BMW Financial Forms F&I Subsidiary to Go After Other Brands

BMW Financial Services, rated first in customer satisfaction in surveys for years, now has a subsidiary dedicated to other brands handled by BMW's 339 stores in the U.S.

With Alphara Financial Services, the lender is launching an “all-out” drive for non-BMW brands handled by BMW dealers, says Edward A. Robinson, CEO of the American region of BMW Financial.

“Nearly 200 of our U.S. dealers have other brands located on their premises in separate dealerships or adjacent showrooms,” Robinson tells Ward's. “The captive lenders for those brands are not up to our segment-leading position in customer relations. We believe that all BMW dealer customers deserve the best-practices provider, and that's going to be Alphara Financial Services.”

Alphara will also be available as an outside-brand finance and insurance provider to two BMW Financial subsidiaries serving the F&I needs of other brands owned by BMW — Mini Cooper and Rolls-Royce.

BMW Financial is only 15 years old, but raised its 2006 managed assets to $19 billion. Robinson predicts BMW's continuing sales growth in the U.S. could raise the total to about $22 billon this year.

“We are the main floor planner and lessor for most of our BMW stores — whether one brand or dual,” he says. “With Alphara, we aim to increase our penetration in GAP, service contracts, credit insurance and the other products and services.”

Robinson says new subsidiary could be particularly appealing to dealership chains and groups using BMW Financial Services for the BMW brand.

“Dealerships with multiple brands tend to fall off in customer satisfaction when they deal with as many as 14 captive lenders,” he says. “Our operations are tailored for maximum customer satisfaction.”

But Alphara may have a hard time convincing dealerships such as Grand Blanc Toyota-Mercedes-Benz-BMW in Grand Blanc, MI, to switch.

“We're pleased with BMW Financial Services as our BMW floor-planner and lessor,” says the store's sales manager, Greg Hozak. “But we're satisfied with Universal Underwriters for our other F&I products in all the three brands.”

Newly structured GMAC also is going after non-GM brand business.

A BMW dealer, who also has General Motors franchises, says what BMW Financial Services and GMAC are doing reminds him of an old insurance practice.

Asking not to be named, he says, “Lower prices and higher commissions generally make the difference on which provider dealers choose. But in the high-line brands, twisting hasn't happened as much, which is why BMW Financial Services is No.1. BMW dealers and owners are pretty loyal.”