AM Online

BMW dealers unhappy as targets increased

BMW UK has tasked its dealers with picking up more retail sales, and is linking bonus to enquiry management as an incentive.

However, the retailers complain they’re not receiving enough support. The carmaker has recently been in a series of tense meetings with the BMW National Dealer Council (NDC).

The NDC has argued that BMW is setting sales targets and changing processes and bonuses without real consultation with the dealers, whose profit margins have fallen as the carmaker chases volume increases.

Dealers are also angry that after investing huge sums in new facilities to achieve the 3% retail standards bonus, it has been halved without consultation with 1.5% now allocated to enquiry management.

Managing director Jim O’Donnell says a year ago only 23% of dealers were taking all the contact details from a showroom visitor – and following that lead up within 72 hours.

“Today that figure stands at 90% and dealer staff are following up enquiries within 24 hours,” he says. “Leaving a follow-up for 72 hours was too long and customers thought the dealer wasn’t interested in them.”

In the latest dealer satisfaction survey by the National Franchised Dealers Association, BMW’s score slipped from 7.3 to 6.6 in the last 12 months. O’Donnell brushes that aside, adding that many of those dealers also have Mini, whose ranking has improved from 8.2 to 8.6.

“They think the management of Mini is great but the management of BMW is crap. It’s the same management.”

BMW sells fewer 3-, 5- and 7-series today than it did 10 years ago so its growth has come from new niches like the X5 and 6-series. However, O’Donnell wants 125,000 registrations this year – up on the 116,000 achieved in 2006 – in order to keep BMW ahead of rivals Audi and Mercedes.

“The hardest part has been attracting new customers to the brand,” he says.

And he fires a broadside at the network: “The average dealer wants an easy life. I’m disappointed that some small groups don’t realize that we have invested heavily in product and we have to grow our revenue and sales. I cannot accept that all our growth is through new product.”

There are “five or six” dealers who aren’t happy with the path BMW is taking. They will not be staying with the franchise when the five-year contract comes up for renewal in September 2008. #AM_ART_SPLIT# “They know who they are and they know we don’t want them after September 2008. We’re trying to manage the sale of these businesses, but as some of them don’t want to sell they spread discontent.

They believe they have been loyal to BMW for years, but they haven’t adapted. They will make a lot of money in selling the business, if they’re being fair they should be walking away happy.”

  • AM view

    Dealers know that Jim O’Donnell hates conducting his business via the media. That they have continued to bombard AM with emails reveals the depth of feeling. But O’Donnell knows that few will want to give up the franchise, so while the NDC may gain some ground, he is unlikely to budge too much.

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