BMW to Sell i3, i8 Directly Over the Internet

By · August 03, 2012

BMW i3

In a move designed to reduce costs, BMW will turn to the Internet to sell its i sub-brand of electrified vehicles.

When the i3 launches in late 2013, BMW is expected to offer it for sale through a direct online site. This setup will be unique to the i sub-brand and will represent BMW's first-ever effort to sell a vehicle directly over the Internet.

"There is considerable risk in BMW's approach of promoting the i brand so prominently," says Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Science in Bergisch Gladbach, Germany. "There is the image risk, if they don't succeed as quickly as expected, and then there's the main risk of costs, which can only be countered with high deliveries."

News about BMW selling the i-Series vehicles in the web confirms the company's plans to move forward with the i3 and i8 after some media reported in June that the vehicles could be canceled.

The BMW i3, expected to launch in late 2013, will carry a price tag of approximately $48,500, compared to the base MSRP of $29,388 in Germany for the BMW 1-Series. Meanwhile, the head-turning i8, expected to launch in 2014, will likely be priced above $120,000.

BMW i8

For the most part, marketing of BMW's i sub-brand will be focused at the world's major urban centers, says Linda Croissant, a BMW spokeswoman.

But will the Internet sales approach works? Ian Fletcher, an auto analyst at research firm IHS Global Insight, sees direct Internet sales as challenging, "Many customers will still want to go somewhere to look at and drive the vehicle before buying. With new technologies, there may be even greater skepticism about buying a car over the Internet, as in many cases you'll have to win the confidence of customers that it works and there is support for them."

Nissan and others initially took pre-orders of the LEAF via the Internet. Nissan's move to offer the LEAF in the US through the more conventional dealership approach has failed to spur sales. Tesla continues to rely on the web as a key sales strategy, and insists that it will never sell its vehicles in a conventional way. It's not yet known if web-based sales is a smart and cost-effective innovation to auto retailing, or if automakers may be unintentionally pushing EVs into a perpetual niche by not having readily available inventory in dealerships.

BMW's goal is to reduce expenses. Internet sales require roughly half the cost of dealership distribution, according to Ferdinand Dudenhoeffer of the Center Automotive Research. That alone should allow BMW to keep prices down on the i3 and i8. And for two vehicles that are already expensive, even a slight price reduction could make the vehicles accessible to a larger market.

Comments

· · 2 years ago

I like the opportunity to buy a new car online if I want to. I wish that was available for all cars. When I go to a dealership, I usually know more about the car I'm interested than any of the sales personal there. Still, I don't know how this works with the delivery process.

In the case of the i brand cars, BMW has been watching Nissan and Chevy very closely. If you’ve noticed, there are some Nissan and Chevy dealers that have sold a lot of LEAF’s and Volts, yet others in basically the same markets aren’t selling any. The dealers are either on board with electric vehicles or aren’t, it’s really that simple. I’ll give you an example. A couple months ago I convinced a friend (a former Mayor of a local town) to go and test drive a volt. His Focus hybrid lease was expiring, and needed a new car. I thought the volt would be perfect for him.

When he arrived at the dealer and ask a salesman to see a volt (they had one in stock and it was buried in the back of the lot – they would have to move three cars to get it out) the salesman said “Why would you want one of them?” followed by “Where are you going to charge it?” Obviously this dealer isn’t going to sell many (if any) volts. I’ve heard similar stories about other Chevy and Nissan dealers many times over. There are even dealers that refuse to sell volts – one made the news in Pennsylvania when a dealer sent a truckload of volts back to GM refusing to sell the “stupid cars”. Auto manufacturers have very little power over the independently owned dealerships here in the US as there are many laws to protect them.

BMW is basically telling their dealer network if you don’t really want to sell the i brand cars, and aren’t willing to complete a training program, have an EV certified specialist on your sales team, keep a decent stock of i3′s on hand and allot a certain amount of showroom floor space for the cars then you won’t get to sell them. You are either committed to selling them or not. These cars require a different level of training for sales. Customers come in with questions that regular dealerships don’t have to deal with like charging and infrastructure issues, battery life, long term maintenance, etc. This isn’t much different from their M cars, not all dealerships get to sell those either.

Also, the prices in the article are guesstimates. All BMW has said is that the i3 will likely cost 'around $40,000 Euro' which has lead people to write it will cost $48,500. I'm guessing it will be less than that.

· · 2 years ago

@Tom
Thanks for the great info. From the info I'm assuming if a dealership is not certified to sell the i3's, the dealership will not be able to service them too.

I'll have to contact my local BMW dealer to see their current plans.

· Bret (not verified) · 2 years ago

I sure hope they are less than $48K when they arrive, because I really want one. I know the i3 is new, the technology is advanced and it's a BMW, but that's pretty steep for a sub-compact. You can get a base model Tesla S with a 160 mile range for $54K. The first price estimate I saw for the i3 was $35K.

I am hoping all of the EV prices will drop by 2014, so they will sell in volume.

· · 2 years ago

Bret, The base Model S is $57,400, not $54,000. There has been a LOT of speculation about the i3 price, but nothing has come from BMW except they have said it will "cost less than a 5-series" and more recently "around $40,000 euros"
It's not going to be anywhere near $35,000, that's less than a LEAF! My guess is between $44,500 and $47,500, but we'll see. That is of course before any incentives. 2014 isn't going to see any significant price drops yet either, I'm afraid.

