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      09-22-2008, 08:36 PM   #1
darkalley
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BMW cutting 44,000 cars from the US in 09

Anyone want to know how bad the US market really is?????????





BMW to cut volume and jobs in U.S.

Diana T. Kurylko
Automotive News
September 22, 2008 - 12:01 am ET


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."

Cost cuts

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.
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      09-22-2008, 10:35 PM   #2
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Law of Supply and Demand will play around here. So, the price of BMW will increase significantly.
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      09-23-2008, 02:01 AM   #3
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Quote:
Originally Posted by valeram View Post
Law of Supply and Demand will play around here. So, the price of BMW will increase significantly.
Yes,i agree!
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      09-23-2008, 02:05 AM   #4
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Good news for the 08 and early 09 owners... Firming things up should improve our market value in the long run...
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      09-23-2008, 08:49 AM   #5
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I wonder how this will effect M3 allocations next year? I know that some folks are still getting under MSRP on ordered MY2009 vehicles - some significantly under MSRP. But if M3 allocations get cut back, I don't think we'll be able to count on deals like that. At the very least they won't be as common. Of course, depending on the economy and oil prices, we still may be looking at too much M3 supply, making it remain a buyers market for this car.
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      09-23-2008, 09:23 AM   #6
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I think BMW learned its lesson for MY08 on the M3. So despite not getting the new iDrive I'm glad I got my 08 at least.
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      09-23-2008, 10:04 AM   #7
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I think BMW learned its lesson for MY08 on the M3. So despite not getting the new iDrive I'm glad I got my 08 at least.
+2
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      09-23-2008, 11:13 AM   #8
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Has anybody gotten a Production Date for the '09 M3 Sedan with DCT yet, my dealer still has none.
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      09-23-2008, 12:01 PM   #9
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Quote:
Originally Posted by darkalley View Post
Anyone want to know how bad the US market really is?????????





BMW to cut volume and jobs in U.S.

Diana T. Kurylko
Automotive News
September 22, 2008 - 12:01 am ET


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."

Cost cuts

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.

Thats a lie. They currently have incentives as we speak.
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      09-23-2008, 12:10 PM   #10
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Quote:
Originally Posted by tzsgti View Post
Thats a lie. They currently have incentives as we speak.
Maybe he is referring to the '09 M3 which has no incentives. As far as the 1-series is concerned, it's probably cheaper to get into an ///M3 right now. The 135i payment is higher than the ///M3 payment I was quoted.
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      09-23-2008, 12:14 PM   #11
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Quote:
Originally Posted by valeram View Post
Law of Supply and Demand will play around here. So, the price of BMW will increase significantly.
+1

Quote:
Originally Posted by darkalley View Post
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.
I mean, if they're not counting MINI's as part of their line-up....

But, anyone else see this as a potential avenue for young, inexperienced people to express their individuality and their artistic vision in all the wrong ways once such budget cars begin to be sold en masse?

In other words, an influx of PiMp MaI RiDeZ y0 and 1337 r1c3 s@uc3 y0.

I sense rough waters ahead.
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      09-23-2008, 12:31 PM   #12
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Quote:
Originally Posted by bjkim88 View Post
+1



I mean, if they're not counting MINI's as part of their line-up....

But, anyone else see this as a potential avenue for young, inexperienced people to express their individuality and their artistic vision in all the wrong ways once such budget cars begin to be sold en masse?

In other words, an influx of PiMp MaI RiDeZ y0 and 1337 r1c3 s@uc3 y0.

I sense rough waters ahead.

Just because they are experimenting w/ four cylinder options doesn't necessary mean that it will be a budget car.
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      09-23-2008, 12:36 PM   #13
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Quote:
Originally Posted by Sedan_Clan View Post
Just because they are experimenting w/ four cylinder options doesn't necessary mean that it will be a budget car.
True enough, seeing as fuel economy cars are all the rage in the States as of this moment. Economic cars that are expensive, anyways.

But, 4 cylinder engines will be cheaper than their 6 cylinder counterparts. The rest was just a pessimistic prediction on my part.\

I'd be very sad to see a 4 cylinder BMW more expensive than any of the 6 cylinder cars in their line-up though. I would hope that it would be a stellar car, with stellar options, with stellar gas mileage, at the very least then.
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      09-23-2008, 12:39 PM   #14
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Quote:
Originally Posted by bjkim88 View Post
True enough, seeing as fuel economy cars are all the rage in the States as of this moment.

