The Wall Street Journal has an extensive report in which Neal Boudette caught BMW cheating with its sales numbers. Boudette unmasked the shocking practice of car makers selling cars to dealers instead to customers: “Hundreds of BMWs counted as sold in July remain in showroom inventories and are still advertised for sale as new cars, according to dealers.” The WSJ dug deeper into the scandal.
The WSJ received reliable information that BMW “made a special offer to dealers on July 31. For one day only, the dealers would receive discounts of as much as $7,000 per 2012-model car as long as each vehicle was reported as sold that day.”
The paper gave BMW spokesman Kenn Sparks the third degree and made him admit that BMW’s “July sales total includes vehicles that were purchased by its dealers for use as what are known as “demos”— cars used on lots for test drives.”
This, says the WSJ, “raises questions about the accuracy of the company’s reported sales, a closely watched figure as BMW and rival Mercedes-Benz vie for the title of top-selling U.S. luxury brand.”
Not that the WSJ is ignorant of shady practices. The WSJ says it has heard of “car companies, which book revenue when they ship to dealers, are known for using a variety of tactics to improve sales beyond what consumers purchase, such as cut-rate deals with rental-car fleets and incentive that get dealers to stock more vehicles than they need.”
The demo deals were news to the WSJ. The paper needs a little training in the time-honored art of number goosing.
The demo deal is an ancient ploy when a sales chief wants to make his numbers. It is just one sample from a rich arsenal of number-enhancing methods. (We encourage our car dealing readers to come forward with the ultimate guide.) As a matter of fact, the WSJ missed another possible scandal. Says the WSJ:
“Last year, General Motors Co. required Chevrolet dealers to stock at least one Volt electric car as a demonstration model and more than 1,000 were shipped as demos. But GM only counted them as sold when they were delivered to customers, a spokesman said.”
Pulled the wool right over your head, Wall Street Journal! In March, there was a sudden spike in Volt sales, which caught many analysts and journalists by surprise. After all, Volt production was on halt due to slow sales. Magazines like Forbes dug for a reason, but came up empty. We heard from a very reliable source that GM gave dealers a sizeable cash bonus if they would sell their existing demo unit, and take a new one. This was a repeat of a similar program at the end of 2011. Shocking I say, shocking!
P.S.: This huge scandal is collateral damage from the war of the luxury models. It is an annual sales race between BMW, Mercedes and Lexus, which appears to be a hobby of the financial press, namely the Journal and Bloomberg. They doggedly track (and probably have office pools on) every lap of this race. Most other countries never heard of this odd spectator sport.