[BMWBear]

Originally Posted by reli

I went through a Broker picking up tomorrow in PA - took about 4 weeks they had a build slot and allocation - 3% off MSRP + PendFed I'll take it in this market

Deals are out there if you look hard enough. Problem is options are not for new orders.

[GS2019]

Originally Posted by taek

Financial Times:
https://archive.md/EFsOt#selection-2027.177-2031.177



Ford also has said it will be moving forward in the future with a "lower inventory" business model.

Mercedes is now making $75k per transaction, so their stance isn't surprising. BMW's change isn't as extreme. Being a BMW buyer at MSRP is probably one of the better places to be in this shortage. I'm shopping for a Rav 4 Prime for my dad, and they are going for $16k over MSRP.

Daimler average transaction Sep 2020: $59,899
Daimler average transaction Sep 2021: $75,369

BMW average transaction Sep 2020: $57,797
BMW average transaction Sep 2021: $64,094

Cadillac average transaction Sep 2020: $54,202
Cadillac average transaction Sep 2021: $81,938

Genesis average transaction Sep 2020: $46,328
Genesis average transaction Sep 2021: $60,087

https://mediaroom.kbb.com/2021-10-13...lley-Blue-Book

This is indeed great info - thank you for sharing
Really surprised to see BMW increased only ~7% from last year this time.
Genesis increased roughly 30% from last year this time. NUTS

[Mojobaggins]

Not only pay over MSRP but less options available, I'll pass on 2022's.

[GS2019]

Are there other auto makers having similar issues with these types of options getting removed?

[GrussGott]

Originally Posted by goobies818

this presents a prisoner's dilemma for the manufacturers. The reality is...it's in their best interests to maintain a collective low volume, high yield environment.

Originally Posted by taek

Daimler average transaction Sep 2020: $59,899
Daimler average transaction Sep 2021: $75,369

BMW average transaction Sep 2020: $57,797
BMW average transaction Sep 2021: $64,094

It's great for manufacturers, bad for dealers in the medium to long term:

(a.) Low volume dealer sales depresses foot traffic & sales of other services
(b.) Low volume opens the door for competitors with supply ... like EVs?
(c.) If the economy takes a turn & MFRs can't ramp up stock to then discount, it'll be a decimation

Originally Posted by bono

Once the chip shortage is gone, free market will kick in and competition will fix the market.

The chip shortage wasn't & isn't a one-off:

It's a symptom of the auto industry's archaic supply needs, a stretched fragile supply chain, and a JIT time-bomb that's been waiting to go off.

As EVs become more popular, vendor suppliers will stop accommodating ICE's capricious supply orders; like in 2020 not giving chip vendors a guaranteed 2021 volume contract for an archaic part only they need: 200mm chips. Therefore vendors put their capacity to other profitable uses and now all of sudden due to a demand spike BAM! No 200mm derived chips.

The same thing happened in the US South with the Spring gas shortage - refineries operate on "pull" system: guaranteed X# of gallons per month ... and they're not incented to up that volume and "push" because then they may over produce and have to drop prices ... much easier to just keep things running smooth & consistent even if it means shortages.

Said simply, many JIT parts vendors operate on profit derivative of booked demand, ie. guaranteed volume contracts. If just one part vendor can't meet volume demands (or shipping is a problem) that means a manufacturer can't make a vehicle & sell it. So they cut orders to their JIT partners. Now those partners gotta scramble to get more volume and move their capacity to other customers ... when the auto makers then up their order there's no more capacity.

The JIT time-bomb.

The chip shortage is the just the first of many little auto supply explosions to come.

[mjr24]

Originally Posted by GS2019

This is indeed great info - thank you for sharing
Really surprised to see BMW increased only ~7% from last year this time.
Genesis increased roughly 30% from last year this time. NUTS

This is highly misleading.

Benz went up because of all the new S classes they are selling versus last year's old model.
Cadillac went up because the Escalade is brand new this year.
BMW hasn't come out with anything new in the upper-end models in the last year.

[allinon72]

Originally Posted by mjr24

This is highly misleading.

Benz went up because of all the new S classes they are selling versus last year's old model.
Cadillac went up because the Escalade is brand new this year.
BMW hasn't come out with anything new in the upper-end models in the last year.

What is new or old doesn't set prices, what the customer demands sets prices. BMW could charge 80k for an entry level 45e right now given the demand, but they aren't. They've clearly made a conscience effort to keep costs in line with previous years, and I think they've done some of the best work at migrating the chip shortage compared to other manufacturers. For comparison, Cadillac nixed their SuperCruise system, their number one most anticipated feature. I think we are doing pretty good without some wireless charging pads

[FCX5]

Originally Posted by mjr24

I don't like what's going on.

I dropped my car off at service yesterday and they seemed really fine with the dealer not having any new inventory because they said they are getting more per car in profit now.

Wouldn't be shocked if dealers start stocking very little to try to gouge us for awhile…..

I'm most certainly not going from 1300 a month for 24 months to like 1750 a month for 36 months.

