swajames

Fear not, gentlemen. I've been out and about a lot today but I'll get back to you guys later!

CVTBenhogan

sdg1871

+10000

swajames

OK guys, here you go.

Firstly, it's important to level set and put the discussion into context.

It's a mistake for any of us to assume that the discussion is about numbers in the absolute sense, specifically an over-simplified and rudimentary assessment on whether we have individually judged sales figures for any given month to be higher or lower than our own perspective on what we deemed to be "good" or "bad". For many of us who have participated in the discussion since the very beginning, before the F10 was even on sale in the US, this debate was more complex and was really always about predictions on relative and not absolute numbers.

The discussion has, for me, been framed exclusively by the philosophical change in what BMW deems a 5 Series to be, and the extent to which this would help or hinder sales. The differences between the E60 and F10 have been discussed ad nauseum and don't really need to be recycled here. Suffice to say, I think it can essentially be boiled down to the F10 being a heavier, less-sporty younger sibling to the 7 series, with less of the 3 Series DNA than BMW had traditionally and previously injected into the 5 Series.

We're all agreed that BMW did its homework and we're all agreed that it is building the car that it feels the marketplace demands. We're probably all agreed that the F10 has indeed attracted new buyers. We're all agreed that it's a great car.

Now we begin to diverge.

On one hand, some may point to current F10 sales as an indicator that BMW got it right. I believe that this oversimplifies the position in two respects. The first is the extent to which the current sales numbers might have been higher still had BMW built a 5 Series that maintained its more traditional blend of sport, utility and luxury. My judgment is that they would. We don't possess enough raw data to be able to quantify the probable delta between current and projected numbers had BMW stayed truer to the 5 series heritage. That said, my perspective, informed in part by the reaction of members here, in other BMW forums plus my own intuition as a buyer of higher-end automobiles, is that there is indeed such a delta. This is important. The evidence from these forums alone indicates that the F10 has lesser appeal to many previously loyal buyers than its predecessor. The F10, for me, has homogenized with its competitors to a greater extent than the E60 ever did. Essentially it is more susceptible to badge buyers rather than conquest sales due to driving dynamics and differentiation. BMW, in my judgment, has this wrong. Sales today may be healthy, the question remains whether that number could have been higher than it is, and with more loyal enthusiasts in the owner base than we see today. Loyal customers are key, badge buyers are as likely to choose a Mercedes, Lexus, Jaguar or another premium brand when their F10 lease is up. To me, the fact that you can today buy a rear wheel drive F10 equipped with a wholly cosmetic "sport pack" is telling, as is BMW's rebranding to focus on "joy" rather than their products being the ultimate driving machine.

The next factor to consider is the cost of customer acquisition. BMW until this month had what is believed to be the highest acquisition cost of all of its key competitors. An article in Roundel earlier this year provided data showing BMW was paying more in incentives per car than its peers. BMWFS subvented leases with artificially high residual values and subsidized money factors and interest rates. BMW in fact announced triumphantly just this past week that it is scaling these back and reducing its investment per car by around 43%. This is, of course, marketing spin and simply confirms that to date BMW has been buying sales to a greater extent that MB/Lexus etc. Turning off the true driver for strong sales - subvented leases - is an extremely risky strategy. It remains to be seen if sales hold up without these financial incentives. My guess is that they won't and that the incentives will be back.

Another factor we need to consider is cannibalization. As other posters have noted, 7 series sales remain weak, falling well short of the S Class. The probability is that far more potential F01 buyers settled for a nearly as big and nearly as nice F10 than BMW saw in high profit upsells from intending F10 buyers opting for an F01/02. Simply put, the F01/02 and F10 have blurred each other's markets and have created internal and not just external competition. BMW is competing with itself to a far greater extent than before and creating unparalleled scope for fratricide.

The final question is the extent to which latent xDrive demand and the delayed Xi released has buoyed current F10 sales and the extent to which xDrive sales will hold up in the medium term. This, again, remains to be seen.

So, in essence, my points are what they always were - could the numbers be better still, and maintaining the perspective that taking even outwardly good numbers at face value can be a risky strategy as the devil can be in the detail. To address one of CVT's first points, I'm not about to tell anyone that the numbers are wrong or that there is something bad about these numbers that only I can see. I am, however, happy to continue to provide an alternative perspective for those who care to read it. I am not suggesting the F10 is a bad car, quite the contrary. I'm also not suggesting that sales are poor. I'm simply asking could they, and would they, be better had BMW not had its "epiphany" and decided that what we were all clamoring for was a better E Class...

