BMW NA Raises Prices by .7%. Huh?

Robert Farago
by Robert Farago
bmw na raises prices by 7 huh

Automotive News [sub] reports that the propeller people are pushing prices upwards, by an average of .7 percent. “The automaker said the move was driven by ongoing economical changes in the marketplace and ‘will ensure revenue generation for the company’s U.S. operations and help to protect the quality of business.'” Uh, how’s that again? (And what’s an “economical change” anyway?) “The rise comes despite the fact that the brand, like the rest of the industry, saw its U.S. new-vehicle sales slip by just over 12% to 231,053 units in the first 11 months of 2008 vs. a year ago.” So, in a declining market, BMW is raising its prices? In theory. In practice, not even the Germans can change the law of supply and demand to hoik prices on vehicles that aren’t selling.

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  • Sajeev Mehta Sajeev Mehta on Dec 25, 2008

    Assuming this means they'll scale back production in tandem, it makes sense: BMW has a loyal customer base, and they consistently show that price is not a determining factor to get the Bavarian brand over a Lexus, Infiniti, Audi, Caddy, etc. Appeal to your core buyer, milk them for all they are worth. Easy money in difficult times.

  • Ronin Ronin on Dec 26, 2008

    If it were true that the loyal customer base is actually buying these cars that would be different. But if over half of the US sales are actually leases (as they are), lease rates up, qualifications down, and now the maker decides to essentially raise cap cost. Pow, fewer leases qualify. This is a big bet from Bavaria, and so far there is nothing in the job outlook to say that people will eat this increase. To the contrary.

  • U mad scientist U mad scientist on Dec 26, 2008
    Most economics experts believe the long-run price elasticity for automobiles to be very inelastic. That is, if the entire industry would raise pricing across all available vehicles in a segment, then the percentage drop in vehicle demand will be less than the percentage increase in price. This was posted in 1997, before credit was so loose people were buying cars on a whim. So, maybe their elasticity numbers would apply if we went back to 1997 or before numbers.

  • MannyG MannyG on Jan 05, 2009

    Raising prices? I just bought a brand new 2008 loaded M3 from my local BMW dealer at $500.00 below published invoice PLUS I got 0.9% financing for 60 months from BMW Financial Services. The vehicle had a manufactured date of 12/2007 and was bought by me in December 2008. They can raise the prices all they want but the market is what it is.