[Jason]

BIMMERPOST NEWS

BMW Looks to Reduce Inventory Oversupply

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Via Automotive News:

BMW confronts oversupply on dealer lots
A scramble to clear inventory as 3 series sedans languish

May 8, 2016

BMW will likely spend the rest of the first half of this year liquidating inventories in the U.S. as it attempts to reduce a heavy stock overhang stemming from the end of last year, when it edged out Mercedes-Benz and Lexus for the U.S. luxury sales crown.

Comments from BMW executives confirm bearish remarks made by major dealership groups that said cars such as the 3 series were sitting on showroom lots, declining in value with each day.

"We are adjusting our production plans and reallocating more SUVs to the U.S.," CFO Friedrich Eichiner told analysts last week, repeating plans to lift the share of light trucks sold -- such as the X5 -- to 40 percent from last year's 33 percent. "The fourth quarter was not as strong as expected, and we took a decision early on to clean up inventories to prepare for maybe a flatter market. That is what we are doing, and we think it should come to an end in the second quarter."

From January to March 31, BMW reduced the supply for its namesake brand from 77 to 43 days, according to the Automotive News Data Center. As a result of the cutbacks in stock, volume for the core BMW brand sank to 95,564 vehicles for the first four months this year. This decline of 9.4 percent meant it fell behind Lexus and came up nearly 20,000 cars short of new segment leader Mercedes. Some nameplates such as the 3-series sedan, 6-series coupe and convertible and i3 electric car saw dramatic declines. Meanwhile the overall U.S. market grew 3.3 percent through April as Americans took advantage of affordable gasoline prices to drive off lots with new light trucks.

However, "The premium-car segment in the USA during Q1 in total declined for the first time," CEO Harald Krueger said during a conference call after publishing results for the group.

Alexander Bilgeri, spokesman for BMW North America, said all luxury brands have suffered slower U.S. sales in the early part of the year, mainly because energy industry problems have rippled into the financial sector.

"Affluent customers generally ride out recessions OK, but specific market volatilities can directly affect the premium vehicle market, and that's what we're experiencing right now," Bilgeri wrote in an email.

Strong sales growth "won't happen again until energy and the equity markets stabilize and business confidence improves," he added. BMW's expansion of the Spartanburg, S.C., plant, which will increase its supply of crossovers, and of its distribution network for imported vehicles speak to the company's confidence in long-term U.S. prospects, Bilgeri said.

AutoNation, the largest U.S. new-vehicle retailer, warned in early January that there was a bulging inventory of unsold cars, especially luxury models. Late last month, Group 1 said it planned to cut orders, particularly for luxury cars, and claimed BMW, Mercedes and Audi each had more than 90 days of supply at its stores.

When asked about the number of days supply or whether BMW was now suffering from the after-effects of trying to win the sales crown, spokespeople for BMW declined to comment.

The German company attributes the problems to an environment last year in which luxury car exporters, enticed by a strong dollar that lifted profits back home, attempted to compensate for weak Chinese demand by allocating more and more vehicles to the U.S.

The problems in the U.S. alarmed some analysts who attempted to extract more earnings guidance from management than BMW was willing to provide.

"You have added the U.S. to the risk section in your outlook statement and taken out Russia, but of course if the U.S. starts slowing for BMW that will have a much bigger impact on your numbers," said Evercore ISI analyst Arndt Ellinghorst during the call, unable to coax an outlook for the second quarter from the CFO.

In its interim report, BMW warned of a "trend towards deteriorating financing conditions" in the U.S. car market, estimating overall industry sales growth will drop to a rate of 1.3 percent from last year's 5.7 percent. This should bring the market to 17.7 million for the year, the company said.

BMW is now pinning its hopes on a strong second half, during which it will complete the three-year expansion of its SUV production capacity that costs $1 billion. By the end of this year, the South Carolina plant, now the company's largest worldwide, will total 450,000 annually. Additionally, Krueger said imports from Germany of its X1 and 7 series should help boost U.S. sales.