The car companies will soak up all the buyers who are not price sensitive to maximize profits for as long as they can. People are borrowing more than ever on cars and homes. It's like a drug to have access to things at any price and borrow as much as possible. Interesting to see how this will play out…

https://www.newyorkfed.org/newsevent.../2021/20210803

[goobies818]

Originally Posted by FCX5

The car companies will soak up all the buyers who are not price sensitive to maximize profits for as long as they can. People are borrowing more than ever on cars and homes. It's like a drug to have access to things at any price and borrow as much as possible. Interesting to see how this will play out…

https://www.newyorkfed.org/newsevent.../2021/20210803

Prob not good is my guess...but that's just my 2 cents. Interest rates are dirt cheap (for now) and lenders are offering ever longer terms to help finance an increasingly more expensive purchase.

I'm not going to dive into the politics or solutions to the issue...but the core theme is...people will borrow as much money possible to shoehorn a purchase (be it a home, car, school...etc) into their income. And the suppliers of said products will keep raising prices to squeeze as much as they can out of those customers.

[FCX5]

Originally Posted by goobies818

Prob not good is my guess...but that's just my 2 cents. Interest rates are dirt cheap (for now) and lenders are offering ever longer terms to help finance an increasingly more expensive purchase.

I'm not going to dive into the politics or solutions to the issue...but the core theme is...people will borrow as much money possible to shoehorn a purchase (be it a home, car, school...etc) into their income. And the suppliers of said products will keep raising prices to squeeze as much as they can out of those customers.

It does make economic sense to borrow at low interest rates and invest the money for higher returns. So instead of paying cash for a car, borrow and put the purchase price into the market where the returns are higher. But I don't think that is what is going on. Many people are just maxing out what they can for consumption. Again, not saying that is wrong, just wondering how this will end up…

[bandersen]

Originally Posted by mjr24

OH NO DOUBT. This was actually supposed to be posted in the M5 forum but I've been looking at X5M's, too, and it's the same there.

There is hardly any shortage....it's called manufacturers are scaling back production to make more per car.

No such thing as COVID, either.

[bandersen]

Originally Posted by FCX5

It does make economic sense to borrow at low interest rates and invest the money for higher returns. So instead of paying cash for a car, borrow and put the purchase price into the market where the returns are higher. But I don't think that is what is going on. Many people are just maxing out what they can for consumption. Again, not saying that is wrong, just wondering how this will end up…

Yup...spot on. Ended up borrowing far more than I planned - and went to 5 years - as I got a 1.9% rate (USAA). I'm just having the monthly nut/amount automatically sold from a mutual fund which, (knock-on-wood) has been beating that 1.9% handily for 45 of 50 years of it's existence.

[bandersen]

Originally Posted by GS2019

Are there other auto makers having similar issues with these types of options getting removed?

Interesting ??. I do know the US makers are simply not making cars...not sure about reducing options. This is a question to ask a Porsche shopper...since they are the KING (on a magnitude of 100) of options availability on their configurator.

Any Porsche/PCA members out there with knowledge??

[FCX5]

Originally Posted by bandersen

Interesting ??. I do know the US makers are simply not making cars...not sure about reducing options. This is a question to ask a Porsche shopper...since they are the KING (on a magnitude of 100) of options availability on their configurator.

Any Porsche/PCA members out there with knowledge??

You can still get pretty much any option on a Porsche. Their margins are much higher. For instance you can still get Bose or Burmeister audio no problems on Porsche. Although, Porsche is benefiting from huge demand due to easy credit and recent market returns etc etc.

typically, when you buy a used car the options are the ones that depreciate the most. So if a company leases a lot of vehicles, the actual realized margin on options is lowered. Example: say someone adds Merino leather for $1000, over a 3 year lease with 50% residual, the owner ends up paying $500. Say, when it is sold at auction at the end of the lease the price difference between Merino and without Merino for the same model is $200, the manufacturer actually made only $700 for the option, not $1000.

When I got my current X5 last year, I bought it used and I noticed that two cars of the same model year with over $10K difference in options only had $2K in price difference (at most). So if you are a manufacturer, you can actually maximize overall profits by focusing on those options that have the highest margin when you consider both the lease and end of lease sale, for those models more likely to sell through leases. For ones that are purchased and not leased you want to offer as many options with margins that are higher than the base car….pricing and packaging is both a science and an art.

Of course there are supply chain issues to consider, but in a nutshell, brands have to consider the overall economics as well. What is clear is that throughout this supply chain crisis the profits of chip manufacturers and car companies are through the roof and it is providing air cover to consumers who are happy to pay above MSRP to say, oh well, I should borrow more and pay more…that is of course a bit of game theory that results in win-win on all sides. The companies make more money and consumers don't mind spending more 😊

Not limited to just cars…

[goobies818]

Originally Posted by bandersen

Interesting ??. I do know the US makers are simply not making cars...not sure about reducing options. This is a question to ask a Porsche shopper...since they are the KING (on a magnitude of 100) of options availability on their configurator.

