Topic: BMW Canada President Provides "Answers"

[baumer00]

http://globeinvestor.com/servlet/story/RTGAM.20071025.wbmw_discussion1025/GIStory/

Interesting read.  Readers were able to send in questions to the pres of BMW Canada, his answers are not what I'd call satisfactory, but he's in a tough position.

[sailor723]

Yep...I'm kind of surprised he agreed to do it. The answers were pretty lame and often seemed to not really address the question. Still,like you say, he's got a difficult position to defend.

[sirAQUAMAN64]

Still, seems a half decent Q&A. Didn't really expect there to be an announcement therein that read "Okay, you guys and gals are right, we'll chop the price today" but he did seem quite intelligent and casual where it made sense to be. Takes guts just to take on the topic like that.

[initial_D]

Takes courage to sit on a hot stove. 

[ovr50]

IMO the Cdn Pres did as good a job as he could do in the circumstances. At least he had the guts (and likely permission from BMW AG) to do the Q&A session. More than some other makers are doing.

And his point on buying in Canada is valid as it applies to the Cdn dealers investment in plant and facilities. If we want continual and first class service, loaner cars, and other perks; one needs to support the local dealers. I would have a bit a "guilt" thing if I bought new in the US, then expected the local shop to rectify all problems for free.

Anyway, the debate will continue, no doubt. 

[ArticSteve]

Our problem as Canadians is that the US and other gobal powers don't give a rat's *ss about us or our wallets.  The California car market alone is larger than that of all Canada.  The failing US dollar is costing the imports plenty in the US, so they are in no hurry to give away more.  

[The Mighty Duck]

Our problem as Canadians is that the US and other gobal powers don't give a rat's *ss about us or our wallets.  The California car market alone is larger than that of all Canada.  The failing US dollar is costing the imports plenty in the US, so they are in no hurry to give away more.   

It's not costing BMW AG.  As the article says, prices are based in Euros, so a drop in the US dollar costs BMW of America, but doesn't affect BMW AG.  And my understanding is that BMW AG tells BMW of America what prices to set.

[gord_boyd]

A big picture partial solution I see coming are two price rises in US markets only over the course of next 18 months--say 5% ea., set first by Europeans, then Japanese, then Americans.
Inflation is set to rise in U.S. more than here on imported items anyways.
I would buy my U.S. origin bimmer sooner rather than later.
(But speaking personally there are significant mileage improvements coming over next three years and so depreciation way too great on new anything which will be out-of-date fairly fast as innovations come to market.  I think if I was giving the Q&A, I might have emphasized R&D commitment on this front so that fence-sitters could rationalize no immediate rash moves).

[mmret]

Not a bad effort from the Pres, and like others have said a tough position to be in.

I was very amused by this one though:

Iain Munro from Calgary Canada writes: Will there be any rebates given to those who purchased earlier in the year?

Lindsay Duffield, BMW Canada: Hello Iain, I hear you have snow in Calgary. A good time to get one of our 12 X-Drive models and enjoy the winter.

[Cord]

Not a bad effort from the Pres, and like others have said a tough position to be in.

I was very amused by this one though:

Iain Munro from Calgary Canada writes: Will there be any rebates given to those who purchased earlier in the year?

Lindsay Duffield, BMW Canada: Hello Iain, I hear you have snow in Calgary. A good time to get one of our 12 X-Drive models and enjoy the winter.

Ask a stupid question ... 

[canadacraig]

And his point on buying in Canada is valid as it applies to the Cdn dealers investment in plant and facilities. If we want continual and first class service, loaner cars, and other perks; one needs to support the local dealers. I would have a bit a "guilt" thing if I bought new in the US, then expected the local shop to rectify all problems for free.

Hi ovr50!!

The BMW President does have a point insofar as it being good for a Canadian to keep his money in Canada. But I'm confused. Should I assume by the point he was making that U.S. BMW dealers do NOT offer 'first class service', loaner cars and other perks because they charge considerably LESS for a BMW? I find that hard to believe. And should I also assume that the money BMW makes in the U.S. isn't enough to invest in plants and facilities? It all SOUNDS logical - but it doesn't hold water. [As far as I am concerned] And it irks me whenever someone tries to use my patriotism to his financial gain.

Craig!!

