BMW and Daimler pledge to keep prices high when chip crisis ends

Yeah well said. I feel like the industry will certainly make some changes after this year but how drastic those changes will be obviously remains to be seen. It’s easy to say they will limit production now but when things normalize there will always be a manufacturer that wants to “cheat” and produce more at higher prices which makes others follow… thus increasing supply and assuming steady demand… reducing prices. Maybe things will just be tighter from a production standpoint but if manufactures are convinced they can maintain the current situation I have a bridge to sell them… this isn’t even accounting for the fact that dealers also put pressure on manufacturers to get cars which is a whole different variable in this…

Yeah I don’t suspect it will. Once the floodgates open and supply isn’t an issue, I wouldn’t be surprised if they don’t make these comments anymore.

This will be years, if ever.

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You’re looking at 2023 at this point at the earliest. Even if they miraculously made enough chips and then some today, it’s going to take months to get enough cars pumped out, shipped, delivered, etc to the thousands of dealerships across the country.

Mary Barra at GM already told the dealerships to plan on running lean once everything is back to normal. Others are surely going to follow suit.

Is the title of #1 automaker and the pat on the back you’ll get for that vs higher profits worth it?

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I’m curious the tradeoff of volume vs margins and how that relates to raw material costs. I don’t know anything about automotive sourcing, but in my experience raw material pricing is typically subject to volume based discounting. If you’re selling less cars you require less raw materials and ultimately that eats into the discounted pricing, shrinking margins.

Companies like audi and porsche can surely lean on VW group for sourcing relationships, but I’m not sure bmw and mercedes have that.

BMW has recently put a focus on cost cutting measures. Are they also saying they’ll accept higher supply chain costs (per unit) for the ability to charge higher prices? I suppose maybe… if the higher prices eclipse the higher per unit cost… but that’s walking a tight rope.


The premise you laid out is true, in normal times. We’re back to raw material shortages, and port delays. Very few raw materials are processed into something usable on-site, most have to be shipped somewhere for processing.

Just about every part in your car has been around the world more than once. Volume discounts certainly affect what you pay, the problem is availability.

Many of these supply chains will need to be reengineered in the coming years. “May you live in interesting times” - yeah interesting will be with us for a while.


CEOs can say what they want (aspire to), but competition and the laws of supply and demand will dictate the reality. The supply chain issues are legit, but that’s what’s holding back supply, not CEO aspirations.


but competition and the laws of supply and demand will dictate the reality.

This. Not sure what BMW is thinking, beside the supply chain crisis, are they thinking government (not all) keeps printing money and buying bonds so upper middle class people gaining profit thru stock forever?

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They always say they will focus on margin, right up to the first time a competitor has a fire sale. And Genesis has some really nice products, really nice.


What about all those vehicles being parked in big parking lots awaiting chips?

So it wouldn’t matter that Ford & Stalantis (FCA) just went cut into GM’s market share & started marketing that

“Ford Model ___” or "Jeep ______” highest sold vehicle in North America for year 202X.

You don’t think GM share prices will take a hit just on the PR?

You don’t think shareholders will start pressuring CEO Barra on share prices? Or CEO Barra will think about the stock options she has to exercise soon? Or the pay tied to share prices?

Not saying it will happen day one everything normalizes but right now it’s easy to send all the “tough” statements but when those factories are idle, & when people hit their limit on paying high prices for cars, someone will say let’s sell 100k extra units cuz we need those cars off the lot cuz we need the cash.

You can’t have profit if you don’t have sales.

Time will tell I suppose. The one thing I’ll give Mother Barra credit for during her term is chasing profit over market share. GM is no longer vying to be the worlds biggest car maker, from her mouth. Could they still pump out junk like it was 1996 all over again…sure. Look where that got them in 2008

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It is quite unclear how they can actually limit production absent external force. With unionized labor, they’d be on the hook for the same wages. With manufacturing real estate owned or on the very long lease they are on the hook for this as well. Are they going to pay workers for not working?

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BMW is thinking instead of selling cars at 12% before incentives just to be #1, let’s focus on profit. The tide already started to turn before the chip shortage with the new regime.

Will you still find some willing to chase a stepper bonus? Perhaps. Will it be as widespread as it was last year…doubt it.

The days of “demand 12% off at buy rate” for any BMW product are gone.


I had (& think @jeisensc also) posted that US sales are down about 3 to 4 million units. It’s not like those vehicles were just sitting in garages & no longer needed cuz the pendamic happened.

Someone, some manufacturer(s) will take the opportunity to take advantage of others not producing enough cars & increase market share along with profits as they won’t have to worry about price wars with the likes of GM & others who no longer want to be part of the race anymore.


The new Ford CEO is making waves for exiting India and Brazil for the same reason: just because you can, doesn’t mean you should. Someone will always want to be #1 in sales/volume, IMHO it’s a booby prize :trophy:

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But they said high inflation throughout every nook and cranny of our economy was just transitory!!!

I bet every car companiy follows the same protocol, keep supply tight and prices sky high.

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To be fair, Ford & GM never knew how to compete in developing nations.

That’s why GM exited India years ago.

Developing nations need affordable & reliable vehicles. Neither company made vehicles that can check both boxes.

Toyota, Honda excel at both those & are able to not only survive but thrive in those markets so there’s a way to do it, American automakers just don’t adapt to those conditions.

We’ll so far it’s supply chain related for than the runaway inflation of the 70s

Captive will actually finance a higher percentage on those cars because the market is so strong on them. Like G63/G550


I think this would continue to inflate the demand for pre-owned and stop many of those consumers who typically get a new car every 2-3 years. Eventually demand will decline while supply increases and trigger a reversal from this aspirational move. Manufacturers have to make and sell new cars. Especially likely when competitor(s) decide to no longer stay the course.