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German BMW dealers hit by flat auto market

Wuerzburg, Germany. More than a fifth of BMW's 350 German dealers are losing money, largely because they have big stocks of unsold cars.

Germany's flat auto market means that dealers cannot shift models from their lots.

A quarter of the new cars delivered by the premium automaker to its dealers in Germany remain unsold, a meeting of BMW's German dealer association in Wuerzburg was told.

"We cannot finance this," said BMW dealer spokesman Peter Enders.

Around 22 percent of BMW dealers are losing money, the meeting heard. Half the dealers have operating margins of more than 2.1 percent but the average operating margin is just above 1 percent.

BMW will begin negotiations with dealers in May for the 2006 dealer payment system. Already dealers are demanding higher basic margins and a less complex payment system.

Dealers who use aggressive price promotions to shift unsold stock were criticized by their colleagues at the Wuerzburg meeting.

BMW says it is trying to help its dealers. To reduce used-car stocks, dealers are offered financial help towards advertising costs and there is a sales program called "Premium Selection" offering incentives to used-car buyers.

Despite suffering lower profits or losses, BMW dealers have been told to invest between 40,000 and 80,000 euros to equip their repair shops with new test devices and assembly systems for run-flat tires by 2008.

But on the bright side they expect to make money retrofitting BMW diesel models with particulate filters.

It is still not clear yet when soot filters will become a standard in BMW diesel cars.

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