Be My Wife

Who has better cars? Audi or BMW? Porsche or Cadillac? Are you only buying because of the brand name and not paying attention to the actual product? There can be so much competition depending on the car. For BMW, I would say their biggest competitors are Audi, Mercedes, and Cadillac. Therefore, the market type for BMW would be an oligopoly. If a consumer isn’t satisfied with a car from BMW, they can get a substitute from their competitor. Of course, the car is going to be different, but slightly the same. There aren’t many manufacturers focusing on luxury cars. In fact, Cadillac is going to discontinue some of their cars. They are going to release something that fits more with today’s needs.

          After doing some more research on how much manufacturers spend on making a car, I found some graphs. 

     For the first graph, from what I read, I do believe this is based on making cars in the US. The materials include: steel, aluminum, and glass, etc which has the highest cost (Statista, 2015).

     The second graph is exactly the same, but in a pie chart. From this article, it stated that the main 4 cost drivers are the raw materials, labor, research and development, and advertising (Kallstrom, 2015). Since BMW focuses on luxury, they should make a lot more profit with fewer cars that they make. To maximize on their profit, they should invest on better material to be able to keep charging more. For example a Lamborghini, those are almost attainable for many. But, because a small percent are able to afford it, the company keeps making a profit. 

     

Works Cited

Henry Kallstrom. February 2015. https://marketrealist.com/2015/02/raw-materials-biggest-cost-driver-auto-industry

Statista, February 2015. https://www.statista.com/statistics/744910/cost-breakdown-of-car-production-by-segment/