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Dealers taken out as BMW goes direct

Date: 12 December 2007   |   Author: Rupert Saunders

BMW is to restructure its corporate sales operations and set up a direct sales team to handle all major contract hire and business car fleets.

The move will take all corporate sales, except for small local businesses, out of the hands of its dealers and allow the company to introduce national sales agreements and pricing.

Tim Abbott, BMW sales boss, (left) said: "We want to take the pressure of the corporate market away from our dealers completely next year. We're saying to the dealers you won't be targeted on sales to the leasing industry and we've put together direct sales.

"Anything transacted with a major fleet will be a direct sale between ourselves and the leasing companies. The negotiation will be between BMW and, for example, Arval or ING."

It's anticipated about 30,000 BMWs a year will be sold direct and the corporate sales team is to be expanded to take on the extra responsibilities.

BMW dealers will act as delivery agents - doing the test drive, handing the car over and collecting funds. They will be paid a fee dependent on units handled and corporate sales standards. It is anticipated about 80% of the dealer network will take up the option to become corporate agents.

BMW hopes direct sales will enable it to regain control of pricing to business car customers, increase its margins and protect residual values as it continues to grow corporate volume.

"We will have an expanded corporate team and we will set the matrix up for discount. But once that's up and running, that's it," said Abbott.

"Traditional corporate teams in dealerships were having to find different ways of going to market, with the result that they are often dealing with brokers, rather than the end-user customers. The line of least resistance has been the broker deal."

For the first time, BMW will be able to offer national service agreements and bespoke offers to suit corporate end-users.

"We want to have a closer relationship with end-user customers. We, as BMW, have never put specific end-user terms in place before," explained Abbott. "A major end-user, transacting through one of the leasing companies, may have some specific need, say satnav. We will offer that as an incentive to buy their cars from BMW."

Dealers were introduced to the changes at their national conference at the end of November. The changes do not affect the Mini at present.