Sales and marketing boss Ian Robertson isn't concerned by the growing sales of rival car brands

Profits will always be more important than being the world’s biggest premium car maker for BMW, according to sales and marketing boss Ian Robertson, after the firm slipped from first to third in the sales race against Mercedes and Audi in the opening months of 2016.

In particular, Mercedes sales have surged, rising up to 20% year-on-year off the back of strong demand in China. BMW’s growth rate, meanwhile, has exceeded that of Audi, but the latter is still selling more cars.

“Profits have always been our guiding light, and our consistency in that field bears testament to that,” said Robertson. “But within that, there is always the challenge of balancing the equation between profit, volume and residual values. If I’m honest we’re not 100% where we want to be.

“But a lot of that is down to some clear, profit-led decisions we’ve taken. In Russia, where the currency has halved in value, we’ve stopped selling our smaller cars. That’s a profit decision that some of our rivals haven’t taken. Likewise, we are more active in some European fleet markets than others.

“The appeal of volume is that it is a multiplier of other savings - if you have volume you can use it to drive profits in other ways. But it can also risk profits. We have a team of people monitoring it, and it is not an easy equation, but profits must always guide our decisions.”

Robertson also highlighted the importance of residual values in setting lease rates and cautioned that over-aggressive discounting would have a long-term negative impact on that, eventually driving the lease rates up again.

“Premium brands do have an inherent advantage in being more desirable,” he said. “I’m not in a position to talk about the strategy of our rivals, but I do know that I am happy with where our residual value predictions are, and you do have to balance out volume gains against long-term knock-on effects.”

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19

11 May 2016
Brainless
Male
W@+&@r.

Another
Useless
Dopey
Idiot.

Jerk in a Merc.

289

11 May 2016
What a load of crap. "Profits are our guiding light" says Robertson.
For the last two years BMW in the UK, have been one of the biggest discounters (12k off 5 series Touring, £26k off 6 series for example), Pre -registering cars in a vain attempt to stay in front of Audi. A completely fruitless exercise - it was only putting off the inevitable as Audi expanded their range, and shot to pieces Dealer profitability!
NOW, now having been overtaken as predicted they aren't interested in volume any more just profitability!
Well that particular horse has bolted, once customers are used to pre-reg stock and big discounts its really hard to wind back the clock....not to mention the damage already done to residual values.
I remember a time when BMW's were exclusive and desirable....when BMW' M.D. stated 'BMW will never be interested in more than 1% of the UK market'.....that was when BMW was profitable and used examples were gold dust.
Depressing!

11 May 2016
289 wrote:

What a load of crap. "Profits are our guiding light" says Robertson.
For the last two years BMW in the UK, have been one of the biggest discounters (12k off 5 series Touring, £26k off 6 series for example)

£26,000, even as a percentage of a high initial cost that's probably one of the biggest discounts out there, 6 series owners must be choking on their breakfast this morning

 

Hydrogen cars just went POP

289

11 May 2016
Yep! and it didn't take much arm twisting either.

11 May 2016
289 wrote:

What a load of crap. "Profits are our guiding light" says Robertson.
For the last two years BMW in the UK, have been one of the biggest discounters (12k off 5 series Touring, £26k off 6 series for example), Pre -registering cars in a vain attempt to stay in front of Audi. A completely fruitless exercise - it was only putting off the inevitable as Audi expanded their range, and shot to pieces Dealer profitability!
NOW, now having been overtaken as predicted they aren't interested in volume any more just profitability!
Well that particular horse has bolted, once customers are used to pre-reg stock and big discounts its really hard to wind back the clock....not to mention the damage already done to residual values.
I remember a time when BMW's were exclusive and desirable....when BMW' M.D. stated 'BMW will never be interested in more than 1% of the UK market'.....that was when BMW was profitable and used examples were gold dust.
Depressing!

Pre registering cars could help them maintain profits. The retail price is a single component along the value chain. There are production costs and all sorts of other costs. As a simplified example, imagine if you can produce 200k cars a year at 20k each but reducing production to 100k cars will up the unit price to 35k each. The market will only bear 100k cars at full retail price say, 40k. Producing 200k cars and discounting them to 30k could still up your profits. BMW are consistently have some of the highest margins in the business. They are doing something right.

289

11 May 2016
...sorry winnie, you have this all wrong. You aren't even considering the importance of dealer profitability to BMW, or the loss of exclusivity and residual values which totally undermines the whole programme.
The Dealers need to remain profitable to put BMW's customer experience in place.
Right now, owning a Mondeo Vignale is way more exclusive than owning a 320D or 520D BMW. That is a really bad situation

12 May 2016
289 wrote:

...sorry winnie, you have this all wrong. You aren't even considering the importance of dealer profitability to BMW, or the loss of exclusivity and residual values which totally undermines the whole programme.
The Dealers need to remain profitable to put BMW's customer experience in place.
Right now, owning a Mondeo Vignale is way more exclusive than owning a 320D or 520D BMW. That is a really bad situation

I disagree. Affordable premium car brands aren't about exclusivity and havent been so for a while. They are about creating nice things yes, but exclusivity in terms of being rare, no. Also, why would BMW care about residual values? Every brand is pre registering vehicles. Everyones residual values aren't that great. If every competitors car has similar residuals so their financing deals can be competitive what does it matter to them? Honestly, I can't think of any mainstream car brands that work to your model of low production numbers, zero discounting or pre registering. Maybe Porsche or Ferrari? Say BMW did limit production numbers like Ferrari. Do you think that someone will wait 8 months for a 3 series when they can pop over to Audi or Mercedes and get a similar quality product in a few weeks?

12 May 2016
289 wrote:

...sorry winnie, you have this all wrong. You aren't even considering the importance of dealer profitability to BMW, or the loss of exclusivity and residual values which totally undermines the whole programme.
The Dealers need to remain profitable to put BMW's customer experience in place.
Right now, owning a Mondeo Vignale is way more exclusive than owning a 320D or 520D BMW. That is a really bad situation

Also, just look at the stats. BMW are consistently one of the most profitable volume car makers. Their margins are amongst the highest for volume car makers.

11 May 2016
xxxx wrote:
289 wrote:

What a load of crap. "Profits are our guiding light" says Robertson.
For the last two years BMW in the UK, have been one of the biggest discounters (12k off 5 series Touring, £26k off 6 series for example)

£26,000, even as a percentage of a high initial cost that's probably one of the biggest discounts out there, 6 series owners must be choking on their breakfast this morning

They might if it actually happened. I wouldn't take every claim on the internet as gospel.

289

11 May 2016
....I have seen the invoice, so I am very sure of my facts Overdrive

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