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If you're in the market for a Bimmer, now is the time to buy. BMW is raising prices this year and next to help ease the burden of unfavorable exchange rates between European currencies and the weak U.S. dollar. CEO Norbert Reithofer told reporters that the company would also produce 20,000 to 25,000 fewer vehicles overall in 2009 and sell 40,000 fewer units in the U.S. Disastrous exchange rates aren't team Bimmer's only problem, either. The German automaker leases 60% of its vehicles in the U.S. during a time when sinking residuals are losing automakers billions.
A quick look at July sales figures shows that even the best-run automakers are hurting. Increasing prices twice within a year when people are cutting back likely isn't going to help matters much, but at least just about everybody else is doing it too.
P.S. BMW will be replacing their Bridgestone RFT's with Michelin RFTs. They say it will have less road noise and be a lot more comfortable.
"He is not gay, he's married"
"Oh please! Its right up there with 'He's not gay, he is in a fraternity'"
Originally Posted by IS_Dude
you have zero experience tuning anything but a george forman grill.
This past week, the auto industry has been shaken by the very pessimistic reports and disastrous quarterly earnings reported by some of the largest automakers. BMW is one of them and with 1.6 percent drop compared to August ‘07, the future does not look too rosy.
While the overall sales for the BMW Group are up 2.2 percent (thanks to the Mini brand mostly), the year-to-date sales are down 8 percent, which for a giant automaker as BMW, can only announce new changes in their business strategy.
Last Thursday, in an important BMW Board meeting, the rumored X7 project was erased from BMW’s future plans, but that’s far away from the bad news to come. BMW is raising prices next year, with some of them being implemented by the end of this year for some of the MY09 cars.
Wait, did you think this was all? No, in the same time with the price increase, BMW will manufacture fewer vehicles in 2009, with a rumored number around 25,000 less cars globally, and it will sell 40,000 fewer units on the U.S market.
How is this going to affect the buyers? Jonathan Spira, a well known and respected Business Editor for BMWCCA, explains it very well:
This will change as BMW will return to a pull-oriented (versus “push”) sales strategy that will limit sales volume, requiring customers not only to pay full price but to wait for cars rather than being able to drive them off the lot (something practiced almost universally except in the United States).
Paying MSRP for a bimmer is something that us, BMW fans, have not encountered over the last few years, with the exception of a few new models that weren’t discounted the first few months.
And if this wasn’t bad enough, then the 60% of the BMW owners that are part of the leasing program, are in for a big surprise as well. The highly subsidized BMW leases were a gimmick that allowed many buyers to get some amazing deals on some quite expensive BMW models. It was pretty much common to lease a $40,000 bimmer for a monthly payment of around $500, a much lower payment that BMW’s competitors with cars in the same price range.
BMW will begin offering higher incentives to customers that are looking to finance a car or cash-purchase it, rather than going through the famous BMW Financial Services program. As a paranthesis, I remember leasing my previous BMW 325i with a finance rate of around 1% over a 3-year period, which combined with higher than normal residual values, it allowed me to lease my $36,000 car for $400/month.
There are many other angles here and tons of other details that can be discussed, but I will let our dear Jonathan Spira take over and give you some more detailed information over at BMWCCA forum.
As always, please feel free to leave a comment and tell us what you think. Let’s start a conversation on this and see what your future plans are.
P.S If you’re on the market for a new bimmer, now it’s the time to analyze the facts at hand and decide fast on which car to get.
BMW to cut volume and jobs in U.S.
Diana T. Kurylko Automotive News Europe
September 22, 2008 06:01 CET
WOODCLIFF LAKE, N.J. — BMW's new North American chief wants to stop pushing for maximum sales volume in a declining market — even if it means bringing 16 years of U.S. sales increases to a halt.
BMW Group's U.S. operations will not take 44,000 new BMW brand cars and trucks that were to be allocated to the United States this year, said Jim O'Donnell, CEO of BMW (U.S.) Holding Corp. Those vehicles will go to markets where they can be sold more profitably, he said.
The smaller sales target is part of a bigger rethinking of U.S. strategy that O'Donnell will present to his German bosses in January. That plan could include the reintroduction of four-cylinder powertrains, O'Donnell said. Currently, the smallest powerplant in the BMW brand's U.S. lineup is a six-cylinder engine.
In an interview last week, O'Donnell said he will:
-- Cut lease volume at least 10 percentage points.
-- Reduce incentive spending and end the traditional December blowout.
-- Change dealer bonuses to boost customer satisfaction.
-- Cut corporate costs. O'Donnell says he will eliminate 90 North American jobs.
"We want to see how the market is going and will revisit our aspirations in January," said O'Donnell, 58. The Scot, who took the helm at BMW in April, has long been familiar with the United States (see story, Page 38).
