Tag Archive | "BMW"

BMW Says It Won’t Raise U.S. Incentives as Profit Trumps Volume

Bayerische Motoren Werke AG won’t increase customer discounts as the race to be 2010’s top-selling U.S. luxury automobile brand goes into the final weeks of the year, reported Bloomberg.

“We’re chasing profit more than we’re chasing volume,” said Peter Miles, executive vice president of operations for BMW’s North American unit. He spoke in an interview today in advance of the Los Angeles Auto Show, which opens to the press tomorrow.

Toyota Motor Corp.’s Lexus, helped by customer discounts, earned the top-selling luxury spot in October, the first time since May, to help widen its lead for the year. The Toyota City, Japan-based company’s luxury brand is under pressure to keep the lead after Toyota’s record recalls this year and new products from competitors BMW and Daimler AG’s Mercedes-Benz division.

The average cost of incentives on Lexus cars rose to $3,746 in October from $1,121 a year earlier, while incentive spending on Lexus trucks rose to $2,810 from $696, according to Autodata Corp., a Woodcliff Lake, New Jersey-based researcher.

BMW lowered its incentive spending by 39 percent last month to an average of $2,926, while Mercedes was relatively flat with a decline of 3 percent to $3,879, Autodata said. BMW’s incentive spending declined 27 percent for the year through October and Mercedes dropped 30 percent.

Subsidizing Leases

BMW traditionally spends most of its incentive money on subsidizing leases, said Jesse Toprak, vice president of industry trends at TrueCar.com, a researcher that follows automobile sales and marketing.

“This year, because of the recovery in the leasing markets, BMW actually was able to control their incentives while still being able to offer attractive lease programs,” he said.

While the same improved leasing conditions apply to Lexus and Mercedes, those automakers are spending on incentives as they go for the No. 1 selling spot, he said.

U.S. sales for this year through October totaled 183,529 for Lexus, 178,080 for Mercedes and 176,736 for BMW, the global leader in luxury-vehicle deliveries.

The totals don’t include non-luxury models such as BMW’s Mini cars or Stuttgart, Germany-based Daimler’s Smart cars and Sprinter vans.

BMW’s November and December incentive spending should be in line with October, Miles said, without providing details.

The company’s U.S. sales will increase 16 percent next year on growth from new products such as the redesigned X3 sport- utility vehicle, the 5-Series and the new 6-Series, Miles said.

“We’re fueling our growth now with new products,” he said.

The race for the No. 1 spot should continue to be close next year, analysts said.

“I think we will see a photo finish” of the 2011 selling year, Toprak said.

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BMW Recalls 150K Vehicles in U.S.

BMW plans to recall around 150,000 vehicles in the United States to fix potentially faulty fuel pumps.

The German automaker said Tuesday that it is recalling 130,000 models equipped with twin-turbo six-cylinder engines to check and perhaps replace the high-pressure fuel pump, reported The Detroit News.

In a separate action, BMW will recall 20,800 2008 X5 SUVs with normally aspirated six-cylinder engines to replace the low-pressure fuel pump.

The bigger recall involving models with twin-turbo engines was announced a few hours after ABC News issued an investigative report into problems with the fuel pumps leading to lawsuits.

BMW said no injuries or accidents had been reported because of either issue.

Auto analysts said BMW’s response may reflect a heightened sensitivity throughout the industry about safety or recall-related issues after Toyota Motor Corp.’s problems. Not only did Toyota recall millions of vehicles, but it also was fined and pilloried in some cases for moving too slowly.

“Here we have a situation where a company is in a possible liability situation, and we’re not even certain anything has happened,” said Jack Nerad, executive market analyst at used-car price specialist Kelley Blue Book.

Nerad and other analysts said the increased sensitivity to safety issues is beneficial.

The larger BMW recall affects 2007-10 model year BMW 335i cars, 2008-2010 135i, 535i and X6 xDrive35i models, and 2009-10 Z4 sDrive35i roadsters. The high-pressure pump in those vehicles may fail, BMW said.

“Symptoms include long-crank engine starting times along with the illumination of the ‘Service Engine Soon’ light,” BMW said. In some cases, the driver may experience reduced engine performance accompanied by a tone and an ‘Engine Malfunction’ light, it said.