But, 4 cylinder engines will be cheaper than their 6 cylinder counterparts. The rest was just a pessimistic prediction on my part.\

I'd be very sad to see a 4 cylinder BMW more expensive than any of the 6 cylinder cars in their line-up though. I would hope that it would be a stellar car, with stellar options, with stellar gas mileage, at the very least then.
It may be a few thousand cheaper, but not significantly enough to make it accessible to the non-spoiled variety. What 4-cylinder powerplants are BMW using overseas?

Many premium car owners express concern about dilluting the brand, so you're not alone.
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      09-23-2008, 12:47 PM   #15
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Quote:
Originally Posted by Sedan_Clan View Post
It may be a few thousand cheaper, but not significantly enough to make it accessible to the non-spoiled variety. What 4-cylinder powerplants are BMW using overseas?
SC, I think they have 2L, 1.8L, and 1.6L gas engines, and 2.0L and 1.8L diesels. I can't recall but there might be 1.6L diesel too. The gas engines are all naturally aspirated, while the diesels are all turbo (like all modern diesels).

In addition, BMW is known to be working on a turbo 4 cylinder gas engine lineup, similar to the turbo I6 and turbo V8. It is this motor that I predict will get green-lighted for the US sometime in the future, especially for the next generation 1 series.
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      09-23-2008, 09:31 PM   #16
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Interesting. I hope this somehow helps increase the resale of our 2008 M3's. $20k depreciation off msrp in 1 year is hard to stomach
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      09-24-2008, 12:17 PM   #17
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Depriciation will still hit, thats just the nature of cars. I think this is good from current owners standpoint, but for those waiting to get in and expecting a deal maybe pushed into Lexus, or Mercedes Benz. People are not just going to wash down their money, especially those that have it. Lets make a deal, value for money, savings, incentives. I'd rather a great costs saving deal than have an imaginery resale value. You get raped one way or the other, usually the other form my experiences. Get em now while theyre on the cheap.
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      09-24-2008, 12:46 PM   #18
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Quote:
Originally Posted by MojorisinM3 View Post
Interesting. I hope this somehow helps increase the resale of our 2008 M3's. $20k depreciation off msrp in 1 year is hard to stomach
It should... reducing the total number of cars sold, and increasing prices, will make our cars more desirable in the short-term.

However, I don't plan on recouping ANY of my total spend for my car, so I don't bother tracking how much money I've "lost" since taking delivery. The payback IMHO is directly to my soul through driving the crap out of the car every day! I'm totally getting my money's worth. She'll have well over 100,000 miles on her when I'm ready for another -- just like my last BMW.
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      09-24-2008, 01:53 PM   #19
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Quote:
Originally Posted by MojorisinM3 View Post
Interesting. I hope this somehow helps increase the resale of our 2008 M3's. $20k depreciation off msrp in 1 year is hard to stomach
As soon as the economy picks up (WHEN???), the depriciation for the current M3 will adjust accordingly. Remember that the M3 is cheaper here in the US, if not the cheapest worlwide. Hold into it and hope for the best.
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      09-24-2008, 04:25 PM   #20
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yay 44,000 less bimmers. makes me a little more special
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      09-24-2008, 06:34 PM   #21
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This isn't just an effort to reduce volume based on the economy and profit margins. BMW is working to improve their 'brand' and get back to the basics of being a car for enthusiasts. In recent years the incentives, low lease rates, and high volumes have deteriorated the overall BMW image and brand. They are working to redefine their image. Part of that is decreasing volume and making sure they are hitting the right target market. As volume increases the 3 series starts to look like a Camry.

I'm all for it. Good for them.
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      09-24-2008, 09:00 PM   #22
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Quote:
Originally Posted by drburton View Post
This isn't just an effort to reduce volume based on the economy and profit margins. BMW is working to improve their 'brand' and get back to the basics of being a car for enthusiasts. In recent years the incentives, low lease rates, and high volumes have deteriorated the overall BMW image and brand. They are working to redefine their image. Part of that is decreasing volume and making sure they are hitting the right target market. As volume increases the 3 series starts to look like a Camry.

I'm all for it. Good for them.
yeah but how about all the dealers that just invested a ton of money in these huge showrooms and service facilities with the promises of increased volumes.
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