BMW says its distribution experiment in San Diego, which calls for stockpiling vehicles in a single location to cut dealership inventory costs, is working so well that it may be extended to other regions.
In March, BMW began placing 3-series sedans in a central pool for five San Diego-area stores. The pool holds 30 percent of the dealers' combined 3-series sedan allocation.
BMW absorbs the storage costs until a store matches a car to a buyer. The pool cars were configured based on what sells in that market.
"The configurations that we are ordering are matching the customers' needs very closely," said Jim O'Donnell, CEO of BMW of North America. "And the dealers use it as an extra source outside of their own stock to find the right car for a customer without the additional cost of swapping."
Jeff Gerken, general manager of BMW of South County in El Cajon, Calif., said the system works. "We are able to sell cars and get them delivered to customers within 72 hours out of the pool," he said. "It has helped keep us from overstocking and paying a lot of floorplan interest."
The San Diego pilot program is scheduled to continue through fall. Before then, BMW will decide where to hold a second trial, said O'Donnell. New Jersey is a candidate.
O'Donnell said he wants to expand the program to include the 5 series and eventually all BMW vehicles, possibly within two years.
He added that holding stock centrally could help dealers as BMW adds vehicle ranges such as the i electric subbrand and a new family of front-drive small cars. The system could reduce the need for dealers to invest in costly expansions.
"We are trying to prepare them," said O'Donnell. "I do believe firmly in this process and I believe it is working well."