By on June 24, 2019

Mini Cooper 5-door production line Oxford - Image: BMW UK

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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40 Comments on “BMW Being Sued Over Perceived Failure to Build Up Mini Brand...”


  • avatar
    deanst

    Wow – an overpriced and unreliable small car fails to gain popularity in America. Who would have guessed?

  • avatar
    sirwired

    Could be worse, they could be Smart dealers.

  • avatar
    Hummer

    What did they expect it’s a one trick pony, not mini people want a small car that’s expensive to purchase and maintain.

  • avatar
    mmreeses

    Student loans + Uber + no mid-sized CUV for first generation Mini owners to move up to killed the brand. YMMV

  • avatar
    aja8888

    You can’t sell those Mini’s in Texas. They are just too darn small.

  • avatar

    Hmm. I thought the number of e46 and e90 legacy parts was enough to sustain them. Sadly I now see +BMW has FWD cars in the lineup…Mini was great for FWD in the states, but I guess even BMW saw that they could charge more for the same car with a spinning prop.

    We are becoming like Japan…everyone drives an identical box vehicle.

  • avatar
    MKizzy

    BMW just needs to bastardize the Mini brand by introducing more CUV models like everyone else.

    For starters; take the Countryman, stretch it to the size of a CRV to squeeze in a third row of seats just big enough for a Cocker Spaniel, and call it the Countryman XL. Throw in a little savvy advertising and problem solved.

  • avatar

    Mini follows the same path as Saturn. In the end Saturn lost any identity and become just another GM brand. What BMW will do – engineer FWD BMW and make Mini based on it – wider, longer and higher. And also develop Mini based on X3, X4, X5, X6 and X7. And X9 too. Really, dealers need fully optioned full size Mini with V12 engine based on 7 series or even better RR for rich 1%.

    • 0 avatar
      James Charles

      Or just make a modern Moke with AWD.

    • 0 avatar
      dukeisduke

      True – GM starved and mismanaged Saturn, which no doubt made the management over at Chevrolet gleeful. Saturn dealers begged and begged for an SUV/crossover to sell, but by the time they got the Vue, it was too late. And the L-Series? Not a Saturn, just a badge-engineered Opel, built in a plant that wasn’t a Saturn plant.

      • 0 avatar
        ToddAtlasF1

        The problem was that they spent many billions of dollars attempting to make the first Saturn competitive with the Corolla and Civic on paper. Other than NVH and durability, it was. Unfortunately, their chosen competitors were able to develop their target cars for 25% as much, and they made a profit while introducing a new generation every four or five years. GM was stuck writing down a multi-billion dollar loss on R&D one year so they could pretend to make millions on Saturn the next. There was never going to be money to develop another car that could compete with the best Japanese models.

  • avatar
    tankinbeans

    Introduce a sub-brand and call it Maxi. Their first named model can be the Thyroidal Malfunction.

    • 0 avatar
      WallMeerkat

      https://www.aronline.co.uk/cars/bmw-mini/mini-2/mini-development-story/

      “one insider had this to say on the Spiritual proposals: ‘When we explained our models called Mini and Midi, they wondered why the bigger model wasn’t called Maxi. We all had a good laugh, and then had to explain.’”

      There was a model called the Austin Maxi, a large (by 70s UK standards) hatchback.

  • avatar
    James Charles

    The “new” Mini isn’t Mini at all. It has none of the personality or attributes that made the Mini an icon.

    The Suzuki Swift would be the closest modern day vehicle to what the original Mini was; affordable to all, runs on the smell of an oily rag, great fun to drive and through around and has personality.

    I don’t see how the “new” Mini can be called a Mini. There is more to the Mini than retro looks.

  • avatar
    Tstag

    They should just build a range of Triumphs and slot them in over the top through all Mini dealers. Job done!

  • avatar
    sportyaccordy

    I think there is a market for premium small cars- the GTI and Mazda 3 endure. MINIs just aren’t very good.

  • avatar
    FreedMike

    No big mystery here as to why they don’t sell – a base three door hatchback runs a touch under 30…and comes with a three-banger.

    Yeah, right.

    The shame of it is that these are *not* bad enthusiast cars at all – as long as you get models with bigger engines, they’re a ball to drive. I wasn’t unimpressed with the quality, either.

    But when you equip one of these properly, you’re now looking at $35,000 for the three-door, and there’s a fairly long list of bigger, more practical fun-to-drive cars at that price point.

    They desperately need to address the value equation.

    • 0 avatar
      ToddAtlasF1

      I guess it answers the question of whether or not people would happily pay for the production complexity of offering interior and exterior colors other than grey and beige. No, no they would not.

    • 0 avatar
      jkross22

      MINI dealers preach the customization of their cars. The problem MINI has – their blind spot – is that any car can be customized. I don’t need to buy a MINI for that.

      So 1 of the 2 main reasons you buy a MINI is bunk. The other reason you buy it is because of the styling/heritage. It seems like BMINI see the brand as though it’s like Porsche, which is laughable.

      BMW won’t admit the reality of MINI – overpriced, unreliable, cute styling that’s worn off, underpowered, etc. The shtick has worn off.

    • 0 avatar
      The Ghost of Buckshot Jones

      A base model 3 door Cooper starts a touch over $21k before incentives. Why lie about something that takes literally 15 seconds to Google?

      • 0 avatar
        FreedMike

        OK, I stand corrected. The totally base model is $21,000 per the car configurator. So I went to Autotrader and searched for a $21,000 base Mini within 500 miles of where I live. There weren’t any. The lowest MSRP of any Mini I could find was $25,000, It’s no trouble to find plenty of these base-engined models optioned up to $30,000.

        But let’s get back to the point, which is this: even $21,000 is silly for a tiny car with a lame three-banger when you can go down the street and buy a Golf for the same money. And $30,000 for an optioned up one is a bad joke.

        I think that makes my point, wouldn’t you say?

  • avatar
    TMA1

    The quirky British car is dead. Bring on the quirky French cars!

    What about you, PSA? Don’t you want a slice of the American pie?

  • avatar
    jkross22

    “He alleges that BMW’s alterations to the plan effectively made the money his company invested to create a standalone Mini dealership totally worthless.”

    My version: I allege that BMW’s products and warranty effectively made the money I paid for the X5 totally worthless.

    At least this particular dealer is now aware of how many of his customers feel.

  • avatar
    Tstag

    Can we just keep this in context. In the European market the Mini sells well. It’s something like the 5th best selling car in the UK and closing quickly on the Ford Fiesta, the top selling small car but cheaper….

    BMW need to let their UK offshoot go off and develop a range of Triumph hot hatches, SUVs and sport cars using BMW components. Do that but combine it with Mini style and I think they will be on to a winner for anyone who wants a premium car with soul.

  • avatar

    How about Mini Jeep? It might work.

  • avatar
    The Comedian

    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.


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