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      09-12-2021, 01:45 PM   #1
taek
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BMW and Daimler pledge to keep prices high when chip crisis ends

https://archive.is/EFsOt#selection-2027.177-2031.177

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“We will consciously undersupply demand level[s],” Harald Wilhelm, Daimler’s chief financial officer told the Financial Times, “and at the same time we [will] shift gears towards the higher, the luxury end.”

BMW had “seen a significant improvement in pricing power in the last 24 months,” said chief financial officer Nicolas Peter. The Munich-based carmaker’s plan was “clearly to maintain . . . the way we manage supply to maintain our pricing power on today’s level,” he added.
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      09-12-2021, 02:05 PM   #2
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I smell BS. 24mo? Benz and BMW 4th quarter 2019 had a knock down drag out rock n roll party on lease and incentives battle to sell more cars. if and when inventory levels return, to keep factory lines moving that kind of selling will return too. For now the supply lines even on non-chip products has issues, it's easy to say those quotes when production is slowed to less 30day supply either/or nearing 90day supply on dealers lots- just like compared Sept 2021 and fall 2019

I know for a fact BMW wants to restrict the number of days of inventory each dealer has, however they reward dealers for selling more cars. Until they reward a dealer for not selling as many cars the restriction means shit once production returns pre-chip and covid.
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      09-12-2021, 02:10 PM   #3
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Supply and demand will reign supreme as always. Customers on the margins will defect to whatever brand meets their transportation requirements at the price they are willing to pay. It doesn't mean BMW and MB won't keep prices high. It does mean that if those two German companies keep prices high, supply and demand may bring them lower unit volume they they expected or had hoped for.
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      09-12-2021, 05:59 PM   #4
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2 things here:

1) I see this public announcement as a nod to other automakers. It's like collusion without actually colluding.

2) it's easy to talk like this when all automakers are forced to make the margin play as opposed to the volume play. As soon as the chip crisis ends and the floodgates open again, they may not be making the same comments.
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      09-13-2021, 08:22 AM   #5
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As always the market will dictate the pricing so nothing to see here.
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      09-13-2021, 10:17 AM   #6
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As always this is one of those things where you have to wait and see what happens, but it makes sense to see manufacturers trying to take advantage of it.

Due to the shortages caused by COVID every manufacturer is dealing with near 0 inventory levels which has lead to a more European style car market in the US. Meaning buyers currently can't expect to go to the dealer and drive home the same day with a brand new lot car. Customers are being shifted toward the online and ordering model instead... The market was already headed this way (Tesla for instance had been doing in the US for years), but the pandemic sped this up heavily.

If this trend holds then manufactures will be able to keep pricing up since they'll be able to get away from needing to discount lot cars to move inventory. The part that they'll probably not like though is the delays will make competition amongst automakers even more fierce as buyers will have much more time to evaluate their choices. For the luxury makes that means they'll need to consolidate their option matrixes (Mercedes is already doing this) and offer much more when stacked up against the competition.
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      09-13-2021, 07:59 PM   #7
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The manufacturer's only control is to not contribute incentive money to customers or dealers. Nothing dealers do affects the manufacturer if they don't discount the cars to the dealers through incentives/trunk-money/rebates. A restricted supply will keep dealers from discounting but that's not really helping the manufacturer's profit. They actually make more if they sell more, even if dealers discount to cost, as long as the manufacturer doesn't have to kick in trunk-money to sell the slow-movers.
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      09-13-2021, 11:07 PM   #8
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Wouldn't you adjust your price if you observed a prevalence of dealer markups? How could a dealer complain about a manufacturer increase in price when their own behavior shows the market will bear it?
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      09-15-2021, 12:49 PM   #9
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Quote:
Originally Posted by heavyD^2 View Post
As always the market will dictate the pricing so nothing to see here.
The market is a dumb animal. Just look at De Beers. It's all about who knows how to manipulate it.
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      09-16-2021, 02:14 AM   #10
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Quote:
Originally Posted by jmg View Post
The market is a dumb animal. Just look at De Beers. It's all about who knows how to manipulate it.
What's crazy is that the majority of the world knows how Diamonds operate now, yet the prices are still high. We now have manufactured diamonds that are perfect compared to natural ones, yet natural stones still fetch high prices.
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