Death to the discount
09 January 2008
The Insider is a fleet manager with years of invaluable experience
Now that BMW has in effect massively increased prices, this fleet manager is forced to reassess his lists...
I've heard the best way to annoy BMW is to call them a fleet company. Apparently, the source of much of their sales and wealth in this country is an embarrassment to them.
The old jacket-on-the-hook image doesn't play well to the general car-buying public it seems, so they're doing something about it.
I recently succumbed to the carpark pull of BMW and stuck the 3 on the choice lists. Of course, I painted myself as a fleet Santa to my drivers, but the reason was mainly financial. I was offered around three or four grand off a 320d, and couldn't pass it up. The residuals perhaps aren't what they were, but the discounts and the CO2 figures more than made up for that.
Now those deals are set to vanish as BMW pull up the drawbridges everywhere, meaning I'm either about to become the first Santa to be denounced for removing presents already promised, or face being hauled over the coals for inflating fleet bills.
What's happened is this: BMW is about to take corporate sales out of the hands of the dealers and introduce national sales agreements and pricing.
“BMW reckons itâ?Tll still maintain the current level of fleet sales but itâ?Ts hard to see how.”
I know exactly why they're doing this - they don't want my custom. They don't want me buying their cars because they're a good deal, they want me buying their cars because my drivers are threatening to ritually disembowel themselves in my office unless they're handed an Ultimate Driving Machine.
Private buyers are also getting their discounts sliced. I read somewhere BMW is threatening to excommunicate any dealership that does business with brokers (and by extension company affinity schemes) that offer cheap 3s, 5s or whatever. It's not too hard to see what was happening. The dealers were struggling to hit sales targets and so to keep their bonuses safe were having to backdoor cars on the cheap both to private buyers via web brokers, and also to fleets.
BMW reckons it'll still maintain the current level of fleet sales but it's hard to see how. We're not a sentimental lot and once you've removed people like me (apologies drivers) who only jumped in when the prices were warm enough, then sales will surely once again fall shy of discount fleet staples like the Mondeo and Vectra.
It's a supremely confident move. BMW patently believes it's being let down by the dealers rather than the brand or the product, and this is their way to restore power to the central office. The boardroom reckons it'll still sell the same amount of cars, just for more money. In effect BMW has put its prices up by 7% from the new year, based on rumours I'm hearing that they're cutting discounts from around 14% to just 7%.
This is the way to do it of course. Clamp down on discounting across the network and the residuals will go up, so reducing the leasing cost price bump. But we all love a bargain, and now the shutters are down on the deal of 2007, I fear my drivers will find that the 3's company policy no longer.