Companies and Markets

BMW to stabilise car prices after years of increases

BMW expects to stop raising prices on its premium cars in 2023 after years of passing on higher costs to customers, which has led to an average 40 per cent increase since 2020.

The German company said on Wednesday it expected to keep prices stable this year while the number of cars delivered to customers would increase slightly.

“Full order books in Europe and outside [has translated] into good price realisation,” said BMW’s head of sales Pieter Nota. “Of course, that has contributed very much to solid profitability of the company,” he added.

Car prices have risen because of higher commodity costs, semiconductor shortages, a focus on selling top-range vehicles and the introduction of more expensive electric cars, according to Auto Trader, an online vendor.

BMW and its rivals have also raised profit margins by focusing on the sale of more expensive cars, as supply chain constraints have left hundreds of thousands of vehicles still to be fully assembled because of a lack of parts.

The median price of a new BMW in the UK rose from £36,638 in March 2020 to £51,350 this month, representing a 40 per cent jump, said Auto Trader.

Volkswagen car prices jumped 19 per cent and those of Mercedes-Benz by 39 per cent over the same period.

Ian Plummer, a director at Auto Trader, said the average price of a new car had risen by 40 per cent over the past five years across all brands.

BMW said there was a slight decrease in European orders at the start of 2023, adding that rising interest rates were likely to have had an impact since four out of 10 sales were funded with the help of its financial services arm.

The company said last week that it would pay out a bumper €5.5bn to shareholders after a profits boost from an increased stake in its Chinese joint venture as well as higher prices for its expensive premium cars.

The company said it expected an operating margin in the range of 8 to 10 per cent in 2023.

Chief executive Oliver Zipse said he agreed with other car executives, such as Volkswagen and Porsche boss Oliver Blume, that the EU should allow e-fuels to help decarbonisation.

Germany and Italy are among the countries with large car industries that at the last minute blocked a planned EU vote on the ban of combustion engines, demanding that the bloc make concessions for e-fuels.

BMW has long been an advocate for hydrogen-powered vehicles as an alternative alongside battery-driven cars as the EU prepares to ban combustion engines by 2035.

The company, which this year launched a pilot series of a BMW iX5 fuelled by hydrogen, said it was considering building a plant to produce cars that run on the gas by the end of the decade “depending on market requirements and conditions”.

The group added “that not all markets worldwide will have the necessary framework conditions for all customers to switch to pure electromobility in the next decade”.


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