The following links could be helpful: https://www.mtvehicles.com/blog/how-much-does-it-actually-cost-manufacturers-to-make-a-car/...

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Answered Same DayApr 04, 2021ACC73001Southern Cross University

Answer To: The following links could be helpful:...

Kushal answered on Apr 05 2021
146 Votes
Toyota Cars Pricing Analysis
Contents
Introduction    1
Costs and margins –    2
Prices    2
Profits    2
Value chain Analysis –    3
Improvement in Operations    3
Pricing Methods    4
Cost plus pricing method –    4
Market pricing method –    4
Recommendations of the prices    5
Conclus
ion    5
References    5
Introduction
Toyota is one of the leading manufacturers of the passenger vehicles in the world and it is based out of Japan. Toyota manages its Australian subsidiary Toyota Australia and sells its cars in Australia. A s we are already aware that Toyota used the Target costing approach in manufacturing as well as they use the Just In Time manufacturing to keep the working capital as low as possible, we do not have exact figures around the exact profit margins for these cars. We will try to break down the value chain for this manufactures and analyze where we can optimize to increase the profit margins. We will also look into whether Toyota should change the pricing method and what are the advantages and disadvantages of these methods.
Costs and margins –
Based on the Target Costing, Toyota assess the environment, competitors, supply and demand of the cars and accordingly decide what should be the profit margins and how should the costs of each activity involved in the production should change.
Current prevailing prices of three SUV models –
Prices
1. 2019 Toyota RAV4 GX 2WD HYBRID - $ 34,990
2. 2019 Toyota RAV4 GXL AWD HYBRID - $ 44,000
3. 2019 Toyota RAV4 CRUISER 2WD HYBRID - $36,000
Based on our research, we estimated that in the target costing, Toyota used 12 to 14% of the margins as profits and the rest of the prices go into costs. Based on this, we will get $ 5000, $ 6300 and $ 5200 as profits for the three models respectively.
Profits
1. 2019 Toyota RAV4 GX 2WD HYBRID - $ 5,000
2. 2019 Toyota RAV4 GXL AWD HYBRID - $ 6,300
3. 2019 Toyota RAV4 CRUISER 2WD HYBRID - $5,200
As per our estimates, Toyota spends as much 55to 60% of the total price in the raw material which include the different parts and the 16% of the costs go into the research and development costs which have already incurred. Based on this, we get $21,000, $ 26,400 and $ 36,000 costs for the raw materials and parts. $ 5,500, $6800 and $ 5,600 as the costs for the research and development. The sales and general administrative expense on an average come around$ 1,500 for each car and based on these total costs we got our total profits.
Apart from this, the rest of the costs go into the sales taxes, depreciation and other costs.
Value chain Analysis –
As a typical value chain analysis, we will look at the inbound logistics, outbound logistics, operations, sales and marketing and advertising...
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