Managing the Financial Side of Commercial Fleets

BMW Sees Opportunity in the Commercial Fleet Market

After entering the U.S. fleet market in 2010, BMW expects to see its program grow over the next several years.

September 2011, by Staff

Even though it has years of fleet experience in the UK - at one time accounting for half of its business there - and Europe, BMW didn't enter the U.S. fleet market until 2010.

The irony of this situation was the fact that there were numerous U.S.-based corporations that relied on BMW for its fleet needs in Germany and the UK "It was a bit of an anomaly," said Drew McClelland, corporate sales manager, BMW North America. "We looked at what the competition was doing - Mercedes-Benz and Audi - and we felt we had to be in the fleet market. Now that we've entered the fleet market, there's no turning back."

EPP Lifts Off

In 2010, BMW North America launched its Executive Preference Program (EPP) as its official entry into the fleet market.

The EPP is a fleet program for the U.S. and Canadian markets, which allows eligible fleet drivers to order BMW- and Mini-brand products. Benefits of the EPP include BMW Ultimate Service, which is no-cost maintenance for four years or 50,000 miles and roadside assistance for four years and unlimited miles. The EPP is open to both companies and employees on reimbursement or car allowance programs.

Helping build the program is a dedicated sales force (see sidebar, "First-Ever Dedicated BMW Fleet Sales Team").

McClelland expects to see the program grow over the next several years with a target of selling up to 5,000 vehicles per year.

What may help popularize BMW with U.S. corporate fleets is the automaker's expanded product line. "We're going into new niches, so from the bottom up, we are expanding," explained McClelland. "I think it's natural to move into fleet sales. But, we'll only do it on the basis that it's profitable for us, and it makes sense. Our fleet sales will be done in a very controlled way because we don't want to damage BMW's brands' residual value, which is one of our strengths."

Model-Year 2012 Forecast

With about 60 percent of its 2012-MY products being new, this could be a big year for BMW in the U.S. market.

The company's next big launch is the new 3-Series, which, according to McClelland, is the automaker's most important model for the U.S. market.
There also will be availability for the first time of the 5-Series. The 528xi will be available sometime in October. "That's going to be a big car for us," predicted McClelland. "It is going to give us a huge sales boost. On the other side of the line, we've got the M5 coming out and that's always been a halo car. We're moving from a V-10 to a V-8. The new M5 will be 25-percent more fuel efficient than the current M5."

BMW announced earlier this year that it will become a major
player in the all-electric and hybrid market with its i subbrand. Among its first offerings will be the i8 (concept above).
BMW announced earlier this year that it will become a majorplayer in the all-electric and hybrid market with its i subbrand. Among its first offerings will be the i8 (concept above).

Showing its commitment to the U.S. market, BMW recently added 1.5 million sq.-ft. to its Spartanburg, S.C., manufacturing facility, BMW's first assembly plant outside Germany and its first in the United States. The $750-million addition is dedicated solely to the production of the BMW X3 Sport Activity Vehicle. The plant now produces about 1,000 X3, X5, and X6 models per day.

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