Dealers should see a better 2018, Mini exec says

DETROIT — Mini USA aims to turn declining U.S. sales around in 2018 with the help of a full year of production of the redesigned Countryman and a freshened trio of small cars.

Such a sales increase would help revive dealership profitability, which has been weaker than dealers and brand executives want to see, Thomas Felbermair, vice president of Mini Region Americas, told Automotive News at the Detroit auto show. Mini's U.S. sales fell 9.5 percent in 2017, the second straight year of decline for the brand.

Dealership profitability "is still not where we would like to see it," Felbermair said. "But this is mainly linked to the volume decline."

Another factor that "is weakening profitability" for dealerships is the drop in recalls, Felbermair said. The Mini lineup has been heavily improved, and the brand had no recalls in 2017, he said. While that's positive for the brand and customers, it cuts into revenue for dealership service departments.

Felbermair declined to say whether average dealership profitability was up or down in 2017 or give a number for the network's average net profit margin. Mini has 127 dealerships in the U.S.

Dealerships did see improvement in used-car profitability last year, Felbermair said. Mini USA launched a program in 2017 that pays dealerships bonuses for hitting used-car sales targets. That program continues this year.

For all of 2018, Felbermair is looking for a rebound in Mini's overall U.S. sales and better news for dealership profits.

"I would be confident to say we're going to see improvement in 2018 when it comes to profitability, further strengthening the used-car business and also a slight growth in volume" of new cars, Felbermair said. "The Countryman is a big driver on profitability because the average MSRP is higher than we used to have."

Mini launched the redesigned Countryman, its largest vehicle, last spring. A plug-in hybrid variant went on sale last summer, and the brand could not keep up with demand for the electrified version, Felbermair said.

Countryman sales rose 17 percent in 2017 to 14,864 vehicles.

Felbermair expects even higher Countryman sales in 2018 given that dealerships will have a full year of production available for the updated model. He has especially high hopes for the plug-in model. The brand aims to double sales of the plug-in Countryman in 2018 to around 1,000 vehicles.

Mini also has freshened its three-door and five-door Hardtops and its convertible for the 2019 model. Those vehicles will begin to arrive in dealerships in early spring with the supply pipeline filled by sometime in June, Felbermair said.

Though U.S. small-vehicle sales are down industrywide, a trend that hurt Mini a lot the last two years, the freshened models could help Mini stay stable or even grow slightly in that segment, he said.