Hot new BMW 5 series in short supply

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From Automotive news:

 

As the launch of the redesigned 2017 BMW 5 series ramps up, dealers have a common refrain: More cars!

“We just don’t have enough product,” said Jeff Dyke, executive vice president of operations for Sonic Automotive Inc. Supplies are “really, really light. We need more.”

At the end of March, BMW had just 200 unsold sedans in dealer inventory, said Ludwig Willisch, head of BMW Group Region Americas. The redesigned 5 series began arriving in dealerships in mid-February. Customers had preordered about 2,000.

“So it’s a scarce species,” Willisch said. “Was it really expected to be that low? I don’t think so, but it’s one of the nicer problems to have.”

Production and deliveries have ramped up since the end of March, a BMW spokesman said. Dealers on average should have a two- to three-week supply now during the launch.

Sonic’s 15 BMW stores are the most of any retailer in the country, Dyke said, and have 224 redesigned sedans, or around a 15-day supply, plus 15 of the 2016 version. He said customers are excited about the car, which he praised. Sonic expects supplies to be much better in May.

Tim Kraemer, senior vice president at Carousel Motor Group in Minneapolis and chairman of the BMW National Dealer Forum, has heard from other dealers on the supply challenge. Forum members talked with BMW executives this month about inventories.

“We want to make sure everyone is watching and monitoring the correct balance, and I believe they are,” Kraemer said. The pipeline will be filled, but “they don’t want to oversupply it to where either one of us has to discount it or incentivize it to sell.”

Carousel’s BMW of Minnetonka has 12 of the cars, less than a 15-day supply, Kraemer said. It had about 27 preorders for the car, equivalent to about a month of 5-series sales for the dealership. BMW has provided good support for the car, including lease programs and a $2,000 loyalty bonus to buyers who have owned BMWs in the past, he said.

For the previous-generation version, incentives soared to an average of $11,005 per car in January, according to Autodata. The nameplate’s incentives fell in February and March as old vehicles were cleared out. The average incentive in March was $6,284. Dealers still have some old vehicles on their lots, but the nationwide supply was down to about 100 vehicles by late April, the company said.

U.S. sales of the 5 series have dropped steadily since peaking at 56,863 in 2013. In 2016, BMW sold 32,408, down 27 percent from a year earlier. This year through March, the company sold 6,641 5 series, down 32 percent through the sell-down period.

Advertising support is ramping up. Sonic’s Dyke expects marketing activity to spike in May when more cars are available at dealerships.

BMW is spending about 20 percent more than is common for a launch on the 2017 5 series, said Trudy Hardy, vice president of marketing for BMW of North America, without giving a dollar figure.

The spend will be biased slightly more toward digital and data-based marketing vs. broadcast TV than is typical, she added. TV advertising kicked off in March and will be strong through the spring.

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