Automotive News went in-depth this week on a lawsuit filed by MINI of Louisville and its owner claiming a lack promotion and development of the MINI brand. It’s not a shocking development given the money at stake and the downturn in sales but it’s still fascinating to read some of the details.
Earlier this year MotoringFile exclusively reported how MINI USA is supporting dealers during the downturn in small car sales. This however gives us a glimpse into the dealer’s perspective when things go south.
The owner, David Peterson and his company, Peterson Motorcars, filed a suit in U.S. District Court claiming BMW has not sufficiently advertised MINI and its vehicles and is helping only some MINI dealers by allowing integration with BMW dealerships.
Key to the suit, Peterson wanted to integrate his MINI dealer into another brand. While MINI USA is allowing the integration of MINI and BMW dealers, they aren’t giving dealers freedom to integrate with other brands. This tied Peterson’s hands and ultimately made the dealership unprofitable.
And MINI of Louisville isn’t alone as it’s one of five dealers to recently close.
Sales Doesn’t Always Equal Dealer Profitability
Like other small car makers MINI sales are down from the 2013 peak of 66,502 Last year MINI sold 43,684 vehicles in the US and they are on pace to move around 36,000 this year.
According to court documents Peterson’s Louisville store sold 164 vehicles last year but had a factory sales target of just 79 vehicles this year.
More interestingly is this bit of into around dealer profitability. While some dealers are operating at a loss, that number is actually getting better. In 2018, 48 percent of Mini dealerships were unprofitable, down from 54 percent the prior year. But dealer profits have dropped, from about $441,000 in 2012 to $221,173 in 2015 and to $130,492 in July 2016, according to court records.
Ultimately MINI of Louisville argues that the diminished sales in the U.S. market are a direct result of BMW’s repeated failure to honor its contractual obligations. On the other hand, it’s fair to say that MINI likely looks at this being a case of a business not being able to be run successfully in a difficult market.
What do you think? Has MINI failed to live up to its end of the marketing and product development bargain or is this just a business failing in a tough market? Sound off below.