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]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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How about Mini Jeep? It might work.
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.