BMW Pays a price for their corrupt biz practices

BMW's corrupt biz practices have caught up with them! People quit buying BMWs. I wonder how those corrupt BMW employees who tried to rip me off feel now??? I have one thing to say them -- what comes around goes around!

http://articles.latimes.com/2011/jul/03/business/la-fi-hiltzik-20110703

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Dude where's my car?

Still waiting for BMW to re-inspect the car after I had returned it to original specs, I called Zoila again and again but could not get her on the phone. So, I once again called up the bureaucratic chain and someone finally got her to take my call. I told her that the dealer and I were still waiting for BMW to inspect the vehicle as she had requested. She told me that since I had sent in a request for early termination of my lease, that BMW was doing nothing further on the matter and that I should contact BMW Financial Services (as if BMW's obligation to honor the warranty suddenly vanished). At that point I was sure that I would be filing a lawsuit against BMW.

After talking to the ever helpful Zoila, I remembered that I had left a couple of items on the car and I returned to the dealer to retrieve them.  When I arrived at the dealer the Assistant Service Manager greeted me and told me that my car "had been taken to another dealer."  I said "what? Did you get any advance call? Nobody told me anything."  She said, "no, they just showed up with a truck and said they were taking the car."  I replied, "did they take and account for all of the parts?"  She said, "well we gave them the parts we had in the box and they took it all and left." (Important because BMW later claimed that parts were missing). She told me that they had taken my car to the BMW dealer in Sarasota.  I remember thinking to myself "why would they take the car to another dealer?"  I have my suspicions, and I'll blog them after we're done litigating the case.

So, I called the dealer in Sarasota and spoke to the Service Manager.  He basically told me that he was instructed by BMW Financial Services not to allow me to get my personal effects from the car (classy way to treat your customer BMW Financial Services).  In Florida, such actions are actually criminal. When I made him aware that I was going to call the Sheriff, he apparently found someone at BMW Financial Services who could "give him permission" to let me get my affects.  When I met him, I gave him the extra key, owner's manual, etc. to the car.  (Important because later, in addition to more than $18,000 for "collection fees", BMW billed me for a "missing key").

Stay tuned for "The $18k bill for "collection fees.""

The BMW bureaucratic slow roll and BMW's non-denial denial

Just as my BMW tech hinted, BMW refused to cover the repair under warranty, well sort of...  After a few weeks of repeated calls to a woman named Zoila at the BMWNA Executive Office, with no answers, the assistant service manager of my dealer finally called one afternoon in September and said "BMW is refusing to cover the repair under warranty."  They asked me to return the loaner vehicle, which of course left me without a car to get to work.  As you can imagine, I was not happy.

I called persistently until I reached Zoila and asked whether it was true that BMW was refusing to repair the vehicle pursuant to the New Vehicle Warranty. She replied "No, we are not saying that we won't repair your vehicle under the New Vehicle Warranty.  We are saying that we cannot inspect or diagnose your vehicle until you return it to factory specifications."  I replied, "could you please put this in writing because the dealer is saying one thing and you are saying another and I just want to get a straight answer."  So she sent me a letter (attached), which says a couple of things.  First, it says that their new vehicle warranty does not cover malfunctions caused by among other listed things modification, which was highlighted.  It also says that their inspection of my vehicle revealed modification and use of aftermarket parts.  What it does not say is that those aftermarket parts or modification is the cause of the malfunction. It also says that if I would like BMW to consider "cost assistance" towards "any future repair", I should call her after bringing the vehicle back to original specifications.

So, my car had been sitting at the dealer for almost two months, with the top end of the motor completely disassembled and BMW wanted me to return the vehicle to "original specifications."  So, I went over to the dealer and spoke to the assistant service manager and my tech.  Both told me that in returning the vehicle back to factory specifications, I should simply remove the supercharger and leave the already disassembled engine parts to them (which they had in the shop in a box).  You can see the attached photos for what the motor looked like with the top end disassembled.

