President Barack Obama's administrative fix for health insurance cancellations that have angered millions of Americans seems simple enough—allow insurers to extend their plans for another year. But for the insurance industry, reversing cancellations this far along is anything but simple.
"It is unclear how, as a practical matter, the changes proposed today by the President can be put into effect," said Jim Donelon, the president of the National Association of Insurance Commissioners in a statement. "Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues."
Over the past month, insurers have sent nearly 5 million cancellation notices for plans on the individual and small- business market that did not meet the new Obamacare standards. The administrative fix will allow those plans to be extended for another year, despite not meeting benefit requirements under the Affordable Care Act.
But the fix is voluntary, putting the onus for renewing the plans on individual insurers and state regulators to approve the policies. The problem lies in trying to set new prices and approvals for the canceled plans that expire on Dec. 31, under an extremely compressed time frame.
"We support efforts to allow people to keep what they have," said an Aetna spokesperson in a statement. "However, we will need cooperation and expedited approval from state regulators to remove the barriers that would make it difficult to make this change in such a short period of time."
"State regulators will need to allow us to update our policies and secure appropriate rates so we can get these plans back in the market," the spokesperson said.
For coverage starting on Jan. 1, insurance customers need to enroll in a plan and pay their premium by Dec.15. Insurance industry consultant Robert Laszewski, of Health Policy and Strategy Associates, said it's near impossible for insurers to complete these steps in just one month.
"This means that the insurance companies have 32 days to reprogram their computer systems for policies, rates and eligibility, send notices to the policyholders and then enter those decisions back into their systems without creating massive billing, claim payment and provider eligibility list mistakes," he said.
(Read more: Obamacare enrollment numbers worse than feared)
Stan Hupfeld, former CEO of Integris Health, Oklahoma's largest health system, agreed. Obama's new fix "is possible, but the logistics of doing it with just a few days left in the policy year are extremely difficult. We've put [insurance companies] in an untenable situation. This is sort of a Hail Mary pass—in the end, [the fix] shifts the blame and makes [the insurance companies] the culprits," he said.
Hupfeld then compared the situation to the debt ceiling argument.
"Let's do it for a year—and let's be back here again a year from now, making the exact same argument. It makes absolutely no sense."
Beyond the administrative burden, Citi analyst Carl McDonald said the change presents a risk of building a less healthy and less profitable pool of insurance buyers on the state exchanges.
"The people in the individual pool today are presumably healthier than the uninsured, so if consumers choose to take advantage of this offer and renew their individual policy, it could cause the exchange risk pool to deteriorate," he wrote in a research note to clients.
McDonald said renewing the canceled plans should not impact revenues, but the potential deterioration of the exchange market will pose a risk for insurers WellPoint, Humana and Health Net, which have all pursued an aggressive exchange strategy for 2014.
The potential for fewer healthy people on the exchanges will have a negative impact on the overall insurance market, said Karen Ignagni, president and CEO of industry trade group America's Health Insurance Plans.
"Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers," she said in a statement. "Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers."
Meanwhile, Howard Dean voiced a slightly more optimistic tone.
"I believe that when Obamacare is in effect, people really are going to be satisfied and happy with it—I do," the former governor of Vermont said. "It wasn't my idea of how to do this but it can work, could work and should work."
By Chris Woodyard
As new-car buyers flood showrooms, used car prices are hitting a four-year low, according to an analysis released Wednesday.
Prices may go even lower next year as more new-car buyers trade in their jalopies and more used cars with expiring leases show up on lots.
The average used car sold for $15,617 at a franchised dealership in the third quarter, the lowest since the same quarter in 2009, when they averaged $14,808, according to the analysis by car-pricing website Edmunds.com. Prices have been easing for most of the year, and the third-quarter average was down 2.8 percent from the second quarter and 0.9 percent from the same quarter last year.
Another used-car price watcher, Tom Kontos of Adesa Analytical Services, noted a tiny uptick in wholesale prices in October, but says the overall trend is down.
Why prices are dropping:
"There was a big rise in leases," says Richard Arca, senior pricing manager for Edmunds.com. Now, "we're seeing the result."
Arca cautions, however, that used-car prices still aren't as low as they dipped a decade ago. Prices of some late-model used cars still are so close to the price of a new car that it might make more sense to buy new, he says.
