OEM Collaboration Necessary to Accelerate Sustainable GrowthTue, 09/01/2015 - 12:44
Q: What role did the momentum of the Mexican automotive industry play in BMW’s decision to build a plant in the country?
A: BMW has a strategy that is aligned with production following the market; if a market is developing, then we should have production in place. Globally speaking, our sales are quite balanced, with the US market counting for around 20% of the group’s total sales. With its position in the NAFTA region, Mexico’s location is highly beneficial and the country is a great platform for producing cars for export, as well as for local sales. The NAFTA region is currently supplying 50% of all parts to the BMW Group, 30% of which come from Mexican suppliers. The plant will produce around 150,000 units per year, creating more than 1,500 jobs and representing an investment of more than US$1 billion.
Q: How has the premium market evolved in Mexico, and how has that affected BMW?
A: The market was really active in 2014, with a 7% growth rate for the total market and 9% for the premium market. BMW followed that trend with its production strategies. This year, the market is still very dynamic, with the overall market growing at around 22% and the premium segment growing at around 12%. The growth of our brands BMW and Mini is exactly 12%, with both brands leading the premium segment. The market is still developing and it will continue to do so for the rest of 2015. While we do not predict another 12% growth, we do expect between 6-10% before the end of the year.
Brands today have a lot more to offer and have aggressive promotional campaigns. Access to credit is showing a significant improvement in terms of simplicity. A few years ago, the premium segment represented around 1.5-2% of the total market; today, this is very close to 4%. If we compare this to Europe or the US, the premium segment normally reaches around 20-25% of the total market. Clearly, Mexico is a car market; the country produces oil and the main mode of transportation is the automobile, so it is only natural that the industry continues to grow.
Q: Which BMW models are the most successful at the moment, and what trends do you expect to influence the success of other models in the years to come?
A: This has been changing a lot over the years, but the 3 Series is our most important model right now. The models of the 3 Series and the 4 Series represent around 37% of our total sales. The second most important family of products is the X Models range, which count for more than 30% of our sales. The 1 Series is still a very successful model, accounting for around 16% of our sales.
The Mexican market is mainly driven by sedans and trucks, so it is paramount for us to have the right products in these two segments. We launched a new 1 Series in April of this year, but we are also launching interesting new models and concepts in several niches. We are highly focused on the launch of the BMW 2 Series Active Tourer, which is more of an Multi-Purpose Vehicle (MPV) than a sedan. It will be an entirely different concept from what we are known for.
Q: In terms of new models and gadgetry, what innovations is BMW bringing into the Mexican market?
A: The BMW i8 is the best example of the company’s abilities. The car is completely sustainable, built from carbon fiber, and is packed with fantastic technology. The i8 has both a combustion engine and an electric engine that work together to produce 362hp, as well as accelerating from 0-100 km/h in 4.4 seconds, showing what BMW is able to do with very low consumption. The driving pleasure that is found in the i8 can also be experienced from the 1 Series, right up to the 7 Series. If you want to go to the extremes in terms of sheer driving pleasure then the M3, M4, and M5 are fine examples. Besides driving pleasure, engines, and sustainable technology, it is important to mention connectivity, which is a very interesting subject. For example, you can now wirelessly update the car’s navigation maps, replacing the old DVD updates. There is also technology that allows the driver to command the vehicle through movement and gestures. These developments are changing the world of vehicles.
Q: How do you see the integration of communication technology shaping the future of the automotive industry, and how is BMW ensuring that it will not be left behind in this topic?
A: It is very interesting to see many technology companies keeping a keen eye on the automotive industry. The challenges of marrying these two sectors are that we must develop the right communication technologies while developing the vehicle to suit them. It will be a race to see if the car makers are able to develop better software and technology in the cars, or if the technology and communications companies are able to build better cars. BMW is the leading premium brand in the world; we create fantastic driving experiences, and we are working toward integrating the most up-to-date technologies in terms of connectivity. Park Now is a specific example of our innovation strategy. This system allows you to detect nearby parking spaces and pay for them. Technology such as this needs to be developed with sustainability in mind, which is something that BMW is employing into its processes.
Q: BMW is investing a lot of time and energy into bringing Electric Vehicles (EVs) into Mexico. What are the main reasons behind this decision?
A: Sooner or later, Mexico will be faced with the challenge of utilizing this technology, so we want to bring the country ahead of the game. We already have more than 40 charging stations in the Mexico City area, and we have asked all of our dealers to support charging stations. We are trying to establish partnerships with governments, but also with some of our competitors to develop charging stations that can be used by a common base of customers. Even though the government is quite receptive toward electric vehicles, there is a lot of work to do because clear policies regarding the facilitation of this technology are yet to be defined. If you look at any mega cities around the world, they are facing huge problems in terms of pollution and air quality, which is the same in Mexico City. Somehow, this needs to be addressed and solved, and I think that we are partly responsible for doing this.
BMW Group has the same strategy for reducing emissions across all brands. Over the last six years, we have reduced CO2 emissions by more than 30%. The introduction of our BMW EfficientDynamics technologies has allowed us to make this reduction and was utilized within every single product across our range of vehicles, benefitting all the markets and segments we operate in.
Q: How difficult is it to join forces with other automotive companies to develop this area together?
A: Everybody is focused on sustainability, so we should be able to work together toward the same goals. People who buy EVs need to have the infrastructure to support them. If the government is not clear about how to incentivize the purchase of EVs, we as private companies have to lead this process. While we are focused on big cities for electric mobility, we also have projects in the pipeline for San Luis Potosi. Our dealer network in the state is already involved with this restructuring plan, so we are excited to see what we can do with the BMW i cars. BMW i is not the only solution we can provide; we are launching Plug-in hybrid vehicles (PHV) this year. By 2017, we will have several PHVs available. The X5 is the first PHV that we are introducing to the market this year. This X5 will have a consumption of 3.3l per 100km, and the emissions level is only 77g of CO2. All of our dealers will be supplying this type of product, so they will need to be prepared for electric technology and carbon fiber in their dealerships.
Q: What are the key factors that would make 2015 a successful year for BMW in Mexico?
A: Clearly, we want to follow the growth of this market and we want to conquer a little more market share. We have a great opportunity to do this based on the range of products that we have today. We also want to increase our focus on customer service, and I would be very proud if our customer satisfaction is really improving by the end of 2015. At the end of 2014, and in the first half of 2015, we were considered by J.D. Power as the number one brand in terms of customer satisfaction, with Mini being the number two brand. Even so, that is not enough for us; we want to provide the benchmark for the industry in this field. This is linked heavily to the expansion and improvement of our dealer network across the country, which will represent a very important milestone for BMW in Mexico.