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Factors That Influenced Bmw Decline Of Unit Sales From 1986 To 1991 In The Us Market.

789 words - 3 pages

There were many factors that influenced BMW decline of unit sales from 96,000 in 1986 to 53,000 in 1991 in the US market.The entrance of Japanese manufactures in the US luxury car scenario in 1989 selling reliability with price competitiveness, an old fashioned positioning relating BMW's brand only to luxury/performance business and some economical and political events contributed to a loss of market share and image.Environmental AnalysisSales in US declined from 1986 peak of 96,000 units to 53,000 in 1991. By 1991, it had declined by 24% due to the Tax Reform about 10% and the Stock Market Crash of October 1987, both an economic and emotional blow to the luxury car market.In general there was a change in social values and consumer behavior. The "conspicuous consumption" of the early 1980s gave away to a more value-oriented purchasing.Despite this new consumer mentality, government actions, and the resulting declining overall market and luxury/performance segment, new competitors entered this segment reshaping it.In 1989 the DM/dollar relationship reflected in a 24 % increase on price.Market AnalysisIn 1991 BMW's global participation in the market resulted in 60% of its automobiles being sold outside Germany and 33% outside Europe. Major county presence was Germany, USA, Great Britain, Japan, Italy, and France.With 5.6% market share in Germany and 0.7% in US, BMW total production in 1991 was 533,000 representing 1.7% of world's outputIn 1985 11,4 million of automobiles were sold in US, in 1991 it dropped to 8.4 million.After August 1989, BMW developed its market plan focusing to basic issues: the composition of product line on the low end and the position of the "price ladder" overall, establishing a new strategy with focus in brand and product, franchise, and organization and people.Customer AnalysisThe Japanese manufactures established a new concept of the luxury car: a car that is so reliable and backed by such strong dealer service that even at a "luxury price" it represents a good value.Consumer research revealed that there was a prestige associated with owing one of the Japanese luxury cars such as Acura, Infiniti, or Lexus - competitors' models. The ownership of one of these cars marked the person as a "smart, in-the-know, value-oriented buyer".BMW buyer's median age varied between mid-30s to mid-40s with annual incomes between 100,000 to 300.000.Competitor AnalysisThe three main Japanese competitors at that point were Honda, Nissan and Toyota.Honda's Acura was introduced in the US market in 1986, Nissan's...

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