The name of the Mini franchise says it all about the pickle U.S. Mini dealers find themselves in.
It's a franchise that's identified with a tiny, low-slung, fun-to-drive car, but American consumers are embracing crossovers and trucks that have a high seating position and room for people and stuff.
Jason Willis, the incoming chairman of the Mini National Dealer Council, said that with new-car sales being down, Mini USA has not made unreasonable demands on Mini dealers in terms of facility upgrades or pushing excess inventory. He said the factory has increased dealer incentives and supported used-car sales.
However, he said dealers need to know whether BMW of North America would allow dealers who have both BMW and Mini franchises to combine operations to save money.
Special Correspondent Jim Henry interviewed Willis, 40, in December. He is fixed operations director at Willis Automotive (Cadillac-Infiniti-Jaguar-Land Rover-Lexus-Mini-Volvo) in Des Moines, Iowa — which includes a rare standalone Mini dealership without a companion BMW franchise. Here are edited excerpts.
Q: Is there a problem with Mini's products, or just the product segment?
A: The Mini product selection, the quality, the fabrics, the material, everything about it is outstanding, the best it's ever been. It's great product. But unfortunately that's the market. It's a lineup of three cars and one small SAV, the Countryman — Mini calls it an SAV [for Sport-Activity Vehicle] — in a market that wants SUVs.
How's your own region — very truck-oriented, I imagine?
Absolutely. In the Midwest, all-wheel drive, SUVs, are definitely the vast majority of what you see on the roads.
How is the Countryman doing?
The Countryman has been a great vehicle for us. Consumer Reports just gave it the highest rating among luxury entry-level SUVs. It's an awesome car. The problem is just getting the word out that it exists.
The brand image is still kind of stuck on the one model, huh?
I think people think of us as a small-car brand.
I understand you have a new ad agency. How's that going?
The ads have been good. They've come up with good creative. The biggest feedback we're getting is the Mini ads — where they've been placed — hasn't been where the most eyeballs are where it's going to be seen. But they have shown more action shots, showing the vehicle in action, and this year they are showing a Mini with all-wheel drive, driving in the snow. That's very important. They're doing something to get Mini out there, get it on people's shopping lists, and to show all-wheel drive is available. A lot of people aren't aware.
What about electric vehicles? BMW is big on EVs; what about Mini?
We do have a PHEV [plug-in hybrid electric vehicle] available in the Countryman. And we do have an all-electric hardtop battery electric vehicle, that'll be available in 2020. We are going to more electric options in the future. There's some talk that with the relationship with Great Wall Motors in China, the possibility is there for more electrification for the Mini brand.
What about charging stations, the infrastructure and all that, at the dealership?
Over the last 12 months we have been asked to put in plug-in posts in the lot, and there's a station in the technicians' bay, and one in the service drive.
Regarding training for electric vehicles, are there a lot of requirements?
Those requirements have been put in and so far, it's some minimal technical training we have been asked to put in.
I heard at the L.A. Auto Show that California is farthest along in having enough charging stations for electric vehicles, but even California is behind the curve; how is electrification going where you are, in terms of infrastructure, units in operation?
Des Moines is — and probably the Southern and Central areas of the U.S. — they're slowly catching on. You're seeing more and more charging stations when you're out and about, driving around. While it's not in super-high demand at the moment, you can certainly see, especially in new construction, that it's starting to change, to prepare for what's to come.
Is Mini making much in the way of demands, corporate appearance-wise?
Mini does have a new corporate identity that they had the last two years, to get away from the all-black buildings with the bright colors. Considering the market the way it is, Mini has been a very good partner in working with us — that now is maybe not the right time to be putting in all that investment.
Have they dropped it completely?
They are working with individual dealers to do as minimal changes as necessary.
What's happening with the notion of combining Mini with BMW stores?
