New BMW Sales Strategy

palbay · #1 10-09-2008, 06:44 PM

This just popped up in my home email.This is from Bimmer/File.Looks like the Pull Sales Plan ain't workin out to good for Uncle Bimmer.As I've said before.....there is a fine line as to how long people will wait and how much they will pay for a luxury item...given the economy we are in right now.Apparently BMW can't sell the 40,000 or so cars that they were going to withhold from the US allocation...in places like Russia,China,India..etc.None of this good for BMW....times are not to good right now.You can limit supply until somebody screams about the price and/or availability.Looks like BMW is not going to wait for people to start screaming.Might be a good time to buy if a new BMW is in your future plans! Thanks! PalBay BimmerFile

BMW Re-thinking Sales Plan
Posted: 09 Oct 2008 01:39 PM CDT

As you all know by now BMW made the decision a few months ago to change its strategy. They opted to use the “pull” mentality in much the way MINI operates and has been successful, a car is sought by a purchaser rather than pushed by the dealer. This is to keep supply and demand in check and not allow for a huge inventory or surplus of cars.
Indications from inside Woodcliff Lakes is that there is another change coming. All indications are that the pull plan is going out the window because the economic downturn has gone global and is not just a US issue. BMW had cut US allocations to send them elsewhere, the problem is that elsewhere is getting hit harder with this downturn than the US. The economy in Russia has lost about half of its value in the past few months, a key emerging market for BMW that is no longer going to have the anticipated demand. That is not to mention the issues in Europe and the remainder of Asia.
As we reported yesterday, BMW will be cutting overall production at the Leipzig plant. This was not part of the original plan of just moving allocations, by eliminating cars this signifies something far worse. The other major issue is that customers are not making large scale purchases, like cars, in fear of our economy worsening. This is not helped by the “pull” mentality and the fact leases are not being subsidized as much as in the past. While the industry as a whole is suffering BMW is seeing former customers looking elsewhere for a lower payment as even with the Owner Loyalty rates BMW is not even in the same ballpark payment wise as other marquees.
In a nutshell BMW has indicated that they will announce “a new aggressive sales and marketing plan by tomorrow”. Making Friday announcements is a technique BMW has been using to spur commenting on blogs and forums over the weekend to get some easy free marketing; mainstream media will cover it as well but over the weekend word of mouth picks up a bit.
We suspect that leases may become a bit more reasonable but more so that financing will become even better for longer periods of time. This would make buying the car via financing have similar payments as a lease. There may be new “pull ahead” programs to get existing lease customers into newer cars sooner with special money factors. While these ideas are pure speculation, something is coming tomorrow and it should move cars.
From our conversations with salespeople in the industry this is welcomed news, as they are getting minimal traffic these days and financially hurting badly.
We should have more details by tomorrow afternoon so stay tuned.

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chonko · #2 10-09-2008, 08:05 PM

If they reduce the price of the X6 back to the 08 pricing, I will certainly reconsider getting one next year.
I could not believe the arrogance of BMW NA to increase the price of the X6 after just one year drastically. It does cost more than the X5 already, and just raising the price because you can makes people look at other alternatives.

palbay · #3 10-09-2008, 08:21 PM

Quote:

Originally Posted by chonko

If they reduce the price of the X6 back to the 08 pricing, I will certainly reconsider getting one next year.
I could not believe the arrogance of BMW NA to increase the price of the X6 after just one year drastically. It does cost more than the X5 already, and just raising the price because you can makes people look at other alternatives.

Good point.Alot of people want an X6...but you don't really need an X6. In the end...the economy does trump everything if things really get bad.Unfortunately we might be there now.Thanks! PalBay

Meiac09 · #4 10-09-2008, 08:47 PM

For an economic stimulus, BMWNA can give a 135i to every person here, since there seems to be a glut of them despite being "hot" and having "low allocations".

Fletcher has about 10. And they're all... manuals! and have sportpack!

BMW can reduce the 96% automatic statistic. That would be good.

motordavid · #5 10-09-2008, 08:50 PM

What a surprise...

..the econ is upside down.
They, BMW, will be hard pressed to come
within 90% of last year's unit, imo. And, "deals"
will eat up profits and margins like an amoeba.

All the "mkting" in the world seldom takes into
consideration the ability to turn a company
on a dime.

Good dig, PalBay!
Good Luck, mD

jayjay_dee · #6 10-09-2008, 09:28 PM

Quote:

Originally Posted by palbay

We should have more details by tomorrow afternoon so stay tuned.

E61Silver · #7 10-09-2008, 09:44 PM

My lease ends in two weeks and haven't done anything yet, hope they will improve the lease deals

AzNMpower32 · #8 10-09-2008, 10:08 PM

My belief is that Accountants and Marketing folks screw everything up in this world. They live in their own world of business ratios, equations, market surveys, accounts receiveable, and blah blah blah. It presents a false picture, really.

B-Line · #9 10-10-2008, 12:36 PM

Here's the bigger issue I see.

Have you looked around at the local BMW dealers lately? Every single local dealer I know has gone through an extremely expensive upgrade, move, rehabilitation.

With all the tens of millions of dollars put into each and every major and minor dealership, BMW still has an obligation to their dealers to deliver vehicles. Those dealers have a lot invested in their new showrooms and facilities.

So what's going to happen? Is BMW going to scale back the number of cars they make? Is BMW going to scale back the number of models they offer?

If I had to guess, I would say it's going to be business as usual. And BMW might hurt for a couple of years, but any drastic and knee jerk reaction to the economy will have them ill prepared or in disfavor when the economy returns, which it will, eventually.

I do suspect the days of the $10,000 premium for new car models is gone, ala: M3, M6, etc. I even suspect MSRP on new vehicles will be out the window with dealerships competing for business.

But BMW is going to continue to make cars, deliver cars and sell cars.

NOW WHERE IS MY ///M X5 ??

palbay · #10 10-10-2008, 12:57 PM

Quote:

Originally Posted by B-Line

Here's the bigger issue I see.

Have you looked around at the local BMW dealers lately? Every single local dealer I know has gone through an extremely expensive upgrade, move, rehabilitation.

With all the tens of millions of dollars put into each and every major and minor dealership, BMW still has an obligation to their dealers to deliver vehicles. Those dealers have a lot invested in their new showrooms and facilities.

So what's going to happen? Is BMW going to scale back the number of cars they make? Is BMW going to scale back the number of models they offer?

If I had to guess, I would say it's going to be business as usual. And BMW might hurt for a couple of years, but any drastic and knee jerk reaction to the economy will have them ill prepared or in disfavor when the economy returns, which it will, eventually.

I do suspect the days of the $10,000 premium for new car models is gone, ala: M3, M6, etc. I even suspect MSRP on new vehicles will be out the window with dealerships competing for business.

But BMW is going to continue to make cars, deliver cars and sell cars.

NOW WHERE IS MY ///M X5 ??

Well said and great points! Thanks. PalBay

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