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BMW Financial Started Small, Grows Steadily

With total assets of more than $24 billion, the captive offers a range of leasing, retail and wholesale financing services to BMW customers and dealers.

COLUMBUS, OH – The youngest captive auto lender has become one of the most aggressive in creating new products and promoting the vehicles of its parent, BMW North America LLC.

BMW Financial Services NA LLC was established in the U.S. in 1992, starting slowly along the conventional models of two long-standing financial arms, General Motors Acceptance Corp. and Ford Motor Credit Co.

BMWFS has grown steadily into a company offering retail and commercial financing for BMW AG’s products: BMW, Mini and Rolls-Royce.

With total assets of more than $30 billion, the captive offers a range of leasing, retail and wholesale financing services to BMW customers and dealers.

What’s more, it has conceived an array of finance and insurance products and is selling products with amazing speed. That is in large part due to an online F&I menu and an eContracting initiative so far approved by five states and poised to enter California and Florida this fall.

Shaun Bugbee, BMWFS sales and marketing vice president, is charging ahead in the eContracting launch.

“This is the F&I road of the future,” he tells Ward’s. “The dealers love it, because there's no cost to them to do F&I sales online, and it’s a great customer pleaser.”

BMWFS is targeting dealers in 17 states for eContracting by the end of 2011.

BMWFS also is bundling a package of other programs the firm believes will set it apart from other lenders.

These include BMW-branded insurance products such as GAP coverage, wheel and tire replacement, (not merely repairs), paint-less dent repair, windshield protection and extended service maintenance.

There also is a maintenance program upgrade of up to six years and 100,000 miles (160,903 km), an industry first designed to boost customer satisfaction.

Employee satisfaction at BMWFS is reflected in BMW being recognized among the top 25 companies in Fortune magazine's annual “world's most admired companies” tabulation, and maintaining that BMWFS is a “healthy” financial services business.

Photos of every employee at the BMWFS building are displayed on a huge wall near the entrance of the company’s headquarters here.

In one of the nation's “barometer” markets, Columbus dealers excel in employee retention, such as the tenure of Darren Geddes at Kelly BMW on the Ohio capital’s east side.

Geddes has been an F&I manager for 10 years at the Kelly dealership and is enthused about all the new initiatives coming from the captive lender.

“Online car shopping is growing by leaps and bounds and there's every reason to dial in finance contracts,” he says.

“We just sold a 335i coupe to a Colorado guy who saw it advertised on our website. The fact we now can do the F&I menu online is a real exclusive, because this buyer wanted to talk about F&I.”

The first states whose insurance commissions green-lighted eContracting were New York, Pennsylvania, Illinois and Maryland and New Jersey, where BMW of North American headquarters is located.

Michigan and Texas came on board in June, with California and Florida expecting to join the eContracting list in September.

BMWFS constantly strives for a “true partnership” with BMW dealers, he says. “Nearly all our products are BMW-branded, including the BMW ‘Infobahn’ that expedites auto maker payments to dealers on a same-day basis.”

Bugbee says initiatives will tout pre-owned BMW and MINI sales, as well as 60-day free flooring that makes possible sales to loyal customers with credit scores as low as 575.

Bugbee joined BMWFS in 1997 and assumed his current position in 2008, following two years as president of Alphera Financial Services, a global lending organization that provides loan products for brands other than BMW. It was founded by BMWFS in 2006.

He previously served for five years at Toyota Financial Services and six years with Ford Credit. What pleases him as a veteran auto finance manager is that BMWFS is “out front” of competitors with online contracts and 60-day free flooring.

Considering all the training involved, BMW dealers welcome the fact BMWFS has invested several million dollars in eContracting alone.

Kelly BMW estimates eContracting will save 25% to 30% in the time devoted to arranging for F&I sales and all the paperwork required to complete vehicle transactions.

BMW Financial says it is the first captive to utilize a single electronic process for the sale of retail, lease and certified pre-owned vehicles.

“The genesis of eContracting brings our dealers an additional bonus,” Bugbee says. “Overall, it’s a premium process for a premium brand.”

It will expedite the buying process for the consumer, “while providing the dealers the ability to submit the fully calculated contract for funding on the very same day,” he adds.

It is the latest in Internet technology aiding the F&I process.

Lisa McPherson, BMW Financial’s general manager-sales operations, recalls at a recent F&I conference when the firm first started doing credit applications online. There was some dealer resistance, she tells attendees.

“Dealers said, ‘What? I’m going to do your job for you?’ We initially paid them to do it. Today, they are all doing it, and they’re not getting paid. Now, if the system goes down, we get flooded with phone calls.”

With Steve Finlay

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