Dealer Incentives Cemented BMW’s 2015 Luxury Sales Crown

After BMW won the 2015 luxury sales crown, I’d read a little article that noted that Mercedes Benz wasn’t happy. They claimed that BMW had spiked it’s sales numbers by delivering too many cars into dealer loaner fleets. MB noted that while the sales numbers were the largest (Lexus was second, and MB third), BMW registrations for 2015 were significantly lower. An article in the March 14th Automotive News looked more deeply into this in an article called “Pressure to ‘punch'” What Nick Bunkley and his co-contributors found was very illuminating.

Punching sales is the industry slang for pushing vehicles into dealer that raise sales numbers. It turns out that this is done across the industry, more or less, for a variety of reasons. In the case of BMW, two e-mails surfaced that show that BMW USA wanted the dealers to put more cars into vehicle fleets. One was dated November 30th and incentivized $1,000 per 2015 3-series sold on a single day and the second was a month later, offering $3,000 for “sales” of more models, including the 2016 6-series and the i8.

While this may seem a bit suspect, incentives that distort actual sales are not that unusual. If one looks at the last 10 years of sales numbers vs vehicle registrations, all years but one had lower sales than registrations. Last year was a bit extreme, though. Total light vehicle sales exceeded registrations by 286,832 units! And yes, that is a lot of cars.

Monthly sales targets and stepped incentive plans both contribute to sales number distortions. If a dealership needs only a couple of cars to hit a bonus target, punching a few sales may actually make economic sense. If moving more than a few cars takes a dealership from one bonus category into the next, more lucrative bin, punching once again in incentivized. But this can be good news for the savvy shopper. Punched cars often sit around and then are put into the used pool with little or no miles, and a full factory warranty! So when you’re out shopping, take a look at the used cars as well, there may be some new gems to be found for the careful automotive prospector.

To be fair to BMW, January 2016 registrations exceeded sales by about 7,000 units. This is more than half of the 11,000 car difference between sales and registrations. But there is no denying that there are a lot of things that go into selling cars, some of which raise some serious questions.

Read the full Automotive News article here.

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