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      12-28-2008, 09:44 AM   #44
Special Agent
mapezzul's Avatar

Drives: Depends on the day!
Join Date: Jul 2005
Location: Bavaria

iTrader: (1)

You all are missing the point here about complaining that BMW keeps raising prices. BMW is trying to DECREASE its sales/lease numbers, yes that is right decrease.

BMW in the past had subsidized cars and priced them low(er) to achieve economies of scale in order to make producing the cars cheaper. Early last year they realized the flaw in this mentality... by having SO MANY cars on the road it increases the supply of used vehicles, thus decreasing the used values and killing residuals.

BMW is trying to get back to a supply/demand equilibrium. Also by increasing new car pricing used cars begin to look like better options and demand rises once again driving up prices and thus residuals.

BMW as a whole no longer needs to sell as many cars to achieve economies of scale. They have signed purchasing agreements with other EU brands and combined forces to get parts on the cheap.

Unlike the Big 3 BMW has the ability to idle its plants, let go of some workers all without fear of the unions as economic downturn items are included in the agreements.

(What the US unions don't get is that if a company goes belly up all those workers lose jobs not just those cut to streamline the company.) I grew up in a union house and know how it works; I still think it is not in anyones best interest at times.

People also need to stop comparing prices in the US to those in other countries, you can not do a dollar to euro (or whatever) conversion that is not how economics works. Even though the dollar is worth "less" than the Euro the dollar has significantly more purchasing power, the dollar goes a lot further. The easiest way to understand this is the Big Mac Index by the Economist
I can by a Coke here for $1.25 per liter - In Germany I can buy a Coke for 2 Euro for a .5L, we get more bang for the buck it is that simple.

BMWs 3 series sedans sold in the US are made in South Africa unless otherwise specified, this includes both engines so for the vast majority of cars sold here BMW is naturally hedged. They know what they are doing and have already hunkered down to weather this storm.

The systematic price increases are there to help the brand, if it prices people out, then maybe they should not have been shopping a BMW to begin with b/c if $300 is going to break a deal then there is an issue.

Best of luck!