German BMW dealers who had taken legal action over the company's decision to reduce their gross margins on sales of the new BMW 7 Series have received a setback in the verdict of a Munich district court, which last week confirmed on appeal a lower court's ruling of May 2003 that BMW had the right to amend its contract terms.

BMW had raised the wholesale price of its new 7 Series models by 2% in January 2002, without changing the cars' recommended retail prices. 14 dealers had embarked on legal action with the support of the German dealer federation ZDK and the national BMW dealer's association, saying the margin per vehicle had been reduced by 11-13%, and accordingly, claiming €631,000 in compensation for lost profits.

The appeal court said that dealers faced with an increased wholesale price had to option to preserve their margins by reducing the amount of discount they offered end-users – a judgment characterised as completely unrealistic by one of the plaintiffs. (Source: autohaus-online.de)