How do companies like Bugatti, Rimac and other supercars make money?


Given that they only produce a handful of cars a year, and sell them for $2-3mil, how do they still make enough profit to cover all expenses?

In: 6

In the words of Prop Joe, “buy for a dollar, sell for two”. All businesses make money by making something with inputs that cost less than they sell the output. It doesn’t matter it’s selling 20 units for $60 million that cost $50 million to make or 2,000,000 for $30,000 each when they cost you $29,500 to make.

That said, many of these brands are owned by very large auto manufacturers, VW (owner of Bugatti) doesn’t disclose that brand’s financials separately from the others. It’s possible they tolerate operating that brand at a loss as long as it’s running within some tolerated amount, as the brand provides some marketing for the bigger company.

At the higher ends of any industry the markup sky rockets. Everything from fashion, to computer parts, consumer electronics, furniture, and cars. Mainstream, mass produced cars have slim margins. Supercars could have multiple 100s of percent markup. Add to that that the companies have wayyy less overhead and you only need to sell a relative handful of cars to stay in business.

They make or license all kinds of status symbol type goods with their brand on them, it’s pure profit.

You need to consider a super-car brand is not an entity on its own. But a simply a brand of an even larger car company with many purposes.

One of these is marketing. Setting records, the brand can act entirely as marketing for the main brand. Millions on a few cars, compared to billions on marketing campaigns.

Another is these cutting edge technologies can act as R&D units and as such can get tax incentives on a much more flexible and faster acting company structure.

Finally, the list price is not often the only way a company makes money. These cars are often bundled with services such as very expensive servicing, tuning and all manner of extras and personalisations. Finally there’s apparel and merch. Caps and t-shirts with Ferrari (fiat/Chrysler) and Lamborghini (VW) may be more profitable than the car selling business.

Rimac in particular produce electrical and electronic components for a wide variety of electric car manufacturers. So even if the Hypercars only make small percentile profits their bread and butter will be from parts sales.