After removing the supercharger from the car on a hot weekend (the dealer was very nice to allow me to do it in their parking lot), I called Zoila back to tell her (which of course required tremendous persistence to actually get her to speak to me on the phone).  Her reply was "well I cannot guarantee you when someone can get out to to inspect your car again."  I knew what they were doing, they were slow rolling me so that I would pay for a new motor out my pocket because I needed a car to get to work.  This is a common tactic employed by large corporations today.  Just like when they make you wait hours to get tech support for your operating system on your computer, they hope you will eventually just go away and/or give up.  You see, most people just decide it's not worth the effort to fight back.  Well, I am not most people.  To begin with, as a member of the military, I just don't have $17,000+ dollars lying around, especially for a "malfunction" that BMW knows all too well has been happening on a large number of E46 M3s, the overwhelming majority of which were/are not modified or using aftermarket parts.  But more importantly, it's a matter of principle -- people expect an automobile company like BMW to stand solidly behind their products and treat their customers (especially someone who had purchased and/or leased 3 of their cars in the past decade without any major warranty claims) fairly and honestly.  

No, I was not going to just sit back and take it.  I was going to fight back!

The final straw was a call from the assistant service manager at the dealer during which she told me that I had to come pick up my vehicle or they would start charging me a daily storage fee.  I went to see her, and she told me that she was again under the impression that BMW was refusing to repair the vehicle under warranty.  I asked her, "did anyone come to inspect the car again?"  She said, "no."  So I connected her with Zoila, who also told her that "BMW was not refusing to repair the vehicle under warranty."  Apparently Zoila also told her that it could be a long time before somebody came back to inspect the car.  I said to her "so what am I supposed to do?  Tow my BMW back to my driveway? Will someone put my motor back together again before I tow it?  And why would someone spend all of those hours putting my motor back together again if all of that stuff either has to be installed on a new motor, or removed again to rebuild this motor?"  The assistant service manager told me that she did not know what to do, because the new factory rep had apparently informed the dealer that BMW was refusing to repair the vehicle under warranty, but this person Zoila was telling her something different.  Beyond frustrated, I told her "I have rights under federal law to terminate the lease early and I was going to do so."

During the next week or two (on or about mid-October), I finally got in touch with the right office at BMW Financial Services and sent in the supporting documents required to terminate my lease early pursuant to federal law.  I called back a few days later and confirmed BMW Financial Services' receipt of the notice to terminate the lease early.  So, it was done. I had severed my relationship with my dream car, not because I wanted to, but because BMW was playing a wait-me-out-game that they knew I could not afford to play on my government salary.

Stay tuned for "Dude where's my car?" and "The $18k bill for "collection fees.""

The Vanos Repair that wasn't

So after waiting a week or so get to receive the new Vanos part(s), the BMW began the repair.  It sounds odd, but the BMW dealer would not open up the valve cover until they received a warranty repair authorization from BMWNA.  Looking back on it, they had a good reason.  They knew what I did not, that some Vanos failures can spit pieces of metal throughout the motor which can cause a catastrophic failure (like scoring the cylinder walls).  Well shortly after the tech removed the valve cover and began inspecting the vanos failure, he realized the worst had happened.  A metal piece had broken off a sprocket in the Vanos assembly (see photos) and had likely spit metal into the engine.  He called me right away.  By the time I arrived at the dealer, the tech told me that he had scoped the cylinder walls and removed the oil pan.  He found metal debris in the oil pan and believed it got there from traveling down the cylinder walls (meaning the cylinder walls had been scored).  This all meant that the motor was destroyed.  I spent about an hour chatting with him about the posts on various M3 and BMW related forums which indicated many other people besides me had similar Vanos failures.  He told me that the dealer had recently repaired a Vanos failure almost exactly like mine.  I asked him, "do you think a supercharger could have caused the Vanos to fail?"  He said, "no way.  You can see from reading the boards that many other people are having Vanos failures on these cars, and none of them have superchargers.  The Vanos is a self contained unit totally unconnected to the Supercharger.  And given that the Supercharger has only been on the car a couple of months, there is no way that one could argue long term stress on the motor.  He said, the reality is that BMW knows that they've got a problem with these Vanos components.  But in my experience, if there is any way for them not to pay, they won't."

