Conquest programs popular with OEMs as luxury brand competition heats up

OpenRoad Auto Group's The BMW Store. Photo courtesy of company.

Aly Jiwani, general manager of The BMW Store, Rolls-Royce Motor Cars Vancouver and Mini Yaletown at OpenRoad Auto Group, is used to a large volume of sales.

In fact, The BMW Store sells at least 2,500 cars a year, Jiwani pointed out.

But some luxury dealers and manufacturers are seeing slightly less brand loyalty from their customers as many luxury product lines are aging, and competition among luxury brands heats up.

“With BMW, it is kind of an aging product line, so we are seeing a lot of lease returns coming back. And unfortunately, because the product line is a little bit aged, customers aren’t seeing equity when they are dropping the cars off,” said Jiwani. “Right now there is a pretty good glut of lease returns. There are more than expected, and people aren’t buying their leases out.”

And many of these customers aren’t sticking with their respective luxury brands like they might have a few years ago. The reason?

“There are just more luxury vehicles on the market,” said Jiwani. “Just so much more to choose from.”

The fact that most luxury models only get full updates every seven years or so, he pointed out, gives lease return customers even more incentive to often look to other brands.

“I think what’s happening now is with how much competition is out there with other luxury brands and other manufacturers, I think that people are now not as brand loyal as they used to be,” said Jiwani. “And I think that because the quality of other luxury brands and the competition is so stiff, people are more willing to try other brands.”

Take a BMW 3 Series buyer, for example. If the buyer leased his or her car three or four years ago, and they come back with their lease return and the new car is no different than the one they have, “they are not as apt to go back into the exact same car, unless it is some kind of stunning deal,” according to Jiwani.

This is when they might start looking to other brands. A Mercedes customer might turn toward Audi, while a Lexus customer might take a look at BMW, and vice versa.

“If they are going to be back in the same car, it has got to be a great deal,” Jiwani said. “People aren’t as loyal as they used to be. That’s why you are seeing so many conquest programs at the manufacturers now.”

 

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