That's still very much an ongoing discussion — how this is going to work, both from Mini and from the BMW dealer side and what it does to their business and their brands. It's certainly the hottest question on the minds of the dealers. We are definitely waiting for a little bit more clarity.
Is there any clarity at all, have they said anything about it?
They are working with a number of dealers right now who are building new facilities who represent both Mini and BMW, with a shared facility. I know there are some discussions there, for when you're building from the ground up.
How shared is shared?
They are asking for separate showrooms, service drives, customer waiting areas. They still want it to be a purely customer-focused, brand experience.
What we're waiting for now is what to do with somebody with an existing BMW store, what you can do without a whole lot of expense, to put in walls or whatever.
What about the few true standalone Mini stores like yours, with no BMW store under the same owner?
No, there's been no discussion of that whatsoever. We're still in the very early stage of what the options are for each dealer.
What about the short term?
Mini has been very open about what can we do in the meantime, whether it's fixed ops, or making more of a used-car presence, for example. They're working with us that way.
In the past some other brands have brokered buy-sells among dealers. Is there anything like that going on?
There has been no conversation at all, in regards to anything buy-sell related.
Does Mini use stair-step incentives?
Mini really doesn't do a stair-step type of incentive program. Sure, they set objectives that each dealer certainly shoots for, and there are targets if you hit a certain percent, but it's not your old-fashioned setup you used to hear about.
Has Mini made changes to dealer bonuses?
The only thing for objectives is, we're still waiting for how objectives are going to work for pre-owned. That program is good through year end. We're anxiously awaiting what the program is for 2019.
How is the pre-owned program?
It's a great program, it definitely boosted used. It made certifying cars more affordable for dealers. It was a fabulous program, we're asking for it to continue throughout 2019. Mini recognizes the current market conditions from a new-car standpoint. They're doing a lot to support Mini dealers on the pre-owned side of their business as another avenue for us. They've been very understanding on that side of things.
Are they twisting the dealers' arms to take more inventory?
Overall, the Mini inventory levels are in line with demand. There are certain regions that are maybe a little bit on the high side. Mini is right-sizing that inventory and adjusting production to address that.
What are the prospects for a new Mini product that's more of a truck?
There are many examples of all different brands over time where you see you've got to evolve with the market and continue to be relevant. Right now, we dealers would love to see a halo car of some sort. We have a new GT coming out late this year that will fill some of that role. The Countryman has shown dealers that something, maybe a size bigger than the current Countryman, would certainly fit in the market.
What is it people like so much about trucks — is it the high seating position, period? Or I guess the high seating position plus more room?
We get a lot of early professionals who come into the brand. That's good. It's real good. But then they get into the next stage of life. They get married, and all of a sudden at a certain point it's from one to two kids, and a stroller or two strollers, and Mini runs out of options real quick. You've got people who really want to stay in the brand, so maybe if we had something bigger?
How's dealer profitability?
The number of dealers that are profitable or not has stayed fairly flat year over year. A lot of that is attributable to the fact that Mini gave us a 1 percent turnaround bonus. That is, 1 percent of back-end money to help support us in this part of the market. That went a long way toward keeping a lot of dealers in the black. It was only promised through the 2018 model year, but they were gracious enough to extend it through the 2019 model year. We really don't know what it looks like beyond that.
How does that work?
It's based on the wholesale price of the car. Every manufacturer, really, offers support on the back end that dealers can use for building improvement, training improvement, just running the business. So they gave us an extra 1 percent on '18 and '17 model-year vehicles, 1 percent of the wholesale price.
How is it working with the captive? BMW Financial Services always scores well with the dealers in J.D. Power surveys. I assume it's the same for Mini? What about rising interest rates?
Mini Financial, that is BMW Finance, continue to be good partners with us. The rising rates haven't seemed to affect Mini all that much. Mini does a lot with Financial Services, like 1.9 percent on CPO cars. They continue to give us support on the pre-owned side of the business, which has been very, very welcome.