(Read more: Nissan's big drive for global growth)
Kontos notes, too, that there hasn't been "a dramatic decline in used-car prices or a flood of used cars on the market" because of the gradual nature of the recovery.
Look for more declines he says.
"The used-car market, in terms of pricing, is poised for further softening," Kontos says. He predicts even more cars will be pouring into the used-car market, making them all cheaper.
There are plenty of countries offering to hand you a new citizenship, provided you invest a sufficient amount of money. For those who do not have millions to spare, which nations are more affordable?
Malta made headlines earlier this week when its parliament approved a program to sell the nationality for just $900,000. It comes with full EU benefits and is one of the least restrictive passports for global jetsetters.
It's likely to be an unwelcome development for an immigration-wary Brussels. Programs are already available for swift residency in Portugal—a "Gold Residence Permit Programme" there can be secured with property investments of at least $675,000. It does not give you full citizenship, however.
(Read more: More US taxpayers renounce citizenship)
Earlier in the summer, Ireland reduced its minimum investment requirement by 50 percent; it now stands at $675,000 as well. It gets you a residency and, if you are patient enough, an Irish passport five years later.
A better deal is on the table in Latvia, where a five-year residency can be locked in for just $96,000. It gives you access to the nations of the Schengen Area—a common visa policy shared by 26 European countries. That privilege may be brought to an end soon given growing Latvian political opposition.
Still, within continental Europe, Bulgaria is on the list with full citizenship for $500,000, according to the OECD. Macedonia's scheme costs the same (and you need to employ at least 10 people), the U.S. State Department said in a report.
Demand for alternative citizenships has grown partly because of the turmoil in the Middle East, as wealthy families from Syria, Libya, Egypt and Iraq, among others, attempt to safeguard global, more visa-free mobility.
Passports in countries that are still stable in the Middle East are almost impossible to get. Although rarely publicized, some have been given to those who have made significant contributions to the nation over a long time. Bahrain has historically been more lenient. In Dubai, part of the United Arab Emirates, a residency can only be applied for when purchasing property in excess of $273,000.
One of the easiest in both process and universal practicality is the tiny, tropical Eastern Caribbean spot of St. Kitts and Nevis. All that's needed is a real estate investment of $400,000 (only villas and condominiums qualify) and a registration fee of $50,000. And you get to travel to 131 countries visa-free, according to the Henley & Partners Visa Restriction Index 2013.
There are other options. Last month, the Caribbean island of Antigua and Barbuda launched a "Citizenship by Investment Programme." A $400,000 real estate investment helps you pass through the borders of 130 counties without a visa.
(Read more: Spanish graduate's rant goes viral: I clean toilets)
There is also the Commonwealth of Dominica. Here you will need a non-refundable investment of $100,000, in addition to $1,800 in fees. It takes eight weeks for the "economic citizenship" to be granted. Expect to travel to 87 countries visa-free.
If you are completely cash-strapped, there is always Paraguay, which offers citizenship for a nominal fee to those who have resided in the country for at least three years. Or Spain, where marriage to a Spaniard is needed for just one year
By Jeff Pohlman
Over the course of CNBC's four month investigation for "Death & Dishonor: Crisis at The VA," we spoke with congressional leaders, veterans and their families and a number of VA employees who were so outraged by the poor conditions at the hospitals where they work that they felt compelled to come forward.
But it wasn't an easy decision for them, primarily because the VA warned employees not to speak with the media. One orthopedic surgeon who used to work at the Jackson, Miss., VA, agreed to speak with us on condition of anonymity. He asked that we shoot his interview in shadow but allowed us to use his real voice. He painted a bleak picture of conditions of surgical equipment at the hospital.
"Occasionally we'd find pieces of bone" on equipment, he told CNBC. "What it really shows is that no one is really taking the time or care to clean the instruments."
(Read more: Chair of House panel says VA 'overwhelmed')
His story was backed up by Dr. Phyllis Hollenbeck, who still works at the hospital. She testified on Sept. 9 about problems at the Jackson center. "Essentially everything that happens in primary care at the Jackson VA can be included under the umbrella of being unethical, illegal, heartbreaking, and life threatening for the veterans, and everything in the care of the veterans starts in primary care."
And many of Hollenbeck's claims are substantiated by an independent watchdog group called Office of Special Counsel. That group raised concerns about understaffing, and the prescribing of narcotics, among other things.
