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Dealer council tackles BMW about sales and profit issues

The BMW National Dealer Council was due to meet with the manufacturer this week to lobby for better margins and more input into BMW’s sales policies.

NDC chairman and Stephen James chairman Duncan Collins, with the backing of BMW retailers, claims that the network is burdened by “excessive new car volumes” and change is required. But BMW argues that only it can set the agenda which dealers must follow in order to achieve its targets.

In a letter to the 154-strong retail network, which AM has seen, Collins says: “While the NDC has achieved some success in the past, we recognize that we need to change if the current departmental losses and unfair practices are to change.

“We are therefore determined to have real input on BMW UK’s policies, including targets, bonuses, margins and finance packages, with a view to improving dealer profitability and our return on the considerable investments made by each of us.”

AM put these points to BMW UK managing director Jim O’Donnell prior to the meeting on Tuesday, February 6. He said it was “unrealistic” of dealers to expect to dictate margins and prices.

“If they think they can influence what can happen in this respect, they are well off the mark,” says O’Donnell.

“We want to make poor performance better so we sometimes need to make changes that they don’t like.

“The nature of dealer/manufacturer relationships is that we set the rules and put mechanisms in place to help dealers achieve them.”

Collins wouldn’t elaborate on the contents of his letter prior to the meeting.

But he stresses: “We have a good relationship with the manufacturer, but we would like to improve it. Our main concern is profitability.”

Many BMW retailers, used to making 3% margin in the past, have told AM that they are now struggling to hit 1%.

O’Donnell says: “Even when the average dealer was earning a margin of 3% there were issues. We have a network of 154 dealers so, in effect, we have 154 difference issues to deal with.”

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