Valley of the East,” says Moorehead. “When you look at the individuals that are going to move into those homes, I see them in Z4s, 3-series, X3s, X5s, and the 1-series BMW is releasing next year.”
Before building the Sterling dealership, Moorehead owned two General Motors dealerships, first a Sentry Buick and Isuzu shop in Omaha, Nebraska, and later Moorehead Buick GMC in Decatur, Illinois, which he later sold. To build BMW of Sterling/MINI of Sterling, Moorehead spent $8 million and raised another $2 million in working capital for the first year. He is expecting to spend another $5 million to $6 million to expand his shop to 57 service bays. The investment should be well worth it: Each work bay earns the company $20,000 per month on top of car and parts sales, and service covers nearly 80% of the company’s operating costs. Car sales fill the remaining 20% and all other sales are pocketed as profit. In 2006, BMW of Sterling/MINI of Sterling sold a total of 2,480 vehicles, including 1,005 new BMWs, 386 pre-owned BMWs, 715 new MINI Coopers, and 96 used MINI Coopers.
The foreign import market also factors into the equation. Having experienced tremendous growth, analysts speculate that the market won’t be cooling anytime soon, especially for BMW. “BMW is one of the most well orchestrated, well executed brands and continues to do extremely well in the United States in terms of sales and profitability,” explains Rebecca Lindland, automotive analyst for Global Insight, an economic and financial analysis and forecasting firm. “While not a huge volume player, they are virtually immune from the generational pressures every other brand faces. In other words, regardless of age, most consumers would rather have a BMW than any other vehicle, if money were no object. And many ‘Gen Yers’ would take a used BMW over a new anything else any day–which is significant because there are 75 million Gen Yers.”
Moorehead fully agrees: “The product has been hitting the marketplace in the correct income and age segment. They’re really controlling this segment with key marketing. Everybody knows what a 3-series is whether you say the brand name or not.”
Luxury Service
Although attracting consumers was never a problem, Moorehead admits that after a few years of strong sales, servicing customers had become challenging. Many were waiting three weeks for service and they weren’t happy about it, explains Barry Jordan, internal consultant for BMW of Sterling/MINI of Sterling.
“Last year, our [Consumer Satisfaction Index] score was a little bit below the market,” points out Jordan, referring to the measurement system used by clients who report to BMW of North America regarding their satisfaction with customer service and their dealership experience. “The management team had to decide what we were going to do to change the outcome of the story.”
The new strategy included a series of management changes, the addition of several service technicians, and adding a night shift to the service department. “We replaced the manager we had with a manager with vision–[someone] who understood