Profit on a ₹10 Lakh Car: Every time a vehicle is sold, there is more than the cost of manufacturing the vehicle. The gap between the cost and the on-road price is where the margin of the dealer is. Based on FADA (Federation of Automobile Dealers Association), Indian dealers make an average margin of 2.9% to 7.49% for each car sold.

Profit on a ₹10 Lakh Car

Suppose a car costs ₹10 lakh (ex-showroom), and a 5% margin is given to the dealer. That directly means a earning of ₹50,000 on that one car. But that is not the net profit. From this, dealers need to pay salaries, showroom rent, service charges, and marketing expenses. After these, the actual profit turns out to be much less than anticipated.

Other Ways Dealers Earn

Dealer profits are not only achieved through the sale of vehicles. Much else within the ultimate bill contributes to extra revenue:

  • Insurance: The purchase package tends to have insurance added. Dealers obtain commissions from insurance companies on such policies.
  • Registration and Road Tax: These are compulsory but occasionally grouped such that they provide small margin advantages to dealers.
  • Accessories and Warranties Packages: Everything from floor mats to warranties is higher-profit items than the original car price.

What Brands Have Higher Margins?

Not every maker provides the same margin. According to the FADA report, some brands such as Maruti Suzuki and MG Motor have a reputation for providing dealer margins that are higher—sometimes even up to 5%. These margins depend on the model of the car, location of the dealership, and the overall demand in the market. Competitive pricing high-volume brands tend to provide more profit to the dealers on lower per-unit margins.

Why Understanding This Matters to You

When you buy a car, you’re not just paying for the vehicle—you’re also contributing to a chain of earnings, including the dealer’s profit. Knowing how the on-road price is structured helps you negotiate better, especially for add-ons and insurance. Understanding where your money goes makes you a smarter buyer.