Financial Crisis Reaches Munich

Automag Buchner + Linse, Munich (Archive Photo)
Mark Zanzig/zettpress

Global economic woes have now reached Munich. One of the sectors that have added strength to the local job market is BMW. The manufacturer of premium cars has not just its headquarter in Munich, but they run a couple of factories and flagship dealers in the city.

In addition to the BMW-owned dealers there is also one independent dealer left, who has sold BMWs in Munich since 1929 – Buchner+Linse’s Automag. This dealer filed for “preliminary insolvency” on 27th February 2009. An officially appointed insolvency manager took over business and now tries to figure out whether the company can be continued or will have to be liquidated.

One wonders how a dealer that sells thousands of new cars every single year can get into financial trouble? Well, there are two main reasons, according to Automag:

:: Overpriced cars from leasing returns

In a climate where it is difficult to sell any premium car, unrealistically high prices for cars that return from a leasing contract can lead to massive losses as they can not be sold at the price required to turn a profit. This makes it difficult to compete with the BMW owned flagship dealers that may have different objectives. (BMW says, however, that every dealer gets the same treatment, be it an independent dealer or a BMW owned flagship dealer.)

:: Extraordinary expensive showrooms

Automag moved to a new, beautiful building (pictured above) two years ago. This had to be done in accordance to BMW guidelines that keep standards high to attract premium customers. Obviously, this increased the cost of the showroom massively. If Automag had ignored the guidelines, the dealer would not have kept its contract which is needed to sell new BMWs. So the dealer had little choice here.

How will the situation resolve for the 200 employees of the dealer? Nobody knows exactly, but according to a report in local newspaper Süddeutsche Zeitung, the insolvency manager is in serious discussion with a couple of investors, hoping to cut a deal within a few weeks.

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