Home » Features » May 4, 2009 – ‘Sweeping changes’ for BMW

May 4, 2009 – ‘Sweeping changes’ for BMW

By Neil Pascale
WOODCLIFF LAKE, N.J. — Roughly one year into his new assignment, Pieter deWaal has something few North American executives can claim to possess: a “brag sheet.”
The sheet of paper that deWaal, vice president of BMW Motorrad USA, spreads out on a table in BMW’s sprawling complex in this New Jersey suburban area details the performance of major motorcycle brands in BMW’s relevant market, which does not include cruisers and scooters, in the last six months of 2008.
The bottom line: While the BMW-relevant market was down 30 percent in the second half of 2008, BMW’s sales were up 20 percent. The company has continued to outperform the market in the first quarter of this year, being essentially flat to the year-ago period while the rest of the BMW-relevant market was down 30 percent.
deWaal attributes this success to the company’s introduction of two mid-displacement offerings last year and a significantly improved relationship with dealers. In an hour-long discussion with Powersports Business, deWaal and Todd Andersen, BMW Motorrad USA’s marketing manager, outlined what they described as “sweeping changes” that have occurred between BMW and its dealer network in the past year. Those changes impact a number of issues, from how the OEM handles dealer advertising and its demo program to the company’s dealer bonus program.
“We understand now better than ever how difficult it is for dealers to survive,” deWaal said. “So we introduced things that would lead to a win-win. In other words, if dealers do the things where we want them to focus, we have to prove for ourselves and the dealers that these would lead them to higher sales, better profitability, more efficiency. And if anything did not meet that criteria, we simply said we would not do that and we dropped it away.”
These sweeping changes come at a critical point for BMW.
In a speech last year, BMW Motorrad President Hendrik von Kuenheim said the company is aiming to raise its worldwide retail sales by
50 percent by 2012. Part of that sales increase figures to come from the OEM’s upcoming entrance into the prestigious supersport bike segment and to a lesser extent, its acquisition of off-road brand Husqvarna. But the North American market, especially the United States, will play a key role in determining whether BMW can hit that 2012 goal.
“Certainly we see over-proportional growth coming from the U.S. in the future compared to the rest of the world,” deWaal said, noting the company expects its U.S. sales to grow twice as fast as those worldwide.
Part of the reasoning for that is currently only 12 percent of BMW’s worldwide sales come from the United States.
“In the past, BMW grew very well mainly on the back of Italy and Spain,” deWaal said, “but those markets have saturated. Coupled with the decline in Europe, we do not see much growth coming from there.
“This (the U.S. market) is where we want to focus so we absolutely believe the volume potential is here.”
Although BMW is looking to fill some open dealer areas, the company will rely primarily on its existing network of approximately 150 dealers to reach its U.S. volume potential.
“Clearly just to add to the (dealer network) numbers is not the prime purpose of our strategy,” deWaal said, noting the company on a worldwide basis has stuck to a smaller dealer network than many of its competitors.
In his first few months in the U.S. market, deWaal, who previously headed up worldwide sales and marketing for BMW Motorrad, and Andersen traveled to 10 cities in a two-week span to meet with groups of dealers.
“This is something that fundamentally changed our business and our relationship,” deWaal said of the dealer meetings.
Andersen notes some of the dealer conversation dealt with BMW’s retail guidelines, some of which were considered to be too strict. Andersen noted some dealers said, “‘You need to respect that we know how to retail. We won’t tell you how to wholesale bikes and you don’t tell us how to retail.’ So we took that to heart and we made a lot of changes.
“But we still maintain the focus on the things that are important. Obviously protecting our brand image, making sure our dealers are representing our product well. Those are things that we still feel strongly about.”
Besides adjusting specific retail guidelines, BMW also changed how it awards dealer bonuses. Although deWaal and Andersen did not mention all of those changes, they did say demo rides will play a big role in bonuses.
“What we know is that the perception of BMW by people who are not current BMW riders lags reality,” deWaal said. “If you can get them to ride a BMW, the chances are they will buy it.”
BMW has placed such a big priority on this because currently 60 percent of its buyers are “conquests” from other brands. deWaal jokingly noted BMW riders typically keep their motorcycles “a bit too long.”
“I want to make a categorical statement,” deWaal said. “If somebody is interested in a BMW, any customer, they should go to a dealer because in our case, you can ride our product before you have to buy it.”
To make good on that promise, the company has redirected some of its marketing funds to subsidize the cost of its demo fleets, Andersen says. This has cut the cost of what dealers have to pay for one of BMW’s two demo fleet trucks to come to a dealership. In return, BMW is asking dealers to show what methods they’re using to try to drive conquest sales.
“The dealers who do it well are very successful,” Andersen said of using the demo fleet. “Just last weekend, we had a dealer sell seven bikes just that day and a few used bikes.”
Such examples of a changing BMW-dealer relationship are what deWaal emphasizes as key in his first year at BMW Motorrad USA.
“We as a team, with our dealers, are here to turn this potential into a reality,” he said, before drawing a reference back to the “brag sheet.” “And it’s beginning to show the first signs of working.”

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