But the VA undersecretary of health, Dr. Robert Petzel, who recently announced his retirement, downplayed the problems in Jackson. He said this in a speech earlier this year, "there have been some public kerfuffles in the paper that don't in my mind reflect the Jackson VA facility."
And in a statement to CNBC, the VA said Jackson has implemented stringent oversight processes to ensure reusable medical equipment is cleaned and sterilized according to manufacturers' instructions before every use."
But CNBC's whistleblower doctor said the problems don't stop with unsanitary conditions in the operating room. "The doctor is the coordinator and commander of this system and makes the decisions. At the VA, it's exactly the reverse. It's an upside down pyramid and the doctor is on the bottom. Particularly when they order medication for some specific reason, they say" 'Well you can't get that here,' and in general when they say they can't get it, that means it's too expensive," he told us.
He said money and cost concerns played a huge role in decisions at the Jackson VA. "Basically what we were doing was saying you need treatment but because our surgery schedule now is backed up so much, you'll have to wait three months or longer for your surgery."
(Read more: Whistleblowers shed light on VA abuse allegations)
We repeatedly asked for a sit-down interview with the VA but our offer was declined. CNBC did receive a written statement that included this: "Jackson has undergone 108 consultative program reviews, site visits, and external surveys, including recent unannounced visits from The Joint Commission, the IG, the OMI, and the Occupational Safety and Health Administration. Recent recommendations have been minor, and Jackson is accredited by all appropriate agencies, including The Joint Commission."
The people running the hospital were handsomely rewarded. The director of the Jackson VA, Joe Battle, received a $6,500 bonus last year on top of his $165,000 salary, and Rica Lewis-Payton, the network director of the South Central Health Care Network, which includes Jackson, got almost $36,000 in bonuses last year, on top of her $180,000 salary.
The VA declined to comment on the bonuses.
By Terry Tamminen
Inventor and futurist Ray Kurzweil predicts that before mid-century, the exponential acceleration of information technologies, robotics, medical science, and artificial intelligence will result in a "singularity," a point at which humans will essentially merge with their technology. Such an event may seem implausible, but discoveries of how technology and humans really interact are being made every day, leading one to the conclusion that it's not an unimaginable future — and it may be the key to sustainable living on an increasingly overcrowded planet.
Heart pacemakers and artificial hips already demonstrate the seeds of Kurzweil's vision and innovations like Google Glass will get more real-time information a lot closer to us very soon. But could we use such technology to measure what our bodies actually need and then design foods and homes that maximize our limited resources to sustain a growing population?
The U.S. Department of Defense has been working on these ideas since 2008 at its National Center for Telehealth and Technology, introducing wearable sensors that report to smartphones on a user's health and wellness. Called "BioZen," the system shows real-time data from the heart, respiration, skin responses, temperature, blood chemistry, and brain waves. The data are used to determine what medicine or nutrition might be needed by the soldier in the field or by the returning veteran undergoing rehabilitation.
(Read more: Is Samsung focusing on a rival to Google glass?)
Dozens of companies all over the globe are working on various versions of BioZen, bringing down cost, increasing functionality, and improving the analytics. These technologies can make limited health-care dollars go a lot farther by preventing illness or by identifying and treating conditions much earlier. Using the same technology to monitor our nutritional needs, and the actual value of the foods we consume, will fundamentally change the way we grow, process, and deliver food to consumers in the future.
Another example of taking a cue from our bodies and improving the technology to meet those demands comes from NASA. Astronauts in the International Space Station go through a 24-hour day of light and dark every ninety minutes. Not surprisingly, their sleep is disrupted and productivity is impacted, so high-tech lights are tuned to mimic natural daylight, stimulating alertness. At "night," when light may be needed for performing some tasks, but astronauts want to avoid stimulation that inhibits sleep, special lights filter out certain wavelengths for a more restful environment.
Florida-based Lighting Science Group, which designed these lights for NASA, has brought the technology to earth with its Definity Digital light bulbs that give you the choice of being alert or promoting sleep (Disclosure: I was so impressed by the company, I invested in their stock). A growing number of studies highlight this problem on Earth, where we spend hours before bedtime illuminated by computer screens, TVs, and other lights that make us more alert at precisely the time we want to start decompressing and getting ready for restful sleep. By combining things like BioZen sensors and Definity lights in the future, the body could send signals to tune lights for our bodies' needs making us more productive and healthy.
