KEY POINTS:
BMW's new North American chief wants to stop pushing for maximum sales volume in a declining market - even if it means bringing 16 years of United States sales increases to a halt.
BMW Group's US operations will not take 44,000 new BMW brand cars and trucks that were to be allocated to the US this year, said Jim O'Donnell, CEO of BMW (US) Holding Corp. Those vehicles will go to markets where they can be sold more profitably, he said.
The smaller sales target is part of a bigger rethinking of US strategy that O'Donnell will present to his German bosses in January. That plan could include the reintroduction of four-cylinder powertrains, O'Donnell said. Currently, the smallest powertrain in the BMW brand's US lineup is a six-cylinder engine.
* O'Donnell said he will:
* Cut lease volume at least 10 percentage points.
* Reduce incentive spending and end the traditional December blowout.
* Change dealer bonuses to boost customer satisfaction.
Cut corporate costs. O'Donnell says he will eliminate 90 North American jobs.
"We want to see how the market is going and will revisit our aspirations in January," said O'Donnell, 58. The Scot, who took the helm at BMW in April, has long been familiar with the US market.
"When you have had 16 years of growth, you do not necessarily look too closely at what you are doing and how much you are spending," O'Donnell said. "I need that fresh look at the organisation."
O'Donnell has ordered his department heads to look at cutting costs. Marketing will be a key area for slashing expenses. O'Donnell said it is wrong "to push in a market that is declining".
O'Donnell expects BMW Group, which includes Rolls-Royce and Mini, to suffer a US sales decline of 10 per cent this year.
Overall US sales of BMW, Mini and Rolls-Royce totalled 336,265 units last year.
Within that total, the BMW brand accounted for 293,795 units.
The weak dollar and softness in the US market led O'Donnell to cut his US allocation of vehicles.
BMW even slashed the US allocation of the X3 SUV by several thousand vehicles, even though it's in demand because of high fuel prices.
"We cut back on the X3 primarily because it could be sold somewhere else and it wasn't a huge profit for us at the moment," O'Donnell said.
O'Donnell also is ending the mad push that BMW makes at the end of the year and cut lease deals, which normally account for a big portion of sales.
O'Donnell has decided not to put any incentives on BMW's three newest cars: the compact 1 series, the X6 crossover and the M3 performance sedan.
The X6 is so hot worldwide that BMW raised its base price.
What has been the blowback?
"Absolutely none," says O'Donnell. Dealers tell him they can't keep the X6 in stock.
- AP
