For example, BMW dealers sold about 2,800 of its tire-and-wheel package in the fourth quarter last year, when sales began. In 2010, the goal is to sell about 13,500 to 14,000 of the package, Shaun Bugbee, vice president of sales and marketing, has said.
BMW Financial Services also is expanding a pilot program to adopt electronic documents across the board. The Woodcliff Lake, N.J., company gets high marks from dealers. It has been No. 1 in the leasing category for six consecutive years in the J.D. Power and Associates Dealer Financing Satisfaction Study.
Bugbee, 47, spoke about his company's plans with Special Correspondent Jim Henry last week at the New York auto show.
What are your priorities for 2010? Notably, you started selling aftermarket products late last year.We have a partner who handles extended service contracts, GAP, tire and wheel, paintless dent and ding, and windshield. It's all BMW-branded, from the customer's point of view.
Are all those items a la carte, or are they bundled together?One of the biggest customer dissatisfactions is the amount of time it takes in F&I, and it takes a while to go through the whole menu and mix and match every item. They (dealerships) typically bundle tire-and-wheel with paintless dent-and-ding repair and windshield protection. Those items logically go together, and for a single price that covers a lot of things and it gets a good acceptance.
Any other big initiatives under way?One of the biggest things we have going on is e-contracting. We've been working on this for two years. We have a pilot program in production in four states. Pretty soon we will be rolling it out to a total of 12 states, including some big ones like Texas, California and Florida.
We find in our pilot that it represents about a 30 percent savings in the time it takes to transact a lease or a loan. What's different about our solution is that it's both loans and leases. Some of the other ones that are out there are one or the other, but not both.
BMW Financial Services didn't bail out of leasing like some others did, but you've dialed back some, haven't you? Where are you on leasing now?To say we're cutting back on leasing is a bit of a misnomer. BMW's been pretty consistent on leasing. In 2008 we were still more than 50 percent leasing. In 2009 we were right around 50 percent, and in 2010 we intend to be about the same.
But you added annual percentage rate programs, right?In the third quarter of 2008 we started diversifying a bit and we had some APRs as well. I would say we were less focused solely on leasing.
How are your residual values?They are very consistent for the past 12 months or so.
Is that something you cultivate?There is a very clear connection between residuals and pre-owned. One of our goals is to drive as much as possible of all our pre-owned business to our retail centers as opposed to auctions.
And that supports prices. The numbers show that much of your used business goes through dealers.It's about 65 percent. That's not just CPO (Certified Pre-Owned); that's pre-owned as well. This is nothing new for us. These programs have been in place for 10-plus years. A majority of our cars stay out of the auction channel.