(Read more: Apple to launch iPhone with curved screen)
And lest you think that these developments are the sole domain of science fiction or risky Silicon Valley venture capitalists, tech giant Qualcomm is sponsoring a $10 million Tricorder XPRIZE competition to stimulate more innovation in the "integration of precision diagnostic technologies," specifically diagnosing a patient's health from his or her mobile device.
The "singularity" event when man and machine merge may actually be more of a series of "multiplicity" events that collectively make better use of scientific discovery and information technology, but either way, our lives are about to evolve into a digital existence that can make us healthier and more sustainable for the foreseeable future.
By Jane Wells
It looks like any other business conference—lots of suits, name badges, a long line to the buffet—except that the 700 people who each paid $599 to be in this conference hall south of Seattle are in an industry unlike any other: marijuana.
"This conference is 100 percent focused on business," said Chris Walsh, editor of the Medical Marijuana Business Daily. His publication is sponsoring the National Marijuana Business Conference. Now in its second year, attendance has doubled, and more than 30 exhibitors paid as much as $16,000 to talk about investments, equipment, legal services and accounting.
"There's a lot of other types of shows out there that are for the typical stoners," Walsh said. "This is all business and financial."
The pot business is, well, growing. A Gallup poll shows that U.S. support for legalizing cannabis has reached 58 percent.Election night saw pro-marijuana laws passing in places such as Portland, Maine, and Lansing, Mich.
"It's an incredibly exciting time to be in the cannabis industry," said Tripp Keber, an investor and the managing director of Dixie Elixirs & Edibles, which sells products laced with THC (tetrahydrocannabinol, the psychoactive ingredient in pot) to medical marijuana dispensaries.
Business has tripled in 2013, according to Keber.
"Three years ago, nobody was interested in investing, but just yesterday I met with a hedge fund. I met with institutional investors," he said.
Investment action is ramping up as the two states that have legalized recreational "adult use" pot—Washington and Colorado—begin to issue licenses and the first retail outlets prepare to open. The federal government said in August that the Justice Department would not stop states from creating their own regulatory and taxation frameworks.
That federal decision to step back in turn unleashed "pent-up demand" from investors, said Troy Dayton, co-founder and CEO of the ArcView Group, which conducts market research on the pot industry. It recently released a report predicting that the legal marijuana business will increase 64 percent this year and top $10 billion within five years.
"This is the next great American industry," Dayton said.
Banking and taxes
But there are a few weeds in the weed patch. One is banking. Though the federal government is looking the other way, banks remain reluctant to offer a place for growers and sellers to safely store their cash.
At the same time, new private equity and venture capital investors are coming out of the woodwork. Many want to invest in products and services not directly related to pot itself, such as security systems and software programs.
(Read more: Slideshow: A gallery of medical marijuana)
"Mark Twain had a great quote," said Dayton. "He said that when there is a gold rush on, it's a good time to be in the pick and shovel business."
The larger dilemma, however, may be the taxes on recreational pot. How high is too high? Colorado voters passed a 25 percent tax on it, more than three times the state tax on medical pot. Washington has mandated a tax of at least 50 percent, versus no tax on medical marijuana.
"I don't think it has gone very well," said Shy Sadis on the rollout of Washington's new law.
Sadis, a longtime owner of several medical pot dispensaries in Seattle, is applying for retail licenses to sell recreational cannabis. State officials want to close all untaxed, unregulated medical outlets and move everyone into the taxed, regulated recreational side—even though there will be far fewer outlets and the product will cost a lot more.
(Read more: Slideshow: Inside America's pot industry)
"A lot of patients come in here and are upset that medical is going to be gone, and they're thinking, 'Wow, maybe my vote should have went the other way,' " Sadis said.
Keber is confident that buyers will eventually migrate to a taxed, regulated, tested, legitimate system. "The alcohol industry has had 80 years to get the process right," he said.
Whether it takes 80 years or 80 days, few believe the momentum toward legalization will go up in smoke.
"No one knows how this is going to play out," said editor Walsh. "We're going to find out in a couple months."
Richard Walsh spends four hours a day or more commuting from a New York City suburb to his job in Manhattan.
