BMW has made changes to the way it distributes new vehicles in the United States, reducing dealer stock holdings but still allowing same-day delivery to customers that demand it.
“We have 350 US dealers and they carry huge stocks [to enable immediate delivery of popular models in preferred colours and specifications]. It’s costly but is needed,” said BMW board member for sales and marketing, Ian Robertson.
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However, in a recent move, the automaker has “taken away dealer stock” by grouping supplies for five or six dealers in central storage compounds, close to a cluster of dealerships.
“It only works if delivery to the dealer can be made in an hour,” Robertson told just-auto.com on the sidelines of a media event ahead of the company’s annual general meeting here in Munich.
He said the logistics were in place for such an innovation to work in the United States where most buyers want to take delivery of their new vehicle as soon as the purchase decision is made. They expect the dealer to have the right car, in the right specification in stock, or something very close to it, and to drive off right away; hence the enormous stocks traditionally carried by US dealerships.
Robertson said the idea can also be adapted for customer test drives: “central support [by the automaker] is another step”. No dealership can any longer carry the huge number of demonstrators needed to cover the full BMW range but the dealer can own some cars with a quickly available, ‘central stock’ available within an hour’s radius to provide many more.
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By GlobalDataFor dealer stock, central stock and the few US buyers willing to wait for a car built to order, Robertson says the Spartanburg plant in South Carolina is “the better choice [for] build to order”. It makes the popular X-series SUV lines and, due to the absence of shipping time that applies to cars shipped in from Europe, is effectively four weeks closer to the dealers and their customers, even when truck shipping time across the vast US continent is taken into account.
“[Supply of] all Xs is tight,” Robertson noted with waiting times of 3-5 months for some models in some markets.
He said BMW had changed the way it designs and builds cars which helps streamline the component supply chain and the actual final build process. He cited bumpers as just one example. A few years ago, just one X model line may have required several different bumpers, all painted, with trim level differentiators and equipment (such as foglight inserts) – all sufficient variations to require separate part designs and numbers.
Changes to the design process (“designers cast the biggest shadow over the design and build process”, Robertson jokes) means the same basic plastic moulding is now used across all model line variants which results in a “lot more standardisation” and now BMW can “make the variation” just before build – with the part being painted, trimmed and equipped for a specific vehicle as close to the assembly line (at which it will arrive line-sequenced for that vehicle) as possible.
