Cas Bmw Projet Switch

9-509-023

REV: FEBRUARY 9, 2009

DAS NARAYANDAS KERRY HERMAN

BMW’s Project Switch (A): Importers vs. National Sales Companies

David Panton, senior vice president BMW Europe, and Stavros Yallouridis, newly hired president and managing director of BMW Group Hellas, Greece, huddled with peers from several other European country markets at the company’s distinctive Munich headquarters (HQ), laid out in the shape of four engine cylinders. The late September 2003 meeting had been called by Panton to review progress on Project Switch, the plan for transferring BMW’s remaining importers in smaller European Union (EU) country markets to company-owned National Sales Companies (NSCs), necessitated by the EU Block Exemption Regulations (BER) set to go into effect on October 1.1 BMW had traditionally contracted local importers to serve smaller country markets. The BER threatened this channel structure. Panton explained. Post BER, an importer located in one EU state could unilaterally decide to set up a dealership next to one of BMW’s NSC-serviced dealers in another EU state, and with the margin advantage built into the importer’s transfer prices, could potentially sell cars at a lower price than that offered by the local BMW dealer at work in that EU state. This could break down our channel organization and create dealer unrest. We had to level the playing field. Yallouridis’s assessment, after two months on the job, was that the entire BMW Hellas organization and the brand image had to be overhauled. Further, the Greek importer was insisting, as part of the deal, that BMW acquire one of his properties on the edge of Athens and allow his son to open a dealership. In addition, Yallouridis also had to decide on the fate of several underperforming dealers that didn’t appear to have the ability to survive the transition, and respond to a request from a high-profile investor to open a new dealership. Panton, a veteran who had successfully managed similar situations within BMW...