Chicago BMW Closing it's Doors!

[Major Softie]

Supposedly, BMW motorcycles are selling well, so what's up with these dealers going away?
]

What I see is that there have been business that operate on some pretty sketchy principles. If it involves "leveraging" and it doesn't involve an actual lever, then I think they are in trouble right now.

It seems that there is a general profit margin that business has had to operate under for many years. There are going to be those who try to undercut the normal profit margins and when they do, you won't hear people wondering about how or why that works. Well, it usually doesn't work for long. There probably are exceptions. In the long run, though, I'll try to do most of my new part purchasing from established dealers. That means I'll usually pay full price. Usually, that works out in the long run. Lots of people get to eat when that system is kept intact. That's just my outlook on the subject of discounters.

Chuey

Certainly discounters are an issue, but there's another problem. The business model for a modern dealership is not designed to survive on bike sales, or even bikes and service. The really big money is in clothing and accessories - especially clothing. These items have MUCH higher markup than bikes, and even than parts. This new dealership model was established by Harley, and BMW happily jumped on the bandwagon. Harley established the model before web sales were a real problem for dealers, but BMW managed to make the shift just about as web sales began to become an issue. So, the expensive new "boutique" sites with their very high overhead are designed to fail if all they sell is motorcycles. Modern Harley dealerships have taken this model to an extreme, where I have seen a number of dealerships where as little as 10% of the floor was for bikes, 10% for parts and service, and 80% was simply a clothing store.

Now, take that dealership that has invested all that extra money in clothing and square footage, combine a slow economy where people are buying far fewer "extras" with a world where all clothing and other accessories can now be bought on the web at a great discount, and you have a world where a dealer can successfully sell motorcycles right into bankruptcy.

[ME 109]

Australia's cattle growers must operate under the same business model.
6 weeks after Australia suspended live cattle exports to Indonesia due to animal cruelty, some growers are saying they'll have to start shooting cattle soon. Pigs arse!
I guess they didn't think of selling them down south where cattle are pulling big dollars.

[montmil]

Chicago BMW / Harley-Davidson is now just Chicago H-D.

I wonder if BMW North America really did have some issues with ChiTown BMW advertising their 20%, then 10%, parts discounts? Other dealers complaining? Multiple issues, no doubt.

I will miss them.

Monte

[Duane Ausherman]

Jeff, this time is different, as we are really at the bottom. Until the central banks realize that someone must peg their currency to a commodity, no recovery is possible. The Fed is only prolonging the disaster and making it deeper and longer to recover.

The other apparent recoveries were only due to inflation. It may be that this time there is no head room left for inflation, as fewer and fewer are trusting the USD. Almost nobody is buying our treasure bonds now, only the Fed. We have created money out of thin air for many years and the world bought them. Now, only the Fed is buying them. That boils down to moving our debt from one pocket to another. The world has "caught on" so to speak.

We are on the brink and any one of several things can shove it over the edge. Ireland's bonds were just rated as junk. Greece is a huge problem. Spain is a far larger problem. The middle east is problematic. Japan only seemed a blip though.

A recovery will start as soon as we start over with honest money. It would be nice if more inflation would give the appearance of prosperity, as it could carry out to the end of my life. I doubt that it will work this time around. I have been wrong before.

[Jeff in W.C.]

Duane, I understand you’ve seen more ups and downs of the economy than I have and probably have a better insight, but I beg to differ with you on this. Recovery, IMO, is kind of a catch-22. Basically, the economy won’t improve until people start buying stuff. People are not buying stuff, because they are worried about their job. Although some big companies are making good money, they are not hiring because people are not really buying their products in a consistently strong manner and that the consumer confidence is low. I agree with the conservatives here, that government cannot create jobs. Neither tax cuts nor increased government spending will significantly increase the number of jobs created. We need to be patient. In time, jobs will be created. This will not happen overnight, but it will occur slowly. (On a side note: does anyone else see the irony in the Republicans/Conservatives asking Obama where the job growth is? Of course this is done for pure political gain, because they know he can’t do anything about it.)

I don’t think tying our currency to a commodity would do any real good. During WWII, our currency was tide to silver. Yet, we amassed debt that exceeds what we have today. In 1946, the debt was at ±122% of GDP. Currently it’s estimated at ±105%. It’s the policies of the “powers that be.” So, IMO, the debt’s a drag on the economy, but not a killer.

The economy will recover when the shit stops hitting the fan. I just read today that Borders savior has backed out. I think the only recourse now it liquidation. That pretty much puts an end to the second largest book retailer in the country. People need to stop hearing stories like that. As long as they continue to hear bad news like that, consumers will be cautious with their money. Banks need to also stop failing so some bit of normalcy can be restored to banks and lending institutions.

[Steve in Golden]

I dunno, it seems like the damn economy will never get better due to the price of oil. As soon as any economic indicators indicate improvement of any sort whatsoever, the price of oil shoots up, squashing any recovery. Oil prices are acting in opposition to economic activity. Too many damn hairless monkeys sucking on the oil teat.

[mattcfish]

I dunno, it seems like the damn economy will never get better due to the price of oil. As soon as any economic indicators indicate improvement of any sort whatsoever, the price of oil shoots up, squashing any recovery. Oil prices are acting in opposition to economic activity. Too many damn hairless monkeys sucking on the oil teat.

I agree there. The oil companies work under their own rules. No supply and demand for them....no competition either.
Record profits no matter how the economy is doing! I've had it! I need to go on a pointless 500 mile ride to nowhere to calm myself down.

[Duane Ausherman]

I suggest that if one is really interested in what is going on, start reading basic economics, such as found in Mises.org.

I favor a default at this time, or wait till later and we are deeper in debt. IT will only be worse then.

[Ray from Indiana]

Littleleroy:

I called Chicago BMW asking where all the parts were that I ordered to do the timing chain job I've been wanting to do for a month. The parts counter guy told me he was the only employee left and he is backed up with orders and he will get to mine soon.

The other thing he told me was that if I needed parts in the future, to call BMW Daytona for a the airhead discount

[wirewrkr]

Another dealer succumbs to the Great Recession. That's a bummer. The BMW dealers that closed around here (SF Bay Area) seem to have either been purchased or expanded greatly right before the crash; as such, they probably had a high debt amount. I don't know what the case is for Chicago BMW.

Overall, I'm surprised there haven't been more closures/consolidations, and not just with BMW's. Unfortunately, I see more closures as dealers stuggle in the near future as our economy bounces along the bottom, since I believe we have a few more years of this before there is any real growth.

It's just plain economics. You cannot continue to sell parts that have an average of 30 percent markup at a discount and expect to make enough profit to keep the doors open.
AND they were told by BMW a few years ago that if they advertised the discount certain bike buying "incentives" were going to disappear.
That was right around the time the ads for the 20 percent discount stopped appearing.
I wonder if they still sell Harley Davidsons.
Don't really care, but was curious.