Finally, CVT, it may surprise you to know that my next car may well indeed be a BMW. Right now I have opted to have three cars that were built for a specific purpose rather than one that multi-tasks. I have a Porsche for fun, a Lexus LS for daily driving and an SUV for utility. I'm considering an F02, in a moment of madness perhaps even the V12, against the Maserati Quattroporte, the Aston Martin DB9, the Panamera and the S63. Why the F01/02 and not the F10? In part, it's because with the F01/02, you get exactly what it says on the tin. I'm just nor sure that's still entirely clear with the F10.

Richard in NC

Well thought and stated SWJames.

Here are a couple more thoughts adding to your thoughts.

1. The non M Sport F10 can be had with the top suspension, BMW choosing to implement it with technology as opposed to old fashioned suspension tweaks. Therefore the M Sport pkg can be merely cosmetic.
2. They did move the F10 towards the 7 but if they would have catered it towards the enthusiast with more light weight technology, etc, would its price be even higher?
3. Since the Gran Sport is a go, (F02)? I bet BMW aimed the F10 for the luxury crowd, leaving the Gran Sport for the enthusiast, ala E Class and CLS. It sure works for Mercedes but note how much more the CLS costs than the E Class. I bet the Gran Sport will be $10k more than the F10 and BMW will get that profit from us....

BabkenBMW

Bravo, BMW. In November they sold 20,702 units of the 5 Series sedan (+86.9%) as well as 5,073 units of the 5 Series touring (+62.9%). Thus the 5 Series was the leader in its segment in November. Now I'm more than sure that in 2011 the 5 Series will leave not even a chance for its competitors in terms of sales. Keep on going, BMW.

Wilchwitz

"The evidence from these forums alone indicates that the F10 has lesser appeal to many previously loyal buyers than its predecessor."

What he said. But I must admit that I am beginning to like the F10 a little more. We should remember that the E60 was roundly criticized at its introduction for being so unlike the much loved E39 it replaced. Yet the E60 went on to be the most popular 5 Series in sales volume ever. I am sure the same will be true for the F10.

CVTBenhogan

Great writeup Swaj.

But let me add a few points. You indicated in other posts the lower sales numbers at the time were trouble for BMW and particulary for the 5er and what it means to the line. The sales numbers show no evidence of trouble for BMW and certainly less factual evidence of any customer revolt against the 5er. Again, you,many here and myself included are worried about BMW's path from sporty to luxury. WEIGHT. All this said, the sales numbers are what count in the end. If the trend continues, the F10 looks poised to crush the Merc and the other models. The only car on the horizon to contend might be a new A6 model.

Back to a point here. My contention is the "true sports sedan concept" is changing with all the new technology. BMW will offer this, but we'll need to go to the M line. Most importnatly, the 5er needs to compete in a broad segment and against the likes of Jag, Merc, Audi, Asian brands and Caddie. With the exception of Caddie, these other brands market their technology and innovation particularly in electronics and safety. Road holding, steering feel, and spartan and moderistic Germanic styling are not main components anymore. So with the F10 and the sales trajectory, BMW seems to have implemented the right plan and with the right car. And 90% of the E60ers on this board will be pulled in and plenty of others. Hopefully then Pete550 can resume a normal life and enjoy his car.

While I'm a bit sad about the direction,there are just too few of us diehards to matter and BMW will gladly clean our pocketbooks with an M5 offering. If I'm not liking this option, they'll throw a new and stretched 3 series at me. Yeap they might get me with this and the ED experience.

Swaj, just poking at you about not buying a BMW again. Based on your post, I think the Panny is the only way to go. It will be interesting how the new M5 compares to it. I really like the Panny and its a great value. I'd go with it if I needed another midsize sport sedan. Going big a F01 isn't a bad choice either. I was at the dealership a week ago, and the 7 series has extraordinary presence, particulary in the L version. Really impressive. It seems BMW has taken some subtle Rolls Royce cues and I can't get the memories of the old "Green Hornet Show" out of my head. While the 5er looks like it in many ways, the 7 just has the "flagship" and "wow." I also saw a big wheeled and massive white sport 7 the other day, and it was like OMG. Anyway. I don't think the 5 will canbalize the 5er and the 7 sales are also strong for the year. The November 5er sales were just really robust and the incentives pulled many people in as well as in the 5er. BMW seems to be loading the lots with 5ers. There was nearly twenty on the Westmont lot here.

It will be interesting to see Dec and Jan sales relative to the E and others.

Rumors of the F10 demise seems highly exaggerated at this point.