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Ack
11-10-2003, 10:16 AM
My friend emailed me today and asked the following questions (directly
from her email):

__________________________________________________ ________

Hey Pete !

I have a question for you? On the news today they are talking about a
BMW plant in SC ......I am assuming that parts are imported here and
then the cars are assembled .... but how can they do this and still
charge the high foreign prices if they are assembled in the US ? Does
this make sense to you?

__________________________________________________ ________

Any of you guys know?

I'm assuming the cost to build any US cars are already worked into their numbers.

TD
11-10-2003, 10:26 AM
Where a car is built has little impact on it's price.

Take a model that is sold in multiple markets (which would include most BMWs sold in the US). The price of a identically equipped 330Ci in different markets is based on what each market will support. It is not just a set price adjusted for currency exchange rates.

You can rest assured that the lower cost of US labor (versus German labor) is factored into the cost of the X5 and Z4. But BMW sells them for what they think they can get.

01silber
11-10-2003, 11:33 AM
Even more so since it is built here in USA, wages are higher and the cost of running a plant are higher I'm sure, but even then the unit being sold is worth what it is worth, cars are only worth what someone will pay for it.
If the whole world as a whole would only pay XXXIX for a certain car and no more then the manufacture would either drop the price or not offer it, or use cheaper materials

When all is said and done I bet that the labor here is not much cheaper then Europe when you factor in unemployment cost, liability, social security etc...

andy_thomas
11-10-2003, 11:35 AM
My friend emailed me today and asked the following questions (directly
from her email):

__________________________________________________ ________

Hey Pete !

I have a question for you? On the news today they are talking about a
BMW plant in SC ......I am assuming that parts are imported here and
then the cars are assembled .... but how can they do this and still
charge the high foreign prices if they are assembled in the US ? Does
this make sense to you?

__________________________________________________ ________

Any of you guys know?

I'm assuming the cost to build any US cars are already worked into their numbers.

"High foreign prices..." ha ha ha :).

I guess your friend doesn't know what BMW charges for its cars in other countries, including its homeland... :)

The other posters are quite correct. While an X5 would be more expensive if built using high-cost German labour, it is priced according to the market. Same for every BMW in every market.

Ack
11-10-2003, 12:42 PM
Thanks for the responses guys. :D I'll send a quick link to this thread for my friend.

rockfish66
11-10-2003, 12:46 PM
Even more so since it is built here in USA, wages are higher and the cost of running a plant are higher I'm sure, but even then the unit being sold is worth what it is worth, cars are only worth what someone will pay for it.
If the whole world as a whole would only pay XXXIX for a certain car and no more then the manufacture would either drop the price or not offer it, or use cheaper materials

When all is said and done I bet that the labor here is not much cheaper then Europe when you factor in unemployment cost, liability, social security etc...

Sadly, no.
The US is cheap third world labor compared to most of Europe (and Japan, for that matter). The only additional cost to doing business in the US - the liabilty of our lawsuit-crazed society- is already built in to the cost of the vehicle, no matter where it's built.

Otherwise, they build here because land and labor are much cheaper, we have lax pollution regulations, energy costs are a fraction of those in Europe, etc.

It's the same reason your Ford is likely built in Mexico, Brazil or Canada.

Car making is now a fully global industry, and it's likely anything you buy has parts made in at least 6 different countries.

Also, as other posts have mentioned, cars are by no means more expensive here than elsewhere. In the UK, for example, a given car often costs in Pounds the same as it costs here in dollars, so it's 67% more expensive there!

numbersguy
11-10-2003, 01:10 PM
we have lax pollution regulations

HUH!?!?!?

Have you been to paint store lately?

rockfish66
11-10-2003, 01:46 PM
HUH!?!?!?

Have you been to paint store lately?

I know, it seems bad, but it's actually much worse (or better, depending on your point of view) many other places.

Pinecone
11-10-2003, 04:09 PM
Back the original post, many of the parts for the Z and X lines built in teh US are made in the US. Engines, transmissions, and other parts are shipped over from Europe for integration into the car.

And if you want to get picky, while the plant in surrounded by SC, it is not IN SC. It is in a Free Trade Zone.

As for environmental laws, in some ways ours are lax, in some ways they are much tougher than other countries. No set answer, but the same paint system used in Germany is used in the US. Many of the same colors even.

Where the US labor setup is better is in the working hours. Hourly wages are not that far off, but Europeans work shorter work weeks. In fact that was one of the big things behind the recent strike. A shorter work week. I don't know about the Germans at this time, but the French work a 35 hour work week. 9 - 5 with an hour off for lunch. I think the BMW strike was for similar hours.

LDV330i
11-10-2003, 04:24 PM
Where a car is built has little impact on it's price.

Take a model that is sold in multiple markets (which would include most BMWs sold in the US). The price of a identically equipped 330Ci in different markets is based on what each market will support. It is not just a set price adjusted for currency exchange rates.


Please note that some of the 325's are made in South Africa but you do not get a special discount for having it built with cheap labor. :D

Pricing for cars are usually part of an overall strategy for profitablity. VW Jettas are made in Mexico and the Golfs in Brazil but they are priced higher than Korean cars. VW did reduce the price of the Cabrio when it tranferred production from Karmann Werks to Mexico.

Sometimes it is a matter of perception. In some markets Audis are priced very close to BMWs. They probably could not pull that off in the US market because of the perceive market value in of each brand. That may be changing now that the S4 is priced right up there with the M3.