The Great BMW Debate

[Galt]

This was never fully concluded, so I thought I'd give it its own thread. So far we have:


Funken: Try to explain why a BMW costs more than a Fiat. The answer is that a lot more labour goes into the BMW. Your theory only explains why a BMW costs more one day and less the next.

Galt: A BMW costs more than a Fiat because on average people are willing to pay more for it. This is the only reason. If people weren't willing to pay more for it, they'd have to drop their prices. Labour time has exactly fack all to do with anything.

Tom: Sure, or just not produce the BMW at all...


We are still waiting for Funken to present a counter argument or renounce the labour theory of value...

[TomViolenz]

This was never fully concluded, so I thought I'd give it its own thread. So far we have:


Funken: Try to explain why a BMW costs more than a Fiat. The answer is that a lot more labour goes into the BMW. Your theory only explains why a BMW costs more one day and less the next.

Galt: A BMW costs more than a Fiat because on average people are willing to pay more for it. This is the only reason. If people weren't willing to pay more for it, they'd have to drop their prices. Labour time has exactly fack all to do with anything.

Tom: Sure, or just not produce the BMW at all...


We are still waiting for Funken to present a counter argument or renounce the labour theory of value...

And here I thought, there could be a thread with a new discussion (that I wouldn't participate in, because I know shit all about cars!)...
And all we get is the same ol' same ol' Funken thread...
I'm disappointed

[andydes]

As usual, the answer lies somewhere in the middle of your two extremes.

Bmw put a lot of effort into R&D, new manufacturing processes and making/sourcing high quality components. There is a lot of labour cost involved there and higher material/plant costs.

Manufacturing doesn't usually run with high profit margins and the automotive industry is a pretty unique case of mass production on steroids (cars are outrageously cheap for what you get).

Could bmw make a car to compete with fiat on price if they wanted to? Possibly.
Could bmw drop the prices on the current range to compete with fiat and make a profit? I doubt it, even if they could ramp up production numbers (and they are almost certainly not set up to do so).

People are willing to pay more for a bmw for perceived higher quality, status etc. But it's not just like finding a point in a simple supply vs demand chart. The entire business model is built around making and selling cars for that market.

[Galt]

As usual, the answer lies somewhere in the middle of your two extremes.

Bmw put a lot of effort into R&D, new manufacturing processes and making/sourcing high quality components. There is a lot of labour cost involved there and higher material/plant costs.

Manufacturing doesn't usually run with high profit margins and the automotive industry is a pretty unique case of mass production on steroids (cars are outrageously cheap for what you get).

Could bmw make a car to compete with fiat on price if they wanted to? Possibly.
Could bmw drop the prices on the current range to compete with fiat and make a profit? I doubt it, even if they could ramp up production numbers (and they are almost certainly not set up to do so).

People are willing to pay more for a bmw for perceived higher quality, status etc. But it's not just like finding a point in a simple supply vs demand chart. The entire business model is built around making and selling cars for that market.

You seem to misunderstand my and Tom's answers. The cost of R&D and production is taken into account when assessing the viability of the project, but the actual price is based solely on what people are willing to pay. Another example is cosmetics. The vast majority of face creams are pretty much identical, yet prices range from <$10 to $>500, just because of the brand name.

[andydes]

Damn it man, I'm an engineer, not a beautician.

When I see the word cost, I immediately think of build costs and overheads, not retail price.

Shit, I'm turning corporate.

[Galt]

Damn it man, I'm an engineer, not a beautician.

When I see the word cost, I immediately think of build costs and overheads, not retail price.

Shit, I'm turning corporate.

You just got creamed.

[andydes]

What about the cgi graphics on cosmetic adverts showing how the cream interacts with the skin?

It's almost like you're suggesting they don't actually spend millions running advanced computer simulations of their latest formulae and just rub it into the eyes of rabbits?

[Galt]

What about the cgi graphics on cosmetic adverts showing how the cream interacts with the skin?

It's almost like you're suggesting they don't actually spend millions running advanced computer simulations of their latest formulae and just rub it into the eyes of rabbits?

Yes, this is correct. Unless they don't test on animals, in which case they just rub it in their own eyes.

I'm serious, btw.

[andydes]

The advertising should reflect this.

[Galt]

I would certainly like to see shifty CEOs gently massaging concentrated parabens onto their corneas on the telly and before movies.

[arctic ranger]

i was from the understanding that vehicles were built on platforms. the main chassis and frame were manufactured in the same plant, then went off to become different models under the same brand. eg the pt cruiser was basically a dodge neon underneath everything.

just off the top of my head, and i'm not really a car guy, I'm pretty sure the bmw goes through alot more engineering. i recall many years ago that they had transmission that had templates for you driving style and maybe even "learned" your driving habits and adjusted how the car would perform.

i would imagine that this would contribute to the cost of the vehicle.

maybe in the case you guys are talking about, the reputation justifies the higher price because of what goes into it

[Galt]

i was from the understanding that vehicles were built on platforms. the main chassis and frame were manufactured in the same plant, then went off to become different models under the same brand. eg the pt cruiser was basically a dodge neon underneath everything.

just off the top of my head, and i'm not really a car guy, I'm pretty sure the bmw goes through alot more engineering. i recall many years ago that they had transmission that had templates for you driving style and maybe even "learned" your driving habits and adjusted how the car would perform.

i would imagine that this would contribute to the cost of the vehicle.

maybe in the case you guys are talking about, the reputation justifies the higher price because of what goes into it

This is true. Audis are VWs are Skodas. Same cars, different brands, different price tags. Boom.

[TomViolenz]

i was from the understanding that vehicles were built on platforms. the main chassis and frame were manufactured in the same plant, then went off to become different models under the same brand. eg the pt cruiser was basically a dodge neon underneath everything.

just off the top of my head, and i'm not really a car guy, I'm pretty sure the bmw goes through alot more engineering. i recall many years ago that they had transmission that had templates for you driving style and maybe even "learned" your driving habits and adjusted how the car would perform.

i would imagine that this would contribute to the cost of the vehicle.

maybe in the case you guys are talking about, the reputation justifies the higher price because of what goes into it

This is true. Audis are VWs are Skodas. Same cars, different brands, different price tags. Boom.

I think the platform thing goes way further though than the obvious examples.
I don't have the details, but basically everybody is in bed with everyone. Like a capitalist orgy

[beats me]

We already went over the "why" many months ago

viewtopic.php?f=40&t=192529

[Galt]

I love being write.