Costs and Profits on Model Ts in 1921

[TrentB]

I volunteered in the Benson Ford Research Center for many years (pre-Covid) and had complete access to the Ford Motor Company’s accounting records during the Model T era. Each month the Accounting Department produced a report entitled “Comparison of Cost and Sales of Autos Produced”. I have a copy of the December 1921 report.

Ford was producing six different body styles in December 1921: They were the Runabout, Touring, Coupe, Sedan, Commercial Chassis and Truck. Each body style was further divided into four categories: Demountable wheels and starter, Clincher wheels and starter, Demountable wheels no starter, and Clincher wheels no starter. Trucks were also produced with solid rear tires so there were six different truck chassis available.

The least expensive Model T in December, 1921 was the Runabout with Clincher wheels and no starter. It’s retail price was $325. The dealer price was 17-1/2% less or $268.12. The factory cost of this car was $234.50. Ford’s commercial expense (primarily advertising) was $50.94 on all models, making the total cost of a Runabout with clincher wheels and no starter $285.44. In December, 1921, 854 Runabouts with Clincher wheels and no starter were produced. The value of this production at sales price was $228,974.48, while the cost of producing 854 Runabouts was $243,765.76. This resulted in a loss of $14,791.28. The Runabout with Clincher wheels and no starter was Ford’s loss leader. Ford also experienced a much smaller loss on Runabouts with Demountable wheels and no starter.

However, once a starter was added to a Runabout it became profitable. In December, 1921, 4298 Runabouts with Demountable wheels and starters were produced. The retail price of a Runabout with Demountable and starter was $420 ($346.50 less the 17-1/2% dealer discount), and the factory cost was $265.46, adding the $50.94 commercial expense brought the cost of this car up to $316.40. The profit on the 4298 runabouts produced that month was $129,369.81. With the exception of the Touring with Clincher wheels and no starter, all of the other Model Ts produced that month were profitable.

In December, 1921 the total profit from the sale of cars, trucks and Fordson Tractors was $1,995,496.43. However, another major source of Ford revenue was the sale of parts. That month Ford produced parts worth $5,362,062.68 at a cost of $4,100,225.56 yielding a profit on Model T parts alone of $1,261,857.12. Which is to say, Ford made about 39% of its total profit on selling replacement parts for Model Ts.

Respectfully Submitted,

Trent Boggess

[George House]

Wow!..Very interesting!..Thank you for sharing the opportunity you had to research the Dec. 1921 snapshot of Ford finances.

[Humblej]

Great research and writeup. This is why I read the MTFCA Forum. Thanks Trent.

[Charlie B in N.J.]

$50 is far more believable than the 2 or 3 dollars mentioned in the other post. The parts sales are very believable also. There’s the old saying that you couldn’t afford to assemble a car by buying parts.