Five days a week, he drives to a Rockland County, N.Y., park-and-ride and boards a bus to the Port Authority terminal in midtown. Then he walks more than a mile to his information technology job downtown, shunning the subway to save money.
His physically grueling commute, which he shares with tens of thousands of others in the region, costs him about $400 a month. It's a tough pill to swallow as family budgets are squeezed by higher payroll taxes and a sluggish economy.
"The bus part is an hour and 20 minutes," said Walsh, 37. "Sometimes I have to stand for that long because there are no seats. The heat doesn't always work and the bus breaks down at least every two to three months." His bus doesn't even have a bathroom, he added.
(Read more: These 5 people have the coolest jobs ever)
Walsh sticks with the rigorous commute, however, even with transit prices going up almost every year. His current trek is actually the least expensive option.
"My wife works 10 minutes from the house, and we have two kids. One of us has to be close to them, so one of us had to make a sacrifice, " he said.
Walsh has tried looking for IT positions closer to home, but jobs locally are scarce and salaries don't compare to those in the big city.
(Read more: Office smackdown: Parents vs. childless workers)
Walsh is clearly not alone.
A study last year from New York University's Wagner School crowned Manhattan as the country's top destination for "extreme commuting"—defined as work trips taking 90 minutes or more each way—and said that one in eight workers in Manhattan is an "extreme commuter."
Recent figures from the U.S. Census back that up. About one-third of workers spend more than an hour each way commuting to the Big Apple; more than half have commutes of 90 minutes or more.
The U.S. Department of Labor finds that, on average, people spend more than $1,100 a year to commute to Manhattan on public transportation, while drivers shell out more than $2,200 for gasoline and motor oil. That figure doesn't include tolls or other expenses.
"The key thing that New Yorkers have to understand is that you can describe the structure of cities in America into two groups: There is New York, and there are the other cities," said Alan Pisarski, a transportation consultant and an author of a series of national commuting studies.
(Read more: Miami—the new Hamptons?)
Pisarski, who wrote "Commuting in America," said workers commute to Manhattan from about 30 counties in the tristate area (New York, New Jersey and Connecticut). People come from as far as Delaware and Pennsylvania, having moved there for a lower cost of living. he added.
"My sense is that New Yorkers have a kind of stoic attitude, and they are sort of proud that they can cope with the pain and the grief and annoyance of it," Pisarski said. "I am amazed they are as tolerant as they are."
It's not much better for those living closer to Manhattan.
Though Tami Wirtheim lives in Queens, her commute often takes more than an hour.
(Read more: 11 ways your daily routine will never be the same)
The 34-year old commercial mortgage analyst commutes on the Long Island Rail Road to Penn Station in midtown, where she boards a subway to the tip of lower Manhattan. If she doesn't time her route perfectly, her commute can take nearly two hours.
"I now pay $210 for my monthly rail card. It was $190 a year ago. It's definitely gotten more expensive," said Wirtheim, who gets a pretax allowance to cover a portion of her commuting costs. She said it's not enough and that every dollar of her commuting money should be pretax.
But, for now Wirtheim is staying with her routine. The cost of living closer to Manhattan, she said, is far more stinging than spending time and money commuting to work every day.
By Eric Baculinao and Elisha Fieldstadt
American forces were dispatched to the Philippines as the Pacific island country struggled to cope Sunday after one of the most powerful storms in recorded history killed thousands and wreaked damage far worse than expected.
"At the request of the government of Philippines, Secretary Hagel has directed U.S. Pacific Commandto support U.S. government humanitarian relief operations in the Philippines in the wake of Typhoon Haiyan," the Department of Defense said in a statement late on Saturday night. Officials did not say how many Americans were being sent to the disaster zone.
The first wave of U.S. force — a team of 90 Marines and sailors — flew to Philippines on Sunday to assist with search and rescue operations and provide air support, the Marines said in a statement.
The death toll could climb as high as 10,000 on the island of Leyte after storm surges as high as trees and wind gusts reaching 175 mph destroyed towns and villages, said chief superintendent Elmer Soria, a regional police director.
The national government and disaster agency have not confirmed the latest death toll -- a notable increase from Philippine Red Cross estimates on Saturday of about 1,000 people killed.
NBC News was unable to independently confirm these numbers.
Super typhoon Haiyan destroyed about 70 to 80 percent of structures in its path as it tore through Leyte Friday, Soria told Reuters.
