BMW Launches Big Marketing Push for X3 Build-to-Order SchemeBy Michelle Krebs October 14, 2010
BMW is allotting $5 million of its marketing budget for the new X3 to encourage customers to order the exact vehicle they want instead of buying an already-built model from a dealer's lot.
The marketing effort will include television commercials, print ads and a heavy presence on the Internet. In addition, BMW will offer spiffs to customers who order an X3, including the ability to watch it being made via web cam.
Build-to-order has never been popular in the United States, where the vast majority of Americans buy vehicles from dealer inventory. Automakers pretty much gave up on efforts to reverse American car buying habits a decade or so ago.
BMW North America Inc. CEO Jim O'Donnell told AutoObserver in an interview in Spartanburg, S.C., Wednesday that the X3 build-to-order plan is very much an experiment, one that BMW said earlier this year it was anxious to begin. He admits that that even some of his German counterparts at BMW doubt build to order will work - Americans won't wait for a car to be built, they insist.
"I have no idea how successful build to order is going to be for the X3," he admitted. "But I'm optimistic."
O'Donnell is not only optimistic, he's ambitious. His target is for 70 percent of all X3 sales to be build-to-order sales.
He says the time for build-to-order may have finally come, with automakers keeping extremely tight control on their vehicle production to stay in step with consumer demand. He points to the X5 as a promising sign for pre-selling vehicles. Current tight inventories of the X5 have resulted in 85 percent of sales being pre-ordered by customers; that's in stark contrast to the 20 percent in 2009.
O'Donnell says customers who order their vehicles tend to load them up with equipment, which pushes up transaction prices - and thus profit margins - on the sale. In addition, a vehicle doesn't sit on a dealer's lot where it has to weather the elements, be maintained and upon which a dealer has to pay financing interest. That's data BMW will use to convince possibly reluctant dealers to shift their behavior.
To convince the consumer to change, BMW not only will heavily market build-to-order, it will offer special spiffs. First, BMW is promising customers can change their orders up to six days before the vehicle is produced and still take delivery in only a couple of weeks, depending on where they live in the U.S.
BMW also is offering certain options only to build-to-order customers. Three colors and two leather choices will be exclusive to build-to-order X3 customers.
Most intriguing, BMW has installed web cams along the X3 assembly line in Spartanburg, S.C., so that buyers can watch via a password-protected website the making of their specific X3. Once their X3 is assembled, buyers can take delivery at the plant and be hosted at a local hotel by BMW. The nearby BMW Performance Center also will be available to them for driver training on the track and X3 test driving on the off-road course.
Edmunds AutoObserver attending a manufacturer-sponsored event, to which select members of the media were invited, to facilitate this report.
Photos by BMW
1. BMW North America Inc. CEO Jim O'Donnell lays out the build-to-order plot during a press event at the company's newly expanded Spartanburg, SC, assembly plant.
2. Webcams installed on the Spartanburg assembly line will enable buyers to watch their X3 as it is built.