[FRANKFURT] Werner Entenmann, who runs a BMW dealership in Germany's wealthy southwest, has long made a comfortable living selling luxury sedans to well-heeled Germans at or near list price. This summer, more buyers are bargaining.
"Every day customers are coming to our showroom with offers from other brands or other BMW dealers," said Mr Entenmann, whose Autohaus Entenmann near Stuttgart sells about 2,200 cars a year. "This is part of our daily routine."
Profits, he said, are down as the discounts eat into margins.
Mr Entenmann's change in fortunes reflects the spreading effects of Europe's sovereign debt crisis. Germany, the region's largest car market, has been a bright spot, growing 0.7 per cent in the first half versus a 20 per cent decline in Italy and 14 per cent in France, according to the ACEA trade group, which predicts that car sales in the European Union will fall this year to the lowest level since 1995.
Still, the German market isn't as strong as it looks. With the debt crisis suffocating car demand in other markets, automakers are pushing for sales in Europe's biggest economy regardless whether customers are really interested in buying.
In June, 87,454 vehicles were registered to dealers and carmakers, rather than consumers, representing 29 per cent of the market, according to data from German auto-dealer group ZDK. These so-called pre-registrations totalled 479,385 in the first half, an 11 per cent jump from a year earlier.
To get pre-registered vehicles off dealer lots, many are quickly sold as zero-mile used cars at discounts of more than 20 per cent, according to Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. These phantom sales reflect the pressure to cut prices that's spread from southern Europe to stronger markets like Germany and the UK.
"It's a bloodbath from a discount point of view," said Andy Palmer, executive vice president for global planning at Nissan Motor Co. "We work in an industry that needs volume - it needs to move metal - so manufacturers discount."
Even Bayerische Motoren Werke AG (BMW) is feeling the pressure. Though the Munich-based carmaker targets recession-resistant wealthy customers and has forecast record sales this year after introducing a revamped 3-Series sedan in February, it's not hard to find a bargain on a new BMW.
Car site mobile.de has dozens of offers from Italy such as a latest-generation BMW 316d listed this week by a dealer in the northern town of Tavagnacco for 28,400 euros (S$43,894), 16 per cent below the German sticker price. And it's not uncommon for customers to walk into German showrooms brandishing online quotes from abroad, demanding that salesmen meet their prices.
BMW isn't alone. A dealer in Rome listed a Mercedes-Benz C200 CDI wagon with automatic transmission, leather seats and alloy wheels on mobile.de for 33,499 euros, 22 per cent off the list price of the Daimler AG vehicle.
With more Germans seeking bargains, average new-car rebates in Germany jumped to 12 per cent of the sticker price in July, the highest rate since at least August 2010, according to trade publication Autohaus PulsSchlag. - Bloomberg
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