So as if, the illimination of MSD’, other incentives, and raising MF’s wasn’t enough, they are now raising prices on many of their models. What economics class says when demand is down, you raise prices?
1 Like
Their sales are down 10 - 12 percent for the last couple of months compared to last year. I don’t know how they think this is going to help.
most of these vehicles in the list (is it complete) look to be more specialized with limited production, barring a few of the 4 series models. seeing a ~2% increase is in line with normal inflation and perhaps even will offer some flexibility in incentives in the future.
These are the models that didn’t see a price change back in April or May.
When sales volumes are no longer growing the next step can often be price increases to make up profits. You may get discounting but the sticker prices will not drop, that hurts the brand.
1 Like
Agreed 100%. If you can make it up on the indivudal unit sales price rather than discounting the hell out of stuff.
Also as they raise MSRP of later models of the same car it will keep the used car market up also.
Here’s an interesting article on “vehicle inflation”:
Pickup truck price went from $27,800 from $37,850 for a truck with the same capabilities in 9 years ($10,050). That’s basically a 40% price increase.
An economics major would probably note that the profit made on SELLING a (new) car is a very small part of the OVERALL profit picture for the manufacturer. Selling 10 cars at $100 per unit gives you double the downstream service and parts revenue as selling 5 cars at 3K per unit, and gives you the opportunity to resell twice the number of cars in the future, with all the profit the CPO programs generate.
Likely twice as many add-on sales, too: tire warranties, extended service contracts, floor mats, carbonfiber bits, coffee mugs, keychains, yada, yada. And with a captive financing arm, twice as much revenue from auto loans and leases.
Dealership economics are all about ROI. If a dealer moves 100 units/month and, after overhead and all selling expenses, clears $100 net/unit, my math says 100 units times $100 = $10,000. If the net goes up by ONLY another $100/unit, profit doubles, and so on. and then there’s service and parts and, and, and
In a highly leveraged dealership where much of the facility is built on borrowed money and the inventory is floored, the net per unit can leverage out to some real money, if the volume is sustained.
What is the rebate spread during that time?
Rebates basically equal that out.
good to know 540 prices are not going up!!!
Hilarious. Sales will definitely tank even further as people find better deals elsewhere. I’ve been a BMW customer for years but they are not the only game in town for sport sedans. and the quality has gone down since they moved to electronic everything. More power to them - maybe they need more assembly lines for SUVs.
http://www.autonews.com/article/20170626/OEM02/170629841/BMW-Bernhard-Kuhnt
"Dealers say they need fresher products, a better car-truck mix, competitive lease rates and a return to the days when BMW’s “Ultimate Driving Machine” tag line resonated wholeheartedly with consumers. "