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Audi no threat

Outspoken: BMW Group Australia managing director Guenther Seemann dismisses ideas of an Audi challenge.

BMW’s true rivals in Australia are Lexus and Mercedes, not Audi: Seemann

14 Jun 2007

WITH Audi charging up sales charts all over the world, and especially here in Australia, you would expect BMW to be viewing its fellow German manufacturer with considerable caution – but not new BMW Group Australia managing director Guenther Seemann.

His English may not yet be fluent, but Mr Seemann has made it clear that he does not even regard Audi as a competitor, mainly because it does not build rear-wheel drive cars, looking only at Mercedes-Benz and Lexus as rivals in the Australian premium car market.

He has also suggested that Audi is buying market share by discounting, and that this tactic will ultimately cost it customer loyalty.

“When you look at the statistics, we have here two competitors in Australia – one comes from Stuttgart and the other comes from Japan,” Mr Seemann boldly told GoAuto last week.

“It is not up to me to decide who our competitor is, the customer decides. We are saying that in the premium segment, where we are and two others … premium cars have rear-wheel drive because of comfort and design.

“The front-wheel drive you cannot design like a rear-wheel drive. Most premium cars, like a Rolls-Royce, they have rear-wheel drive. The most sportiest cars, like a Formula One, they all have rear-wheel drive. The drivers like our cars.

“Everybody wants to play in this segment because it is less sensitive when it comes to stock market crashes or ups and downs in economies. This target group is more stable in buying power. This is why everybody wants to play in this field.”

But surely Audi’s rapidly growing sales suggest that the market has decided that it likes what that brand is doing, regardless of whether its vehicles drive the front, rather than rear, wheels?“This brand is a good brand,” Mr Seemann conceded. “I’m not saying that people do not buy this brand, but what is important for the customer when they buy a premium brand is trust.

“From our point of view, it took us many years to build the trust in our customer when they purchase a BMW. It takes many years to achieve what we always wanted to achieve, to become number one or number two in the world.

“Secondly, it is also respect. A premium brand never ever does short-term actions to increase the sales. For example, offering tomorrow a $15,000 discount, because you will lose recent customers who bought the same cars for the normal price. So there is more to being a premium brand ... you cannot do short actions.”

GoAuto suggested that BMW was surely risking its own hard-won reputation for engineering dynamically superior cars by introducing controversial innovations such as iDrive and run-flat tyres.

 center imageLeft: BMW CS Concept and GoAutoNews, May 2, 2007.
Click on link at bottom of page to read this story.

“We were the first car manufacturer who introduced iDrive and this is what BMW is all about. We also introduced ABS in motorcycles, we introduced Xenon lights, we introduce lot of technical things which may be a couple of years too early, but at end of the day a lot of car manufacturers are now copying us,” Mr Seemann said.

“With run-flat tyres, again we were the first one who said, ‘This is how we see it’. We introduced it as a safety feature, so if you have a blow-out you don’t cause an accident. And also because we found out that 95 per cent of people cannot change a tyre because they have never done it before.

“We are in the fourth generation (of run-flats) and the comfort issue is nearly there, where it should be. Nearly. The first generation was too hard, it was a hard feeling, but we now get less and less complaints about comfort with the fourth generation.”

Interestingly, Mr Seemann noted that Australia is one of only three or four countries in the world that still complains about run-flats and said that getting tyre dealers to change them was a particular problem they are working on here.

After 14 years working for BMW in foreign markets – most recently in China and the Middle East – Mr Seemann said he has a policy of taking 100 days to listen and learn before making comments about a new territory.

That time is now up and he is surprisingly candid about setting a target by which he can be judged in the future.

Mr Seemann said he wants to increase sales from last year’s 16,000 units to 20,000 within five years, starting with a new record of 16,800 this year. That should ensure BMW Australia stays ahead of Mercedes-Benz in passenger car sales – not to mention Lexus and Audi.

“I have a plan in the next four or five years that we will grow steady on average five per cent every year, which will then be the magic 20,000 units,” he said.

“Segment leadership is always the goal for us. In Australia we already enjoy many years segment leadership, but for us it is steady sales and also the profitability that is much more important. We do not grow like a yo-yo, we grow steady.

“The challenge is to prepare our dealer network to accept this growth. Every dealer must take the next step, which means further investment and bigger showrooms, because BMW will bring much more models into the market so our portfolio will be bigger.

“The key of our success is always our partners. I call the dealers independent entrepreneurs. At the end of the day, a partnership is to respect each other on the other side, (there are) always targets to achieve.

“I take it very seriously to always protect the interest of our dealers. A dealer must be successful and must earn a lot of money, otherwise BMW will not have a future.”

Mr Seemann speaks often about the environment and talks excitedly about the coming generation of hybrids being developed in conjunction with DaimlerChrysler.

However, he does not seem keen to tackle the Australian Government or the oil industry on the issue of our petrol standards, which will prevent BMW’s latest and more efficient “High Precision Injection” engines coming here because of high sulphur levels (as reported in GoAutoNews last month).

He says the problem is not just Australia’s, but every country outside Europe, including the United States. He also claims that BMW has little influence here because of its relatively small market share.

“Our policy is to introduce the same car here as in America or Germany or wherever. There might be a time when we are unable to introduce the same car in Australia as in Europe, but the same will apply to all other car manufacturers,” he said.

“At the end of the day, it is not up to us. We are a very small player in the market. We do not want to offer second-class products for Australia, but (Australian petrol) is not up to the standard of our new technology.

“It will take time. I believe that Australians are so proud of their country, that the protection of their country is a very high priority. I want to believe it is only a matter of time that every other country in the world will have this same kind of petrol (as Europe).”

It is only early days for Mr Seemann, of course, but for now he appears happy to be in Australia and, with a quiet, almost nervous and shy approach that contrasts with our experience of most German car executives, brings a different style to his predecessor Franz Sauter.

“My personal style is open-minded. I am not (into) micro-management. For me, everybody has a target, I have a target, but I do not interfere in the way to reach the target,” he said.

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