Chinese BMW Dealers Ask the Company to Reduce Sales Targets

BMW is currently trying hard to reach a milestone they weren’t supposed to this year anyway. The company set out to reach a 2-million car sold target in 2016 initially but after being encouraged by record-breaking numbers in 2013, they decided to move it down two years, to 2014. That’s right, BMW wants to sell 2 million cars this year.
Chinese BMW Dealership 1 photo
Photo: baidu
Will they do it? It’s a hard question to answer. Last year, the grand total worldwide was of 1,963,798 and, considering the numbers they are posting in 2014, chances are they will do it. So far, the year-to-date growth shows a 12 percent increase in sales so things are looking up.

However, something isn’t right and the management must’ve forgotten about the strains they are forcing upon the dealership network. Since China is the brand’s biggest customer at the moment, the Chinese dealers are feeling the brunt of it.

According to The Wall Street Journal, various dealerships are already saying that enough is enough and are asking for better deals and terms. Their complaints claim that the goals the Munich-based giant has set for them is too hard to achieve, especially since the Chinese market started to slow down recently, the economic growth falling to 9.8 percent. Compared to last year, when the same number was 15 percent, things are not all that good at the moment.

“Many dealers are buying many more cars than consumers want,” said Li Jinyong, president of Pangda Automobile Trade Group Co., China’s third-largest auto dealer by revenue. “Sales at the retail level are weaker than what car makers report,” he added.

Different problems chip in to rain on BMW’s parade

Not only that concerns the sellers but also the fact that inventories keep piling up:

“This year the inventories are too high. Sales growth can’t keep up with the rise in inventories. Dealers must offer discounts greater than rebates to sell cars,” said a senior executive at a major BMW dealer group that wanted to remain anonymous.

And it doesn’t stop there. Apparently, the goals set for 2015 are even higher, BMW looking to further increase its sales growth by no less than 10 percent which is a big leap forward.

In order to sell so many cars, dealerships will have to cut prices. At the moment, BMW is offering a discount of around 5-6% but since the stocks are piling up, the dealerships might have to cut deep into their own profits to in turn manage selling them to the final consumer.
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