The fix may entail the replacement of the high-pressure fuel pump, a software update or both. BMW expects that about 40,000 vehicles will need a new pump.

In the other action, BMW will recall 20,800 2008 X5s to replace the low-pressure fuel pump. If the pump fails, the engine will stop running and the driver will lose power-assist for the steering and brakes, although the steering and brakes will still function.

BMW said it had notified regulators. Owners of affected vehicles will be sent letters in the coming weeks.

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BMW Plans to Test Short-Term Car Rentals

BMW AG has announced plans to launch a project to let drivers in Germany rent its luxury sedans and roadsters by the hour, the latest effort from an auto maker to build a business by enabling consumers to get around without buying a car.

Short-term car-rental programs aren’t new, but few have emanated from car makers, whose traditional growth approach has been to prod people to buy more cars, not fewer.

But among consumers in the world’s biggest and ever-expanding cities, particularly younger drivers, car ownership is flat or declining, according to urban planners and researchers, The Wall Street Journal reported. To reach them, a handful of European auto makers, such as Daimler AG, maker of Mercedes-Benz cars, and PSA Peugeot Citroen, have been exploring alternatives that revolve around selling them transportation some other way.

As populations grow—and along with them congestion and pollution concerns—the number of car owners is likely to decline per capita over the next 15 years in Tokyo, New York, London and other cities in developed countries, said Sarwant Singh, a partner at market-research firm Frost & Sullivan.

With short-term car-leasing and car-sharing programs, auto makers are aiming not only to tap into customers who don’t own cars, but to draw them to the brand in the event they do eventually want to buy or upgrade to a new car, he said.

BMW’s 12-month pilot program, called “BMW on Demand,” will allow drivers near its Munich headquarters to rent various models from its product lineup, from its compact 1 series (€16, or $22.29, an hour) to its flagship 7 series sedan (€32 an hour). Customers will be able to pick up and drop off the cars at BMW Welt (or “BMW World”), the auto maker’s exhibition, event and car delivery center next to its headquarters, and can reserve them online, by phone or at a counter there.

A BMW spokesman said the company anticipated many potential customers would choose models they perhaps couldn’t purchase outright—such as its M6 sports coupe, which has a U.S. starting price of $102,350—and rent them for special occasions. If the program is successful, the car maker plans to open more leasing sites in Munich and eventually in other European cities.

BMW’s project is similar to Peugeot’s Mu initiative, which the French car maker has been expanding across European capitals this year. It allows drivers to use a pre-paid account to lease vehicles—from a van to a scooter to a bicycle—on a short-term basis.

Daimler, on the other hand, has been testing a Web-based ride-sharing initiative called Car2go, much like Zipcar’s car-sharing business in the U.S. and U.K. Software links drivers with Daimler’s Smart-brand cars, allowing them to pinpoint and pick up an available car ad-hoc, then drop it off when and where they prefer.

In Ulm, Germany, the initial test site for Car2go, some 15% of the city’s registered drivers are signed up with the program. The car maker has since expanded the program to Austin, Texas, and last week announced plans to eventually begin it in Hamburg and other locations.

Daimler last month also launched a carpooling variation of the program, called Car2gether, that uses social media to link riders with compatible drivers. At first passengers will be required to pay a small cash fee to help with the gas and maintenance. As the program progresses, Daimler plans to install an automated payment system, from which it will take a small cut of the fees.

Mr. Singh of Frost & Sullivan said he projects membership in such car-sharing businesses to climb roughly tenfold by 2016 to 4.5 million members in North America and 5.5 million people in Europe.

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BMW’s Reithofer: Room to Grow in U.S. Luxury Segment

SPARTANBURG, S.C. – BMW CEO Norbert Reithofer says there is significant room for growth in the U.S. luxury segment but the premium market won’t return to the 2 million-unit level until 2013 or 2014.

BMW executives, here to preview the redesigned X3 crossover, said the luxury market today is tracking at about 1.5 million vehicles. The company counts Mercedes-Benz, Audi, Jaguar, Lexus, Volvo and Saab among premium brands.

Reithofer said his outlook is based on other countries, such as Germany, where the premium segment is 30 percent of the total market.

“That means fierce competition between Mercedes-Benz, Audi and BMW,” he said at a meeting with journalists here, where BMW also is touting its latest plant expansion.

