Mini seeks higher used-car sales

Mini executives want the brand's U.S. dealerships to pursue used-car sales with more vigor. Higher used-car sales would help Mini and its retailers at a time when new-car sales have slumped, they say.

So Mini USA launched a program at the beginning of the year that pays dealerships bonuses for hitting used-car sales targets.

Each Mini store gets a customized target. If a store hits its target, it will receive additional margin of 1 percentage point of the vehicle's sticker price on each new-car sale.

"The used-car business is a huge potential for the Mini dealers in the U.S.," Thomas Felbermair, vice president of Mini Region Americas, told Automotive News. "The numbers show that dealers with a strong used-car business are the successful dealers. It's just a matter of focus."

About a third of Mini's 127 U.S. dealerships don't meet the brand's preferred minimum standard for used-car sales, Felbermair said.

That would be to sell at least one used car for every two new cars sold. A ratio of one used car for each new car sold is ideal, Mini executives said. Yet some Mini dealerships don't actively build their used-car inventories by buying at auctions or purchasing off-lease vehicles. It also helps to have a dedicated used-car manager or sales staff.

"It's your mindset: Do you have a used-car business unit or do you have a little bit of used car because it comes with the new car?" said Sebastian Mackensen, global head of Mini. "It doesn't get the focus and the attention. And then it also doesn't give you the full opportunity of profit and supporting your business. The cars are getting sold and bought anyway, but other people in the industry outside of our franchise system are getting part of the cake."

Maximizing used-car sales is especially important when new-car volume is suffering vs. previous years, Mackensen said.

Through the first four months of 2017, Mini's U.S. sales fell 12 percent from a year earlier to 13,732, following an 11 percent drop last year. The falloff comes as sales of Mini's cars have been pinched by a consumer shift to bigger vehicles amid low gasoline prices. Mini's annual sales in the U.S. hit a peak of 66,502 in 2013. Mini sold 52,030 vehicles last year in the U.S.

U.S. dealers welcome the used-car bonus program, said Michael Vadasz, chairman of the Mini National Dealer Council. But they also want more support from Mini on marketing used Minis to consumers, plus better wholesale pricing for off-lease vehicles.

"The crux of the issue, it's really more about the demand for the car," said Vadasz, general manager of Otto's Mini in Exton, Pa. "Demand through the first part of the year on the used side has not been as robust as everyone would have hoped."

Otto's Mini typically has a fairly good used-car business, selling 25 used cars for every 30 to 40 new cars sold monthly, he said. But so far in 2017, the dealership has failed to hit any of its monthly used-car sales targets.

About half the Mini dealers at a 20 group meeting Vadasz attended in early May also said they weren't hitting targets yet.

The targets set by Mini seem to be higher in the first half of the year, Vadasz said.

"The good news is" that they are cumulative, so dealerships can catch up with a good month or two if they miss a goal.

As Mini explains it, the monthly bonus program is for 2017 and will be paid out quarterly. If a target is missed in a given month, the bonus money will be escrowed and can still be earned if the annual target is achieved.

Missed months can be made up until year end.

Vadasz said, "I'm one of the dealers hoping to make it up in the last half of the year."