Mini, dealers weigh how best to compete in truck-crazy market

PALM SPRINGS, Calif. — Mini, a small purveyor of compact cars, is figuring out how to thrive in the land of the giants.

In the truck-hungry U.S., the British marque's sales fell last year to 28,138, the lowest since its launch here nearly two decades ago.

With some retailers struggling to justify full-service dealerships — especially in less-populous markets — Mini is considering alternatives to continue to support its base of owners.

One option: service-only locations. As part of a pilot, Mini has authorized seven dealerships to transition to service centers.

Mini is exploring "flexible formats that make sense for the market opportunity," Michael Peyton, head of Mini of the Americas, told Automotive News.

"We've recently launched Mini Anywhere, our online sales tool, that will allow more people that maybe don't have a Mini dealer near them to get a Mini," Peyton said at a press event here last month. "But then the next question will be, 'OK, if I don't have a full dealership near me, how do I get it serviced?' "

As a niche brand, Mini doesn't have the customer base in large swaths of the country to support a full-service dealership, said Jason Willis, chairman of the Mini National Dealer Council.

Yet, there is "Mini fandom," and service-only centers are a way to serve existing customers in those regions, said Willis, dealer principal of Mini of Des Moines in Iowa.

Service center availability has always been a challenge for Mini, said a dealer who requested not to be identified.

"We're selling cars into a lot of white spaces," the dealer said. "In the midsection of the country, customers have to drive two hours to get their car serviced."

Mini in recent years has struggled in America, where pickups, crossovers and SUVs have dominated the sales charts.

Its sales peaked at 66,502 in 2013. The brand declared that year that it would sell more than 100,000 vehicles per year here by 2020.

However, its full-year U.S. sales have declined each year since 2015, while Mini's market share has stalled over the past two years. Mini reported 22,070 deliveries through September, a 0.2 percent share.

There are some markets that are over-dealered or too small to support a dealership, Willis said.

"This is an expensive business to operate," the retailer said. "The financial statement talks, and sometimes you make a tough choice."

Consequently, the brand's dealer network has slimmed to 111 stores, down from 127 at the start of 2019. A handful of stores are expected to close next year.

"We had too many dealers for the opportunity that was out there," Peyton said.

The network right-sizing is aimed at driving store throughput and profitability. "Back in 2019, we had a significant number of dealers that were not profitable," Peyton said.

That prompted BMW Group to let Mini dealers downsize their stores or move operations into their BMW locations, sharing backroom expenses to help defray operating costs and real estate overhead.

That strategy, coupled with the current supply chain-related inventory shortages, has lifted Mini dealer balance sheets. Nearly 76 percent of the network is now profitable.

Peyton said he's shooting for annual per-store sales of 400 to 500 vehicles.

Retailers "are the face of Mini to the customer, they're the ones that deliver the experience," he said. "But we want to make sure that they're sustainable."

Peyton expects supply issues to cap annual sales this year at about 31,000 vehicles.

"Our assumption was always that we would be kind of just flat in our overall sales" compared with 2019, he said.

But Peyton sees sales ramping up in 2024 as new products come to market. Mini plans to introduce its next-generation Countryman, including an electric version, in a couple of years. That could be followed by two China-made EVs — a subcompact hatchback modeled on the two-door Hardtop and a small crossover.

Once the next-generation models arrive, Peyton expects the brand's U.S. sales to be in the 45,000 to 50,000 range.

"That's a good, sustainable number for us, for the dealer network," he said.