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BMW Says It Won’t Raise U.S. Incentives as Profit Trumps Volume

BMW Says Profit Trumps Volume
A Bayerische Motoren Werke (BMW) logo on the hubcap of the company's 530d automobile, near Walchsee, Austria. Photographer: Guenter Schiffmann/Bloomberg

Bayerische Motoren Werke AG won’t increase customer discounts as the race to be 2010’s top-selling U.S. luxury automobile brand goes into the final weeks of the year.

“We’re chasing profit more than we’re chasing volume,” said Peter Miles, executive vice president of operations for BMW’s North American unit. He spoke in an interview today in advance of the Los Angeles Auto Show, which opens to the press tomorrow.

Toyota Motor Corp.’s Lexus, helped by customer discounts, earned the top-selling luxury spot in October, the first time since May, to help widen its lead for the year. The Toyota City, Japan-based company’s luxury brand is under pressure to keep the lead after Toyota’s record recalls this year and new products from competitors BMW and Daimler AG’s Mercedes-Benz division.

The average cost of incentives on Lexus cars rose to $3,746 in October from $1,121 a year earlier, while incentive spending on Lexus trucks rose to $2,810 from $696, according to Autodata Corp., a Woodcliff Lake, New Jersey-based researcher.

BMW lowered its incentive spending by 39 percent last month to an average of $2,926, while Mercedes was relatively flat with a decline of 3 percent to $3,879, Autodata said. BMW’s incentive spending declined 27 percent for the year through October and Mercedes dropped 30 percent.

Subsidizing Leases

BMW traditionally spends most of its incentive money on subsidizing leases, said Jesse Toprak, vice president of industry trends at, a researcher that follows automobile sales and marketing.

“This year, because of the recovery in the leasing markets, BMW actually was able to control their incentives while still being able to offer attractive lease programs,” he said.

While the same improved leasing conditions apply to Lexus and Mercedes, those automakers are spending on incentives as they go for the No. 1 selling spot, he said.

U.S. sales for this year through October totaled 183,529 for Lexus, 178,080 for Mercedes and 176,736 for BMW, the global leader in luxury-vehicle deliveries.

The totals don’t include non-luxury models such as BMW’s Mini cars or Stuttgart, Germany-based Daimler’s Smart cars and Sprinter vans.

BMW’s November and December incentive spending should be in line with October, Miles said, without providing details.

The company’s U.S. sales will increase 16 percent next year on growth from new products such as the redesigned X3 sport- utility vehicle, the 5-Series and the new 6-Series, Miles said.

“We’re fueling our growth now with new products,” he said.

The race for the No. 1 spot should continue to be close next year, analysts said.

“I think we will see a photo finish” of the 2011 selling year, Toprak said.

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