(Read more: How to help Typhoon Haiyan survivors)
An estimated 9.5 million people were affected and over 630,000 were forced from their homes and served within and outside evacuation centers, according to a Sunday report from the National Disaster Risk Reduction and Management Council(NDRRMC) of the Philippines.
The United Nations Children's Fund estimated that 1.7 million children lived in the areas that were pummeled by Haiyan. "This is not the first natural disaster to strike the Philippines recently, following the earthquake in Bohol three weeks ago, so we know how vital it is to reach children quickly," said Tomoo Hozumi, UNICEF's representative in the Philippines.
The NDRRMC started to compile a list of the dead by names and regions — listing electrocution, drowning and falling debris as causes of death in most cases.
"We had a meeting last night with the governor and the other officials. The governor said, based on their estimate, 10,000 died," Soria said Sunday. "The devastation is so big."
The surging seas, which flattened buildings and swept away hundreds of people, resembled a tsunami, according to Reuters.
"The devastation is … I don't have words for it, it is really horrific," the country's interior ministerMar Roxas said in Tacloban, the hardest hit city. "All systems, all vestiges of modern living, communications, power, water, all are down."
Tacloban, a town of more than 220,000 people, was almost completely submerged by waves of up to 40 feet in height.
"The water was as high as a coconut tree," Sandy Torotoro, who lives near the Tacloban airport, told The Associated Press.
Mila Ward told the AP she saw over 100 bodies on the street on her way to the airport. "They were covered with just anything — tarpaulin, roofing sheets, cardboards," she said.
"From a helicopter, you can see the extent of devastation. From the shore and moving a kilometer inland, there are no structures standing. It was like a tsunami,"said Roxas, who had been in Tacloban since before the typhoon struck the city.
Throughout Leyte, officials were struggling to cope with the number of dead.
"We have so many dead people," said Remedios Petilla, an official in Leyte. "We don't have bags, bags for the dead."
Communications were difficult and emergency crews were slowly making their way into the hardest hit areas, but some regions were still not assessable due to closed roads and power outages, contributing to the ambiguous death toll.
"There were heavy winds, heavy rains, no power, no cell phones while the storm passed," aid worker Joe Curry of Catholic Relief Services said.
The deaths came even after officials evacuated almost 800,000 residents to emergency shelters.
"People are walking like zombies looking for food,'' Jenny Chu, a medical student in Leyte, told Reuters. "It's like a movie.''
By Sunday, Haiyan had become a category 1 storm and continued to weaken as it brushed by the island of Hainan off the coast of China and Vietnam, The Weather Channel reported.
"The typhoon should make landfall in northern Vietnam by early Monday and may actually weaken to a tropical storm before landfall," but heavy rainfall and flooding was a concern, it said.
By Chris Reiter & Dorothee Tschampa
German ski legend Rosi Mittermaier passed on racing tips at Austria’s Zillertal resort last winter to a group of 10 students who all had one thing in common: they owned a BMW 7-Series sedan.
Bayerische Motoren Werke AG (BMW), the world’s biggest maker of premium cars, last year began offering perks that money can’t buy to owners of its flagship model in a bid to keep its most profitable clients loyal. Daimler AG (DAI)’s Mercedes-Benz quickly followed suit with a similar program of its own. Both were responding to down-market shifts by the more exclusive Maserati and Jaguar brands as competition for elite buyers intensifies.
The BMW and Mercedes preferred-customer programs represent an effort to strengthen relations directly with customers who can afford any car they want. The initiatives also reflect the tightening race as BMW and Mercedes vie to be the world’s leader in upscale cars.
The BMW Excellence Club, which started in July 2012, is currently only offered in Germany and comes automatically when a person buys a 7-Series. The program entitles members to attend exclusive events like skiing with two-time Olympic ski gold medalist Mittermaier, a private golf tournament ahead of the BMW International Open and an evening at silversmith Robbe & Berking hosted by German television celebrity Thomas Gottschalk and catered by Michelin-star chefs.
“The aim is to retain these customers, and we think we have an attractive package that encourages them to stay,” said Stephanie Boeckler, project manager for the BMW Excellence Club in Germany. “It’s important to be in contact” with buyers of the brand’s flagship model.
