BMW Aims to Reduce Inventory Oversupply

Today’s report reveal an oversupply of BMW vehicles is U.S. dealerships. The automaker wanted to overstock towards the last months of 2015 to topple over their competitors, Lexus and Mercedes-Benz. Now, it is time to liquidate the stocks that are just sitting on showrooms and lowering in value each day.

In an interview with analysts last week, CFO Friedrich Eichiner said: “We are adjusting our production plans and reallocating more SUVs to the U.S The fourth quarter was not as strong as expected, and we took a decision early on to clean up inventories to prepare for maybe a flatter market. That is what we are doing, and we think it should come to an end in the second quarter.”

The redux has already started. In the first quarter of 2016, Automotive News Data Center reports that BMW reduced the supply from 77 to 43 days. The stock cutback resulted to sinking of volume for the core BMW brand to 95,564 vehicles from January to April 2016 – falling behind Lexus and almost 20,000 cars short of Mercedes.

There was a dramatic decline in U.S. supply for the 3-series sedan, 6-series coupe and convertible and i3 electric car. As the gasoline prices become more affordable in America, the U.S. market grew 3.3% through April. However, the premium car market did not experience as much traction as BMW hoped.

BMW CEO Harald Krueger said during a conference call said: “The premium-car segment in the USA during Q1 in total declined for the first time.”

The spokesman for BMW North America, Alexander Bilgeri also said that this is affecting not only BMW but all luxury brands. The slower sales are attributed to some energy industry problems that affected the financial sector. Strong U.S. sales are expected to happen when the energy and equity markets stabilizes. This makes it a bit more difficult to deal with the oversupply from last year.