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One of the primary reasons for the different prices is that exchange rates vary, and it is not practical to change the prices of vehicles dramatically from year to year. The dollar has been weakening for years against other currencies; however, BMW cannot raise prices in the U.S. to recover this weakening 100% without really impacting sales. A few years ago the Euro was worth around a dollar, nowadays it's around $1.4 dollars. If BMW had increased prices in the U.S. and additional 40% more than Europe over those years their U.S. sales would have really dropped.
So BMW "averages" the exchange rate out... getting a better profit margin in those markets where currencies are strengthening, and getting a poorer profit margin in those markets where the currency is weakening, e.g., compare what the relative costs of a Candian BMW vs. a U.S. BMW would be at the exchange rates of a few years ago, and you will see that it is the exchange rate changes that account for much (but not all) of the disparity seen Today.
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12-11-2007, 12:54 PM
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