Failed MINI of Louisville Dealership Sues MINI USA
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.
<p>I still say they <em>might</em> be suffering from the reliability of the 2nd gen (R56, etc) cars. Stuff like that will hurt for a very long time.</p>
<p>Sorry but you are wrong; Feel free to looks at MINIs IQS year over year and see that MINI quality/reliability has actually been going up year over year.</p>
<p>The fact is in the states the modern Mini has become quite passe’, like what happened to the new Beetle and The PT Cruiser. In the states the modern Mini was geared towards auto enthusiasts and nostalgia and that market either moved on or lost interest. In Europe the modern Mini was seen more like a regular car and still sells better.</p>
<p>In the states, the modern Mini stopped being interesting about 2007.</p>
<p>I do agree. What MINI should do is come out with a limited edition rear wheel drive MINI. That would potentially boost sales a little</p>
<p>rear wheel drive Mini… shocking ! It’s denying history</p>
Yeah no, that wouldn’t work
<p>Has nothing to do with being “passe” and has everything to do with market trends which show when Gas is relatively HIGH small vehicles (which include MINIs and others) sell great. When Gas is relatively LOW, large vehicles ans SUVs see a spike in sales.</p>
<p>The problem with MINI is that it only has 1 Large vehicle. Other manufacturers get to plow through when things like this happen because they have a diversified “size” portfolio. MINI needs to set itself up so that it has an equal size of different vehicles in order to help protect itself against, gas trends.</p>
<p>Being involved with both brands for all of my career within fixed operations, I do agree with the lawsuit and I’m confident more will join. Long story short, mom and pop dealerships are being forced to remodel every so often to maintain the visual appearance of the dealerships for dismal numbers in sales and service? MINI: “You will be required to reface the dealership within 5 yrs, plan ahead.” Dealerships usually spend more than $3 million dollars for these pointless “facelifts” Which is great. But where did MINI go south? BMW in all of my career had vowed and made several statements that they would never release a front wheel drive vehicle. Well….they did.</p>
<p>Not very smart in the sense that they shot MINI sales. Face the facts, price out a MINI then price out 2 series and price out a MINI Cooper S. You’ll find that its not too far off. Well, you may ask, they are two different animals. Yes, you are right. However, being in yuppy-ville all the younger techies want to keep up that “lavish” lift style. In their young minds “MINI or BMW?” What do you think is more appealing to a techy fresh out of college with a 6 figure job?</p>
<p>Lastly, hate to say it, but MINI will most like be closing operation. The sales numbers makes no business sense aside from keeping their current clients happy. But in corporate business, does customer satisfaction really have a play in that?</p>
<p>I do hope that more dealerships join the lawsuit and I’m sure that they will be favored in these cases. I know that there are several dealerships within our market and the state of California that have thought of doing the same.</p>
Wong, you just need to close stores that don’t turn a profit, just like very other manufacturer does.
<p>Nice dealership showrooms. I agree strangely with the dealer. I don’t think Mini or BMW are doing enough to market their brand. But again they are trading a model last updated in 2014 in 2019. Yeah facelifts but no major new model so must be hard to do.</p>
<p>In Australia one reason not to buy a Mini is the poor after service primary cause Mini shares service centre with BMW. The govt. police and politicians all drive BMW now. So trying to book your car in for warranty or service can mean a wait of a few weeks. They do a good job but to long to get in.</p>
<p>They need to do better but understand people aren’t buying new Mini’s cause small cars aren’t selling or popular.</p>
Yeah, MINI needs to change their models every 3 years…. that would do wonders for trade values….
<p>The market changed and killed Mini, gas was $4 and cars were king and now gas is $2+ and everyone drives bigger SUV’s and trucks. Couple that with poor value compared to even BMW, limited amount of dealers and some quality issues and the end could be near. Smart is gone, Fiats are dead and Mini’s are way too expensive. You either have to do electric quick or much more performance ie poor man Porsche in a front wheel drive car.</p>
You were right on the first part, gas is low so people want big size. So if MINI had 3 models which would fit that size they would be fine. As for your other points……”poor value compared to BMW”? LOL, what the heck are you talking about.
MINI’s way to expensive? Compared to what exactly?
<p>I agree that the problem is marketing. When you do what is conceptually a retro car, you MUST connect potential buyers with that history. It is not something that non-car people will come by naturally, so you have to connect the dots for them. The further we get away from Gen 1 cars, to becomes less likely that potential customers will understand the linkage to the Mini heritage. It requires reinforcing in the marketing plan.</p>
<p>These days, many people don’t understand the basics. When I tell people that the center dash pod is a holdover from the original Mini, many are STILL surprised. They don’t know that the original car had a central instrument cluster because it was intended to be sold in left hand drive and right hand drive countries. It lowered costs because they didn’t have to manufacture left and and right hand instrument pods. I wouldn’t be surprised if most of the current and potential MINI owners have never seen an original Mini beyond posters in the dealerships.</p>
<p>I don’t agree that we’re seeing fallout related to the N14 engine. It was last in the general population in 2010 and JCWs until mid-2012. The N18 ran through 2013. It’s been a long time since 2010 and 2012.</p>
<p>IMO, the reason that MINI of San Francisco closed (went out of business) was due to the high cost of leasing/rent for 2 buildings they moved into. One building was the showroom, the other the Service Center which weren’t located together but in different parts of the city. The showroom was in a very high cost commercial rent area. Originally MINI of SF was in the same location/building as BMW of SF (showroom and service center).</p>
<p>I find it interesting that this article notes “While MINI USA is allowing the integration of MINI and BMW dealers” Wonder why BMW of SF didn’t at least re-integrate the MINI Service center back into the BMW Service center?</p>
<p>For MINI SF, at least after they moved to the new building, their CS was part of it I think.</p>
<p>One time, I went there to buy extended maintenance contract (I bought my R56 from them when they were at the old BMW location). They didn’t have to over sell me anything as I knew the price was fixed and I was gonna get it. The lady in charge of contracts handled it so poorly (really), I decided not to get it.</p>
<p>Another time, my wife and I walked in wearing very casual clothes. (we probably looked like possibly college kids or young adults) After seeing the floor for bit without anyone saying anything, one sale guy came up and basically told me if we were looking for used cars and pointed to the downstairs where used lots were. After I told him I was looking for a new one, he tried to move me to the entry level Cooper. I told him I was considering JCW Countryman (seriously I was), and his attitude and language clearly changed. And I could sense that he was thinking he messed it up. That was that. They closed a few months later.</p>
<p>If one of the reason for poor sales is lack of or poor advertising of the MINI (by the BMW group), Imo, it kind of all started at the end 2005 when MINI changed their ad agency. The commercials and ads for MINI USA from 2001-2005 were creative and fun and were done by Butler, Shine.
BSSP had some good ads but overall weren’t as good as Butler/Shine.</p>
<p>I feel that the advertising didn’t bring the excitement of joy of wanting to own and drive a MINI like Butler/Shine did.</p>
<p>Interesting. I confess to not having a point of comparison as I bought my 2009 MINI in 2009. I’ve only really known the 2nd company. I think the way it should be done is to exploit the difference (ie, quirkiness) of the car and explain that in reference to the Mini. In other words, embrace what is odd about the MINI and show the lineage back to the Mini.</p>