· Scott (not verified) · 2 years ago

Both Tesla S and BMW i are being marketed as premium vehicles at roughly the same price after you add in a few typically overpriced BMW options, . The Tesla is superior in just about every measure. The i3 isn't appealing visually and appears to be similar to a Smart Car with 4 doors in material and size.
http://www.autocar.co.uk/car-news/scoop/bmw-i3-caught-hot-weather-testing

I know which one I would rather have. The next couple of years should be interesting as more manufacturers enter the EV market.

· · 2 years ago

Scott: Yes they are two VERY different cars. The Model S looks to be a really great full size sedan and hopefully will sell very well. There is plenty of room for both. I agree the next five years or so is going to be very interesting, I'm particularly interested in seeing what the production Infinity LE will look like and how big the battery will be (hoping for 35-40kWh).
However I have to correct you a bit. The i3 will have a base MSRP that is between $8,000 and $12,000 less than the least expensive Model S, so it's not roughly the same price. Of course you can add options on either car and the base Model S isn't 'loaded' by any means. I went to the Model S site to configure my car and after I added a few options that I really think should be standard on a $57,400 car like leather interior, premium sound system, the wheel upgrade because I think the stock rims are hideous the car is nearly $70,000 after tax, and that's for the 40kWh pack that will be EPA rated at about 128-130 miles per charge. Still, I think its a great car, but it is much more than an i3 if you equip them equally and it should be because it's a bigger car with a longer range unless you get the REx option on the i3. Then there are people that don't want a car as big as the model S. I know I don't want a car that big, I have no use for it. A four seat hatchback fits my needs perfectly. There are also people that won't buy a model S because they don't think Tesla will be in business in a couple years. I know this because I have met and talked with many of them through my blogs.
Beauty is in the eye of the beholder, some people love it, others hate it. It's just great to see we have all these electric options to choose from. Only a couple years ago we had no options.

· Frank the Volt Owner (not verified) · 2 years ago

When I bought my Volt, I found the one I wanted on the internet and went and got it. Had looked at a few at dealerships, but they were quoting lease prices around 700mo. (I think this is turning alot of people off). None of the 'finance' guys were aware of the 7500 rebate going to the lease company. Found out where the ALLY rep was and got the one I wanted total payment of 340mo. I really didn't care what dealership it came from. The salesman was nice, but I knew more than he did. I can't understand how the average joe would trust/be influenced by a car salesman. I know that there are exceptions to the rule, but I have never been impressed with a car salesmans knowledge.

· · 2 years ago

Frank: Your experience isn't all that atypical. I know a lot of people that do exactly what you do. There are still a good number of people that don't know anything about cars and a good salesman could be beneficial for them through the buying process so I don't advocate getting rid of all dealerships, just give us alternative way to purchase if we desire; like through the internet.
Your point about the lack of understanding regarding the $7,500 credit and leasing financing speaks to the point I made about BMW not allowing all their dealerships to sell the i brand. Many Chevy and Nissan dealerships are guilty of this. Some outright push customers away from these cars because they just don't want to be bothered with them, and some are so blinded by partisan politics they think they are helping the 'other side' if they promote electric vehicles, when nothing could be further from the truth. So BMW isn't going to let a dealer sell the i brand unless they really want to, and are willing to do training (sales and service) stock the cars on site and have an area of the showroom floor that will always have their plug in cars on display. Plus they will allow internet sales to alleviate the issue of having to drive long distances to buy one if you don't live near a certified i brand dealer.

· · 1 year ago

I received info from our local European BMW dealer, that the i3 will be offered only with lease through their own BMW Financial Services. It was also told that in Europe it would mean that it's offered only in the markets where BMW Financial Services operate. BMW is seeking through this clearly for good risk management, if something does not work out like the market expects, it's easier to allow the customer to return the leased car rather than to look for compromises not suitable for premium brand. Lets see with what plans VW will come out, but it looks that Leaf can be only decent pure EV you can really own in Europe, until Tesla starts to deliver their cars. After update and pricecut Leaf really has good edge on the market. PHEV prices in Europe are high, Ampera would be a nice car if there would be any space even for kids on the back seat. Mitsubishi Outlander PHEV prices are announced in Europe, these are 25% more than similar diesel model, thats 25% more than expected. Outlander PHEV costs 43500-52000 EUR in Netherlands. Volt costs 43700-46200 EUR in the same market. Still Outlander sounds like a good deal, but if BMW 520d is in the same range, then you do not have to only think green, but also be a fan of pure EV drive to go for Ampera or Outlander here.

· · 1 year ago

Kristjan: The information you received is wrong. The i3 will be available for sale, not just lease. If you are looking to buy and EV you should also look at the Renault Zoe which will be available soon. The LEAF is not your only EV option.

· · 6 weeks ago

Every car company lunch their new model car with technology and features, BMW also lunch the i3 & i8 model with some new look and techniques. BMW is a luxurious and comfortable car in market, most of people like to use this type of cars and its all parts are designed with new technology, how can people like this type of model very well is important for the company.
BMW Repair Lynden, Wa

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