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Originally Posted by wtwo3
I actually wouldn't be surprised if it's actually cheaper for bmw to just install all options on every car. The optimization to their supply chain would be immense and potentially offset the added cost of extra equipment. There's multiple avenues for cost mitigation when you maximize your sourcing. Volume based discounting, transportation optimization, inventory optimization, smoother demand/supply planning, etc. You're streamlining a process which typically puts a huge damper to your supply chain and overall manufacturing. Forecasting also becomes much easier using this model.
As an example to how much of an impact supply chain efficiency has on cost - An individual paint, which might be offered for free on one model, can easily cost someone $5,000 on a model it's not typically offered on. Why? It's not because the paint is more expensive than other paints. It's because of the disruption to the supply chain. You as a customer are paying BMW $5,000 because of the disruption you're causing to their supply chain by ordering a non-standardized color for your model.
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If it was cheaper for them to have every feature on every car they would already be doing it. Even if that came with a small increase in base price they would still do it if they could. Pretty much all Audis have standard heated seats and Lexus has standard adaptive cruise control, so BMW is already loosing out by not having that stuff standard. There's no reason they would be leaving both money and a competitive advantage on the table if that was the case.
The only time it's cheaper to include an option than not include it is if the number of cars not getting it is extremely small. Like this was the case for heated seats on the "base" $35k Model 3 a few years ago because they made it pretty much impossible to actually buy one even if you wanted it to so production of that spec was miniscule. (It was mostly made to meet a specific Canadian regulation around tax credits, but I digress.) This does not apply with options where the ratio of cars with and without the option are more reasonable.
The more parts BMWs needs the more they have to pay for shipping, storing, and time for installing those parts. Sure, economics of scale apply but that doesn't mean that overall buying more of something costs less than buying fewer. The total parts cost up until the point of installation is larger with more standard equipment.
Also stuff like adaptive cruise control radars are expensive and often come from suppliers like Delphi or Bosch. So the car manufacturer isn't just paying the raw cost of building these parts but is covering the logistics and profit margin of a supplier too.
Individual paint is actually a special case, and you're paying for more than just the disruption to the assembly line. I remember hearing about paint-to-sample with Porsche where they actually have to test the paint on every material it will be going on (steel for chassis, aluminum for body panels, and plastic for bumpers) to make sure the color matches on all of those. They they have to do durability testing for that specific paint on all those materials. This is extremely labor and time intensive. If you're picking a color under BMW individual that isn't normally offered on that model then the material composition of the exterior metals or plastics might be different, potentially requiring testing. Also the labor involved for painting one car on an entire assembly line a different color than all the others is obviously vastly more than simply installing or not installing heated seats or radar cruise.
I would also guess that a huge proportion of the cost for individual color is profit because they know people who want it are willing to pay that much. Even if individual color didn't cost BMW anything they would still charge $5k for it because they can.