MINI Cutting Jobs at the Oxford Plant
We already knew that BMW Group is planning on cutting 8,000 jobs this year, consisting mostly of temporary workers. While that surely impacts MINI’s corporate offices, we weren’t sure how that would impact the Oxford plant. Through sources we’ve now learned that MINI plans to cut as many as 90 temporary positions. As a result of this, production will be cut by approximately 3,000 cars and all shifts will be shortened by 90 minutes.
These measure are being taken so BMW can attempt to save 6 billion euros ($8.62 billion) by 2012.
The main issue is obviously the weak dollar and the general state of the world economy. However there is another, smaller issue; the Fiat 500. Besides the dollar and the economy, it is expected that the Fiat might steal away as many as 3,000 MINI sales this year worldwide – especially Italy where the MINI has been quite successful over the years.
The effects of the housing market bubble burst in the United States have far reaching consequences and are causing ripples all accross the globe.
I am sure, the Fiat 500, and other entries in the MINI’s market segment will force some product revisions sooner than anticipated.
Anyway you look at it, it seems the good times at MINI are over.
So does that mean that MSRP will still be their sales strategy??
It appears this is more actionary than reactionary;an excellent business model. Would you rather BMW think more like Ford, GM, and Chrysler who usually react to which way the wind had blown?
Simple Economics would say that cutting production by 3000 is not going to change the way that MINIs are sold – supply and demand will still dictate MSRP as price for admission. This is not a sales strategy, it’s a market reality. If you are a current owner and the company decides to incentivise or otherwise cheapen the car, the value of your MINI would immediately drop.
And Fiat is bringing in the 500 WAY under the price of the MINI (base price 10,500 Euros is rumored, with well equiped only 15,000 to 17,000 Euros) – so I think it will steal MINI sales, if BMW keeps on it’s current path of pushing the MINI further into the “premium” priced small car arena. My opinion, BMW made a mistake not keeping the MINI Cooper’s price point closer to where it started, and more in line with its “heritage” as an enthusiasts car that any working stiff could easily afford to purchase. Around here in our local MINI Club, the MINI is becoming more of just an expensive toy for those who can afford such “toys”, with lots of the Club’s original (enthusiast) members unable to justify the high-cost of replacing an older MINI with the new models, so selling or trading off the old MINI and moving on. I think Fiat has read the market and sees how it can jump in where BMW entered the market with the MINI, and take those customers.
Sort of sad. Economy is in a real tough state right now.
What? Where are the joyous refrains from those who thought they were building too many cars and it should be more exclusive to keep values high? I thought this would be good news to the old guard? No?
<blockquote>Anyway you look at it, it seems the good times at MINI are over.</blockquote>
Wow. It never ceases to amaze me the apocalyptic leaps people take from the tiniest little bit of news. MINI is proactively trimming its temporary workforce. Big whoop. Even if margins are thin, MINI is still making money and profits aren’t exactly automatic in the auto industry. It’s unfortunate that in many manufacturing sectors short-term profitability comes at the expense of labor, but such is the way of things. Losing your job sucks, no doubt, but temporary means exactly that.
I do agree with Mark however that especially in the USA, MINI is starting to price itself out of a lot of customers. Especially with cars like the tC which has basically MCS stats, but a $18k price tag. Not that a tC is an apples-to-apples comparison, but it’s just one example of a quality, small car with lots of sport appeal. I’m glad MINI isn’t just another econo-box with roll-up windows, but it has creeped up in price such that I don’t think I’d consider a MINI now the same way I did back in 2006. Getting exactly the car I wanted then was $26k, now it’s closer to $30k and that used BMW 325ci is looking better and better all the time. I know it can’t be helped, with the dollar and all, but it’s still unfortunate that there’s such a gap there now.
What Nathaniel said. A few less cars means more cars sold over MSRP.
No doubt this will halt any plans for an expanded dealer network in the USA – if there were any.
Why the heck would they not bring the MINI One over here to fill in the low end? I can’t see how it would cost them that much sine they are the same basic car anyway? I am sure I am oversimplifying or missing something, but it seems like a no brainer to me.
