BMW Being Sued Over Perceived Failure to Build Up Mini Brand

Matt Posky
by Matt Posky
bmw being sued over perceived failure to build up mini brand

Like most brands focused on smaller vehicles, Mini is not faring particularly well in the United States and dealers have grown annoyed. Some have even decided to take BMW to court over its handling of the brand, including one owned by former Mini dealer council chair David Peterson.

The allegations? BMW of North America breached its dealership agreement by failing to effectively promote and develop the Mini brand as promised.

Deciding whether or not BMW is truly at fault should prove exceedingly difficult. But Mini is clearly struggling. Over a third of its annual volume goes to the Countryman — its only crossover model. The rest of its sales are broken up between the numerous variations of its iconic small car, which isn’t occupying the “hot segment” at present. With a not-so-diverse lineup and MSRPs better suited to larger vehicles, Mini’s annual sales have been dwindling since 2013 and failed to surpass 45,000 U.S. deliveries in 2018. Unfortunately, 2019 is already on track to be markedly worse.

According to Automotive News, David Peterson’s Mini of Louisville, Kentucky, is one of five U.S. Mini dealerships that have closed this year. Placing the onus firmly on BMW’s shoulders, Peterson Motorcars filed a suit in U.S. District Court for the Western District of Kentucky, claiming the automaker had not sufficiently advertised Mini and its vehicles and providing selective support to Mini dealers by allowing limited integration with BMW dealerships.

From Automotive News:

Peterson’s lawyer, Dennis Murrell, told Automotive News that Peterson decided to terminate his Mini franchise shortly before the store closed. Murrell said that Peterson, who owns Mercedes-Benz stores and didn’t have an option to transition Mini into a BMW store, had “no viable way to keep it open.”

According to the lawsuit, “Peterson Motorcars is left with a dealership that is not financially viable and an unusable single purpose facility in which he has invested millions of dollars.”

The lawsuit also alleges that BMW interfered with Mini of Louisville employees “in an attempt to force Peterson Motorcars to terminate its dealership on terms favorable to BMW.”

Peterson and Mini of Louisville seek monetary and punitive damages, plus costs and attorney fees.

BMW addressed dealer profitability in 2018 and allowed some Mini dealers downsize their stores or simply move operations into existing BMW locations to mitigate operating costs. But participating dealers are still expected to differentiate the brands with Mini-branded showrooms and a dedicated sales and service staff. As a Mercedes-Benz franchisee, Peterson found himself trapped between a rock and hard place with union-jack inspired taillights. He alleges that BMW’s alterations to the plan effectively made the money his company invested to create a standalone Mini dealership totally worthless.

However, effectively faulting BMW remains tricky. As a small-car brand, Mini’s plight is not dissimilar from what has befallen Fiat (which sold 15,521 vehicles in the U.S. last year) and Smart (which sold 1,276 and is leaving the market). But we could probably place some blame on their marketing teams. After all, when was the last time you saw a commercial for the Fiat 500?

In truth, it might not even make sense for automakers to sell these cars in the U.S. anymore. While Mini volumes have remained consistent in Europe, fuel economy mandates have encouraged the industry to lean more toward BEVs and hybrids for economy minded models. If Mini’s products are already seen as expensive in America, saddling every small vehicle with a powertrain that tacks on a few extra grand will be a nonstarter. However, that’s more or less BMW’s plan for the brand right now.

As for the lawsuit, the automaker has denied the allegations and filed a motion to dismiss five of the claims made by Peterson. Thus far, Peterson and company have consented to dismiss four claims but wants to keep BMW on the hook for its alleged violation of Kentucky dealer law and claimed defamation of Peterson himself.

[Image: BMW Group]

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  • Inside Looking Out Inside Looking Out on Jun 25, 2019

    How about Mini Jeep? It might work.

  • The Comedian The Comedian on Jun 25, 2019

    I picked up a new 2019 JCW 2 door 10 days ago. Could not bring myself to buy it, signed on for a 2 year lease. Even at 12% off MSRP it was not a bargain. Clearly not a wise use of money, and I’ll be driving my Tahoe through New England winters. However The car is stupid fun to drive. Before deciding I drove an M2, a Golf R and an STI. The MINI makes no sense at all, but it just made me grin. I’ve owned several cars that are faster, and better by the numbers, but I love driving the MINI. But, even with that, two years is all I’d risk. Residual is artificially high, I’ll be gone in 103 weeks.

  • SCE to AUX From the SAE: Level 3: "When the feature requests, you must drive."The timing of that request will be the subject of lawsuits. Too little warning, and this is just a Level 2 system wearing nicer clothes.Pretty car, though.
  • Analoggrotto So, who has the digital Tourettes?
  • Analoggrotto Mercedes can try but will NEVER match the superlative engineering of TESLA. The #1 Choice for the #1 members of society. The lower class can stay on earth and drive Mercedes.
  • Dukeisduke The "fix" is not a fix - it just assures that when the o-ring breaks down and leaks brake fluid onto the board, the fuse will blow and the car won't burn to the ground. The HECU ("Hydraulic Unit Assembly" in H/K parlance) will still be dead, and you'll have no ABS or ESC. So the car won't burn to the ground, but you'll be looking at an expensive repair. I priced the HECU (Kia p/n 58920-1M640) for the 2012 Forte Koup - the MSRP is $2,325.79, and I can get one from the online seller I buy from for $1646.65. It's not much labor to replace, but then you have to bleed the brakes, or preferably flush the system, since the car's 11 years old and could use a flush. Folks relying on a dealer will be out $3k or more for repairs.I went to the NHTSA site and filed a defect report (the only way I could find to comment on the recall) to tell them that they should force H/K to replace the HECUs on all the affected vehicles, instead of allowing them to just do the minimum.
  • SCE to AUX All right Hyundai - enough of this.These are all older cars, and I believe H/K issued a recall for the same thing before. My former 09 Sedona was recalled for an ABS fire risk. The solution was some sort of extra ground wire from the battery down to the ABS unit or something - I didn't trace it.H/K has a habit of issuing partial solutions with limited scope (saving face), then later expanding the recall greatly. They did this with the 2.4 engine debacle, corroding control arms, and now this ABS thing.As for the EV vs ICE fire debate, no need to stir that pot here. EVs use hydraulic ABS brakes as well, but they don't appear to be covered in this recall (yet... and it would only be the early Ioniq 1 EV, if any).Looking into my crystal ball, they'll probably have to recall the Ioniq 5/6 and Genesis GV60 for an ongoing charging issue, where the charging port heats up and limits the charging rate on an AC plug (at home).Following their usual pattern, a software fix was issued first, greatly slowing the charge rate. Owners are irate, and I think Hyundai is simply delaying the day when they have to replace the wiring harness and charge port on all their new EVs, at great expense.Sorry Hyundai - can't defend you on this one.