[Needsdecaf]

Good time to lease a 3 series or i3!

[bodonx]

Hopefully, the realize their new strategy doesn't work.

Luxury buyers move away to other brands. Stop making excuses.

The day BMW tarnish their iconic product, we know it will go down sooner or later.

Civic has better interior than 3-series. A lot of competitors handle better than 3-series. Go back to E46 recipe.

[HawaiiG80Green]

Originally Posted by bodonx

Hopefully, the realize their new strategy doesn't work.

Luxury buyers move away to other brands. Stop making excuses.

The day BMW tarnish their iconic product, we know it will go down sooner or later.

Civic has better interior than 3-series. A lot of competitors handle better than 3-series. Go back to E46 recipe.

Same thoughts here. We just bought a 2016 Civic Ex for my wife. For a lease payment of $220 a month, you get Apple Car Play, reverse camera, comfort access, projector headlights(i added hid), sunroof and it drives very well for a non german car.

I have a 2016 LCI M3 as well and wish i did not have to pay a lot of money on those features. I initially thought of getting my wife a 3 series but backout out due to this.

[Zirenz2006]

Originally Posted by bodonx

Hopefully, the realize their new strategy doesn't work.

Luxury buyers move away to other brands. Stop making excuses.

The day BMW tarnish their iconic product, we know it will go down sooner or later.

Civic has better interior than 3-series. A lot of competitors handle better than 3-series. Go back to E46 recipe.

Civic has better interior than 3 series?

[greekcs]

so does this mean no 440i for a while?

[luv135i]

Originally Posted by Zirenz2006

Civic has better interior than 3 series?

I will say the new civic is nice. Maybe not better than a 3 but its better than you would expect in a civic.

[autopal]

Strong sales growth "won't happen again until energy and the equity markets stabilize and business confidence improves,"

Somehow Mercedes does not seems to have this problem, competing in the same market. Sounds like BS to me, and just the "corporate excuse"

[Kief]

Aside from the true ///M series (and some of them are questionable), BMW has lost its edge, have gotten softer to appeal to more buyers. Nowadays, BMW seems more interested in being the sales king instead of sporty and exclusive like in years past.

The competition is getting better, if not already having exceeded BMW. And I'm a diehard BMW fanboy, but just bought my first non-BMW (Jag) in recent memory. Driving my F-Type R brings back that feeling of excitement/emotion I had when I bought my first E46 many moons ago. I've been very loyal, wife still has an F15 MSport w/MPPK & MPE, but I've got my eye out on an F-Pace within the next few years if the status quo continues

[Taran.J]

So how much less for a I3?

[X3paul]

Originally Posted by autopal

Strong sales growth "won't happen again until energy and the equity markets stabilize and business confidence improves,"

Somehow Mercedes does not seems to have this problem, competing in the same market. Sounds like BS to me, and just the "corporate excuse"

I blame it aswell on a no balls design. Not only are new bmw cars beeing outdriven by competitors in every dept, its design is so boring - look at the new 7. I was in vienna last weekend saw maybe a handfull of new 7's one right in the airport. Looks good specially the interior but the front and rear I am sorry for owners but it looks out dated allready. Looks good but somehow old allready. What will happen when A8 comes out? And the samesauge design that the new 5 will be will hurt sales if the 7 when it comes out. An ageeing lineup doesnt help. Tough times ahead I think.

[SCOTT26]

Originally Posted by autopal

Strong sales growth "won't happen again until energy and the equity markets stabilize and business confidence improves,"

Somehow Mercedes does not seems to have this problem, competing in the same market. Sounds like BS to me, and just the "corporate excuse"

Again overlooked that like BMW other manufacturers are seeing decline in their core portfolios but further rise in their SUV models as the North American market is driving increase of sales to all SUV segments.

