Hernando Carvajal
Marketing Director
BMW de México
View from the Top

Bringing Right Premium Models to Mexican Market

Mon, 09/01/2014 - 10:14

Q: How has the marketing strategy for BMW evolved to boost sales in parts of the world such as Mexico?

A: We are focusing on promoting the same brand strengths in Mexico that have kept us the number one premium brand in the world. The real factor that singles BMW out is the driving experience, referring to the joy and the pleasure of driving a BMW car, as well as the technology and design facets of the brand. We also keep innovating and pushing the boundaries of what efficiency can achieve since customers expect a BMW to be extremely powerful, but also efficient. We are positioned as a leading premium OEM in Mexico and we keep on pushing those brand facets. Mexico is a relatively small market in comparison to our other main global markets today, but it represents some of the fastest growth at more than 19% annually. This makes it a strategic market for us and we are projecting very healthy growth for this year. Mexico represents an important market in the Americas region and is definitely one to watch.

Q: What are the particular demands of Mexican customers, and how are you tailoring your products offering to meet these?

A: You would not envisage that our target market is being driven by fuel economy considerations when purchasing a car. However, it is definitely driven by the technology that creates fuel economy. That means that we have to keep pushing the message of efficient dynamics and offer top efficiency while making the car more fun to drive. This key aspect really resonates with the Mexican market and our customer group in particular. Whether we are talking about direct injection, a turbo engine, hybridization, or electric powertrains does not matter so much as long as the end product drives very well. Every single OEM is under pressure to deliver smaller, more energy efficient vehicles, but those units are often perceived as not being very fun. We aim to deliver efficiency with a lot of fun. We have two hybrids on the market right now each with 240 horsepower. We have also just introduced the BMW i brand, which is an all-electric vehicle that offers a normal BMW driving experience. We are firm believers in delivering what the customer expects so that they do not have to sacrifice driving pleasure for efficiency.

Q: Which role does constant investment in technology play in living up to the customer expectations associated with a premium brand?

A: We invest in technology because we believe it is the way forward. For somebody to be willing to pay more for a car, we have to be able to offer a compelling product, especially from a technology perspective. Technology is integral to the way that a vehicle is designed and built. The way we use technologies in the engines is how we can keep being relevant in an era where government conditions increasingly require manufacturers to ensure vehicles emit less and less CO2. This is especially difficult to achieve in large premium vehicles, but we firmly believe that investing in technology will enable us to produce lighter vehicles and more efficient engines. That way, we can offer both an efficient car and a premium brand driving experience.

Q: What makes the i brand technology unique?

agile. That is due to the fact that we have built the vehicle with composites and kept the weight down while the center of gravity is low, making the car extremely agile. In research projects such as the Mini-e and the Active-e, we adapted a regular vehicle chassis to an electric powertrain, so we adapted a vehicle designed for internal combustion propulsion for an electric powertrain. With the i brand, we opted for an architecture that puts all of the features of the power train as low to the ground as possible. We call it the drive module, and it is entirely made out of aluminum. The passenger seat, which we call the life module, is all built in carbon fiber. This is the first mass production car to be built with carbon fiber, which has allowed us to keep the weight relatively low. This also means that we are able to use the electric powertrain more efficiently as well as creating a car that is extremely fun to drive. The technology is designed to take this sort of powertrain to another level, making the i brand car different from anything else out there in the market.

Q: How does the car itself fit into BMW’s wider i philosophy?

The car is in fact just one aspect of the whole puzzle. The way we source the materials is another important part of our i philosophy. We have a partnership with SGL to produce the carbon fibers, which are taken to Germany for production in our Leipzig plant. The energy to produce the car comes from hydro-electric power. The whole concept was built on the idea of sustainability to ensure personal mobility in the future and solve common megacity problems. The whole i brand is built on the premise of individual mobility and the car is the central part of that.

Q: Is your customer base ready for this type of vehicle, and how big do you expect the potential market to be?

A: The premium segment worldwide is huge, but conditions obviously have to be right for these vehicles to be successful. It is difficult to imagine now how much the market will change in the future when compared to the evolution of electric vehicles in the past. Electric vehicles were not sold en masse in the past because the infrastructure and mindset was not in place to support sales growth. Looking at the development in Northern European countries, where there is heavy taxation of CO2 emissions, we can see a far greater penetration of electric vehicles. This will start happening more and more globally, making it easier for people to make that purchase decision. It is definitely nowhere near being a done deal in Mexico, but we are working with our partners, and even our competitors, to ensure that the right conditions are created in the country. Everybody has electricity in their household so the source exists. The story today is about changing the paradigm and mindset. We are definitely confident that electric vehicles will become a trend in the future, given the climate change conditions and government regulations. We are seeing a change in the basic S-curve of technology. The internal combustion engine was devised over 100 years ago, and today we are essentially using the same basic technology. The only thing changing is efficiency. Prices will also come down when electric vehicle technology is produced in greater numbers, allowing it to reach a much wider customer base. Non-premium brands are doing a lot of electric research as well, which is indicative of a wider change taking place in the mindset.

We are working together with local government officials and we are talking to our competitors about the proliferation of electric mobility. We are all sure that this will be a reality in the Mexican market, although it will start small. Local governments are showing more attention for better air quality and living conditions. If the conditions are there, then an uptake of this technology will happen. We will continue developing that technology, such as the i Wallbox domestic charging point for electric vehicles, developed with Schneider Electric. In addition, we are working with different companies such as Carrot, a car sharing company, and Ecobici. We will increasingly try to work with these sorts of service providers, and we are already making plans to bring the i brand to Mexico because we believe that if there is any city that is suitable for this it is Mexico City.

Q: What current models are doing particularly well in the Mexican market?

A: Mexico is a sedan and SUV market, and models such as the 3 Series and 5 Series perform very well. We have a very strong product pallet for this market. We have just launched our 4 Series, which we know will resonate very well with the Mexican market. The 4 Series is very dynamic, modern, and above all fun to drive. All of those cars are micro-hybrids and all possess engine start/stop systems and break energy regeneration. We focus on these technological aspects to remind consumers that these cars are also very energy efficient vehicles. Towards that end we are also introducing hybrid models. We are selling the Active Hybrid 3 and we have launched the Active Hybrid 5. We used the Mini E program in Mexico, not for sale because that vehicle was never sold in any market, but to test the market reaction. We are trying to learn from local market needs what we need to do with our technology to ensure that we bring the right products to Mexico. We believe there is quite a bit of fuel in the premium segment in Mexico and we are expecting good growth. We are also developing our distributor network to support this. Our distributor network is our face to the customers and we need to develop a very close relationship with them.

Q: How do you create the right buzz around new products when you are launching them?

A: This has definitely become more of a challenge. However, one of our strengths is that we will be seeing quite a bit of movement over the next year, involving the launch of a number of new product lines. Creating the right buzz around new launches is becoming more complex, but the top priority for us is getting people behind the wheel. We know that if we get people to experience the feeling of driving a BMW, we have a very good chance of converting that into a sale. We tend to extend our efforts on that aspect, while tailoring our communication on the technology and the aspiration of owning a BMW. I believe the electric car market will provide substantial opportunities for us. There is going to be quite a proliferation of new models in that segment, which will allow us to focus on highlighting BMW vehicle efficiency.