BMW has announced plans to enter the UK consumer finance market by establishing partnerships with American Express for co-branded BMW and Mini credit cards, with Newcastle Building Society to offer branded savings and bond products, and with UK Insurance (part of the RBS group) to offer home insurance.
It is easy to see why companies such as American Express are willing to enter into partnership with BMW. BMW has powerful brand equity and will offer access to a low-risk and therefore attractive customer base. In addition, the cost of setting up a co-branded credit card for American Express is low and the potential profit is high.
Branded BMW products are likely to appeal to wealthy, but astute consumers. This means that BMW will need to ensure that these new products are competitive and offer a genuine benefit to this knowledgeable consumer base, or they will simply not succeed.
Interestingly, the BMW savings product will offer better interest rates on savings that consumers use to purchase a BMW car. However, it is difficult to see how this will be a highly successful offering since the current climate of 'buy-now-pay-later' in the car market is unlikely to drastically change in the near future.
BMW has already had success offering financial products in various countries across the world since launching its first credit card in Germany in 1997. And as long as the products launched in the UK are competitive, BMW, with its strong brand name, can expect to add the British market to its successful foray into the consumer finance sector, while also achieving its parallel aim of gaining more information on its customer base. 'End Intelliext
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