In July 2014, BMW of North America initiated a policy limiting its attractive four-year/50,000-mile free scheduled maintenance to original-vehicle-buyers only, declaring that free maintenance service was not transferable. Now Automotive News reports that the policy will change again, starting with 2017 models, when the remainder of a vehicle's free scheduled maintenance may be transferred to a new owner along with the car.
That's the good news.
The bad news is that at the same time, BMW NA will trim the free scheduled maintenance period to 3 years or 36,000 miles, whichever comes first. It was nice while it lasted.
Those BMW owners who keep their cars more than three years will be disappointed, but apparently, they are in the minority. According to Ludwig Willisch, President and CEO of BMW of North America, his dealers have been telling him that more than half of new BMW owners replace their BMWs after three years.
The money saved by BMW NA will not necessarily go into the company’s coffers. BMW NA will use the money to provide bonuses to dealers that meet or exceed BMW’s brand standards, customer satisfaction, and pre-owned vehicle sales goals and also hire BMW Genius product specialists. The bonus will be 1 percent of a new vehicle’s sticker price and not all dealers will qualify for it.
In 2017, BMW NA will start using loyalty rates instead of customer satisfaction as the basis for dealer incentives. Willisch explained, “We had a bonus which is fairly complicated and we did not move the needle on customer satisfaction. We needed to make it simpler.” He also said that dealers that achieve better-than-threshold performance ratings should get a higher incentive payment because “in some shape it is linked to additional cost.”
The new program will increase the dealer holdback on new vehicles. Dealer holdback is a part of the dealer discount that BMW NA retains and pays to the dealer at a later time. The current holdback is 5 percent of a vehicle’s base sticker price. Beginning with 2017 models, the dealer holdback will be 5 percent of the vehicle’s full sticker price.
The change in holdback plus the change in incentives and bonuses is designed to make BMW dealerships more profitable and improve customer satisfaction. In fact, if it works out as planned, some BMW dealers could be among the most profitable in the industry, according to a memo from Willisch to dealers.
Meanwhile, what do buyers of new 2017 or later BMWs who keep them for at least four years lose because of the free scheduled maintenance cutback? Probably an oil change and some diesel exhaust fluid for the diesel vehicles and maybe a set of wiper blades. Of course, with parts and service prices these days, that could be a few hundred dollars. On behalf of BMW owners who buy versus lease and who see at least 50,000 miles before they think about a new car, we’re sorry to see the program scaling back.—Scott Blazey
[Photos courtesy of BMW AG.]
