BMW Financial Services Began Small, Grew Steadily, Gets Creative

COLUMBUS, OH — The youngest captive auto lender has become one of the most aggressive in creating new products and promoting the vehicles of its parent, BMW North America LLC.

BMW Financial Services NA LLC was established in the U.S. in 1993, starting slowly along the conventional models of two long-standing financial arms, General Motors Acceptance Corp. and Ford Motor Credit Co.

BMWFS has grown steadily into a company offering retail and commercial financing for BMW AG's products: BMW, Mini and Rolls-Royce.

With total assets of more than $24 billion, the captive offers a range of leasing, retail and wholesale financing services to BMW customers and dealers.

What's more, it has conceived an array of finance and insurance products and is selling products with amazing speed. That is in large part due to an online F&I menu and an e-contracting initiative so far approved by five states and poised to enter California and Florida this fall.

Shaun Busbee, BMWFS sales and marketing vice president, is charging ahead in the e- contracting launch.

“This is the F&I road of the future,” he tells Ward's. “The dealers love it, because there's no cost to them to do F&I sales online, and it's a great customer pleaser.”

BMWFS is bundling the e-contracting undertaking, which Busbee has targeted for all of BMW's 338 U.S. dealers in a 3-year time frame, with a package of other programs the firm believes will set it apart from other lenders.

These include BMW-branded insurance products such as GAP coverage, wheel and tire replacement, (not merely repairs), paintless dent repair, windshield protection and extended service maintenance.

There also is a maintenance program upgrade of up to six years and 100,000 miles, an industry first designed to boost customer satisfaction.

Employee satisfaction at BMWFS is reflected in BMW being recognized among the top 25 companies in Fortune magazine's annual “world's most admired companies” tabulation, a ranking that was maintained through the recent financial crisis.

Photos of every employee at the BMWFS building are displayed on a huge wall near the entrance of the company's headquarters here.

In one of the nation's “barometer” markets, Columbus dealers excel in employee retention, such as the tenure of Darren Geddes at Kelly BMW on the Ohio capital's east side.

Geddes has been an F&I manager for 10 years at the Kelly dealership and is enthused about all the new initiatives coming from the captive lender.

“Online car shopping is growing by leaps and bounds and there's every reason to dial in finance contracts,” he says. “We just sold a 335i coupe to a Colorado guy who saw it advertised on our website. The fact we now can do the F&I menu online is a real exclusive, because this buyer wanted to talk about F&I.”

The first states whose insurance commissions green-lighted e-contracting were New York, Pennsylvania, Illinois and Maryland and New Jersey, where BMW of North American headquarters is located. BMW dealers in Michigan and Ohio are expecting to join the e-contracting list later this year.

The once conservative BMW is shaking up its advertising strategy. In a spot scheduled for this summer, a couple snuggles in a 3-series convertible. After she asks him if he has taken any “precautions,” a Tony Soprano-like figure appears just outside the car, facing the camera head-on.

BMWFS constantly strives for a “true partnership” with BMW dealers, saysays Tom Stepanchak, BMWFS marketing general manager. “Nearly all our products are BMW-branded.”

Stepanchak says initiatives will tout pre-owned BMW and MINI sales, as well as 60-day free flooring that makes possible sales to customers with credit scores as low as 575.

Busbee joined BMWFS in 2008, after two years as president of Alphera, a separate lender that finances non-BMW brands sold at BMW dealerships and 92 Mini stores.

He previously served for five years at Toyota Financial Services and six years with Ford Credit.

What pleases him as a veteran auto finance manager is that BMWFS is “out front” of competitors with online contracts and 60-day free flooring.

BMW dealerships, challenging premium-brand competitors, display poster signs claiming BMW Financial Services offers products the others don't.

Considering all the training involved, BMW dealers welcome the fact that BMWFS has invested more than $3 million in e-contracting alone.

Kelly BMW estimates e-contracting will save 25% to 30% in the time devoted to arranging for F&I sales and all the paperwork required to complete vehicle transactions.

BMW Financial says it is the first captive to utilize a single electronic process for the sale of retail, lease, and pre-owned vehicles.

“The genesis of e-contracting brings our dealers an additional bonus,” Bugbee says. “Overall, it's a premium process for a premium brand.”

It will expedite the buying process for the consumer, “while providing the dealers the ability to submit the fully calculated contract for funding on the very same day,” he says.

Lisa McPherson, BMW Financial's general manager-sales operations, recalls when the firm first started doing credit applications online. There was some dealer resistance.

“Dealers said, ‘What? I'm going to do your job for you?’ We initially paid them to do it. Today, they are all doing it, and not getting paid. Now, if the system goes down, we get flooded with phone calls.”