Lower-than-expected sales of the BMW Z4 in Europe and North America are hurting the roadster segment on both sides of the Atlantic.
Roadster sales in North America were down 21.1 percent to 24,242 units in the first half compared with the same period a year ago.
In June, the peak of the convertible-buying season, sales were down 20.1 percent from the June 2003 figure.
Roadsters are doing better in Europe. The segment grew 8.9 percent to 97,977 units in the first half compared with the same period last year.
But just two new models are primarily responsible for driving that success -- the Smart Roadster and the Mercedes-Benz SLK.
"The roadster segment could have had its day," says Steve Saxty, a partner in Powerbrand Associates, US consulting firm in New York. "There is a discrete amount of money to buy a $30,000 to $40,000 vehicle. There are alternate options like an SUV or a Mini Cooper if there is nothing attractive in the segment."
Frankfurt-based analyst Jochen Siebert, vice president Europe of CSM Worldwide, agrees that the segment may have peaked.
"We expect this segment to stagnate on the relatively high level it has reached in the previous 10 years," he says.
The Z4, introduced in 2002 in the USA and early last year in Europe, is the surprise loser.
Production of the Z4 was down 39 percent to 19,751 units in the first half compared with the same period last year.
Z4 sales in western Europe fell 2.5 percent to 14,162 units in the first half.
This drop came despite changes that should have helped sales significantly:
Global sales of the small convertible were down more than 21 percent in June to 4,589 units.
Meanwhile, Mercedes-Benz sold 6,100 SLKs globally in June, an increase of nearly 145 percent from a year earlier.
In North America, Z4 sales have plunged 25.4 percent in the first half to 7,359 vehicles.
BMW dealers there are now offering a discount of $3,500 (about E2,800 at current exchange rates) on the 2.5-liter model and $4,500 on the 3.0-liter version.
"That is a substantial incentive even in today's world," says Jeff Schuster, executive director of global forecasting for J.D. Power and Associates in Troy, Michigan, USA. "I would imagine they did not anticipate the falloff in sales to happen this soon."
There was an initial offering of 2.9 percent financing for the Z4 2.2i in Germany, but no further incentives.
Dealers aren't the only ones hurt by the slow-selling Z4.
"We are currently producing at 20 percent below expectations," a major component supplier to the Z4 told Automotive News Europe.
Analysts say buyers are rejecting Chris Bangle's controversial styling.
"It is definitely related to the style direction taken with the product," J.D. Power's Schuster says of the sales downturn. "They went out on a limb with the design, and it has an impact on the faster falloff of sales compared with what the Z3 did."
Says George Peterson, president of AutoPacific, a US consulting firm in Tustin, California: "The Z4 is not particularly pretty. The interior is relatively spartan. The people who bought it initially were able to overlook that, but the vehicle is no longer a fad or fashion, and people have a hard time with it."
A BMW dealer in Germany adds: "We have a much higher rate of male customers for the Z4 than for the Z3. Our female customers tend to miss the Z3. They dislike the styling of the Z4."
Female buyers are rejecting the Z4 and say they miss the Z3, says a dealer in Germany.
In addition, BMW no long offers a four-cylinder base model, the 1.9-liter version, which started at E25,100 when it was available.
The higher prices have pushed the Z4 out of the market niche once occupied by the Z3.
CSM's Siebert says: "We have observed changing customer patterns with the Z4. While its predecessor, the Z3, was often bought as a second car, the Z4 is simply too expensive for many customers to have as a second car."
Ed Robinson, executive vice president for operations at BMW of North America, says neither the Z4's design nor its price is a problem in the US. He says sales are down because the overall roadster segment is off.
BMW spokesman Michael Rebstock at company headquarters in Munich says: "We are satisfied with the Z4's performance in the light of a difficult market."
The Z4 will soon have more competition in the roadster segment. The new Porsche Boxster will be introduced early next year.
At the same time, the Nissan 350Z Roadster, which is already on sale in North America, will be offered in Europe.