BMW, Mercedes-Benz plan lower volumes, higher margins
13 September 2021
BMW and Mercedes-Benz chiefs plan to continue undersupplying cars and restricting volumes even when the chip shortage eases in order to maintain current high prices.
The companies will also shift their focus toward pricier, higher-end models. It marks a public change in strategy from the two best-selling premium German brands.
“We will consciously undersupply demand,” Daimler CFO Harald Wilhelm told the FT, adding the company will “shift gears towards the higher, the luxury end”.
BMW CFO Nicholas Peter agreed, pointing out a “significant improvement in pricing power in the last 24 months” and revealing the plan is “clearly to maintain… the way we manage supply to maintain our pricing power on today’s level. Customers are ready to wait three to four months, and this is helping our pricing power”.
The pandemic has “opened everyone’s eyes” that a different model is possible, said a Bernstein analyst. “Everyone loves it, including dealers.”Mercedes-Benz’s last quarterly return on sales was 12.2%, up from 8.4% pre-pandemic. BMW’s margin was almost 16%, up from 8.6%.
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