Mini might welcome non-BMW retailers

GREER, S.C. — With one exception, all of Mini's 121 U.S. dealers are also BMW franchisees, reflecting BMW's desire to keep its small-car brand within the family.

That could change now.

Mini's new Americas boss, Michael Peyton, intends to take a more brand-agnostic approach with the line and says he is open to bringing non-BMW retailers into the house.

"There's a new sheriff in town," proclaimed Peyton, 51, a former Ford and Harley-Davidson exec who took over as vice president of Mini of the Americas in July.

When looking to expand, or replace an underperforming dealership, Peyton said he will seek the "best operator" in the market. A "handful" of non-BMW dealers have expressed interest in Mini franchises, he said.

"For markets where Mini needs to perform better, I've got to make sure I'm looking at who the right operator is, regardless of what franchise they have," Peyton told Automotive News in his first media interview during an event last week at BMW's U.S. manufacturing plant. "If it's the BMW dealer that's the best dealer in the area, fantastic. But if the best dealer is with another brand, then it's OK to look at them as a potential operator."

It remains to be seen how interested the top performers in any given market might be in taking on a struggling franchise that sells subcompact cars in crossover-obsessed America.

Mini sales peaked at 66,502 in 2013. The company declared that year that it would sell more

than 100,000 vehicles a year here by 2020. But last year, U.S. sales fell 7.3 percent to 43,684 vehicles, according to the Automotive News Data Center. So far this year, Mini delivered 30,715 vehicles, down 18 percent from a year ago.

Anemic sales have hammered dealer income statements. Nearly half of Mini dealerships are losing money this year, Peyton said, and eight Mini dealerships have closed so far in 2019.

Peyton, a more than 30-year industry veteran who previously ran BMW's motorcycle business in the Americas, has his work cut out for him.

For starters, Peyton plans to add stores in underserved markets and cull their numbers in saturated markets.

"We need to make sure that we look at where the customers are, where the opportunities are in the market and to make sure that the network is properly structured," he said. "I'm focused on the throughput of the stores."

To further shore up the bottom line, BMW of North America agreed to let Mini dealers downsize their stores or move operations into their BMW locations to help defray operating costs and real estate overhead by sharing backroom expenses.

A little more than a quarter of the Mini dealer network has expressed interest in doing that, Peyton said. And about half of those are already making the move.

"We're taking those initial learnings and making sure that the customer experience is appropriate from Mini's standpoint," Peyton said.

Differentiating the Mini brand and customer experience within a larger BMW store will be critical.

Dealers are expected to maintain Mini-branded showrooms and dedicated sales and service employees in the consolidated locations.

"A lot of Mini customers don't necessarily want anything to do with BMW," Peyton said. "So the importance of separating the consumer experience and making sure we have those exclusive touch points — that's something that has been a learning."

Mini's product pipeline will evolve with changing consumer preferences. Executives have hinted that crossover-type models are coming.

"We will see growth in that segment," BMW Group sales boss Pieter Nota said earlier this year.

Crossovers accounted for 38 percent of the U.S. light-vehicle market last year, up from 27 percent five years ago. During that period, small-car market share shrank to 12 percent from 18 percent. Mini's largest model, the four-door Countryman compact crossover, was the brand's bestselling nameplate through October this year.

"It's making sure that we are in tune with what the customers are looking for," Peyton said.

That philosophy is also leading Mini down the path of electrification.

In March, the first all-electric Mini, the Mini Cooper SE, will arrive in the U.S. The car is based on the BMW i3s subcompact's battery-electric powertrain and the two-door Mini Hardtop's body style. The SE is powered by an electric motor that delivers 181 hp and is capable of going from 0 to 60 mph in 6.9 seconds.

The new EV will start at $30,750, including an $850 shipping fee. As a zero-emission vehicle, the SE will be eligible for state and federal EV tax credits that would knock the price down to as low as $18,750, depending on where it is sold.

"Everyone should be able to have access to an electric vehicle, but you also shouldn't have to compromise, feeling like it's a lower end or less premium vehicle," Peyton said.

The SE has received interest from more than 10,000 potential customers, and Mini expects to sell about 2,000 units in the U.S. by the end of next year.

A second Mini EV is at least a couple years away and is expected to be on all-new platform.

"We need to make sure we're in the crossover space, certainly for the U.S. market, with an all-electric vehicle," Peyton said, hinting at the future product. "We want to build upon what we're learning with the SE."