"When you have had 16 years of growth, you do not necessarily look too closely at what you are doing and how much you are spending," O'Donnell said. "I need that fresh look at the organization."
O'Donnell has ordered his department heads to look at cutting costs. They were to have reported back to him by the end of last week. Marketing will be a key area for slashing expenses. O'Donnell said it is wrong "to push in a market that is declining."
O'Donnell expects BMW Group — which includes Rolls-Royce and Mini — to suffer a U.S. sales decline of 10 percent this year.
Overall U.S. sales of BMW, Mini and Rolls-Royce totaled 336,265 units last year. Within that total, the BMW brand accounted for 293,795 units.
"We'll be down maybe a little bit less than the marketplace, about 10 percent down — which I am fine with," O'Donnell said. "I'd rather sell fewer cars than blow them out the door without any profit."
Soft BMW brand sales account for the group's overall downturn. O'Donnell expects Mini sales to approach 50,000 units this year, up from 42,045 in 2007.
The weak dollar and anticipated softness in the U.S. market led O'Donnell to cut his U.S. allocation of vehicles. BMW even slashed the U.S. allocation of the X3 small crossover by several thousand vehicles, even though it's in demand because of high fuel prices.
"We cut back on the X3 primarily because it could be sold somewhere else and it wasn't a huge profit for us at the moment," O'Donnell said.
No December blowout
O'Donnell also is ending the mad push that BMW makes at the end of the year. Traditionally, that's when the automaker offers its highest incentives, most generous lease offers and dealer cash to compete with similar promotions by Lexus and Mercedes-Benz.
He also has sharply reduced BMW's lease deals, which normally account for a big portion of sales. BMW's lease penetration fell from 63 percent in February to 50 percent in August, according to the Power Information Network.
Because of the decline in sales and a renewed emphasis on profits, O'Donnell has decided not to put any incentives on BMW's three newest cars: the compact 1 series, the X6 crossover and the M3 performance sedan. The X6 is so hot worldwide that BMW raised its base price, including shipping, to $56,325, up $3,000.
What has been the blow-back? Absolutely none, says O'Donnell. Dealers tell him they can't keep the X6 in stock.
Sounds like one arrogant bastard. I think I would take my money somewhere else if I had to buy, not judging that based on his interview, but the general theme of BMW Dealers. It seems like if anything it will add more fuel to the fire. I don't get their approach, it seems like everyone else is trying to get the customers in to the showroom to sell them a vehicle and BMW is trying to do the opposite. I do understand the whole exchange rate and shit that is killing them right now.
BMW has achieved sales increases in the US for 16 straight years, but that impressive streak is going to end in 2008. BMW USA CEO Jim O'Donnell has decided to stop shipment of 44,000 vehicles destined for the States by the end of this year. The move was made to prevent pushing increased sales in a down market because too many incentives were needed to entice consumers. The weakness of the US Dollar vs. the euro makes high incentives unprofitable. Some vehicles, like the X3, are coming to the US in smaller numbers even though they are selling well without incentives. Leases are also a cause of concern, with 63% of its vehicles leaving BMW showrooms with a down-payment and a mileage limit. O'Donnell wants to cut that number by 10% or more, and in August, leases were down to 50% of sales.
The German automaker is also looking to cut expenses in the U.S, with plants to slash 90 jobs in the States, along with reducing marketing expenditures. The largest short-term change is that BMW will not end December with a high incentive sales blowout, which means if you're waiting for the big Bimmer sales event, it probably won't happen.
The BMW Group in the US reported September sales of 18,506 vehicles, a decrease of 25.8 percent over the 24,932 vehicles sold in September 2007. The BMW Group also reported a year-to-date sales volume of 236,327 vehicles, down 4.8 percent, compared to 248,273 vehicles in the same period of 2007.
BMW Brand Sales
Sales of BMW brand vehicles decreased 29.5 percent in September for a total of 14,744 compared to 20,901 reported in the same month a year ago. Year-to-date BMW brand sales were down 9.6 percent, to 195,633 vehicles compared to 216,337 vehicles sold in the same period in 2007.
“At BMW, we are fortunate to have set a rational plan in place for the entire year. While our sales this month are on a level with others, in the year to date, we are still tracking better than the overall premium market,” said Jim O’Donnell, President of BMW of North America, LLC. “New products such as the just refreshed 3 Series with its new look and new iDrive Control will keep us attractive in the market place. A new dimension will be added to our range of vehicles with the introduction of the Advanced Clean Diesels in the 3 Series and the X5, which will be available in all 50 states. We are also getting ready for the U.S. launch of the all-new 7 Series which comes early in the new year.”
BMW Automobile Sales
BMW’s automobile sales are down 35.9 percent in September to 10,552 versus 16,457 in the same month a year ago. Year-to-date sales also decreased 9.9 percent, to 152,988 automobiles compared to 169,760 in the same period of 2007.
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