So, the BMW dealer told me that they would have to order a new motor for the car.  However, they had to get approval from BMWNA.  As I left I thought to myself, my dream car just died and I have the feeling BMW is going to try to weasel out of paying the warranty claim.

Note in the photo to the right, you can see a good sprocket compared to the broken one.  The teeth literally sheered off.  You can also notice in the photos above an "X" scratched near each valve, the tech told me that the tech who had done the valve adjustment marked each one as he adjusted them.  You can also notice where the pieces of metal got trapped between the sprocket teeth and the chain as you can see chipped teeth and casing with chain cut marks.

Coming up next, "The BMW bureaucratic slow roll and BMW's non-denial denial".

Uncovering a prior BMW coverup and discovering the "Vanos problem"

Given the BMW factory reps' hostility, mean spirit and ambiguous promises to honor the warranty, and a comment form a BMW tech that "vanos failures on this car are pretty common", I decided I would do some research on "vanos" systems.  I quickly found numerous forum posts from BMW customers with E46 M3s who had "vanos" failures.  Indeed, I actually found two companies who had been created just to sell parts to repair BMW vanos systems.  I owned one a 2003 E46 M3 and received a letter from BMW of North America telling me to take the car to Reeve's BMW in Tampa to have the motor rebuilt and that caused me to sell the car soonest.  So, I was not surprised in my research on vanos failures when I came upon a plethora of raging BMW owner complaints about the early E46 M3s which had catastrophically failing motors.  Apparently BMW initially placed blame on customers "over-revving" their motors, and only after what appears to be a massive internet campaign to expose their scheme to defraud BMW customers did BMWNA reverse their position and repair owner's vehicles.   BMWNA later conducted a massive voluntary recall program to disassemble and repair all motors constructed from 2000-2003, apparently they were replacing connecting rod bearings (due to defective parts and/or poor engineering).  

So I learned that there seemed to be many more people out there with failed E46 M3 "vanos" systems and that when BMW had catastrophically failing motors on early E46 M3s they initially tried to void customer warranties, just like they tried to do to me. I was getting wise to their business practices.

A mean-spirited BMW factory rep and the false promise to repair the car

So as the service manager and I traded phone calls for a couple weeks, the BMW factory rep was scheduled to come and review my car and the warranty claim.  When he showed up, the service manager called me and said "the BMW factory rep has voided your warranty."  I said, "he cannot void the warranty.  Read the plain text of Magnusson Moss."  This escalated into some charged conversations about Magusson Moss and BMW's reported practices of "voiding warranties" when customers installed after market parts on vehicles.  I also took the time to point out that BMW dealers sold and installed aftermarket superchargers pursuant to an agreement with Dinan Motorsports.  The service manager confirmed that his own dealer sold and installed Dinan superchargers in E46 M3s but he also explained that BMW of North America had recently began a spat with Dinan because BMW was in the process of rolling out an expanded BMW Motorsports aftermarket parts line which would compete with Dinan aftermarket parts.  He told me that as a result, BMW of North America was discouraging dealers from continuing to sell and install Dinan aftermarket parts.  

Frustrated with the Service Manager's panicky calls, I asked to speak directly to the BMW factory rep.  It was hard and required me calling the BMW of North America Corporate Office.  After navigating the BMW bureaucracy, I eventually managed to get a call from the BMW factory rep (he too has since moved on from his position).  

