We've seen it before and we'll see it again, quite possibly before the end of the year: A luxury brand padding its numbers with questionable "sales." This time it's BMW, according to a report in The Wall Street Journal, although there have been rumors of arch-rival Mercedes-Benz doing the same thing in past years.

Regardless, fudging the numbers ain't right, and the Journal paints a pretty compelling case for BMW having done just that. The scenario involves the practice of selling dealer "demos." These are supposed to be vehicles that dealers buy to allow customers to test drive or use for loaners and such and then sell as used cars. But according to the report, that's not what's happening. In July BMW offered a one-day, last-day-of-the-month sale price to dealers to buy demo vehicles at discounts of up to $7,000. Those units were booked as sales by the manufacturer, but dealers aren't really using the vehicles as demos, they're putting them on the lots as new cars.

Last month BMW reported sales of 21,297 in the U.S., taking a 1,900-unit lead over Mercedes. The German automakers are locked in a fierce battle to emerge on top of the U.S. luxury sales crown, which BMW narrowly won in 2011.


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  • 32 Comments
      • 2 Years Ago
      [blocked]
      Shahul X
      • 2 Years Ago
      More importantly they are holding the $7k as profit and selling to consumers
      rmkensington
      • 2 Years Ago
      They are putting too much work into selling the most cars. No one really cares when it comes time to look at cars, unless your dead last in sales figures.
      reattadudes
      • 2 Years Ago
      as a former new car dealer myself, let me inject a little brevity to this discussion. every vehicle that is sold requires the manufacturer to be notified. in Chrysler terminology (I was a Dodge dealer), this is called the New Vehicle Delivery Report (NVDR). in the old days, it was actually a card. dealers would tell the salesman, "go burn the NVDR", or call the manufacturer, and let them know that a specific vehicle was sold. a special phone number was provided for this, and a sense a franticness ensued if it was the end of the month. a lot of popular vehicles are on what is called a 'turn and earn' system, and speed is of the essence. there are some serious repercussions with this, however. 1) first and foremost, that sold vehicle must be titled and registered. who will the new owner be, Mickey Mouse? 2) if the dealer registers the cars to themselves, what are they going to do with them? most likely, they already have a fleet of service loaners and demos, as the manufacturers require. and let's remember, the dealer will still be paying flooring on them, and since they have been registered, insurance. and if you think floorplan interest is cheap, think again. and don't forget the insurance. 3) for many manufacturers, the basic bumper to bumper warranty does not extend to a second owner, just the powertrain only coverage does. this is a real issue when the dealer tries to resell this 'used' car. 4) registration. if dealers register the vehicle, it is now a used car, even if it has zero miles. some states like California are real sticklers about this. for example, if a Report of Sale is affixed to the windshield (you California residents know what I'm talking about), that car is considered USED from now on, even if financing falls thru, and the car comes back. how many people want to buy a "new" BMW with zero miles that is registered as a "used" car? not many. if the dealers are taking that cash back from the manufacturer and applying it to the purchase price to the 'second' owner, the dealer is shooting themselves in the foot, as resale values of the used cars on their lot will plummet. when manufacturers do things like this, its not only really kinky, but it whets the appetites of Attorneys General all of the country looking to make a name for themselves. manufacturers have come up with some hair-brained schemes before, but none involved gray areas of the law like this does. -Nissan went crazy with leases back in the late 90s, putting out Sentras for $99 a month. they moved lots of cars, but Nissan took it in the shorts when the cars came back in at lease end, to the tunes of thousands per unit. -my all time favorite was Mitsubishi's "0/0/0" program. that's zero down payment, zero interest, and ZERO PAYMENTS FOR ONE YEAR. there was just one little problem. after that year, over 30% of buyers not only didn't make a payment, but had made a run for it, and couldn't be found. oops.
      TPGIII
      • 2 Years Ago
      Unfortunately cheating often pays. In many situations there is no penalty, and by time the cheater is caught, the lie has already become fact for many people. Back in 98 GM lied about Cadillac sales, but the truth wasn't revealed until nearly 5 months later. But no one remembers the year the Lincoln pass Cadillac in sales. GM still cheats by claiming vehicle made by a partnership that GM is the minority holder in and the vehicles carry the other partner's name. That would be like if Toyota had claimed NUMMI cars that carried the Chevrolet, Geo or Pontiac names.
      mikemaj82
      • 2 Years Ago
      big deal, 70% of BMWs are leased anyway.
      BimmerFile
      • 2 Years Ago
      This is laughable0 MB did this for the last 3 months of 2011. BMW is clearing out last years models- nothing different than what every brand does to clear inventory- this is just not advertising to the customer which adds costs to discounts.
      NY EVO X MR GUY
      • 2 Years Ago
      Bmw leases more cars than they finance. That should count as pending sales.
      Clinton
      • 2 Years Ago
      RDR'ing sales demos is nothing new. EVERY manufacturer does it since the dawn of car sales. Everything from a Ferrari FF, BMW 7 Series, to a VW Jetta, or a Toyota Camry. Not rumors, not fudging, it's fact of life in car sales. Trust me, BMW is the lesser offender for punching demo's. Cars on the lot are already invoiced, only portions of remaining MY12 were RDR'd, with BMW's less than 30 day day supply, that is not a lot of units. I've seen other manufacturers who've done more.
      • 2 Years Ago
      [blocked]
        Rr778
        • 2 Years Ago
        Agreed BMW sales problems are plaguing profitability. With m sales vanishing as buyers demand value, the gt body flop, and I line launch off in the future. The distance we see that BMW has had major issues bringing in the dollars when compared to its peers. Cost cutting measures like using the 335is as the next m3 and sharing engines in m5 and 550 help reduce costs, but with buyers in the 50k -110k hunting for value BMW is loosing dollars by not bringing value to the table. BMW can look for profit in its hunt to find ways to repackage products, but they seem to be unsuccessful as buyers seem to understand they are getting an recycled product.
          Rr778
          • 2 Years Ago
          @Rr778
          futuramautoblog please read about this fall in earnings of 28% dated August 1, 2012 I fail to see how you see this as a positive for bmw. http://phys.org/news/2012-08-bmw-fall-percent.html
          Rr778
          • 2 Years Ago
          @Rr778
          The business week article reflects a year in which Large caps and the SP500 in general are having a great year, NOT BMW VS ITS PEERS. So yes they make more now than they did in 1982, but thats not relevant. Using that idealogy would could sit here jump for joy at the success of chevrolet, but its still not relevant and we all know that. Areyou saying that the gt model, and the M line are selling well against their peers? They are flat as M buyers opt for better eqiupped porsches (AT A DISCOUNT TO A BMW!!), or better handling camaros\mustang. Remember when we even had an m3 and m5 every year? And everyone under the sun is aware of how much BMW has tied up in advanced materials, and its pretty obvious we shouldnt expect anything exciting until CRFP becomes significant as a building material.
          futuramautoblog
          • 2 Years Ago
          @Rr778
          BMW is doing just fine... they expect to earn record profits this year http://www.businessweek.com/news/2012-03-13/bmw-targets-higher-2012-pretax-profit-as-3-series-fuels-demand
      SteveW
      • 2 Years Ago
      It's not personal. It's just business!
      break572
      • 2 Years Ago
      They're just digging a hole for themselves by taking sales away from the next fiscal year. There will be even more "demos" for sale at the end of next year.
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