BMW of North America is countersuing Florida megadealer Norman Braman for breach of contract, resorting to unusually strong language in criticizing the performance of one of its largest retailers.
Braman had filed a federal lawsuit against the automaker in September in U.S. District Court in Florida, arguing that changes to the brand's dealership bonus program represented unfair and illegal modifications to the franchise agreements for his two South Florida BMW stores.
BMW responded Dec. 1, denying that its program changes are illegal and, in its counterclaim, arguing that Braman Motors Inc. has failed to carry out its "most fundamental contractual obligations" as a BMW dealership for the last several years. The two stores in question are Braman Motors BMW of Miami and Braman Motorcars BMW of West Palm Beach, Fla.
"Braman has performed poorly; in fact, it has ranked among the worst performing dealers for BMW NA in the entire Southeast United States," BMW argues in its filing. "This has been particularly troubling to BMW NA, given that the Miami metropolitan area, which Braman services, is one of the largest luxury automotive markets in the nation. As a result of Braman's poor performance, BMW NA has lost hundreds of sales to its competitors annually in the Miami area."
BMW's filing goes on to say that Braman's sales performance is poor because the dealer sets retail prices for its vehicles "much higher" than those charged by competing BMW dealers in Florida and elsewhere.
"Specifically, it extracted far more sales profit from BMW customers in its market area than other BMW dealers on average," the filing reads. "In short, instead of seeking to fulfill its core contractual obligation of 'achiev[ing] the best possible performance obtainable for BMW vehicles' through competitive prices, Braman has focused almost exclusively on dealership profits."
Until the Braman filing in September, BMW says it had "patiently but steadfastly" urged Braman to improve its sales performance rather than suing or moving to terminate the dealerships' franchise agreements.
Braman lawyer Russell McRory of Arent Fox dismissed BMW's response as a litigation tactic and "one of the most frivolous claims" he's seen from an automaker. Norman Braman, a BMW dealer since 1975, has never even received a so-called "you stink" letter or any letter from BMW saying his dealerships were underperforming, McRory said.
Braman BMW ranks 10th in sales volume among BMW's 344 dealerships, McRory said.
"This is just to throw some mud on the wall and hope something sticks," McRory said.
A BMW of North America spokesman declined to comment.
At issue in Braman's complaint is BMW's Added Value Program, which awards dealers a bonus worth up to 5 percent of a vehicle's sticker price for meeting certain sales and service criteria. BMW had announced changes to the program for 2017, including two new components to measure and tie parts of the bonus to the proportion of BMWs a store services in its market as well as the number of customer defections to other brands.
Other dealers also objected to the changes. The modifications are now on hold until May 1 while BMW of North America CEO Bernhard Kuhnt and a select group of dealers work on a compromise.