Introduction
BMW's primary home country is Germany, but the interesting fact is that although BMW is a European company, the breakdown of sales places Germany in third place. According to the data collected for BMW worldwide automobile sales, Chine, the United States, and Germany are the top three countries that sell the most BMWs. "Out of all the BMW sold worldwide, Chine holds a steady 33.6% of BMW automotive sales, The United States is in second with 14.6% percent of all sells and Germany is 10.6% of all sells." (Carlier). Based on all the sales data, the effects of the Federal Reserve would impact the sales of BMW, but the impact that would come from the central bank of the Republic of China would be significant due to the majority of deals that were contributed from China in 2021.
Federal Reserve
The Federal Reserve, or any treasures at that matter, controls the money supply or surplus within the country; that's why the treasures of each country hold so much power, and their decisions have a profound effect on businesses functioning within the United States. "The Federal Reserve System is the central bank of the United States, which is one of the most influential economic institutions globally, meaning that their responsibility is to manage the income and output of currency within the United States." (Boyle) one of the essential functions or jobs of the federal reserve is to have the responsibility of creating or destroying billions of dollars every day. With the increasing or decreasing of the surplus of currency within a country, the loans will improve or increase, and the rates of the loans. When the Federal Reserve increases the income, "Banks then increase the money supply in circulation even more by making loans to consumers and businesses" ( Boyle). The more money in the economy and more loans more people can take out, the more product they can purchase or get, which would allow more sales of luxury items like BMW. The federal reserve would impact the sales of BMW across the United States but would not affect the sales, for example, in China. Know when BMW first started producing the X models, then yes, the United States economy would've had a significant impact on the sales of the X models due to the United States being the first place that the x models were made and produced for years.
Central Banking
Central banking is any "financial institution that has been privileged to control the production and distribution of money and credit for a nation or group of nations" (Potters). China's Central bank refrained from cutting interest rates and injecting liquidity into their economy due to the expected economic impact of the cushion growth from the worsening covid outbreaks. According to Bloomberg News, the focus of the China state council "is to focus shifts on reducing the reserve requirement ratio for the banks possibly, this move would allow lenders to have cheaper funding to spur loans and growth in the economy" (Bloomberg News). Although the central Bank of China would have an economic impact on the BMW sales or financial stability of the sale of BMW as a company, it still can be affected the most by the Federal reserve of the united states, with "Beijing facing a narrower window in which to do so as the U.S and other countries central Banks facing soaring inflation, with tighter monetary policies in the U.S this result in this has already whipped out chine's premium yield over the U.S. Treasuries" ( Bloomberg News). China does still have a drastic impact on BMW as a company back in February 2022 the Chinese authorities had to give BMW permission too raise its stakes in the business "within the Brilliance china automotive holding Ltd to 75% from 50%" ( Wilkes). This would lead to a one-time positive effort of 7 billion euros to 8 billion euros, allowing BMW to be one of the first Western automakers to benefit from relaxing China's foreign ownership rules. With BMW being the Assembly and producer of the total electric ix3 in China, it will expand and continue to reach and grow in the global market, expanding the ultimate driving machine. Although all central banks can play a role in impacting the BMW market, it's important to remember the three primary functions of any central bank, and they are "to provide a banking service to commercial banks and other depository institutions and to provide banking services to the federal governments, Promote stability in the financial system, and to conduct monetary policy." (Lumen).
Germany Fiscal Policies
According to Adam Hayes from Investopedia, "Fiscal Policy refers to government spending and tax policies to influence economic conditions, especially Macroeconomic conditions, including aggregate demands for goods and services, employment, inflation, and economic growth." (Hayes). A Fiscal policy can often be compared to or contrasted with a monetary policy, which does enact by the country's central bankers but not by the elected government officials. With Germany's Fiscal Policy Plans to adopt a balanced budget containing no new debt, "this would allow Germany debt to GDP ratio below 60%" (OECD). Fiscal policy priorities are forward-looking investments, education, and research and security.
Conclusion
When looking at the data that is given and the fiscal policies, the decisions that were determined that China, as of the moment, would have the most significant impact on the sales of BMW than any other country; this was determined due to the percentage of sales that China holds more than any other country in portions in sales. Although the home country is Germany for BMW, the export sales are why this company prosper as well as it does because of the quality and product they produce for other countries' consumers. Although the Federal reserve will always affect all the other countries and sales of BMW, it is still ranked number two in top sales for BMW.
Work Cited
BMW Sees Up to $9.1 Billion Boost From China Stake Purchase. (n.d.). Retrieved April 26, 2022, from https://www.bloomberg.com/news/articles/2022-02-11/bmw-sees-up-to-9-1-billion-boost-from-china-stake-purchase
Budgeting and Public Expenditures 2019 - OECD. (n.d.). Retrieved April 26, 2022, from https://www.oecd.org/gov/budgeting/budgeting-and-public-expenditures-2019-germany.pdf
Carlier, M. (2022, March 22). Key Automobile Markets of BMW Group 2021. Retrieved April 26, 2022, from https://www.statista.com/statistics/267252/key-automobile-markets-of-bmw-group/
China Central Bank Holds Interest Rate With Focus Now on RRR. (n.d.). Retrieved April 26, 2022, from https://www.bloomberg.com/news/articles/2022-04-15/china-s-central-bank-unexpectedly-keeps-policy-rate-unchanged
Hayes, A. (2022, February 8). What is fiscal policy? Retrieved April 28, 2022, from https://www.investopedia.com/terms/f/fiscalpolicy.asp
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