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The sales decline is do to a combination of factors and BMW only has control over some of them.
1) As others have states not having new versions of the AWD 3 series hurts sales. Obviously this situation is changing.
2) the real world price seems higher. The lines may be a positive for the bottom line at BMW since they probably have very high margins but they are a negative for sales.
3) a little less sporty looking/driving base sedans compared to the previous version.
4) The 3 series has gotten so long over time that IMHO it no longer looks like a 3 series. If you really like the new 3 series looks/length, you may like cars like the A5 as well. Overall I think the 3 series is still a good looking car but I no longer consider it a good looking sports sedan.
5) external competition has gotten stronger. If I was on the fence between a Mercedes C class and BMW 3 series and it was an extremely close call based upon what's important to me, I would choose the Mercedes C class every time simply because you see many less of them on the road. And many of the prior C class sedans were rather ugly so you have a car that simply looks like a different car without a zillion of them on the road in places like Northern California.
And with the ATS that is just more competition coming after BMW's market. Based upon the reviews, the 3 series appears better but if you really put the emphasis on driving fun, you might overlook the 3 series advantages.
In addition, there are many people who will buy American when the American car is close enough and others that probably want the ATS simple because its new and more exclusive right now.
The Infiniti G37 may be old but it still gets stellar reviews from Consumer Reports and it has been offering great lease/purchase deals. I don't care what some of the car magazines state, a lightly optioned Infiniti G37 is simply a better value then a lightly optioned 328i for the truly value minded driving enthusiast that isn't seeking ultimate performance. (I am not talking about the BMW sportline since some people may not want to spend that much on that one option). For the BMW to be the better value, the customer either has to do European delivery or drive tons of miles.
6) internal competition is stronger. In addition, I believe 15-25% of the people who buy an X1 may have been 3 series customers. I would have probably gotten the 3 series if I didn't buy an X1.
Some people may simply want a BMW so I could even see BMW losing some 3 series sales to the X3 now that SUV has improved.
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