From what I understand from the news clip, the production reduction by approximately 3,000 cars is aimed at the European market due to the new sales competition from Fiat 500. U.S. market should not be affected; however, I would not be surprised to see BMW shifting MINI production from Oxford to other facilities around the world to offset the weak dollar. Unlike the R53 where its powertrain was produced in Brazil, R56 manufacturing and production are exclusively in Europe and U.K.. Either way, MINI has to remain profitable in order for BM W to continue infusing money into R&D.
In any dynamic market there will always be a “new kid on the block,” if there wasn’t we would all be content with the status quo. MINI has proven itself as an icon in its market, there will always be those cars vying to achieve the same status. As Robert Cringely was quoted “If automobiles had followed the same development cycle as the computer, a Rolls-Royce would today cost $100, get a million miles per gallon, and explode once a year, killing everyone inside.”
I saw the 03 Cooper S I bought in 2003 go up by approximately $2200 in comparison to a 2006 model, but look at other manufacturers as well European, Asian and Domestic (US). Prices go up to cover all sorts of costs associated with development, technology, production, transportation, overhead, etc.
I second the view from Lee L. ealier.
To me that one thing that MiniUSA has never seemed to jumped on was bringing the entry level Mini One to the states. If you spend anytime reading Mini2 you can see a lot of younger buyers buy into the Mini One with plans to eventually go after a Cooper or Cooper S. To me bringing it to the states at a competitive prices point would give Mini more sales.
The downsizing of the workforce is sad but think Mini is wise to act before getting themselves into a financial bind. The financial markets world wide are looking iffy at best, not preparing for the future can cause huge harm to the business if things go from bad to worse.
MINI has come to quickly realize that they are flooding the market with unsold dealer inventory. My MINI dealer still has unsold ’07s and they are being offered with 4.9% financing through BMW Financial services. MINI of the Hamptons is offering brand new ’08 R56 MC’s for $299 per month/36 month lease with ZERO out of pocket cash outlay.
It seems to me some of the initial sales projections for the R56 were a bit optimistic and BMW is quickly taking action to rectify the problem by cutting back production. The worst thing a car manufacturer can do is to churn out cars that no one will ever buy. Witness how Chrysler flooded their US dealership network with unsold new car inventory prior to Mercedes selling the company to Cerberus investments.
The Clubman will already see limited production numbers and dealers will have fewer production slots. Again, this is a wise move. BMW does not want to repeat some of the mistakes they made with the R56 last year. The remaining unsold ’07 inventory must be costing dealerships a fortune and MINIUSA is eager to get rid of the cars by whatever means deemed necessary.
Obviously, this is not the “doom and gloom” scenario for MINI, but given the current climatic situation with world markets, a weakened dollar and more people postponing or indefinetely delaying big ticket purchases, this definetely has to hurt the bottom line, somewhere.
MINI today is facing more fierce competition in its market segment than ever before. 6-7 years ago they owned this market, today they have to share a piece of the pie.
What outcome I would like to see from this situation?
a) Better, more competitive product
b) better value for the money. I agree with other posters here that MINI’s are becoming very expensive commodities in their market segment. I paid for my new Clubman S nearly $30K out the door and this is for a car with just a few options and no equipment packages.
3 years ago for my R53, similarly equipped, paid no more than $23K out the door.
Once you hit that price threshold you are placing your product against some serious competition/alternatives.
Hopefully not, buy the BMW 1-series could spell trouble for MINI sales, especially, fully optioned and JCW Cooper S models.
Interesting times ahead.
Why am I back in the moderation queue?
My MINI today would be $1900 more minus about $250 for now standard OBC that I didn’t get. That’s over four years, so about $415 a year. Plus today’s engine and transmission are major upgrades. So overall, when considering the weak dollar, not too bad.
Cutting some temporary jobs to adjust supply for possibly lower demand- and only 3k units across Europe out of a yearly production of over 240k for the world is not a huge difference. Additionally, it’s not stated that the 3k is of any MINI model in particular, maybe they’re cutting Convertible production as the next gen nears production and demand slows- who knows.
MINI is being smart about it. And has been good about holding pricing reasonably steady.
