BMW can't turn a profit in London

[tazsura]

Wow. That is an eye opener. Especially coming from such a well respected Dealer Group such as HR Owen.

Having said that, my nearest BMW dealership in Essex (so ALL of the Chigwell mum's X5's were bought there!) has gone though about 3 or 4 different ownership changes in the past 5-7 years. As of last year the dealership closed. If the level of care i received while i was there was anything to go by, i can see why!!!

How times are changing...


Taz :idea:

[Leadfoot]

In the UK you will get more discount off a BMW than any of the other top German brands and that spells only one thing, they aren't selling as many as they need to sell.

Sure they are still selling a shit load of them but with the discounts being offered compared to the others BMW would have to sell 4 cars for every 3 from either Audi or Mercedes. When you can trim back production and maintain your profits surely that is the better option than going for the big numbers.

Just ask Porsche which is the better, they did buy a heck of slice of VAG while only shifting a tenth of their volume.

[RussianM3_dude]

Well, operating costs in London should be pretty huge.

[Leadfoot]

Well, operating costs in London should be pretty huge.

They are the same for everyone else.

[RussianM3_dude]

Well, if there are too many BMW garages, then they might not be turning enough profit to offset the high costs.

[Leadfoot]

I don't now how many dealers BMW have in the London area but nation wide it's about 145 dealers. Too many for sure but then who is to blame for that.

[Audiphile]

Interesting article. BMW has been struggling with shrinking profit margins since the late 90s. Their profit per unit has been slipping and is below Audi and Mercedes-Benz while that of Audi has been increasing. BMW discounts heavily in the States as well to maintain volume. Although they post profits, there margins are declining and this is a big concern in Munich. Also, one of the reasons the Quandts forced the previous CEO to retire. Sales up, but margins down. No wonder BMW is seeking cooperative agreements with other makes, like MB for the next generation B-Class and Mini. It will be impossible to compete against Audi in terms of ecomonies of scale in the future as a stand alone company, especially as Audi surges. I read several years ago in ANE that German BMW dealers also loose money or have very small profit margins from selling BMWs... and yet BMW's arrogance continues. Thank goodness they have consumers brainwashed.

[Leadfoot]

Here is another thing most people don't know about BMWs, the company (BMW) set aside £800 for each car sold for warranty repairs in the first year. I don't know if any other brand in any different but clearly they expect them to give problems.

But Audiphile you are basically confirming what I was saying about BMW discounts, in the UK BMW need to sell roughly 4 cars for every 3 from Audi or Merc to achieve the same profit. Clearly they are having the same problem as all companies do when they try to expand too quickly.

[Reno]

Irrelevant point when you have THE financial City and one of the biggest luxury car markets in the world right on your doorstep.

Operating costs are totally and utterly irrelevant. Besides every other car company has lots of showrooms in London, you think BMW have higher overheads than they do?

Rubbish point

The only thing you can get from this is that a lot of BMW customers are not brand loyal and have chosen to buy cars from BMW's competitors.

I do not agree. I think it is very relevant. Operating costs for dealerships in London are materially higher than for dealerships outside the capital. And, indeed, they have a bigger market, but apparantely that is not enough to compensate the higher costs.

And indeed, it is the same for other brands, but it is not known whether their dealerships in london are profitable. Perhaps they are incurring losses as well, but it is not known to the public.

[Leadfoot]

I do not agree. I think it is very relevant. Operating costs for dealerships in London are materially higher than for dealerships outside the capital. And, indeed, they have a bigger market, but apparantely that is not enough to compensate the higher costs.

And indeed, it is the same for other brands, but it is not known whether their dealerships in London are profitable. Perhaps they are incurring losses as well, but it is not known to the public.

In the London area there is 19 Audi dealers compared to 26 BMW dealers and 52 Mercedes dealers. I think this should answer you question as to if BMW have too many dealers, clearly the answer is no compared to Merc who have double.

The problem Reno is the discount that you can get on BMW cars, in fact the brother-in-law was offered discount to change to the new M3 from his Z4M Coupe. Why discount a car that will sell out anyway, it doesn't make any sense at all, either dealers are given too big of targets to meet or BMW has to get on up of the discounting that is going on because it's starting to affect the second hand market.

[RussianM3_dude]

Here in Switzerland, BMW discounts are not that large. I got 3.5% for my 130MSport, but could have went to maybe 4%, but I don't like to haggle. Alfa Romeo offered me 8% rebate for a 159 2.2 TI and the best trade in. Mercedes offeres very little and Audi does about 2-3%. Volvo gives zilch.

[Leadfoot]

Here in Switzerland, BMW discounts are not that large. I got 3.5% for my 130M/Sport, but could have went to maybe 4%, but I don't like to haggle. Alfa Romeo offered me 8% rebate for a 159 2.2 TI and the best trade in. Mercedes offeres very little and Audi does about 2-3%. Volvo gives zilch.

Just to show what the discounts are like here in the UK, your same 130iM/Sport retails at £26610 less extras, anyone at a push can buy this very car from a BMW dealer at £23343 what is a £3267 saving which is over 12% and the same is true for the 335i M/Sport, retail £35960 and can be got for £32278 which equals a saving of £3682 again just over 10%.

This is the norm for BMW cars, but try the same with an Audi S3 and you will be lucky to get £500 over and the same for the S5.

Some may see this as great value when buying a BMW, me I see it as the car being over priced to start with.

[Audiphile]

In the London area there is 19 Audi dealers compared to 26 BMW dealers and 52 Mercedes dealers. I think this should answer you question as to if BMW have too many dealers, clearly the answer is no compared to Merc who have double.

Wow, MB has 52 dealers in Greater London compared to 26 for BMW and 19 for Audi. Yet, Audi is more than 15,000 units ahead of MB in Great Britain so far for 2007 according to a recent article in Audi Driver (the English Audi enthusiast magazine that I subscribe to). I think MB needs to be more worried than BMW if this the case. They are getting spanked by Audi and BMW. :lovl:

[RussianM3_dude]

Just to show what the discounts are like here in the UK, your same 130iM/Sport retails at £26610 less extras, anyone at a push can buy this very car from a BMW dealer at £23343 what is a £3267 saving which is over 12% and the same is true for the 335i M/Sport, retail £35960 and can be got for £32278 which equals a saving of £3682 again just over 10%.

This is the norm for BMW cars, but try the same with an Audi S3 and you will be lucky to get £500 over and the same for the S5.

Some may see this as great value when buying a BMW, me I see it as the car being over priced to start with.

However cars are wildely overpriced in Britain to begin with. Even at 23,000GBP the 130 in Britain is 3,000GBP more expensive then in Switzerland.

[RussianM3_dude]

In the London area there is 19 Audi dealers compared to 26 BMW dealers and 52 Mercedes dealers. I think this should answer you question as to if BMW have too many dealers, clearly the answer is no compared to Merc who have double.

Wow, MB has 52 dealers in Greater London compared to 26 for BMW and 19 for Audi. Yet, Audi is more than 15,000 units ahead of MB in Great Britain so far for 2007 according to a recent article in Audi Driver (the English Audi enthusiast magazine that I subscribe to). I think MB needs to be more worried than BMW if this the case. They are getting spanked by Audi and BMW. :lovl:

I would think Mercedes sells more expensive high margin models then Audi and BMW.

[Leadfoot]

However cars are wildely overpriced in Britain to begin with. Even at 23,000GBP the 130 in Britain is 3,000GBP more expensive then in Switzerland.

Funny you should say that, usually UK spec is a lot higher than in Europe which accounts for a lot of the difference in price, maybe Switzerland is a little different.