Toyota Earns About Rs 40k Per Fortuner – Dealer Rs 1 L, Govt Rs 18 L

Cost of vehicles have risen to unprecedented levels globally, especially in India where manufacturers increase prices of their models almost every quarter. This is more true for the passenger vehicle segment where cost of ownership has increased substantially in the past few years.

An average buyer understands the difference between the ex-showroom price of a car and the actual cost of the vehicle incurred while purchasing it. The difference between the two prices is arbitrary and goes higher as ex-showroom prices increase. But one rarely questions how much each manufacturer earns on selling one car.

If broadly categorized, proceeds of a purchase of a vehicle go to three sections- manufacturer, dealer and the government (both State and Central). Surprisingly, out of these three, the manufacturer earns the least on sale of a car. The price bifurcation has been explained in more detail by a video on YouTube channel Taxation with CA Sahil Jain.

The video starts with the example of Toyota Fortuner which is a premium offering with an ex-showroom price of Rs 39.28 lakh for which a buyer has to shell out approximately Rs 47.35 lakh (on-road) from his/her pocket. Considering the high price, one would imagine that Toyota could be earning a big chunk of it which is not true. The company only earns about Rs 35,000-40,000 per vehicle, even as premium as Fortuner.

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