BMW of North America is starting 2018 by increasing a subsidy paid to U.S. dealers when they put vehicles into their loaner fleets. It's one of several initiatives intended to ease tension between the automaker and its retailers.
In January, BMW added $500 to the loaner subsidy in each vehicle category, Tim Kraemer, operator of three Maryland BMW stores, told Automotive News. Kraemer was chairman of the BMW National Dealer Forum until his term ended last week.
"They increased the monthly subsidy across the board to help the dealers" bear some of the expense, Kraemer said. "It's good. I'll go on record saying it's not enough, but it's a step in the right direction. The single biggest expense in the dealership is the cost of the loaner cars."
The subsidy now ranges from $1,500 to $2,500, depending on the vehicle category, Kraemer said. For example, the amount on a 3 series or 4 series jumped to $1,500, while the subsidy on a 6 series, 7 series, i3 or i8 rose to $2,500, he said.
BMW of North America CEO Bernhard Kuhnt empathized with Kraemer that the increase was not enough.
"Believe me, if I would have been a dealer, I would have said exactly the same," Kuhnt said in an interview. "But I think it's a very strong compromise."
It's also an example of how Kuhnt, who took BMW's top U.S. job in March, wants to approach dealer relations, he said. The loaner program is one of several topics that dealers and BMW have agreed to work on together to improve. The wider efforts are largely ongoing, and BMW has started tweaking some dealer policies.
BMW is also streamlining its incentive programs. For example, the automaker in January ended a requirement that customers must finance with BMW Financial Services to receive certain incentives, Kraemer said.
"They simplified a bunch of the process and have really done a nice job of communicating how they want to drive sales and promote good behavior," Kraemer said.
BMW also is working on an information-technology solution to make it more clear to sales staff which incentives a customer qualifies for.
"How can you make it easier to understand, avoid complexity so the dealer understands it and, more importantly, the salesman understands it with the customer sitting in front of him?" Kuhnt said. "What can we automate? What can we simplify? It's really working with the dealers to understand their requirements and avoid mistakes."