How BMW managed to pull off a sales uptick

BMW was the rare luxury brand reporting an increase in deliveries last quarter amid a cavalcade of supply chain crises roiling the industry.

The German automaker's first-quarter sales rose 3.2 percent to 73,714 vehicles, while total U.S. luxury sales dipped 10 percent to 503,709 cars and light trucks.

BMW's momentum suggests that the automaker — and its dealers — have done better than their peers in navigating the parts supply shortage.

Mark Smith, president of Principle Auto in San Antonio, said BMW is "doing just a tremendous job to get cars to us any which way they can."

The brand is taking a "we're not going to let it whip us attitude" to the industry's supply chain challenges, said Smith, who operates two BMW stores.

Last month, BMW was forced to pause production at its German and other European plants after Russia's invasion of Ukraine suspended deliveries of wire harnesses, a vital part of a vehicle's electrical systems.

But as soon as BMW realized it had a wire harness supply issue, Smith said, it told dealers: "We're going to miss some cars this month, but we've got supply chains in other parts of the world where we can make them."

BMW National Dealer Forum Chairman David Sloane said frequent communication between the factory and dealers has "made the difference."

According to Sloane, management keeps dealers informed about the near-term production outlook and inventory headed to stores.

"Having that information allows us to accurately tell customers when a car is coming and confidently sell into the pipeline," he said. "If we don't know far enough out what product is coming and when, it's much harder for us to presell those cars."

A season of tight inventories across the industry is still tapping the brakes on sales growth for many.

LMC Automotive and J.D. Power expect a U.S. light-vehicle sales total of 15.3 million for 2022, down from an earlier forecast of 15.9 million. Cox Automotive also cut its 2022 forecast, to 15.3 million from 16 million.

BMW, which has claimed the U.S. luxury sales crown for the past three years, solidified its lead over its legacy brand rivals in the new year.

The German marque scored a 9,349- vehicle lead over Lexus in the first quarter. The Japanese luxury brand delivered 64,365 vehicles, down 13 percent from a year earlier.

But EV juggernaut Tesla, which does not break out sales by market, has likely overtaken BMW as the true segment leader.

The Automotive News Research & Data Center estimates Tesla delivered 110,000 cars and crossovers in the first quarter, up 42 percent from a year earlier. Based on that estimate, Tesla accounted for more than a fifth of all luxury segment sales in the quarter.

Mercedes-Benz continues to lose ground as it grapples with production shortfalls caused by tight semiconductor supplies. First-quarter deliveries tumbled 20 percent to 62,251.

Audi rounded out the top five, reporting sales of 35,505 in the quarter, down 35 percent from a year earlier.

It also helped BMW that it committed early to large quantities of semiconductors to keep production flowing. The automaker is now reinforcing supplies.

According to Cox Automotive data, as of March 21, BMW had a 30-day supply, compared with a 37-day pool for the overall luxury segment.

Smith said he has only a two- to three-day supply on the ground at his BMW stores.

To offset the lack of inventory, dealers are preselling into the pipeline.

Smith said he begins each month with 75 to 85 percent of his allocation already sold.

"Cars don't stay long," he said. "We get a chance to gas it up, clean it up — we're pre-printing all the paperwork."