[deutschmann59]

I was just curious. I read this article today on Yahoo news saying now Ford and Chrylser will extend the same discount GM has extended, their "employee discount". The article says, "Chrysler will also join the GM program, as it too responds to marketplace pressures brought on by the world's largest automaker."

So do you think any pressure will be put on any of the premium auto makers like BMW, Mercedes-Benz, Audi, Jaguar (I wonder if Ford's discount also includes Jags?), etc? It just makes me wonder because the article says GM had a "blockbuster" sales record last month.

Since I drove my new Bimmer, I kind of know now why GM is in trouble, but I'm curious to find out if these companies are starting to feel any heat.

Here's the article:
http://news.yahoo.com/s/nm/20050705/...d_discounts_dc

[HRC]

No, I don't think so. You only have a fire sale when the ship is in danger of goin' down. Plus, BMW isn't in direct competition with the big three, so I don't see the pressure. Maybe if Audi or Merc did it...

Danny

[Hunter399]

No!

BMW had no need for a discount like GM's, they are in a different league.

[ward]

crappy products require discounts

BMW isn't and never will be a price leader, people pay extra because it's a better product. Discounts are for people who battle on price rather than quality

[deutschmann59]

Originally Posted by ward

BMW isn't and never will be a price leader, people pay extra because it's a better product.

That's true, but the last part of the article says "And when they do [lower prices], we fear that Detroit will have once again simply set a lower price level for all its products going forward, lowering the structural profitability of the industry." They're talking about the American domestic product, but still the premium car makers like BMW, MB, Audi, Lexus still sell cars below "ultra luxury".

What I mean is, people who buy the "ultra luxury" line like 7 series, S class, Bentley, etc. are the ones probably least mindful of pricing. But those who buy the E or C class, the 3 series, the IS or GS...they know they are prepared to pay more, but how much more is reasonable now that GM, Ford, and Chrysler (you know, three really big car companies) are really kind of shaking the ground in the entire automotive market. The article even mentions that Japanese makers will feel the ramifications (but they don't mention European makers).

I guess what I'm saying is I really expected Ford to match GM, but DaimlerChrysler really kind of surprised me...I wasn't expecting Chrysler. I was just thinking maybe this move would kind of offset the market a bit.

[psyran]

Ahhh, don't think so.

[JBOO]

Originally Posted by sharp1183

That's true, but the last part of the article says "And when they do [lower prices], we fear that Detroit will have once again simply set a lower price level for all its products going forward, lowering the structural profitability of the industry." They're talking about the American domestic product, but still the premium car makers like BMW, MB, Audi, Lexus still sell cars below "ultra luxury".

I think this is a valid point. If the Big Three drive prices down, it could affect European/Japanese pricing. In fact, it already has. The new E90 offers more value than the previous model and you can now get discounts on models that before the dealers would never budge. Who ever got a BMW at invoice 5-10 years ago?

[RichReg]

Originally Posted by sharp1183

That's true, but the last part of the article says "And when they do [lower prices], we fear that Detroit will have once again simply set a lower price level for all its products going forward, lowering the structural profitability of the industry." They're talking about the American domestic product, but still the premium car makers like BMW, MB, Audi, Lexus still sell cars below "ultra luxury".

What I mean is, people who buy the "ultra luxury" line like 7 series, S class, Bentley, etc. are the ones probably least mindful of pricing. But those who buy the E or C class, the 3 series, the IS or GS...they know they are prepared to pay more, but how much more is reasonable now that GM, Ford, and Chrysler (you know, three really big car companies) are really kind of shaking the ground in the entire automotive market. The article even mentions that Japanese makers will feel the ramifications (but they don't mention European makers).

I guess what I'm saying is I really expected Ford to match GM, but DaimlerChrysler really kind of surprised me...I wasn't expecting Chrysler. I was just thinking maybe this move would kind of offset the market a bit.

This is short term Sharp, they can't do this forever. Eventually, the demand from people that want these cars is going to run out. If it doesn't, well then GM & Ford will lose money ANYWAY because they are selling their cars for so little. Don't you think they could have given an employee discount to everyone a long time ago? They are going to try to make up for it by selling volume but there's no guarantee that volume will increase by enough of an amount to make up for it.

[fredtoo]

I'm thinking this pricing program is a way for the big to blow out inventory before the new model year.
It has to effect prices for japanese and low level Euro cars, as some of them are in the same price class as the US cars. It would not surprise me if a potential E90 buyer was lured over to the dark side by a 400 hp gto.

[HRC]

Originally Posted by fredtoo

...It would not surprise me if a potential E90 buyer was lured over to the dark side by a 400 hp gto.

I would be happy if that were so...one less e90 on the road, I'm not joking!

Danny

[RichReg]

Originally Posted by HRC

I would be happy if that were so...one less e90 on the road, I'm not joking!

Danny