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This past June Shaun Bugbee assumed the role of Executive Vice President, Operations with which he was responsible for all BMW sales operations within the U.S.
Now I have been saying this for a while now that all these declining sales will only be tolerated for so long. Lessening the incentives, and making it more expensive to lease a BMW is not a long term solution.
Here's the challenge with BMW NA. The depreciation of the brand after 3 - 4 years is so high, that the lease returns were being sent to the auction, and they were losing money on the whole. Go look at the Mannheim numbers on a 3 year old 3 or 5 series and you will see what I mean. When you calculate the money made during the lease and then afterwards at the auction, the profits were going down with the lease return because of the depreciation. But that was sure to happen because when you flood more cars in the market the supply must affect the demand.
So they did what they believed would counter that which was to lessen the maintenance time from 4 years 50,000 miles, to 3 years 36,000 miles while removing things that were included in the "Ultimate Maintenance" like brake pads etc.
But after bringing in so many new customers from the years of the free maintenance, many have left the brand because their purchase was driven by the deal rather than for the brand.
Same thing applies for the incentives. BMW was giving such amazing incentives with the money factor low and residuals high in the past. This made fans used to a certain amount to pay for the car but all that changed as the residuals went down and the interest rates went up. The price to lease the same car after the lease was over went up significantly. Because again the reason was the same. BMW was losing money on the lease returns so they had to do something different.
Now obviously that was an oversimplification of what's going on but all of this to say, who ever is really in charge of NA sales, be it Shaun Bugbee or someone else, these declines in sales are horrible when you look at the sales of NA cars on the whole has been going up. And since these declines are month after month it's not a hiccup, it's a momentum. They must make some serious changes if they want to keep their job.
Just my opinion.
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