4 ms·

You don't think a 1 NeueDM = $10 would have an effect on BMW sales abroad?

lispm 14y ago
This makes any imports (energy, goods, materials, services, ...) totally cheap. Thank you. BMW has factories world wide. With that exchange rate they would go on a big big shopping tour and buy any market they can. This would be the big expansion of the German industry. Do you have other good ideas?
- excuse-me 14y ago
  Yes it could move all it's manufacturing to China and then use it's strong currency to let all it's citizens buy cheap Chinese TVs in Walmart How's that working out for you guys?
  - lispm 14y ago
    We have already factories in China. China is already cheaper than Germany. Much. Still we have the factories in Germany. Check out VW some time. http://en.wikipedia.org/wiki/Volkswagen_Group_China http://en.wikipedia.org/wiki/Volkswagen_Group_China
danmaz74 14y ago
@lispm: imports would be cheap, and German labor would be very expensive. Germany (like most of Europe) imports raw materials, adds value with labor, and exports finished goods. BMW could not export made in Germany cars with a profit anymore; this could still be good for BMW (just like Apple, they could build everything in China), but it would be bad for the Germans.
- lispm 14y ago
  German labor is already VERY expensive. We still have factories in Germany and outside of Germany. Each BMW uses a lot of materials and energy for production. That would get a lot cheaper. Plus BMW imports lots of parts from other countries. We really had that discussion years ago. When the West German Deutsche Mark was getting stronger all the time. BMW expanded in Europe and outside of Europe. Still it kept its factories in Germany. The quality of its workforce is extremely high.
  - danmaz74 14y ago
    @lispm: "the raw materials would get cheaper" doesn't mean anything for export. Raw materials for export get in, and they get out inside the finished goods - at the same exchange rate. The exchange rate is neutral for raw materials that get reexported. Instead, relative labor cost would change. That labor is high quality? Yes, it is. But importers wouldn't buy it "at any cost". Higher price, same value -> less demand. As for the DM getting stronger all the time: It did so in time, while German relative productivity was rising. On the contrary, this would create an incredible shock. I wish you not to see your dream come true. You could find out it's a nightmare.
    - lispm 14y ago
      The German manufacturing industry does not export raw materials. It exports cars, machines, tools, power plants, .... For building these things it needs all kinds of materials. Much of that is imported. > relative labor cost would change German has already a much higher labor cost than most comparable countries. Still we have industry here and Germany is the second largest exporter in the world. > while German relative productivity was rising Productivity is high and still rising.
      - danmaz74 14y ago
        lispm, I see that your very proud of Germany. Just be careful not to be too proud. Nobody is perfect, and nobody can prosper alone.
- deleted 14y ago
  [deleted]
nickik 14y ago
Changes in currency only have short time effets. The prices tend to new equillibirum. Your imports get cheaper and after a while it reaches a new equillibirum (balance) between the two. Deflation(Inflation can only grant a short term benefits and that is without calculating in the distortionary effects.

lispm 14y ago

This makes any imports (energy, goods, materials, services, ...) totally cheap. Thank you. BMW has factories world wide. With that exchange rate they would go on a big big shopping tour and buy any market they can. This would be the big expansion of the German industry. Do you have other good ideas?

excuse-me 14y ago
Yes it could move all it's manufacturing to China and then use it's strong currency to let all it's citizens buy cheap Chinese TVs in Walmart How's that working out for you guys?
- lispm 14y ago
  We have already factories in China. China is already cheaper than Germany. Much. Still we have the factories in Germany. Check out VW some time. http://en.wikipedia.org/wiki/Volkswagen_Group_China http://en.wikipedia.org/wiki/Volkswagen_Group_China

danmaz74 14y ago

@lispm: imports would be cheap, and German labor would be very expensive. Germany (like most of Europe) imports raw materials, adds value with labor, and exports finished goods. BMW could not export made in Germany cars with a profit anymore; this could still be good for BMW (just like Apple, they could build everything in China), but it would be bad for the Germans.

lispm 14y ago
German labor is already VERY expensive. We still have factories in Germany and outside of Germany. Each BMW uses a lot of materials and energy for production. That would get a lot cheaper. Plus BMW imports lots of parts from other countries. We really had that discussion years ago. When the West German Deutsche Mark was getting stronger all the time. BMW expanded in Europe and outside of Europe. Still it kept its factories in Germany. The quality of its workforce is extremely high.
- danmaz74 14y ago
  @lispm: "the raw materials would get cheaper" doesn't mean anything for export. Raw materials for export get in, and they get out inside the finished goods - at the same exchange rate. The exchange rate is neutral for raw materials that get reexported. Instead, relative labor cost would change. That labor is high quality? Yes, it is. But importers wouldn't buy it "at any cost". Higher price, same value -> less demand. As for the DM getting stronger all the time: It did so in time, while German relative productivity was rising. On the contrary, this would create an incredible shock. I wish you not to see your dream come true. You could find out it's a nightmare.
  - lispm 14y ago
    The German manufacturing industry does not export raw materials. It exports cars, machines, tools, power plants, .... For building these things it needs all kinds of materials. Much of that is imported. > relative labor cost would change German has already a much higher labor cost than most comparable countries. Still we have industry here and Germany is the second largest exporter in the world. > while German relative productivity was rising Productivity is high and still rising.
    - danmaz74 14y ago
      lispm, I see that your very proud of Germany. Just be careful not to be too proud. Nobody is perfect, and nobody can prosper alone.
deleted 14y ago
[deleted]

nickik 14y ago

Changes in currency only have short time effets. The prices tend to new equillibirum. Your imports get cheaper and after a while it reaches a new equillibirum (balance) between the two. Deflation(Inflation can only grant a short term benefits and that is without calculating in the distortionary effects.