Bmw dealers to invest $300M in the U.S. showrooms

Article by Christian Andrei, on August 29, 2010

In the middle of the worst recorded car demand in the last ten years, 338 BMW dealers are intent on investing no less than $300 million to smarten up their operations or expand into new areas.

According to BMW, this is besides the $2.2 billion already invested over the past nine year. The profitability of the dealer is critical to the future success of a company's sales network, permitting for expansion or modernization that will bring in more buyers onto the lots.

The investments from BMW dealers are a strong demonstration of confidence in the success of the BMW brand in the US in the future.

The carmaker said that by the end of 2009 majority of the 338 dealerships would have gone through modernization with an addition of five new showrooms to open in cities like Boston, Chicago, and Houston. In contrast, Audi said last October that its 270 dealers in the US will be investing about $1 billion in the span of 3 years.

BMW dealers, according to O'Donnell, president for BMW of North America, were putting more emphasis on their used car business after BMW absorbed a 1.6 billion Euro ($2.07 billion) hit last year from declining residual values, when the carmakers sell cars coming off lease for much less than what was anticipated.

The carmaker said that its dealers sold about 16 percent more Certified Pre-Owned (CPO) units, which assists in maintaining significantly better residual values in contrast to the mass auctions typical through the used car market in the US.

Figures from the first quarter of this year show that CPO sales tend toward an increase by another 15 percent for the whole year. CPO sales last year totaled 104,500 units, representing about one-third of US sales of new BMW vehicles.

Topics: bmw, showroom, investment

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