BMW is slowly working on moving toward a direct-to-customer sales model, in which is sells cars… well, directly to the customers. This flies in the face the traditional sales model, in which car companies sell their cars through authorized dealerships. In Europe, BMW sells some of its cars directly to the customer, which seems to be popular among those who have done it. Which is why BMW is looking to expand that sales model throughout Germany.
Of the next few years, BWM’s dealership partners in Germany will be reduced from 120 to just 100. Those 120 dealer partners own several locations throughout Germany but BMW will allow the contracts of 20 partners to expire, without renewing them. Instead, BMW wants to switch to the direct sales model entirely in Germany by 2026. However, BMW wants to switch all MINI sales over to this new model by 2024.
There are many pros and cons the business model switch but it does seem like customers prefer it as well. With direct-to-customer sales, BMW has exact control over pricing, discounts, and sales. That can lead to customers losing out on special discounts they may have previously gotten from having close relationships with certain dealers. Certain customers’ relationships with dealers may have also netted them allocations on special cars that they may not get with the new sales model.
However, there are some pros that customers like quite a bit. For starters, they know exactly what they’re getting. They see an advertised price and that’s the price of the car. No adjusted dealer markups, no hidden dealership fees, and no shady salespeople trying to sell aftermarket warranties. There’s also no sitting in a dealership for three hours while a salesperson pretends to talk to a manager about the price. You just specify your car, BMW gives you a price, and you order. Not having any gray area or wiggle room offers nice peace of mind.
It’s worth noting that this business model won’t happen in the U.S. market. Tesla was the first brand to really try such a model in the ‘States and it’s been fighting an uphill battle with dealerships and unions ever since. So major automakers don’t see any direct-to-customer sales happening in the ‘States anytime soon. However, there are many U.S. customers who would like such a sales model to be implemented, so many sometime down the road, as more and more brands switch to full electrification.