<blockquote>Why the heck would they not bring the MINI One over here to fill in the low end? I can’t see how it would cost them that much sine they are the same basic car anyway? I am sure I am oversimplifying or missing something, but it seems like a no brainer to me</blockquote>
I think it’s a matter of a price vs. performance gap. There are so many other cars in this market like the tC or the Civic Si or even the Corolla S or Mazda3 that simply have more horsepower than a MINI One would have at that price. The american buyer, in general, is not particularly sophisticated and would look at the MINI One’s diminutive horsepower numbers and probably buy elsewhere – not realizing the handling and character they’re giving up. But at the same time, character isn’t everything. I originally thought about going simple with a Cooper, saving on gas, and enjoying the piece of mind of the simpler engine. That is, until I drove a Cooper S. So were I a new car buyer for whom the MCS was out of my price range, I don’t see myself buying a MINI One when I could just get a tC or a Corolla S, go pretty fast, and still get good gas mileage.
All that is to say is that I think that MINI has drifted slightly north of the pricing sweet spot they were in just two years ago. At the time the MINI was easily the most small car for the money, but I’m not sure that’s as true as it was then. Love ’em, just can’t quite look at them the same now as when I bought.
<blockquote>Why the heck would they not bring the MINI One over here to fill in the low end? I can’t see how it would cost them that much sine they are the same basic car anyway? I am sure I am oversimplifying or missing something, but it seems like a no brainer to me</blockquote>
I think it’s a matter of a price vs. performance gap. There are so many other cars in this market like the tC or the Civic Si or even the Corolla S or Mazda3 that simply have more horsepower than a MINI One would have at that price. The american buyer, in general, is not particularly sophisticated and would look at the MINI One’s diminutive horsepower numbers and probably buy elsewhere – not realizing the handling and character they’re giving up. But at the same time, character isn’t everything. I originally thought about going simple with a Cooper, saving on gas, and enjoying the piece of mind of the simpler engine. That is, until I drove a Cooper S. So were I a new car buyer for whom the MCS was out of my price range, I don’t see myself buying a MINI One when I could just get a tC or a Corolla S, go pretty fast, and still get good gas mileage.
All that is to say is that I think that MINI has drifted slightly north of the pricing sweet spot they were in just two years ago. At the time the MINI was easily the most small car for the money, but I’m not sure that’s as true as it was then. Love ’em, just can’t quite look at them the same now as when I bought.
C’mon people they are cutting temporary workers, thats what temporary means …right? As for demand, we talking about a production rate change of about 1% of gross…3000 cars is hardly even worth mentioning!
If I’ve calculated it correctly it looks like MINI’s prices have gone up less than inflation since 2002. I’ve calculated a net average 17% inflation rate since 2002. So all else being equal a $20,000 MINI should be $23,423 today. MINI’s bottom end has not gone up much but they do have a goodly number of new options (some of them quite expensive) which does push the top end quite high.
I paid $24150 for my Cooper S in January 2006. A roughly equivalent 2008 Cooper S would be $24950. An a price increase of 3.3 over 2 years. This is roughly half the net average rate of inflation for 2006 and 2007. When you consider it this way, the price increases are quite reasonable.
First off nice post DB. Interesting info. While I didn’t write this post maybe I can help clear up a few things…
>I am sure, the Fiat 500, and other entries in the MINI’s market segment will force some product revisions sooner than anticipated.
It will be no sooner than planned. The revision had been planned and scheduled before the Fiat 500 was even introduced. Revised vehicles will arrive in late 2009 as 2010 models – exactly three years after the initial lunch as is customary with BMW products.
If you want to hope for something I would suggest hoping that the level of interior quality the Fiat 500 has will inspire BMW bean counters to give more free reign to MINI designers.
>No doubt this will halt any plans for an expanded dealer network in the USA – if there were any.
This will not affect plans currently in place to grow the dealer network over the next two years.
>Why am I back in the moderation queue?
The current version of wordpress has many different ways of fighting spam. One of them is to automatically move into moderation all comments with large word counts (probably anything over 300 – or roughly a full page). Another thing that may be at play here is that WP looks at each comment’s format and how it aligns with popular comment spam formatting.
>Hopefully not, buy the BMW 1-series could spell trouble for MINI sales, especially, fully optioned and JCW Cooper S models.
There will still be a 7 to 10k difference in price between moderately optioned JCW cars at a 135i.
Does this mean we have to cut back on motoringfile to follow the trend? lol
The MINI temp. fans will also be cut and forced to work on production of the smart cars?
Really this is just streamlining the company production.