When he finally returned my call I was eating lunch at the Olive Garden (love the soup and salad lunch there!).  I had to take the call outside because the factory rep was very angry and yelling and started the conversation by telling me that he did not appreciate me calling his superiors and wanted the name of my commander so he could call my superiors!  I replied, "why on earth would you want to call my superiors?  The US Government did not lease this vehicle, I did in my capacity as a private citizen.  He replied, well if you want to get me in trouble with my superiors, I was in the Army and know how to get you in trouble with your superiors.  I replied "wow, so you are using a federal communications system to call me and threaten and coerce me from calling your company and asking them to honor their new vehicle warranty?".  He hung up on me.  "Nice", I thought.

Upset at his treatment, I called the General Manager of Bert Smith BMW and explained to him what had transpired and asked him for his help.  He was nice and agreed to help.  A day or two later, he called and said that BMW of North America had agreed to pay for the "vanos" repair.  I was pleased and thanked him for his help.  The same or following day, I received a call from the factory rep who told me that he would not cover labor, only the "vanos" part.  So, I called back the Dealer General Manager and explained.  I told him that it was incredible to me that BMW would honor the warranty only as to the part and not the labor.  He agreed with me and promised to call BMW to inquire.  Later that day he called my cell phone and said that he had managed to get BMW to honor the warranty for the labor to install the new vanos.

The Initial Diagnosis

The next business day, I received a call from the BMW service department.  The caller said "your car is throwing a vanos failure code."  I asked what a "vanos" was, and the caller said "it's the system that controls the opening and closing of your valves."  The caller said they wanted to do some more diagnostics and they would call me back.  The next day I received a call from the service manager (he has since moved on to another dealer).  The first thing I noticed was a panicked tone in his voice.  At that point, I began to suspect something serious was awry.  He basically told me that the "vanos" needed to be replaced and that it cost in the neighborhood of $5000.00 and if BMW would not pay for it, he could not do anything to help me further.  I said, "why would BMW not pay for it?".  He replied, "because you have a supercharger installed on the car -- you see, BMW has a policy of "voiding the warranty" when customers install non-BMW parts on their vehicle."  I told him that I was familiar with the Magnusson Moss Warranty Act and knew that it prohibited such "tying" practices (i.e. tying warranty coverage to the use of manufacturer parts).  I also told him that under Magnusson Moss, BMW could not "void the warranty" and furthermore had the burden to prove that the aftermarket parts caused the failure of the "vanos" before denying a warranty claim.  I told him, the more plausible cause would have been his own technician's negligence in adjusting the valves, which are of course connected to and right next to the "vanos."  When I said that, I realized the cause for the panic in his voice.  He was worried that his dealer would be liable for the repair.  What I did not realize is that there was even more reason for his panic.

Leaving the dealer in "Limp Mode"

Among the maintenance work performed during my service was a valve adjustment.  At that time I had almost no knowledge of a "vanos" component on the motor.  My car remained at the dealer for several days.  When I picked it up, I drove a couple of miles to the interstate and as I got up to speed, I realized the car was running rough.  I looked at the gas gauge and realized the tank was nearly empty.  I drove across the bridge towards tampa hoping not to get stranded on the bridge.  By the time I made it to the Westshore Boulevard in Tampa, my dream car operating in what I have since learned was "limp mode."  I called the assistant service manager at the dealer and told her I thought I was running out of gas, but feared maybe something else was wrong.  I filled up my car with gas, but the car remained in "limp mode".  I called the assistant service manager back and she told me sometimes it took a while to return to normal after running so low on gas and drive it a bit further.  She told me if it did not resolve,  I should return the car to the dealer.  It did not resolve, so I returned the car to the dealer.

How it began

I took my my dream car and sole remaining outlet from the stress of military life, a beautiful 2006 BMW M3 Convertible, to Bert Smith BMW in St. Petersburg, Florida in August 2008 for its "Service II" scheduled maintenance visit.  What I did not know when I dropped it off to the dealer was that I would never bring my dream car home again.