Würzburg, March 29, 2006
"Despite good products, BMW dealers fared worse in 2005 than at any time since 1990," says Peter Enders, President of the Association of German BMW Dealers, in a major BMW analysis published by the industry magazine "kfz-betrieb" in its latest issue No. 14, which appears on April 6, 2006.
The price system introduced in 2004 with its margin reductions, the discounting behaviour of the dealers themselves and the fierce intra-brand competition had led to an average return on sales of 0.5 percent in the BMW dealer organization in 2005. "This is a modest result for the 319 entrepreneurs still in the network," said Enders.
Ludwig Willlisch, Head of Sales BMW Group Germany, also describes the 2005 results in German BMW dealerships as "unsatisfactory", but speaks of a "slip-up". However, the dealers themselves are also to blame for excessive discounts: In a few cases, according to Willisch, "business nonsense" is simply being made. However, this also happens because the competitive environment in Germany has become much more aggressive in the last 24 months. "Even competitors who were not previously known as discount drivers have joined this camp. The offers they are pushing are astonishing," says Willisch.
BMW's goal is to work together with the dealers to return to an average return on sales of around 1.5 percent. This is still a far cry from the 7 percent return on sales that BMW AG achieved in 2005, but it is a step in the right direction.
The protagonists from the manufacturers' and dealers' camps agreed that in order to limit the brand dealers' margin losses, the Group's own branches and the dealers themselves would have to be more disciplined in their handling of discounts. In particular, vehicles should not be passed on to large EU intermediaries (resellers) in future. Instead, manufacturers and dealers should heed the profit-promoting business philosophy of "quality instead of quantity".
The BMW market & brand analysis by "kfz-betrieb" is rounded off by an analysis by the well-known automotive lawyer Dr. Christian Genzow. He explains that for many years there has been no other manufacturer or importer in Germany that has been involved in such vehement and extensive disputes with its contractual partners as BMW AG! A further source of crisis is the "existence-threatening behavior of the BMW branches". All of this is causing a lot of controversy in the ranks of a premium brand.
"kfz-betrieb" is a trade magazine published by Vogel Auto Medien, Würzburg. The most widely read trade magazine in the automotive industry celebrated its 95th anniversary in 2005 and is the official organ of the German Motor Trade (ZDK), the professional lobby for over 40,000 car dealerships and workshops.
If you have any questions, please contact
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