BMW Plans for Squeeze Play at Dealerships

BMW's current U.S. retail sales network of 300 dealers is big enough to handle an increase in the brand's volume to 500,000 units without any expansion of franchise points, says Tom Purves, chairman and CEO of BMW of North America LLC.

However, the dealers would have to do more if sales here climb significantly in the next several years.

“We have an operation facilities plan for dealers if this becomes a necessity,” says Purves who predicts the German luxury auto maker will sell about 275,000 vehicles in the U.S. in 2004.

The plan's potential short-term solutions for dealers include adding a second shift for service personnel and keeping the service department open additional days, plus scheduling more overtime work.

Dealers also could rent additional space to display cars. Many dealers don't have enough space to show pre-owned vehicles, which have become an important part of BMW's retail business plan.

BMW dealers have invested about $300 million in recent years to improve their ability to deliver high-quality cars and provide speedy service, says Purves.

He emphasizes BMW is not seeking to create new dealerships.