Filed under: Plants/Manufacturing, BMW
BMW to cut jobs and volume in the U.S. next year
BMW has achieved sales increases in the US for 16 straight years, but that impressive streak is going to end in 2008. BMW USA CEO Jim O'Donnell has decided to stop shipment of 44,000 vehicles destined for the States by the end of this year. The move was made to prevent pushing increased sales in a down market because too many incentives were needed to entice consumers. The weakness of the US Dollar vs. the euro makes high incentives unprofitable. Some vehicles, like the X3, are coming to the US in smaller numbers even though they are selling well without incentives. Leases are also a cause of concern, with 63% of its vehicles leaving BMW showrooms with a down-payment and a mileage limit. O'Donnell wants to cut that number by 10% or more, and in August, leases were down to 50% of sales.The German automaker is also looking to cut expenses in the U.S, with plants to slash 90 jobs in the States, along with reducing marketing expenditures. The largest short-term change is that BMW will not end December with a high incentive sales blowout, which means if you're waiting for the big Bimmer sales event, it probably won't happen.
[Source: Automotive News - subs req'd]
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Reader Comments (Page 1 of 1)
tuna 7:14PM (9/22/2008)
Not surprising. The US dollar keeps falling. The market's got election year jitters on top of the panic over the banking industry. And, the cars are too expensive!
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stevereportdotcom 7:22PM (9/22/2008)
You get for what you pay for. Even though the interiors of newer BMW's are making you wonder who designed it (I've seen better interior designs in Hondas) its the handling of a BMW that is still untouchable. As far as 3-series are concerned (there bread and butter) I have yet to drive something that feels and handles better in that class. IS's, TSX's, CTS's.. still can't hold a candle to a BMW. Oh, and you get the snob appeal.
You can't snob anyone in your Hyundai (not yet anyway).
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3seriesisking 8:01PM (9/22/2008)
That's about the stupidest thing I think anyone has ever said. If you can honestly say you've seen better interior designs in Hondas and that a 3 doesn't handle better than anything in it's class you must surely be smoking crack.
3seriesisking 8:02PM (9/22/2008)
I recant what I said about you dissing the handling of the 3.....the blind rage that followed your interiors comment caused me to misread the handling part.
KeatMP 10:47PM (9/22/2008)
I'm sorry 3seriesisking, could you repeat that, I couldn't hear you over your bias.
2004m3driver 11:58PM (9/22/2008)
BMW interior is just ok. Infiniti M45 > 5 series interior.
Seminole 12:55AM (9/23/2008)
While the 3 series interior isn't as visually appealing as, say an A4, I think it is a very nice interior, especially in beige. It is very driver oriented and simplistic and to me I really like that. I don't think you can say that any current Honda interiors are better, not after they went button crazy.
3seriesisking 9:20AM (9/23/2008)
It doesn't take bias to know that BMW and Honda interiors are two very different animals and it's just a fact that Honda design's can't compete. No, BMW doesn't match up to an Audi but to say that they are below Honda standards is just crazy talk.
FSM 7:56PM (9/22/2008)
How about they keep ALLLLLLLL the X3's and I won't have any hard feelings.
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JF 8:29PM (9/22/2008)
Incentives are essentially the same thing as selling the vehicle at a lower price. So I don't get it when people complain that a car is priced too high, and then later the automaker gets bashed for lowering the price to adjust for the market (AKA "incentives").
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Noidor 9:11PM (9/22/2008)
Why bring cars to an increasingly stale market. And it's not just BMW, I suspect that Mercedes, Toyota, Honda, and Nissan to an extent are going to be hurting.
The next domino to fall going be entry-level luxury market. There will be an exceedingly high number of defaults on loans & leases. Dealers are going to be even more strained.
So when domestics are going to be pushing for a bailout "loan", I see them asking government to take on debt obligations and guarantee them.
Of course this creates further inflation, which then coupled with stagnation is going to make for empty shelves and high prices. Yes, those jokes about long lines in Russia are going to be a reality real soon in US. Default on government guaranteed debt? You betcha.
Should have gone cold-turkey rather than pumping in more heroin.
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Jeff 9:19PM (9/22/2008)
Can't say I'm sad about this. The less BMWs for sale here, the better.
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dave 9:35PM (9/22/2008)
Tough job these days being a marketing manager for any company - let alone a company such as BMW. If they would have produced 'economy' cars yesterday, how would it have diluted their brand image then, or today? This worldwide market upheaval was tough to see coming. Honda it seems was prepared. But - they aren't a 'performance' car company.
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JC 10:45PM (9/22/2008)
I live in Miami, FL and I can honestly say 99% of Beemers here are purchased, rather leased, just for the snob appeal and for pure show off. Handling is near the bottom of the list for these consumers. Most of the people here spend more time in traffic than anything else. A Beemer "comes to life" in an open road during high speeds and curves...its legendary handling kicks in then. A Beemer is a waste in bumper to bumper traffic and with its rather heavy steering it can become a chore ...but I look good in it! Now for the interior, it is typical German/Bavarian - simple and to the point, no flash. Now if BMW can Please get rid of the horror called the "iDrive!!!!!"
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Bluestreak 8:03AM (9/23/2008)
I thought "Beemer" was the nickname for BMW motorcycles and "Bimmer" was for the cars. Perhaps I've been saying it wrong for years.
Regardless, those paying new money for the "snob appeal" of BMWs and other luxo brands will continue to do so. For those of us who are willing to tolerate the unappealing styling to get the excellent chassis and inline six, I can only hope the used market won't see an increase in pricing. I could care less about what others think of the roundel on the hood, the 3 Series is one of the most communicative drives on the planet.
jim 10:45PM (9/22/2008)
The mid tier luxury automakers, BMW, MB, Lexus, Land Rover etc. are in for a great shaking out. It will be a long time before the market will support those brands in the US and EU. The party is over.
I came across this inflation rate calculator at the Mpls. Fed Reserve, http://minneapolisfed.org and for grins punched in the cost of of the 1967 2002, the car that David E. Davis Jr. and Car & Driver touted as the best automobile under $2700. Simply indexing for inflation, the 2002's descendant model, either the One Series or Three should cost around $17K, not the twice that that the cars cost.
BMW and other manufactures pricing has far out striped the natural market value and now it seems the correction is beginning. It won't be pretty.
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vpoort 4:43PM (9/23/2008)
Interesting economic analysis based upon inflation rate. However, prices are based upon supply and demand, not cost. Certainly, BMW's appeal (demand) is based 95% on its snob factor (5% enthusiast factor), and increasing supply would lower the snob factor, thus lowering prices and profits.
Anyway, since purchasing power has outpaced inflation (at least before GWB took office), what people can afford to become a snob has grown faster than inflation.
jim 9:41AM (9/24/2008)
vpoort-True, which is why the correction will be so ugly
Christian de Saint Preux 1:08AM (9/23/2008)
CTS interiors.. WAY better than any 3 series... or even the 5 series.
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