BMW of North America will implement a new distribution system for its 5-series sedan, resulting in a pool of cars in three locations nationwide. The plan calls for stocking the cars at three central locations. If 10 cars are allocated for a dealer, some of the vehicles will be stored at one of the company’s three processing facilities instead of the dealer’s show room. The advantages are “lower floorplan, better grosses and higher throughput and customer orientation," Peter Miles, senior vice president of operations said. The processing facilities are located on both the west and east coasts and in the south, Miles said without detailing the exact locations of the storage sites. BMW did not provide details on what percentage of the store allocations would be held in the pools.
"The basic principle is to make more of the inventory that exists available to sell and to reduce the dealers' floorplan cost," said Miles, according to Autonews. The company conducted a six-month pilot test of the system in 2011 with participation of five dealers in the San Diego region for the outgoing 3-series sedan. In the experiment, around 30% dealerships' 3-series allocation was stored at the central location. BMW says it does not have data on how much was saved on inventory in the dry-run.
The success of the tests prompted BMW to implement it on the national level in the second half of 2012, Miles said, adding that dealers could save tens of millions of dollars nationally. He added that the new system will cut the company’s variable expenses. Details of the new distribution system will be disclosed at BMW's dealer meeting in San Diego in February