In Germany, BMW and Mercedes dealers will now adjust a car's cost based on inflation.
Thanks to high inflation rates globally, BMW, Mercedes, and others, like Kia, are taking serious precautions, only guaranteeing prices for German buyers for up to four months.
Here's an example. Let's say you go to a BMW dealer in Munich. The dealer says the M2 you ordered will cost you $63,200. Eight months later, the car is done, and BMW of Munich had since raised the price of that M2 to $65,000, despite the fact you should have locked in pricing when you ordered the car per EU price protection guidelines. These regulations essentially state that a vehicle must be purchased for an agreed-upon amount outlined in writing by the dealer and the prospective buyer. But if you don't take the adjustment, the contract is now voided. In some cases, German customers are even expected to pay a penalty if they then decide to walk away from the deal.
"We are currently experiencing a dramatic increase in raw material prices, which makes an adjustment of the recommended retail prices unavoidable," says Thomas Djuren, head of Kia Germany.
Now, in the US, the dealer simply tells you, "tough luck." Here in America, these dealers set their own prices, as they aren't actually part of the brand of cars they sell. OEMs may try to step in to prevent egregious markups, as we've seen Ford do, but dealers largely set their own prices for cars.
Per German news outlet Automobilwoche, brands are engaging in the practice, meaning your Mercedes GLS, VW Golf, or Kia Sorento could increase in price after you've finalized things at a dealer too. Over in Europe, rising inflation rates are even worse than in America. In Germany, inflation is running north of 10%. It's just as high in the UK, too. Here in the US, inflation has "only" hit upwards of 8%, though rates continue to rise here.
BMW says it will contractually guarantee our private customers the vehicle price if, when the vehicle is purchased, there is a maximum of four months between the date of the purchase agreement and the confirmed delivery date."
Mercedes has something similar to say: "The purchase price changes in the same proportion as the list prices change up to the date of delivery."
There is a strange loophole, especially if you're reading this as an American. The price increases are from the OEMs. However, due to German law, dealers can choose whether or not they pass these price increases on to consumers.
Volkswagen has another solution. If a delivery date is specified when buying a VW, the brand's customers will have their traditional level of price protection in place. However, if a dealer doesn't have the model on the lot or must place an order for it, VW will behave the same way as BMW or Mercedes.
Kia's policy is the kindest thus far, promising fixed prices for German buyers for up to seven months before it makes adjustments. "I am convinced that our customers can understand this inevitable step," Djuren said.
As of now, it's not clear to what degree this pricing strategy will come to America, if at all. Here, dealers are free to set pricing as they please, so in many ways, the strategy is already in place. BMW has also confirmed it will not bring this strategy Stateside for the aforementioned reasons.