green to rduce costs further.

[Guest]

cars used to be alot higher but they have droped as people keep selling them for lower in the stores but who cares if they sell fro lower it just hurts them as they will have to keep going lower till there is no profit there loss not mine

[Guest]

The price I quoted was the price you can sell for if you produce all the goods yourself

So whilst you can sell a car for 70,000 you can sell its parts for 120,000! Making selling the parts more profit!

[Guest]

yes he is right as most people who make cares make there own goods it not for people just starting the game it fro onger players

[Guest]

hmm those are not the prices if you make the goods your self lol as you dont make power at .04 you make it at .01 it would drop the price way down

[Guest]

You can SELL it at 0.04 though, making the effective production cost 0.04! (minus the selling price)

[Guest]

that why when you make cars you sell them your self you can make alot more money selling and makeing things your self the people that sell on market sell them there till they get money to sell them buy there selfs most of the time not always

[Guest]

You can SELL it at 0.04 though, making the effective production cost 0.04! (minus the selling price)

You are confusing value with cost. You are using value to evaluate cost, which is fine, but it has nothing to do with your profits or production expense. I have nothing against this philosophy, I think you should always look at this aspect of any venture, but it's not the determining factor in the market because of the laws of supply and demand.

If this principle is important to you, build power plants, wells, and mines, and forget production facilities all together. You can sell your raw materials on the open market, and do very well. I've found very few things that actually make good profit over the individual components cost on the market, and you certainly will never get rich buying all resources from the market to make your product. So, the greedy capitalist in us all, might chose to look at the game in this respect, but what is the fun of that?

[Guest]

Hmm, you're right Halee. I must be a very greedy capitalist

Products that DO make a profit over component profits (lil list here for whoevers benefit )

Tables: Sell Price: 180~ : Cost = 7 wood (wood sells @ 16)
Gas: Sell Price: 12~ : cost: 0.2 oil (oils sells @ 20~)
Steel: Sell Price: 130~ : cost: various (sells at about 85 in individuals)

I'll update this when I find more

[Guest]

You are pretty right.

I tried to change somebody(ies)'s opinion on the cost in some post, using my 6 years knowledge which I learned on campus. Even if I tell how the backward induction works with easy words, what I received is just "I don't agree with you." It doesn't work, and really waste a lot of my time, enegy and passion.

If you need cars, my suggestion is that, firstly to product all the materials and sell them on the market, then to buy the cars from the market, the case is just like that some one will help you to product cars and even give you some money..

However, I should also point out that, the factory in the green can have less production cost.

[Guest]

I completely agree that if you can sell the raw products for more than the car (minus car production costs), there is no point in making the car. It's just a waste of money no matter how you look at it.

As for cost or value, I think it is just a matter of definition. But if I am the person you are referring to, kiddbeck, then I think you never really understood my argument.

[Guest]

You completely agreed? Souds my words worked.

I assumed that somebody will tell the poster: To sell the cars for 50K is totally right, if you product all the materials yourself, since 50K-28K>0, your company was still improving with time.

Don't you feel the logic is quite familiar?

[Guest]

This right here sums it up:


Cost to sell car on market: 70k

Cost to sell the items REQUIRED to make a car on the market: 120k

Return on car: 70k- production cost

Return on what is required to make car: 120k

Actual reason the market works this way:
if everyone started selling their goods instead of producing cars, the price of the goods will drop. Alternatively, since there are less car MAKERS, there is less competition, hence raising the price of cars. Of course the market refuses to balance out. In reality, the car should be selling slightly more than the cost to SELL the goods on the market. Of course we all know what happens with that, then people will start trying to sell them faster by lowering their prices... eventually ending up about.. mm... I'd say, 70k per car, sound about right? Well, it doesn't MATTER if it sounds right, thats just the reality, and those smart enough to realize it, will be the ones hitting manager in the end.

[Guest]

Building a car is also a waste of time...not only money.