Are automakers pushing electrification just to reach emissions targets regardless of whether they are profitable?
We put so much emphasis onto electromobility because we want to, not because we must. That being said, we are also seeking ways to increase the profitability, but it is a learning process. We started early, so we have already gained a lot of experience. In terms of profitability, there is obviously a difference from car to car. We make good money with our mainstream plug-in hybrids.
Isn’t the X7 a bit too large for Europe?
Its main markets are the U.S., China and the Middle East. In Europe the key markets are Russia, the UK and Germany. The X7 is entering a sub-segment of the market where BMW was previously not present, so its sales will come on top of what we already offer and be an extra growth driver.
How important do you think autonomous driving technologies will be for BMW’s customers?
It will be important, as it will offer customers a choice between our traditional driving pleasure experience or a chance to relax and do something else, if the traffic conditions are too laborious.
How will the European market perform in 2019?
The disruption that WLTP [Europe’s new test regime] has caused will continue well into 2019 — certainly into the first quarter. The irony is that we at BMW were very well prepared [for the changeover that happened Sept. 1, 2018]. That wasn’t the case for everyone, so a huge number of cars were suddenly put onto the market prior to the deadline. We still feel the impact. In addition, the European market is quite volatile due to uncertainties on the situation in Italy and Brexit. As far as BMW is concerned, though, I can only say that with all the products we have coming, we are confident about the future.
Is the disruption affecting prices or volumes? What is BMW’s strategy to overcome this?
We adjusted our guidance [Sept 25, 2018] and have deliberately taken out some volume to protect profit margins.
Has the diesel decline stabilized?
First of all, we are committed to diesel as a modern, efficient drivetrain, and we are investing in it. It also plays an important role when it comes to lowering overall CO2 output. We do see some stabilization in Germany, especially with the new Euro 6d-temp compliant engines.
Consumer attitudes toward cars are changing. Interest for cars among the younger generations is declining, while the sharing economy is expanding. How do these changes affect BMW’s strategy?
I’m not sure that young people are really so uninterested in cars. That may be true in some cities in Europe, maybe in New York City, but it’s not that widespread. We are currently transforming from a car manufacturer to a premium mobility provider. With DriveNow, we already have quite some experience with sharing services and I am sure we will be able to cater to changing customer needs going forward.
How important is connectivity when trying to attract young customers?
It’s absolutely key and not only for young customers. Connectivity in and around the car is an increasingly important purchase criteria. In China we know almost 60 percent of customers would be ready to change brands if the new one offers significantly better connectivity. The figure in Europe isn’t far behind and in all cases it’s growing. We can see that connectivity will be one of the main purchase criteria of the future, which is why we are investing a lot in this area. That’s why in the new 3 series, for example, we offer our Intelligent Personal Assistant, which recognizes speech and employs artificial intelligence to adapt to the user.
For the foreseeable future you will be managing multiple brands, traditional BMW vehicles, M performance cars and electrified models from the i subbrand. Do you expect that one day the i subbrand will be absorbed into BMW?
That’s an interesting view, but there is only one brand, which is called BMW. BMW i and M are two very strong subbrands that play different roles. M underlines the sporty aspect of the brand while i emphasizes the innovative aspect, which is something that will continue in the future.
So the i subbrand will remain as a stand-alone entity even when electric cars become mainstream?
Yes, it will continue in other innovation areas such as autonomous driving or connectivity, which you see coming together in the iNext
How big is the part of the luxury market that you want to reach with the X7 and 8 series?
It’s sizeable and we believe we have the right products. Don’t forget the new 7 series, which we will launch soon. Early this year we will also bring to the market a four-door 8 series Gran Coupe. Each of these products will also come in a sporty M version.
What did you bring to BMW from your past experience in consumer products companies?
Customer focus. For a long time, BMW has enjoyed great success with a very strong product focus — if we further strengthen that by adding top customer focus, we will be unbeatable.