“The SEC is looking into the Munich-based auto maker’s sales practices in the U.S. to determine whether the company engaged in a technique known as sales punching, according to people familiar with the matter. Sale punching occurs when a company boosts sales figures by having dealers register cars as sold when the vehicles actually are still standing on car lots.”
This happens with every single dealer and every single brand. The dealers do it to get their unit bonuses from the manufacturer and I imagine the manufacturer is ok with it since it helps with their monthly projections and stock prices. The probably SEC does not like them manipulating sales numbers and therefore stock prices, but it is a very open secret if not common knowledge this happens so investors are not necessarily being misled. Edit: I should add I do not think the manufacturers are encouraging dealers to do this, but it is not being discouraged.
I doubt it - I think what you’ll find is what other brands do, like Volvo, which is keeping them in service for a defined period of time/mileage before selling them. May reduce their sales numbers a bit, but will keep them on the up and up.
100% but there are a lot of BMW dealers that all provide loaners to their service customers. What will probably happen is loaners will just not be reported as “sold” in BMW’s system like they are now until it reaches an actual customer.
This is common practice, when i was at a competitor, every year the GM from distribution would ask what I had in my pool. I had a mix of cars wrecked or destroyed, exec demos, nonsalable pre-series and internal employee lease vehicles. They would push to punch as many cars as possible. We would use internal dealer codes for the wholesale and retail. This pushed the cars out of sales tracking, I’d have to pull them into my “pre-owned” inventory which allowed me to track what I had. It was an absurd exercise, but that’s how desperate the rivalry was.
Not with every brand I believe, and that’s why the SEC is after them. Like @28firefighter said, others (Volvo, MB I think) actually require punched cars to get to certain mileage which forces dealers to use them as loaners. Looks like BMW encouraged its dealers to punch cars to boost sales without requiring them to be used as loaners.
Do you see many Volvo loaners available for lease with 1-2k miles or less?
Even if they don’t have a cap they manage it somewhat.
And maybe that BMW cap is also under scrutiny? Maybe the SEC thinks it’s too high.
But it would be naive to think that manufacturers do not close their eyes on punching.
Dealers can punch cars without putting them in loaner service but they are not reported as sales. The purpose for doing this is to “earn” bonus money from BMW now. But hopefully we will see what actually comes of this and the reasoning behind it.
It’s kind of stupid because all you’re doing is stealing sales in the future, can’t retail it twice(unless they were getting really shady and reversing sales and punching again). With Saab when I put a car in loaner service it had to stay in a set amount of time to get the loaner money and punching it for retail wasn’t done until the car was actually sold to a retail customer. Towards the end they got wise and you had to order loaner cars or take them out of the port, ie they had to invoiced as loaners(prevented you from taking crappy inventory and converting to loaners, common BMW practice). We never got into these kind of shenanigans.
They will likely get hammered on this. Let’s assume that the dealer owns the vehicle when they receive the shipment at the dealership. Transfer of Title likely occurs from BMW Corporate to local dealership.
The local dealership when “selling a loaner” to itself, wouldn’t cause the title to transfer, unless they had their service department setup as it’s own entity. They likely wouldn’t do that because you are going to get into intercompany profit eliminations and becomes rather complex quickly, especially when you need to offload the service vehicles.
At the end of the day, the dealerships and BMW Corporate were recognizing revenue without a transfer of title and that is a no no. Under Armour is being investigated for something similar with regards to pulling sales ahead and they actually sold the products, just at a steep discount. They however would have had a transfer of title whereas BMW did not.
I would guess their entire service vehicle procedures and program will change… Maybe even before the investigation is over to try and get ahead of the SEC. Just my $0.02
