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Economic Analysis on BMW Cars in the US Car Industry - Case Study Example

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This paper "Economic Analysis on BMW Cars in the US Car Industry" discusses BMW that produces motorcycles and automobiles. The company sells vehicles under three luxury brands: BMW, Mini, and Rolls Royce. Despite the worldwide automotive downturn in 2008 sales volume of BMW has continued growing…
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Economic Analysis on BMW Cars in the US Car Industry
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Download file to see previous pages Mini and the 1-series rapidly grew at a much higher rate through 2008. Since the early days of the new millennium, BMW has been one of the first automakers to utilize flexible factories in which more than one vehicle model could be produced at the same time. This enabled the company to meet shifts in market demand more effectively than BMW’s competitors could. BMW challenges to retain its market position in the international market for luxury cars. Many automakers, such as Hyundai with its Genesis sedan or Nissan's Infiniti brand are increasingly successful in realizing higher margins earned on luxury vehicles. BMW is rated behind luxury brands such as Lexus, Porsche, Mercedes, and Infiniti for these reasons

1. The car industry is undergoing a rough phase for some years because of the recession set in many parts of the world including the USA. According to Mr. Kinoshita of Toyota, Credit squeeze has made sales and profits tumbling caused by deteriorating demand. The BMW Group reported a year-to-date sales volume of 70,606 vehicles, which is 29.4 percent, compared to 99,977 vehicles sold in the same period of 2008. Experts project that in future strongest sales growth is unlikely to come from the US and Europe which became more a manufacturing center. Sales growth is likely to come from Asian countries such as China, India, the Middle East, and Russia where demand for motor vehicles is increasing. Sales in the number of vehicles are shown declining in the following table.

During the recession, the demand for the product is the primary factor. Supply is usually flexible to adjust with the demand without which products will have to be idle in the market or to be sold at reduced prices. There are so many suppliers in the market and most of them are languishing for want of adequate demand for vehicles. In this situation, prices fall. A price war has been set in the premium car market among importers and dealers who are struggling to survive in a market with declining sales. And now BMW has entered the battle for the second time with price reductions. ...Download file to see next pagesRead More
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