AUTOS : BMW to Reduce Prices of Some Models by 9%
BMW of North America Inc. said Thursday that it will cut prices on some 1990 models by nearly 9% and improve its distribution system in an effort to raise annual U.S. sales from about 68,000 cars this year to 85,000 cars by the mid-1990s.
Karl Gerlinger, BMW North America’s recently appointed president, said the new pricing reflects a fundamental change in the U.S. luxury car market that has shrunk from 1.4 million cars in 1986 to just over 1 million units this year.
The price cuts and enhanced ordering system are intended to relieve the company’s 413 U.S. dealers from high inventory pressures, thereby reducing dealer costs, Gerlinger said.
Will Mail Out Coupons
“We have to stay out of this rebate game,” he said, adding that customers will be able specifically to order the cars they want instead of choosing from bulging inventories.
The U.S. marketer of the prestigious German cars expects the program to allow dealer floor plan costs to drop by about half next year when compared to 1988 levels as inventories decline from an average 86-day supply to about 55 days.
To preserve customer loyalty--and appease those who purchased the higher priced 1989-models--BMW also will mail to owners of its more expensive cars coupons worth up to $1,000 that can be used toward a new BMW if purchased within three years.
Gerlinger denied that price reductions by BMW and other luxury car makers are in direct response to new competition by Japanese luxury car makers now entering the market with comparable models for thousands of dollars less.
“It is important to look at this competition . . . but our long-term strategy does not just focus on them because our cars are priced from $20,000 to $70,000, and we have to look at the whole market range,” he said.
Wednesday, German car makers Audi and Volkswagen announced price reductions for their 1990 models. Last month, Jaguar announced a model priced at under $40,000.
BMW also plans to offer a new entry-level model this spring called the 318i, said Carl Flesher, vice president of marketing. It will feature a new 1.8 liter 16-valve four-cylinder engine and be priced at between $21,000 and $22,000 in attempts to lure buyers into the market at a lower price before moving them up to more expensive cars.
Prices on BMW’s 1990-model 3-series coupes and sedans, all powered by six-cylinder engines, remain at 1989 levels ranging from $24,650 to $34,950, although driver side air bags are added for the new year.
Its two mid-sized 5-series sedans have been reduced by as much as 5.5%. The 525i’s price was cut from $37,000 to $35,000. The 535i was lowered from $43,600 to $41,500.
Prices of two of BMW’s large 7-series sedan, the 735i and 735iL, were reduced by as much as 8.6%. Its flagship sedan, the 750iL, is unchanged at $70,000, but a compact disc player has been added as standard equipment for 1990.
Mercedes-Benz Hikes Prices
A new coupe called the 850i will debut in mid-1990. It may be BMW’s most expensive model at more than $70,000, Gerlinger said.
BMW’s other 1990 models will go on sale later this month.
In a related development, Mercedes-Benz of North America Inc. posted price increases averaging 2.2% higher than final 1989 levels, although it said several car lines have more standard equipment, making those cars less expensive for 1990 on a comparably-equipped basis.
Mercedes also announced prices on its 300SL and 500SL roadsters, its first completely new two-seaters since 1971. They range from $72,500 for the six-cylinder 300SL roadster, to $83,500 for the V-8 powered 500SL that now becomes Mercedes’ most expensive model.
A gas guzzler tax ranging between $500 and $1,300, depending on model, is an additional cost, a company spokesman said.