[ovr50]

Well, neither you nor I really know what the Cdn Pres of BMW really meant when he said those things. But I don't think (opinion only) that he meant to imply that US buyers get less service not don't make enough in the US to justify new plant and equipment. Who knows? 

I guess we all independently entitled to use our purchasing dollars as we see fit. If I would feel guilty about buying in the US and letting the local Cdn dealer carry the warranty and do all necessary, I guess that is my problem. Others can react differently. The US side is the grand master of using patriotism to buy American and keep the dollars at home. It's not necessarily a bad thing (my opinion again).

[The Mighty Duck]

I think he meant those comments to mean that if we all shop for BMWs in the US, the Canadian dealers won't be able to afford to provide the same level of service they are right now (less revenue for the dealership = cost cutting measures).  Though I wonder about that, since we always here that a dealer makes the majority of its profits through service and used cars, not new car sales...

[sailor723]

IMO the Cdn Pres did as good a job as he could do in the circumstances. At least he had the guts (and likely permission from BMW AG) to do the Q&A session. More than some other makers are doing.

And his point on buying in Canada is valid as it applies to the Cdn dealers investment in plant and facilities. If we want continual and first class service, loaner cars, and other perks; one needs to support the local dealers. I would have a bit a "guilt" thing if I bought new in the US, then expected the local shop to rectify all problems for free.

Anyway, the debate will continue, no doubt. 

One point here....The local dealer isn't going to "rectify all problems for free". He's going to be paid by BMW for any warranty work he performs. What difference does it make which division (Canada or US) of BMW AG writes the cheque for repairs to your BMW?

[Cord]

One point here....The local dealer isn't going to "rectify all problems for free". He's going to be paid by BMW for any warranty work he performs. What difference does it make which division (Canada or US) of BMW AG writes the cheque for repairs to your BMW?

Probably because it is one of those divisions writing the cheque and not the mother company. Those divisions each have their own goals and budgets to meet and giving one more revenue while giving the other more expense doesn't work.

[2latecrew]

I think he meant those comments to mean that if we all shop for BMWs in the US, the Canadian dealers won't be able to afford to provide the same level of service they are right now (less revenue for the dealership = cost cutting measures).  Though I wonder about that, since we always here that a dealer makes the majority of its profits through service and used cars, not new car sales...

If this is true how would it harm Canadian dealers if BMW AG decided to charge Canadian dealers LESS (more in line with the cost US dealers pay) which results in lower BMW prices which results in more sales which results in greater service volume.

If they were truly concerned with Canadian dealer stability in Canada they would be concerned with getting more Canadian BMWs on the road that "Need" to come back to Canadian dealers for service. More BMWs on the road in Canada to trade up to the next level when the time comes.

What we need to remember is that BMW Canada dealers are PAYING more for the cars they sell to us. All the talk about incentives means that BMW AG is dictating what BMW Canada does. There is only so much money to go around.

Their position is Canadian cars cost more because we are getting $xxxxx of the 10 K difference put into incentives and financing deals etc.

So a BMW dealer in Canada pays 40 K for a 5 series but is able to offer 4% lease rate.
A US BMW dealer pays 30 K for a 5 series but gets no offers from the manufacturer for low finance rates?

I was not able to easily find the current Canadian BMW lease rates (maybe some else can enlighten me) but examples from other makes

Spotted in the Boston Globe was an advertised GMAC lease on a 2007 Chevrolet Silverado 2500 4x4 for $249 per month, while a GMAC SmartLease on a similar Chevy pickup truck in Ontario costs about $400 per month (with $2,000 down in both cases).

Indicates that the "incentive" argument is likely crap. US dealers offer incentives, family pricing discounts subsidized lease rates too as far as I know.

If a dealer can manage to lease the same Vehicle in the US for 150 a month less there is something going on. The argument that yeah they have a lower price but can't match our incentives doesn't hold watter because what consumers care about is the bottom line. We don't care if the price of the car is reduced from 25000 to 20000 due to a 5000 factory to dealer incentive or because the dealer paid 5000 LESS for the car with no incentive.

[ovr50]

It's the US buck that's weak against the Euro. What should happen is the US prices should go UP; but not a chance of that happening in the largest car market in the world, and one of BMWs profit centres (although not as profitable as it was due to weak buck).