<blockquote>I paid $24150 for my Cooper S in January 2006. A roughly equivalent 2008 Cooper S would be $24950. An a price increase of 3.3 over 2 years. This is roughly half the net average rate of inflation for 2006 and 2007. When you consider it this way, the price increases are quite reasonable.</blockquote>Considering the exchange rate, the MINI is cheaper today than two years ago.
Having spent some time with a Fiat 500 today I don’t think MINI has anything to worry about!
Yes the design is nice (with lots of design ideas taken straight from the 2001 MINI) but the quality of the plastics and materials in the car is very poor, I don’t think anyone used to MINI standrads of fit and finish would put up with them for very long!
There are still 2007 MINIs sitting on dealer lots in the midwest. MINI is offering low-rate financing. Times are certainly changing for MINI since the days they were all sold as soon as they hit the lots.
>Times are certainly changing for MINI since the days they were all sold as soon as they hit the lots.
Dealers in the Midwest US have been running specials on MINI dating back to 2003. In talking with a few of them, they’ve had trouble clearing out the previous year’s inventory for the last two years because they were produced all the way up to December. I’m guessing 2008/2009 will be different.
Gabe, I do not want to sound like I am contradicting you, but for a while I worked on the other side of the fence and pre-2007 cars were selling like hotcakes as soon as they hit the dealer lot. We had a huge deficit of R50 Coopers as each and every single one of them bound to the dealer were already sold. R53s were selling briskly, even pre-specced off the lot models. This was in mid to late 2006.
Last year I visited that dealer and they had over 118 R56s catching dust in the street level lot and they had 2 full floors in the garage area accross the street. I was told by higher ups… The car is selling but nowhere as briskly as the previous model. Take that for whatever is worth.
Here in South Florida we have 5 MINI dealers (Soon 6 when the Naples one opens up) and right up to the end of ’06 I do not recall any of them giving special fiancing rates or subsidized lease deals on any R53 inventory. MSRP all the way.
Perhaps your region is different, but down here the 1st gen cars sold fairly well throught their 5 year run. Now days the dealer that I worked for is blasting radio ads for unsold ’07 inventory, something that I never recall happening for the past 6 years.
Times have changed indeed.
I would like to add thta if the R56 is such a hot selling model, why MINIUSA is currently offering 4.9% on unsold ’07 inventory and is offering/offered sub $300 per month payments and short term leases on them? MINI of the Hamptons is offering a real ZERO lease, no inceptions, deposits or downpayment whatsoever on ’08 R56 Coopers in stock. I called them on Sunday as I have a friend interested in leasing a MINI and this sounded like the perfect opportunity to get a killer deal.
I believe the rather slow sales at MINI dealers all over the country are prompting BMW to cut back production at Oxford. This would also explain why the Clubman will see reduced production slots. BMW will never admit to low sales publicy but all it takes is to visit you local MINI dealer(s) and see their volume of unsold cars.
I applud their decision to cut back production. The MINI will never be a high volume seller car. I can only hope that the current grim financial outlook of world markets will discourage BMW’s quest to put a BMW and a MINI on every driveway. That is Toyota’s and GM’s mission, not BMW’s.
MINI has made the mistake in the last few years of switching model years in the winter. The perception is that cars, even though they were produced a month before, are “leftovers.” This causes the perceived value to drop for no real reason. The optimal time to switch model years is August-September. This means that the “new” model year MINIs arrive when dealer inventory is lowest. Then there are minimal “leftover” MINIs in the slower Fall and Winter seasons.
BMW is cutting jobs in the workforce globally. They have also restructured departments in Munich.
The USA dollar vs Euro is hurting BMW MINI.
Having said that, they are selling more and more cars and want to be the No 1 luxury car maker.
Forget the budget car market, BMW MINI is not interested.
At the end of the day, the Quandt family and BMW shareholders want a return on their money.
Between my two local dealers, counted seventy-eight new MINI Coopers on the lots, including more than half a dozen Clubmans. Salesman told me the Dealerships are going crazy trying to figure out how to move all the excess inventory.
I recall the Fiat Punto gave the R53 Cooper S a good run for its money. Now Fiat appears to be coming back fighting. Look also at the Fiat Grande Punto 3 and 5 door variants, plus the Fiat Bravo Turbo model with its stylish interior, which both come in Diesel. MINI now has to compete with this Italian carmaker.