When Brisbane BMW opened up a new store in Darra last year they were told that sales at the Fortitude Valley dealership would suffer as a result. Adding an economic downturn to the mix certainly wouldn’t have improved this forecast, but as it turns out the company’s sales are now higher in both dealerships.
FROM his Brisbane BMW dealership in Fortitude Valley, managing director Martin Roller discusses how his initial target was to sell 1200 cars this year, but the trend is already heading towards something much higher.
“This year from January to June our average sales were 130 new cars a month in the Valley, which is up 40 cars a month on what we were last year,” says Roller.
“Our revenue was $190 million last financial year and I would be expecting it to be around the same this year if not with a slight increase.”
The logic goes that when the economy goes down, so too do the sales of luxury goods. And in the initial stages of the downturn the fortunes of Brisbane BMW were proving this point correct, unfortunately at the same time that Roller was expanding into a new market.
“The global economic crisis initially impacted us – in the Valley in the first half of last year we were selling 90 new cars a month, but in July to October we were selling 65 a month, a drop of around 30 per cent,” he says.
“On the first of July 2008 we opened Westside BMW and the first six months were very difficult out there – there’s a new business, there’s no clientele and you’ve got to find your marketplace. But we did a lot of local marketing and riding off the coattails of Brisbane BMW.”
So the Fortitude Valley store had dropped 30 per cent of its sales and the new store at Darra was averaging just 15 new cars a month, but then Roller changed his tack.
“Then what changed is that the business strengthened a bit in the way we approached the market. We made our prices more flexible and did deals that traditionally we wouldn’t have done,” says Roller.
“We saw the opportunity and developed the land a few years ago for Westside BMW. It’s started with humble beginnings but we’re thinking long term.”
Westside BMW has now more than doubled its sales to what is now in the mid-30s per month and in June Brisbane BMW reached its peak of 195 cars sold. But the increase in cars sold does come at a cost, with lower prices as a main driver, however Roller has kept his 160 staff in a time when the car industry has suffered serious setbacks.
“Volumes are up but I’ve got to say profit is down. However, we have managed to maintain our staff levels while others haven’t,” he says.
“You’d expect that opening up a new dealer would take away some of our customers from the Valley, but our car sales in the Valley have actually grown – this business has either come from other dealerships or we’ve found new buyers.”
“We’ve actually gone against the national trend – in fact, BMW made the forecast that our sales in the Valley would have been lower given that we opened Westside BMW.”
Roller refers to studies showing how in the past, recessions have provided opportunity for some businesses to gain market share, particularly if they are offering deals and are able to differentiate themselves.
“We’ve been very aggressive in the marketplace and we’ve been able to attract new buyers and we’re getting the old ones back. We’ve gone from 20 to 30 per cent of the Brisbane luxury car market, keeping in mind that we didn’t have the 25 per cent share in the Western suburbs before,” he says.
“The bottom line is this is a strong success story in the worst economic conditions we’ve ever seen – it says we’re doing something right.”
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