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BMW Of North America: A Journey From Max Hoffman To Modern Dealership Practices
BMW of North America took over from Max Hoffman on March 15, 1975. At that time, it inherited a dealer and distribution network that Hoffman had been developing since 1962. By April 1967, Hoffman's directory listed 129 BMW dealerships and six independent distributors across the US. However, these were mainly concentrated in the Northeast and West Coast, leaving large areas like Texas without representation.
Hoffman expanded the number of dealerships significantly after the success of models like the 1600-2 and 2002. Despite this growth, his method of awarding franchises was often informal. For instance, in Burlington, Vermont, he offered a franchise to someone who replaced his car battery late one evening. In Tacoma, Washington, Werner Scharmach paid just $1,500 for dealership signage and equipment.
Tom McGurn, BMW of North America's first public relations manager, noted that while the West had better facilities, the Southeast was largely overlooked. Some large-volume dealers existed, such as Peter Pan in San Mateo and Knauz in Lake Forest. Bill Knauz became a dealer in 1971 after meeting Hoffman's sales manager at an auto show. His dealership already sold other brands like Mercedes and Citroen.
By March 1975, when BMW NA assumed control from Hoffman, there were about 250 dealerships nationwide. Some dealers opted not to continue under the new management due to required investments for branding standards. However, most agreed to continue, leading to a network of 295 dealerships by September 1976.
Hoffman paid lower margins to BMW dealers compared to Fiat or Volkswagen dealers and was inconsistent with warranty claims and spare parts supply. Lee Maas from Classic Cars in Dallas recalled having to manage shortages himself. Bill Knauz echoed these sentiments but maintained a personal relationship with Hoffman despite business grievances.
Knauz described his relationship with Hoffman as informal yet preferable compared to BMW NA's initial approach post-Hoffman. He felt that BMW NA's businesslike methods lacked the personal touch he experienced with Hoffman. McGurn recalled Knauz supporting strategic growth rather than rapid expansion.
The Businesslike Approach
Under John Cook's leadership as CEO of BMW NA, dealer margins improved along with faster warranty claim processing. The company also initiated dealer meetings which Hoffman had avoided due to concerns about dealers comparing notes on his inconsistent practices.
Bob Lutz recalled Hoffman's reluctance for dealer meetings: "Maxie... you never want to get all the dealers in one room." However, BMW NA began holding these meetings in spring 1975 to introduce management plans for brand awareness and support for dealers and customers.
Marketing Strategies
BWM NA's marketing efforts included a new tagline: "The Ultimate Driving Machine." This resonated well with enthusiasts alongside successful racing campaigns like the 3.0 CSL in IMSA racing. Cook aimed for sales of 18,000 cars in 1975 but exceeded expectations by selling over 19,000 units that year.
The company's rapid growth continued into subsequent years but presented challenges due to infrastructure limitations keeping pace with demand according to Larry Demski who joined as an engineering workshop technician in 1977.
Technological Advancements
The introduction of more sophisticated vehicles brought challenges related to technology integration within dealerships' service departments lacking adequate diagnostic tools or training needed for advanced electronics present on newer models such as ABS systems or airbags introduced during this period.
BWM NA expanded its sales network reaching approximately400 dealerships by late1980s; however McGurn noted this was excessive given sales volume constraints limiting profitability among individual dealerships compared against competitors selling higher volumes per location impacting investment capabilities negatively affecting overall business performance amidst exchange-rate fluctuations coupled with increased competition from Japanese luxury brands entering market space during early1990s notably Lexus setting new standards customer care inspiring similar focus within BWM organization globally starting US before migrating Europe eventually leading reduction dealership numbers through strategic adjustments aligning consistent branding efforts enhancing exclusivity improving technical training personnel ensuring quality service delivery across board ultimately achieving steady sales growth post1991 financial crisis recovery period onwards maintaining strong market presence today represented349 automobile plus145 motorcycle104 MINI38 Rolls-Royce retailers meeting exceeding standards representation customer service expectations worldwide end—
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