BMW Dealers In Germany Not Exactly Enthusiastic About New Terms

German BMW dealerships have been told to take a pay cut and for some reason they're not too happy about it.
By Wallace Castillo

It looks like BMW really is feeling the squeeze right now. Just after announcing that 2018 profits would be lower than expected, German newspaper Süddeautsche Zeitung has reported that the company is set for a standoff with dealers in its homeland.

BMW has 600 official dealerships across Germany, but only 50 are directly owned by the company, with the remainder — who bring in €11 billion ($12.94 billion) a year, so they're kind of a big deal — working under license. Now, though, BMW HQ is looking to change the licensing terms, giving its 550 independent dealers until the end of September to sign a new contract that will leave them significantly less income.

Not surprisingly, it hasn't gone down too well.

That would be a disaster for potential and existing customers

According to the reports, the dealers are threatening to ignore the deadline. The Association of German Licensed BMW Dealers has said it will inform BMW in writing Wednesday about its members' refusal to agree to the new terms.

With the deadline expiring on Sunday, next week could get pretty interesting; if no solution is found, it's possible that sales of BMW cars and parts could be affected as soon as Monday. That would be a disaster for potential and existing customers, so BMW isn't about to let that happen, but it's not going to want to climb down and hand profits back to the dealers. The company's share price is already down around 8.5% this week, so this latest impasse definitely hasn't come at a great time.

It's the kind of situation that made Tesla go without a dealer network. Then again, taking business tips from Tesla might not be such a great idea right now.

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