In the last couple of weeks, the auto industry has been reporting the sales numbers for 2015. With the numbers come the bragging rights for the next 52 weeks. For example, Ford Motor Co. has been the longtime sales leader in the pickup realm. That leadership was challenged for a time last year by General Motors. However, Ford regained the lead position and has been taking advantage of the bragging rights in its latest ads. Indeed, just about everywhere you look, you will find one automaker or another exercising the same rights.
In the world of luxury car sales, bragging rights are especially important for good reason. There is so little room between the first- and third-place – perhaps 3,000 cars – that top position does distinguish one line from the others. To get to this coveted position, carmakers will resort to all sorts of methods to eke out just one more sale.
For example, BMW’s strategy was simple: Pay dealers to buy cars from their allocations, report the sales and then use the vehicles as loaners. The strategy had two benefits. Not only were dealerships able to bump their sales by a few vehicles, but they were also able to show off the new products to service customers. It was a double-win. To facilitate purchases, BMW offered up to $1,750 per vehicle. Dealers were then asked to book the sales immediately.
The results, though not spectacularly high, did help the automaker eke out top-spot in luxury sales. BMW ended the year with a 1,400-vehicle lead over number two Lexus. The carmaker’s lead over third-place Mercedes-Benz was nearly 3,000 vehicles.
Interestingly, BMW, Lexus and Mercedes-Benz all have loaner programs. BMW, sources say, was quite aggressive in using the loaner program to increase sales reporting figures. Using an incentive program such as this is not uncommon in the car industry. Most automakers will offer dealers incentives to move extra iron at certain times of the year. Some carmakers run quarterly incentive programs while others, like Mercedes-Benz, run them every half year.
Maryann Keller, a Connecticut-based independent car analyst, told Bloomberg today that carmakers “do … this all the time to set sales records or make claims that they are the best in show. BMW can beat their chest this year. But you can question whether they did it on the same terms as their competitors.”
Not only did BMW actively engage in sales-assisting, but the automaker reportedly also outspent rivals in December on consumer incentives. According to Autodata, BMW spent an average of $5,169 per vehicle, about $600 more than Mercedes-Benz and $1,400 over Lexus. It spending was for leasing deal discounts and rebates.
BMW’s strategy worked, apparently, though spokesman Kenn Sparks declined to tell Bloomberg just how much it helped sales. He did call the vehicles “an important part of BMW’s customer-satisfaction and marketing plan.” Further, he indicated, the automaker periodically uses incentives to encourage dealers to expand their loaner fleets. In an email, Sparks noted that BMW prompts its dealers to “renew their loaner” fleets regularly. The automaker wants dealers to have “the newest models with the latest innovations … and have a full range of BMW models on hand.” Sparks said the program began two years ago to improve the retail experience.
While BMW linked incentives to customer service, an analyst with TrueCar Inc., an automotive-pricing outfit in Santa Monica, Calif., believes loaners did help secure the top spot for BMW. Eric Lyman said “This is a strategy we see across the industry and especially with luxury brands … That probably got BMW some or all of the” 1,400-car margin over Lexus.
Interestingly, using a different method of counting results in wildly different results. Basing sales on calendar year registrations, the other traditional means of measuring sales success, casts a new light on sales positions with Lexus and BMW swapping first and third. R.L. Polk, the registration-reporting division of IHS Automotive, puts Lexus sales at 340,392; Mercedes at 337,288 and BMW at 335,259.
Polk, longtime de facto keeper of registration stats for the industry, keeps those cars sold but not yet delivered out of its new-vehicle registration figures. Tom Libby, manager of loyalty solutions at IHS, said that BMW may not have needed the loaners to win, adding that late December sales might not even show up in state registrations until the next calendar year. Polk takes its figures from the Departments of Motor Vehicles of all 50 states.
Information for this report was provided by Bloomberg and Automotive News.