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# Thread: How many Cars Toyota has to sell to cover the 100 million USD investment claimed

1. ## How many Cars Toyota has to sell to cover the 100 million USD investment claimed

Just wondering what is the profit margin per car and how many they have to sell to make up for the investment they made..

2. Check: 9MFY14: Indus Motor records impressive profits – The Express Tribune

Toyota Indus posted a profit of Rs. 2.32 Billion for the 1st 9 months of financial year of 2014. Roughly calculating \$ at Rs. 100, you get 0.0232 Billion which is \$232 Million.
So if the sales of the new model remain the same as the existing model, they will be making a profit of over \$100 million easily.

3. Originally Posted by pistonhead
Check: 9MFY14: Indus Motor records impressive profits ? The Express Tribune

Toyota Indus posted a profit of Rs. 2.32 Billion for the 1st 9 months of financial year of 2014. Roughly calculating \$ at Rs. 100, you get 0.0232 Billion which is \$232 Million.
So if the sales of the new model remain the same as the existing model, they will be making a profit of over \$100 million easily.
get your maths right... Rs. 2.32billion is a mere \$23.2 million and not \$232 million, so not a lot.

Think of the cost amortization in this way ( a bit simplified). If Indus invested \$100 million (which is 10 crore USD), and if they sell on average 40K corolla models a year, they need to add \$2500 to each car just to recover the original cost (in one year). Now the maths is easy...if they intend to recover the cost in 2 years, they need to add \$1250 to each car; 3 years and they need to add \$833, and so on. I haven't read the original news of \$100 million investment but my guess would be its not solely on Corolla model but overall. Plus, they make profit on spare parts, may be even some export, etc.

I said at the beginning that this is a simplified version...it business terms, its not only how quickly they recover the money but also the real profit in terms of what opportunity costs they have missed i.e. how much more profit they made by investing here as opposed to somewhere else. If they were making \$23.3 million profit before this investment, then the new profit has to jump significantly to justify this investment. That's how corporates think so its far more complex than what I wrote.

4. My bad.... messed up my maths.

5. Originally Posted by Exubery
get your maths right... Rs. 2.32billion is a mere \$23.2 million and not \$232 million, so not a lot.

Think of the cost amortization in this way ( a bit simplified). If Indus invested \$100 million (which is 10 crore USD), and if they sell on average 40K corolla models a year, they need to add \$2500 to each car just to recover the original cost (in one year). Now the maths is easy...if they intend to recover the cost in 2 years, they need to add \$1250 to each car; 3 years and they need to add \$833, and so on. I haven't read the original news of \$100 million investment but my guess would be its not solely on Corolla model but overall. Plus, they make profit on spare parts, may be even some export, etc.

I said at the beginning that this is a simplified version...it business terms, its not only how quickly they recover the money but also the real profit in terms of what opportunity costs they have missed i.e. how much more profit they made by investing here as opposed to somewhere else. If they were making \$23.3 million profit before this investment, then the new profit has to jump significantly to justify this investment. That's how corporates think so its far more complex than what I wrote.
very well explained

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