BMW has announced a massive decrease in sales in the US market
23 September 2008

BMW has become the latest company to announce a dramatic decrease in sales in the US market, with the company’s north American boss announcing that BMW USA has stopped shipment of 44,000 cars that were due to cross the Atlantic before the end of the year.

CEO Jim O’ Donnell, previously boss of BMW GB, reportedly took the decision due to the increasing cost of the incentives necessary to keep BMW’s sales figures buoyant in the ‘States.

The weakness of the US dollar against the Euro has reduced BMW’s ability to make profits on American sales.

The news is a major blow for BMW – and proof of the depth of the economic slowdown. BMW sales in American had previously remained strong even as other European premium brands began to suffer.

And with dealers in the UK reporting their slowest September since the ‘5X’ registration plate change was moved to the beginning of the month, the news from this side of the Atlantic is unlikely to get any more cheery.

Find an Autocar car review

Driven this week

Join the debate

Comments
1

23 September 2008

It wasn't the incentives that killed BMW in US. It was leasing. The viability of leasing crashed when the residual values crashed. BMW NA, like the Big Three and others, thought the good times would always roll; that there would always be some sucker to pay premium for an ex-lease 3yr old, bog standard 3 series. Was the same nonsense as securitisation of mortgage loans being resold at premium with investment grade AAA rating, which blew up America's bubble finance economy in the first place.

Like the US, Britain has lived the high-life on falling real wages. The circle was squared by borrowing. I would estimate at least a half of BMW's extra sales over say ten years ago in US were due to this froth from credit purchasing and healthy leasing residuals. BMW must know internally that the US premium market will settle back about 50% lower than 2007. Overall expect US auto sales to fall back to about 12 million new units from a high of 16 million plus in 2006.

Unless the US authorities can make house prices rise again - which they can't, short of handing out free dollars to everyone - and bring back the millions of relatively high-paying, secure industry jobs exported overseas in the last forty years - which they won't - then the US auto market is a bottomless pit. See the Big Three's demand for a $50bn bailout. What happened to Capitalism in the Land of the Free?

Add your comment

Log in or register to post comments

Find an Autocar car review

Driven this week