BMW Ends 16-Year Streak of Ever-Higher Sales

BMW has conceded that in 2008, it won’t sell more cars in the United States than the previous year, after 16 consecutive years of growth.

What’s more, BMW indicates that’s OK with them. They are also raising prices, in a effort to put profits before sales volume, in so many words. In June, BMW took a mid-year price increase on 2008 models that averaged out to less than 1 percent per car, to be followed by higher prices on 2009 models as they are introduced. For instance, the 2008 328i Convertible went up $350, to $43,975 suggested retail.

“Growth must not be achieved at the expense of profitability,” said BMW Chairman Norbert Reithofer. “We will sell fewer cars in the U.S. this year than last year,” he said in a conference call last month. “But rest assured that this decline will not jeopardize our market position in the United States.”

BMW may sell slightly fewer cars, but at the same time it is expanding production at its single U.S. assembly plant, near Spartanburg, S.C., with an emphasis on models that sell well in North America.

That’s a natural hedge against the dollar-euro exchange rate. In recent years, the exchange rate has made BMW’s dollar-denominated costs cheaper in euros, but it has also made its dollar-denominated revenues worth fewer euros.

You could argue that BMW has no choice but to accept a lower level of sales. Through August, U.S. sales for the BMW brand were already down 7.4 percent, to 180,889, according to AutoData. However, sales for BMW’s highly fuel-efficient Mini brand were up 32.3 percent to 36,932, in the same period. All told, including the Rolls-Royce brand, BMW Group sales were down only 2.4 percent to 218,090.

In addition, BMW is about to introduce a new generation 7 Series flagship, plus a facelifted 3 Series model. Business as usual would be to crank up the incentives on leftover 2008 models, bank on a sales increase for the 2009 models, and try to achieve at least a slim sales increase for the year.

This new attitude could change – I recently had to temper my enthusiasm for the new-found restraint at General Motors, when GM uncorked its Employee Discount for Everyone incentive.

But for now, BMW seems to be making a genuine effort to break the incentive habit.