[SCOTT26]

Originally Posted by bodonx

Hopefully, the realize their new strategy doesn't work.

Luxury buyers move away to other brands. Stop making excuses.

Or they buy the equivalent SUV model in this case the X3 as they have been doing in North America.

[DieGrüneHölle]

The dealers can only buy so many cars to pump up the sales numbers.

[Yeineken]

Wonder if a 3 series diesel would fall under this? Driving my current 500+ miles a week would be a lot better on the wallet in a cheap 3er diesel.

[keyalex]

Originally Posted by Zirenz2006

Civic has better interior than 3 series?

I think you are missing the point. I agree with the original post. BMW does need to step up their game and build cars with the original DNA.

[FogCityM3]

Not surprising. As mentioned before, moving away from its performance roots (the core differentiator vs other euro luxury brands) will eventually come back to haunt BMW. The X5 is a great SUV, but let's face it, when BMW becomes the SUV provider of choice and Mercedes is winning the performance sports sedan, it demonstrates that BMW has completely lost touch with its performance and rabid enthusiast roots. All the warning signs were there including enthusiasts leaving the brand, key management turnover, the near death of the ///M division with the most criticized product in ///M history, the diversion of massive capital to an uncompetitive i-brand (already seems to have lost the battle vs Tesla), and the ultra-segmentation of multiple models within a series that only serve to confuse consumers.

BMW should do a better job in tapping consumer and enthusiast opinions, including using this forum as a data and information gathering medium.

[PandaM3]

good time to lease an i3 for those waiting for their reserved Tesla Model 3's to get built

Too bad I'm already a year into leasing a Spark EV while waiting for my reserved Model 3 otherwise I'd be leasing an i3

[faiz]

They should give out better residuals and incentives. Last year this time it was amazing and the sales showed.

[Sassicaia]

Originally Posted by FogCityM3

Not surprising. As mentioned before, moving away from its performance roots (the core differentiator vs other euro luxury brands) will eventually come back to haunt BMW. The X5 is a great SUV, but let's face it, when BMW becomes the SUV provider of choice and Mercedes is winning the performance sports sedan, it demonstrates that BMW has completely lost touch with its performance and rabid enthusiast roots. All the warning signs were there including enthusiasts leaving the brand, key management turnover, the near death of the ///M division with the most criticized product in ///M history, the diversion of massive capital to an uncompetitive i-brand (already seems to have lost the battle vs Tesla), and the ultra-segmentation of multiple models within a series that only serve to confuse consumers.

BMW should do a better job in tapping consumer and enthusiast opinions, including using this forum as a data and information gathering medium.

Near death of the M devision? Most criticized product in M history?

Huh? Any links to show what you are talking about?

[kevinlevrone]

BMW needs to realize that their latest cars are simply ugly.

1 - series - I couldn't believe they could build a 1-series that is uglier than the previous generation. Even the facelift (which could easily fix it by adopting the 2-series front end), did not fix the ugliness.

F30 3-series - they took all the good things from the e90 LCI and ruined them. That front nose, that side profile...it's just sad The C-class and A4 easily look better.

F10 5-series - unnecessarily heavy and large, looks bland and doesn't have any personality whatsoever.

G11 7-series - frankly it looks uglier than the facelifted previous generation 7-series.

New X5 - easily looks worse than the previous generation

New X6 - front end looks worse than the previous generation

i3 - hilariously ugly.

What is the common denominator here, for the F30, X5 and X6: front-ends are ruined by two design elements: headlights merging into the front grille, and headlight shapes that resemble some random lines drawn by someone with Parkinson's disease.

BMW really needs to change something in their designs. They need designs that look great right from the first sight, instead of controversial designs.

I stepped into a BMW dealership a few days ago and there was no car that I would have spent my money on, except the F30 M3 which somehow manages to look really good despite its F30 design roots.

[NightStalker]

People have too much stigma against BMW on this forum. If you don't like the current line up then get something else lol. Stop complaining.