BMW USA races forward into growth mode – February 12, 2007
February 21, 2007
Filed under Features
By Neil Pascale
While BMW Motorcycles were making headlines overseas — more than 100,000 were sold in one year for the first time and the company reached the 2 million milestone — the news in the United States was more subdued.
Year-end U.S. sales in 2006 were essentially flat compared to the previous year’s numbers. But there were other benchmarks, perhaps less visible, that were equally important to BMW Motorcycles USA that were achieved in the last year, said Arturo Piniero, vice president of BMW’s subsidiary.
Piniero, in an interview with Powersports Business, said BMW’s efforts to improve brand awareness and dealer inventories were both achieved in 2006. In addition, he foresees significant growth in 2007.
“For us, it was a very positive year because we’re pursuing a premium natural volume strategy to keep the transaction prices high as well as the residual values of our bikes very high,” Piniero said.
A change in strategy
The past year marked the final part of a 3-year stabilization phase that BMW had outlined to its dealers, Piniero said. The period marked a change in strategy for BMW, which had focused on volume in 2003 — that year’s U.S. sales of 15,299 marked a 13 percent increase from the previous year.
“We gained volume,” Piniero said of 2003, “but our brand was perceived poorly. And I think the main asset that we have right now is our brand.”
The latest new bike buyer satisfaction survey shows BMW’s emphasis on rebuilding its brand during the past few years is having an effect.
The percentage of new bike buyers who would purchase a motorcycle from the same manufacturer of their current motorcycle is higher for BMW (66 percent) than the industry average (64 percent), as reported in the J.D. Power and Associates’ 2006 customer satisfaction survey. Plus, BMW’s percentage is increasing compared to last year, while the industry’s average has slightly fallen.
Overall, the German OEM is the second-highest OEM in this rating category, Piniero said.
Another satisfaction rating BMW continues to improve is the percent of customers who would recommend a BMW to a fellow rider. That number increased to 75 percent in 2006 compared to 68 percent the previous year.
“This means the awareness of our brand and our premium strategy is working,” Piniero said.
Brand awareness is especially key for Piniero, who sees a noticeable difference in the customer perception of BMW’s autos vs. their motorcycles. For the latter, Piniero said in an interview with the American Motorcyclist Association that “we aren’t thought of as a first choice, like our cars.”
But the company’s efforts at improving that seem to be working.
The 2006 J.D. Power and Associates satisfaction survey shows more new bike buyers, who didn’t view BMW as their first choice, are considering the German manufacturer more often as a second choice.
In fact, 6.4 percent of the new bike buyers in 2006 viewed BMW as a second choice, company officials reported. That number might seem small, but it’s significant when you consider the company only owns 2 percent of the overall street motorcycle market share in the United States.
“We’re adding more and more new products to our model range,” Piniero said. “This is attracting younger customers and it’s giving us potential to grow. We’re foreseeing our sales in 2007 to increase 15 percent,” meaning that the U.S. market would approach 15,000 units.
BMW dealers in the United States market sold 12,825 new bikes in 2006, only slightly higher than the company’s 2005 total. With the flat sale levels, the U.S. market is the company’s third-biggest worldwide market, with Germany being the top market (23,617) and Italy (13,651) the second highest.
BMW reported worldwide sales had increased 2.7 percent.
The company’s U.S. dealer network remains around 150, a number that’s remained stable during the past 5 years.
“What we’re pursuing is an average sales per dealer,” Piniero said. “This is the way to first of all keep the profitability, and second to represent the brand in the proper way.”
Piniero said the company has no current plans to increase the number of dealers in its U.S. network. “We aren’t willing to increase our number of dealers just so we can increase our geographic ratio or pursue a bigger sales objection,” he said.
While the U.S. network has remained stable, the number of new models the company has released in recent years has increased. BMW has launched 17 new motorcycles since 2004, including two new models in the competitive medium displacement category. BMW launched the F 800 ST and the F 800 S with their unique design in 2006.
All of which points to a 2007 that is likely to produce more headlines in the United States, not to mention overseas, than the previous year did.