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BMW focused on growth, but not leadership

Series player: BMW’s burgeoning small-car range that will include the 2 Series Active Tourer, and refreshed 1 Series (left) in a few months, will be one of the key drivers of the car-maker’s 2015 growth.

New local BMW boss expects more growth to come in booming premium segment

3 Feb 2015

BMW Group Australia expects its record sales run to continue in 2015 on the back of further growth in the premium segment, but the company’s new managing director Marc Werner would not be drawn on whether the brand will threaten Mercedes-Benz for market leadership.

The Munich marque achieved its best sales result in Australia last year in an overall market that was down 2.0 per cent, BMW’s 22,722 new registrations representing a 10.7 per cent increase over 2013.

This was enough to maintain its position as the country’s second-biggest-selling premium car brand behind Mercedes (27,121, not including commercial vehicles), although a fast-closing Audi – up 20.1 per cent in 2014 year and intent on taking leadership within the next few years – finished on 19,227 units.

BMW Group Australia managing director Marc Werner officially took the reins from Phil Horton in September, but only arrived in Australia in October after leaving his post as the area manager for BMW in Russia (which he established), Japan, South Korea and India.

Speaking with GoAuto at the X6 SUV launch in the Yarra Valley last week, Mr Werner brushed off suggestions that BMW was targeting market leadership in Australia, adding that he would be satisfied with continual growth in the burgeoning premium market.

 center imageLeft: BMW Group Australia managing director Marc Werner.

“For us it’s more a question of sustainable growth,” he said. “It’s not volume over everything. For us it’s more important that we grow the business on a sustainable level.”

The increase in popularity of upscale brands in Australia is unlikely to slow anytime soon, according to Mr Werner, who said that BMW is busy looking for more opportunities to develop in the segment.

“If you look at the premium segment, it grew from 70,000 in 2013 to 89,000 last year. And I believe that this year will see a premium segment of 100,000 units.

This means that the appetite for premium brands is there. It’s sustainable.

“We as a manufacturer doing business in that particular segment need to identify what are the trends and where are opportunities for growth.”

While Mr Werner said that BMW was in a “good position to exploit further growth in the small-car segment” with models such as the 2 Series Active Tourer, 2 Series Convertible and the forthcoming 1 Series facelift launching this year, he emphasised that the company was wary of becoming too reliant on its smaller fare.

He said a “robust” update to the 6 Series and its new-generation 7 Series would be “a showcase for the innovation and technology the brand is famous for”.

“There is certainly room for further growth potential as far as the small-car segment is concerned but we do not want to become the small-car premium brand.

We want to balance that with further growth and further emphasis on 3, 4 and 5 Series and particularly on the X (SUV) range where at the moment we do not get enough production,” he said.

“Our focus won’t just be on lower-end growth, and this is the key to our sustainability. We will be seeing major action in the upper segment as well – this is where you build the brand image.”

Mr Werner highlighted a number of perceived challenges for car-makers in Australia’s ultra-competitive new-car market, including the lack of incentives for EV customers that could impact sales of its all-electric i3 hatch and plug-in hybrid i8 supercar.

“Many of them (challenges) are unique to this small market. They include, for example, the closure of several manufacturing facilities, bespoke crash-testing laws, luxury car tax, the question of grey or parallel imports, the complete lack of interest from the government regarding lower emission vehicles and CO2 legislation, and counterfeit parts and insurance issues – the current debate over the right to repair vehicles,” he said.

“Put them together and you have a pretty tough environment.”

As GoAuto has reported, BMW placed well below the luxury segment average last year in the influential JD Power Customer Service Index (CSI) Study – and behind Mercedes-Benz and Audi – despite earlier in the year saying it was working to become the top-ranked brand in Australia.

Mr Werner said the company took the results “very seriously” but had found that its own internal research, and surveys by Neilson, provided more positive results.

“We have a very dedicated team, not only on the aftersales side but on the service side and dealer channel development side that are continuously looking to improve the services that we are delivering to the customers,” he said.

“That is an ongoing business with us that has the highest management attention, not only with the board of BMW Australia, but back in (global) headquarters.”

BMW’s ‘Future Retail 2016’ new dealership standard in Australia kicked off last year following its adoption in Europe, and Mr Werner said the rollout would continue in 2015 and bring new concepts and technologies to showrooms. “We have recently launched the so-called ‘product genius’ which is a supporting tool for the sales consultant in order to take the customer through the functionalities and all the options and possibilities that out products offer,” he said.

“This has proven to be very successful in many other markets and the dealers are really enthusiastic about this.”

Mr Werner said BMW Australia was also looking at other retail alternatives that could be integrated into the current dealer network following last year’s successful Mini pop-up store on Chapel Street in Melbourne’s South Yarra, pointing to a possible shopping centre retail space along the same lines as the one premium EV brand Tesla set up in Chadstone in December.

“We are constantly looking at new point-of-sale brand representation solutions and pop-up showrooms,” he said.

“These are really promising concepts because this is also something where you can interact with new customers and this is something you want to do. It’s about new retail concepts and we are continuously looking into that.”

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