Dear reader, here follows the first interview in a series, were we talk in depth about the future of European and global car makers. BMW is the first brand entering the arena…
Q1: What were/are your challenges in the European market outside Germany?
A: Of course, the biggest challenge in 2017 was the situation in the UK, because with the Brexit we had a very difficult and volatile market. We had an excellent first quarter, this was still before the real effect of the Brexit took hold, and also then there was a tax change on the first of April, and after that it (the market) was really a mess, we had to be very careful in choosing the channels in which we sold our cars, because we saw a big drop of the residual values, we saw a big pressure on the Diesel used car market, we had to work very closely with our retail partners, with our dealers, to avoid making the wrong decisions and that we produce too much cars for this market. So we had to monitor and steer this market very carefully.
So that was also the biggest market in my region, it accounts for more or less 30 pct of my region. It was a big challenge for me that despite the situation in the UK, to reach another record sales figure for my region.
We also saw a strong growth in the south of Europe, on the one end inflated by the share of the rental market, last but not least because of the tourist boom in Spain and Italy in the wake of the terrorist threat, but the real private market was not that strong. We wanted to maintain our market share, but we do not want to go (too strongly) into the rental market, so this was a very difficult exercise to find the opportunities, the right channel. We want to go strongly into the fleet market, which is very important for us. We are investing a lot into our processes, into our structures to be performing in the fleet market. Speaking of political uncertainties, Cataluña is also something that has hit us at the end of 2017.
The second thing is diesel, we have seen a big shift of demand in markets like France, UK, the UK is the biggest change together with Germany, the share of diesel for premium brands have even gone down to close to 50 %, in France it remained quite high but went down as well, the total market is already close to 50 %, the premium segment still around 70 %, but went down from 95 %, so also there, you have to make the right shifts in your production capacity towards petrol and plug-in hybrid and electric cars.
The further challenge is how do you manage the used car market and the resale values, and last but not least there is also the lobbying towards the political circles because in our opinion, diesel is more part of a solution than part of the problem, the diesel engine is still very efficient, we believe that we have non manipulated and clean diesel engines. But the whole industry has been concerned indirectly. The French election then was rather positive for the market. Overall, despite the good macroeconomic environment, we are still dependent on the political developments. That is something we need to anticipate. The other thing is that we have grown considerably in volume in electric cars and plug-in hybrids.
Q: Are you satisfied here with the sales results?
A: Yes we are, 103.800 sold electrified vehicles sold, that is almost as much as Tesla, we are leader in the premium segment in that field, we have a big share in the total market, in Norway for example, we have now 60 % of our volume sold there as electric or plug in hybrids. We had also very good growth in France and in the UK. With the latest tax changes there is a big increase in demand for plug in hybrid and electric cars in the UK now, overall we have not enough production capacity for the i3’s, we have long lead times now. We are now number 2 behind the Zoe, which is great for a car in the premium segment.
Q: Aren’t you worried that the diesel market contracts too fast?
A: We think that now this trend will continue, but it will be more managed, there will be a more softer or gradual evolution.
Brothers in arms: Jean-Philippe Parain alongside Peter Henrich, presently President and CEO of BMW Belux.
Q: Indeed, BMW’s are valuable, well made products with a long service life, so political developments affecting their value are very important…
A: Indeed, our CEO Harald Krüger made at the last IAA an important statement that we are there to make quality cars which stand out for their technical excellence and that we stand firm in our shoes as manufacturers and stay clear from any manipulation.
Q: So you are very pleased with the sales results of the electric/electrified cars?
Driving pleasure will remain paramount, also in autonomous driving…
A: Yes, we have a high demand, we would need even more models, for example we have not yet a compact SUV with the plug in hybrid drivetrain, but we have already a very wide range and the arrival of the Mini Plug In Hybrid Countryman is also a very good complement to the BMW brand.
Q: Of course, you are looking also the high-end market…
A: First of all we are number one in Europe with the 7 series, around 20 pct more than the S class, and we have the new 8 series which will come later this year, and we have the X7 which will really build up our portfolio in this segment. Mercedes is now selling 60-70.000 GLS worldwide, so this will be also a very important segment for us, as well as the 8 series.
Q: I think it is also a challenge in marketing, that you make the public aware of new concepts like Reach Now, Charge Now, Drive Now…
A: For sure, I had the pleasure to launch Drive Now in Brussels in the summer 2016, it is a successful operation now in Brussels. We would like to expand in Europe, we are currently discussing with Madrid, Rome, Milan
Q: It cannot go fast enough…
A: Well, it is not always a smooth ride. There are a lot of discussions in Paris, as you know there is Autolib, so it is not always an easy entry and to be well aligned with the authorities, even in Brussels it took some time to achieve that, but we are really satisfied, we have a good cooperation with the team here from Drive Now. It reaches a lot of people who have never driven BMW’s before, so that I truly very interesting for us.
Q: I also heard that in the 2 series, 70 pct of the customers are new to BMW…
A: Indeed, exactly. It is also noteworthy that 40 pct of the volume of these 2 series is indeed the hybrid version, so that is significant. This segment is now a bit under pressure from the SUV segment, so more and more people now buying the active tourer will move to the SUV segment, that is why the renewal of our X range, with the X3, X2 and later in the year the new X5, is very important.
Q: One last question, autonomous driving, you have a special view on that, in the sense that you want it to be active autonomous driving, could you comment this further?
A: We are very active in this field, we will see soon iNext, our BMW i product in 2021, we will bring a new benchmark in the market in terms of autonomous driving, we have successfully invested in a new center in the north of Munich and hired many engineers, started cooperation with Intel and Mobileye, which is one of the benchmark co operations in the industry, and we are confident that we will be leading the pack in terms of autonomous driving technology.
We thank you for this interview.
Hans Knol ten Bensel