Persistent high unemployment, a housing slump and changing spending habits have put a damper on U.S. new-vehicle demand. In the past, U.S. consumers often refinanced home loans to draw cash for major purchases that often included a new car.

U.S. light-vehicle sales rose 10 percent for the first nine months of this year, but many automakers were hoping for a more robust recovery at this point in the cycle.

“The global economic slump has changed the way consumers view and purchase all premium products from luxury watches to expensive homes,” said Jim O’Donnell, president of BMW of North America LLC. “It has had a profound effect on the auto industry as well.”

Reithofer said becoming the No. 1 luxury brand in the United States is not a goal.

“It is not our first priority to overtake Lexus in America. It is to be a very good premium brand in the United States,” he said. Residual values, incentive spending and volume “all have to be in balance,” he added.

While the Chinese market is growing rapidly, the premium segment in China is likely to account for 7 percent of the total market in 2010 and is still developing, Reithofer said.

BMW is building a second factory in China, but rather than make a large sedan, it will produce the compact X1 crossover that goes on sale in the United States next year.

O’Donnell said that BMW sales in the United States are likely to increase 10 percent this year and that the brand will outpace the premium market next year because of the new 5 series.

Next year BMW will benefit from the redesigned X3 crossover, redesigned 6-series coupe and convertible, a freshened 1-series coupe and convertible and the launch of the all-new X1 crossover. O’Donnell predicted that the U.S. premium market will rise 10 percent in each of the next two years.

‘Amazingly stubborn’

“The recession has proven to be amazingly stubborn,” he said. “I think we can say the start of the recovery is proving to be a bit stubborn as well.”

O’Donnell forecast that BMW brand sales in the United States will reach 212,000 to 215,000 cars this year, up from 196,502 in 2009. BMW Group’s sales, including Mini and Rolls Royce, are expected to rise to 260,000 vehicles this year, up from 242,087 in 2009.

BMW Group’s sales reached 336,000 vehicles in 2007.

“This is a push market. We have to work, claw and fight for every sale,” O’Donnell said. “The entire market is incentivized because even though a lot of new vehicles are being introduced, the economy remains very conservative.”

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New X1, 5 Series Boost BMW Q3 Sales

PARIS – BMW said deliveries in the third quarter beat its forecasts as the new X1 sport-utility vehicle and revamped 5-series sedan won customers, Bloomberg reported.

Sales of BMW, Mini and Rolls-Royce cars and SUVs rose about 16 percent in September to cap a “very good” three-month period, CEO Norbert Reithofer said.

Group deliveries in September 2009 totaled 122,354 vehicles. Sales increased 9.1 percent in July 2010 and 13 percent in August.

The CEO declined to comment on financial expectations for the third quarter, saying he hasn’t seen internal figures yet.

BMW has a target of selling 2 million cars and SUVs by 2020, and is planning on 10 percent growth in deliveries this year to 1.4 million vehicles.

The automaker, which is also developing a new front-wheel-drive model, will overhaul the 1-series compact and 3-series sedan in the next two years, providing momentum for sales independent of economic developments, Reithofer said at the Paris auto show.

The front-wheel-drive technology will be installed in BMW-brand models and will also be used in the Mini small-car lineup, Reithofer said.

Sales volumes for the vehicles could total 700,000 to 1 million vehicles a year, he said.

BMW doesn’t need a partner for the front-wheel-drive platform because it can generate economies of scale on its own, Reithofer said.

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Strong Unit Sales to Drive BMW Q3 Results

FRANKFURT – BMW AG expects strong unit sales in the third quarter to drive results, with an expected seasonal slowdown having less of an impact than forecast, reported Reuters.

“Our car sales volume is set to rise by some 10 percent to more than 1.4 million units for the full year,” Chief Financial Officer Friedrich Eichiner said in the text of a speech to investors on Thursday.

“We also forecast a full-year EBIT (earnings before interest and tax) margin of more than 5 percent for the Automobiles segment,” he added.

The group’s aim is to become the strongest premium brand in China “especially with respect to brand awareness and customer satisfaction,” he said.

Currently, the BMW Group is the number two premium manufacturer in the Chinese market, with a market share of 22 percent, Eichiner said.

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