Any Porsche/PCA members out there with knowledge??

Porsche does have a disclaimer on their configuration that not all options might be might not be available(last I saw a short while back)

Also, my bmw dealer is next door to a Porsche and their lot was bone dry ofinventory.

[TXSchnee]

Originally Posted by bandersen

Interesting ??. I do know the US makers are simply not making cars...not sure about reducing options. This is a question to ask a Porsche shopper...since they are the KING (on a magnitude of 100) of options availability on their configurator.

Any Porsche/PCA members out there with knowledge??

Adjustable steering columns are gone (chips to be placed when available), and TPMS issues, are the ones I see on the Cayenne 9Y0 forum (Rennlist). I know there are others, but nothing as glaring as what BMW is doing. Of course, Porsche sells as many Cayennes in one year as BMW sells X5s in one month, so that is why they aren't hit as hard. I am on a waiting list for a Taycan 4S Cross Turismo, no allocations available until late next year, it is worse if you want a 911.

[FCX5]

Originally Posted by goobies818

Porsche does have a disclaimer on their configuration that not all options might be might not be available(last I saw a short while back)

Also, my bmw dealer is next door to a Porsche and their lot was bone dry ofinventory.

Porsche, like Tesla has sold out for months. There are long waiting lists…

[dminahan]

Originally Posted by GS2019

Are there other auto makers having similar issues with these types of options getting removed?

Mercedes is removing options. It changes by month and sometimes without warning was what I was told by a dealer. What I was told was there was a chance I would order certain packages and the factory may make a package lite version. For example a certain package with navigation usually comes with augmented reality but it may have navigation and not the augmented reality part. But by pulling that feature it also means one cannot have a dashcam as it is fed through same system. And then you can't add the feature back when chips are available. Another thing was some of the cars were coming with no SOS button feature but that could be added back in at dealer at a later date. I found in my area/state, Mercedes dealers were charging over MSRP. Dealers in other states were not for anyone that was from their state. BMW in my state and neighboring states were not charging over MSRP for an X5 xDrive40i, as i was not looking for an upper model for this purchase. Land Rover Dealer in my area would only sell at MSRP prior to the shortage hitting but salesman/sales manager there was very egotistical and it turned me off so I bailed on considering their vehicles anymore as I felt greater chance of problems anyway on their cars.

[dminahan]

Originally Posted by reli

I went through a Broker picking up tomorrow in PA - took about 4 weeks they had a build slot and allocation - 3% off MSRP + PendFed I'll take it in this market

What broker did you use or can you PM me if you don't want to post it?

[FCX5]

Originally Posted by dminahan

Mercedes is removing options. It changes by month and sometimes without warning was what I was told by a dealer. What I was told was there was a chance I would order certain packages and the factory may make a package lite version. For example a certain package with navigation usually comes with augmented reality but it may have navigation and not the augmented reality part. But by pulling that feature it also means one cannot have a dashcam as it is fed through same system. And then you can't add the feature back when chips are available. Another thing was some of the cars were coming with no SOS button feature but that could be added back in at dealer at a later date. I found in my area/state, Mercedes dealers were charging over MSRP. Dealers in other states were not for anyone that was from their state. BMW in my state and neighboring states were not charging over MSRP for an X5 xDrive40i, as i was not looking for an upper model for this purchase. Land Rover Dealer in my area would only sell at MSRP prior to the shortage hitting but salesman/sales manager there was very egotistical and it turned me off so I bailed on considering their vehicles anymore as I felt greater chance of problems anyway on their cars.

Would be interesting to know if cutting options and keeping prices high has impacted their ability to sell cars to the public. I would assume not much since they can sell whatever they make…the demand is so crazy right now in the US, that car companies can put out anything and it will sell. BMW looks to be the best in terms of not gauging their customers with above MSRP, even if I think they can raise prices by a few thousand dollars every other month like Tesla is doing and keep selling every X5. But to their credit, they are not doing that.

[3Wagon]

While BMW is selling all the cars they make, I highly doubt anyone is making all the cars they would like. Because shortages and shipping issues are universal, whoever has the cars right now will sell the cars. that seems to be BMW rationale w/ the rationing - keep the lines going rather than stop delivering models like Merc stopping deliveries of v8s.

the M21-22 models aren’t all they could be, but BMW could do exceptionally well if they can deliver ANYTHING because there aren’t choices. BMW wasn’t my first choice this time around, but because they can deliver has put me back behind the Roundel.

Incidentally, BMW has already upped their earnings guidance by 9%. expect a MONSTER quarter for BMW group.

[GrussGott]

Originally Posted by 3Wagon

BMW wasn’t my first choice this time around, but because they can deliver has put me back behind the Roundel.

Same! Further, I've been ready to beat up BMW for selling order configs they can't deliver, but, at least for me, AFAIK right now, they're gonna deliver on time, to spec, and what they promised!

If that all happens, then I have nothing but kudos for BMW in this environment - they'll have beaten Benz, Audi, & Porsche, at least for my business.