There’s a lot at stake. Mercedes has vowed to surpass BMW in sales and profit by the end of the decade, and a strong presence at the top end of the segment is key. Luxury sedans and coupes generate profit of about 15 percent of the sales price, compared with average margins of roughly 9 percent across the premium segment. The vehicles also add cachet to higher volume models like smaller sedans, wagons and compacts.
“Above and beyond the profit impact, the luxury segment has a strong halo effect on the brands,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “That’s especially the case for Mercedes,” which is the traditional leader in sales for top-of-the-line luxury cars.
Germany’s upscale brands are also stepping up the pitch for high rollers as Fiat SpA (F)’s Maserati and Tata Motors Ltd. (TTMT)’s Jaguar roll out models aimed at a less-exclusive audience. While the German brands currently outsell their Italian and British rivals by more than 20 to one, Maserati has started selling the $65,600 Ghibli targeting buyers of the BMW 5-Series and Mercedes E-Class, and Jaguar plans to go after similar customers with a mid-sized sedan in 2015.
The Daimler unit has traditionally dominated the upper end of the luxury market with models such as the S-Class sedan, $106,700 SL roadster and $116,600 CL coupe. It’s seen the lead narrow after BMW added the $77,600 6-Series Gran Coupe in 2012.
Five years ago, Mercedes sold 129,100 autos starting at more than $75,000, double BMW’s deliveries. That lead over BMW will likely shrink to 56 percent in 2013, according to estimates from IHS Automotive.
The No. 3 in upscale cars countered BMW’s club in February by starting the Mercedes-Benz Circle of Excellence, which also holds events for members and offers preferred status at elite hotels such as Hotel du Cap-Eden-Roc on the French Riviera.
Around that time, Mittermaier, who competed in the 1976 winter Olympic games, and her husband -- World Cup alpine ski racer Christian Neureuther -- were escorting BMW drivers down the slopes of Kaltenbach, Austria, including a group lunch at the gourmet Wedelhuette mountain chalet. The trip included three nights at the four-star Hotel Woescherhof in Uderns.
While BMW’s effort is just focused for now on Germany and the 7-Series, the Mercedes program is active in 25 countries and open to frequent customers and owners of select models such as certain AMG high-performance vehicles and Maybach ultra-luxury cars. Membership itself is free in both cases.
In the BMW program, members can attend one event a year without extra cost. They also get driver coaching, a Diamond customer card at car-rental company Sixt SE, and a BMW Carbon American Express card. Participating in Mercedes’ events -- such as winter driving on the frozen terrain of Arjeplog, Sweden -- costs extra.
The offering is “a response to the increasing requirement for individualization and differentiation,” said Andreas von Wallfeld, head of face-to-face customer communication at the Stuttgart, Germany-based carmaker.
Events, including entrance to Formula One races, art exhibitions and fashion shows, are experiences that “cannot be purchased in this form and are usually only accessible thanks to Mercedes-Benz,” he said, adding that demand for the more than 20 events this year has exceeded capacity.
The program is flanked by an overhaul of the S-Class sedan to add touches like a rear seat with a hot-stone massage function. Mercedes also plans to widen the number of the model’s variants to six, including the stretched Pullman version.
Volkswagen AG (VOW)’s Audi, which is also vying for the global lead in luxury-car sales, has a club for owners of the flagship A8 sedan in China. The program puts on special events and offers VIP airport shuttle service.
The pampering of these buyers isn’t free from self promotion. At BMW’s event at Robbe & Berking in Flensburg, Germany, in October, the carmaker presented the BMW 760Li Sterling, a prototype decked out with 12 kilos (26.5 pounds) of silver.
The model was aimed at showing off the BMW Individual customization offering, which started in the 1990s with a special version of the 7-Series for Karl Lagerfeld. It has since made flourishes such as a rear-seat leather dog basket for a designer’s pooch, salmon-skin accents for the interior of a fish manufacturer’s car, and an in-vehicle safe for a Russian investor.
As demand for personalization grows, the BMW unit has increased its offerings, including special wheels, wood trim and seat fabrics, to 32,695 products, almost double the range three years ago.
The unique 7-Series model included dashboard elements in hand-hammered silver, a technique known as martelé. The car would cost about 320,000 euros, more than double the 147,000-euro list price. Customers don’t seem to object to the enticements that are part of the package.
“We’re very happy with the response so far” to the program, said BMW’s Boeckler. “All of our events have been fully booked.”
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