"It is a highly competitive market out there," says Joe Lawrence in his most diplomatic way.
Lawrence, director of sales for BMW Canada, is on the line discussing his firm's latest round of cash and cash-like incentives designed to drive sales. It's never easy or fun for the sales boss at a premium brand - BMW being the world's largest maker of premium brand cars - to talk discounting, but that's the reality in a Canada.
First, he points out, came the currency crisis of 2007, when the Canadian loonie hit parity and beyond with the U.S. greenback. That forced all the manufacturers to adjust pricing in one way or another - either by lowering prices to match or at least be competitive with the U.S., or by simply adding incentives that effectively lowered prices.
BMW Canada went the incentive route, rather than pure price-cutting, which was a strategy embraced by Toyota Canada, among others. BMW, which actually leases 50 per cent of its deliveries in Canada, went the incentive route in an effort to support residual or resale values. Some members of the public complained about sticker prices, but few are now saying BMW should raise prices as the loonie has dropped to the 85-cent U.S. range.
Canada also saw a flood of used cars pour into Canada during the 2007-2008 period. The strong loonie made U.S. imports attractive then in ways that are not so attractive now.
In fact, says Lawrence, BMW and its Mini brand are scrambling to find enough nearly-new used vehicles to run through the companies certified used car program.
"Last month was our best all-time for pre-owned sales," he says.
To keep the new metal moving, today, BMW has some cash incentives available to "support" sales. Definitely ask dealers what they are, if you're buying a Bimmer, or use a pricing service such as www.carcostcanada.com.
In addition, BMW Canada has lease and finance rates as low at 2.9 per cent. BMW Canada is also pushing added content and features as a way to sweeten deals without actually putting cash on the table. For instance, you can get a free automatic transmission with a list price of $1,600 on the 3-Series and the 5-Series is being offered with a $3,800 Premium Package at no charge.
Adding free content without cutting prices or piling on cash incentives helps BMW Canada support residual values. That helps the leasing business, naturally. At the same time, strong residual values matter to buyers who plan to sell or trade-in in the next three or four years.
Oh, yes, it's a tough market out there - "competitive," as Joe Lawrence puts it.