14 Sep 21

BMW and Daimler will keep prices high after semiconductor crisis

BMW Serie 8 Coupé won't be cheaper than anticipated

According to the profits made in the pandemic period, mainly German automakers are shifting to a new price model after the semiconductor crises. 

Car manufacturers had to deal with major supply chain problems as the semi-conductor crisis hit the industry along with the pandemic. Yet, through the sales of luxury cars and lowered discounts, profits were high. 

Profiting by selling fewer cars seems to have changed the price strategy of Daimler and BMW. Daimler's CFO Harald Wilhelm stated to Financial Times that they will "consciously undersupply demand levels" and shift towards the luxury end. 

BMW also gave signals of a similar strategy as CFO Nicolas Peter said that the automaker wants to keep the price advantage by cutting production teams through electrification and increase prices after the pandemic. 

A new formula for automakers

According to Ellinghorst, only a 1% decrease on overage discount would create an additional $20 billion for car manufacturers, while discounts in Europe and the US have dropped at least 2% since the outbreak of the pandemic. 

Turning the semi-conductor crisis to an advantage, automakers will start embracing the new approach of keeping the demand for luxury cars low, while increasing their prices. 

To learn more about post-Covid strategies of automakers, don't forget to attend Fleet Europe Summit 2021. You can register here

Image of the BMW 8 Serie Coupé, courtesy of BMW

Authored by: Mufit Yilmaz Gokmen