The company is looking for new ways to keep retail customers in the fold. BMW Financial expects vehicles coming off leases to decline to 94,000 in 2011 from 143,000 this year after industry sales collapsed in 2008 and 2009.
Tim Sturm, general manager of vehicle sales at BMW Group Financial Services, said BMW Financial's retail owner loyalty -- as measured by people who move from one sale or lease into another and stay with BMW Financial -- is about 18 percent. The company thinks the new program can help almost double that by the end of 2012.
The dealers in the pilot of the program “did very well with it,” Sturm said during an interview this month at the National Auto Auction Association convention. “They were able to show us hard numbers in terms of sales and additional revenue that they gained because of it.”
Sturm said BMW Financial and dealers always have courted customers before their lease contracts expired, helping bolster the loyalty rate among those customers to more than three times that of retail customers.
BMW Financial wanted to reach out to customers, especially lessees, as they started to consider getting another vehicle, Bugbee said in a meeting Monday with Automotive News reporters and editors.
“Sometimes, the first indication we had that a customer was back in the market was when his lease was paid off early,” Bugbee said. By month 33 of a lease -- often shortly after the vehicle is worth more than the remaining payments -- about 55 percent of customers are paid off, he said.
Sturm said dealers also are reaching out to customers who purchased new or certified used vehicles.
Chris Allen, lease portfolio manager at Tischer BMW in Silver Spring, Md., said his dealership participated in the pilot, and he thought the program worked.
For example, Allen had a customer who owned a 2007 3 series with a monthly payment of $650. That customer is now driving a 2011 3 series equipped with a navigation system and satellite radio, which the previous car didn't have. The customer qualified for a special finance rate of 0.9 percent and is paying $632 a month on a 60-month contract.
The store sold a new car and took in a vehicle for its used-car inventory.
“We don't have to go to our system to pull the customer information,” Allen said. “It makes it easier to find everything in one place.”