Rather than slashing the price or pouring on incentives, BMW is limiting the supply of its European-built X3 compact crossover to maintain profits until it shifts production to South Carolina.
Sales of the $40,000-plus vehicle fell to 394 units last month, down 64 percent from January 2008, and dealers throughout the country reported shortages. BMW sold 17,622 X3s in the United States last year, down from the high point of 34,604 in 2004.
A BMW spokesman says the sales drop was planned as part of an effort to limit X3 imports. Last year BMW cut its overall U.S. allocation by 40,000 units but declined to break out the number of X3s.
Tim Smith, owner of Bob Smith BMW in Calabasas, Calif., says BMW has cut supply so radically that he has no X3s in stock. Says Smith: "It will hurt us. We do well with the X cars, especially the X5."
X3 profitability is a problem for BMW. The X3 is made by supplier Magna Steyr in Austria; the strong euro has cut into profits on vehicles sold in U.S. dollars.
In 2010, BMW will begin assembling the redesigned X3 at its factory in Spartanburg, S.C.