Quote:
Originally Posted by jrougeux
Yeah, since their income fell by 75% but revenue fell only by 10-20%, there's something else happening besides selling fewer cars.
I'd like to see how their cash flow compares from this year to last; net income can be easily swayed by write-downs or other special items, while cash flow is a better indicator of how much money the company actually has coming into its coffers.
Anyone have this information?
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I'd be willing to bet their warranty costs have increased substantially over the last few years. Things like the HPFP issue on the N54, and other nagging issues seem to be much worse now than before. They've been buying back x35i cars left and right to avoid lemon law suits when people are on their 3rd and 4th fuel pumps, and that CAN'T be good for the bottom line. Even the replacements have to be hurting. I'm not sure what their margin is on each unit, but if you figure the pump replacement cost at $500 each (parts and labor), and them doing it multiple times on many vehicles, along with other more typical warranty costs, it has to be having an effect.