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Old 02-07-2012, 01:20 PM
PHC1 PHC1 is offline
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Originally Posted by jdebonth View Post
Biggest market = higher demand? I thought the law of supply and demand would then make them more expensive over in the US?

Or, bigger market = more dealers competing with each other that brings prices down? So the german dealer is making $18k more than a US dealer on the sale?
No. There is plenty of supply for the demand in the US. The idea is to manufacture and sell many cars. Since we are the biggest market, many German manufacturers have to be careful about the pricing so they don't price themselves out of the market. Since Audi, BMW and Mercedes are in strong competition against each other in the US, they are all producing similar models that are also priced very similar. There is no shortage of any models from any manufacturer, so there are no inflated prices as your law of supply vs demand would dictate.

Now, at least the last time I heard, Porsche for example, costs relatively the same price in Euro as it does in Dollars here in the US. Why? Because once again, we are used to certain prices and are more or less OK with them as witnessed by the relatively brisk sales of German cars here in the US. Not that the prices are not going up almost every year and with every new model! If any of the German manufacturers decided to increase prices that would reflect the Dollar to Euro conversion and charge the same, they would quickly price themselves out of the market. All the car manufacturers essentially "hedge" against the dollar fluctuations with various financial strategies and tools and that's why many have factories around the world, including the US for models that sell the most as this also helps keep the cost down and profits up.

That is also the reason that BMW and others are in a big hurry to build factories over in China so they can supply their demand and their best selling models and keep prices competitive.

The only car where your model works is Ferrari. There is demand but Ferrari keeps supply in check. There is always 1 Ferrari less than there is actual demand for. That's why you see people paying $40k over just to get a "new" Ferrari with a few hundred miles on it since Ferrari NA does not allow dealers to charge over sticker.

I don't know what the profit margins are in Europe for dealers. I know the profit margins here in the US have been shrinking for our dealers.

Last edited by PHC1; 02-07-2012 at 01:28 PM.
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