Robertson sees "plenty of room for improvement" in the Chinese market (Photo: BMW)
BMW sales chief Ian Robertson wants to process future sales transactions in minutes. He’s counting on information technology to enable this speedup in what has, for decades, been a much lengthier process. In an interview in late 2015, Robertson talked to automotiveIT about technology-driven changes in car retailingÂ and the new significance of premium vehicles. He also described how current mobility trends will affect BMW'sÂ business model.
Mr. Robertson, BMW Group has had a record sales year.Now you are introducing the new 7 Series and the new X1. How much room for growth do you still see?We are proceeding under the assumption that the new positive sales trends for our vehicles will continue, and we see this worldwide. The BMW X1 is one of our best sellers and the BMW 7 Series represents a strategically significant core element in our portfolio. A premium brand like BMW always defines itself by its top models. And wherever in the world we have introduced the new 7 Series generation so far, the feedback has been thoroughly positive.
Let’s briefly look at the individual markets. In China, the BMW and Mini brands grew about 2 percent during the first three quarters of 2015. Will this continue in 2016 if China’s economy stumbles?You know what? China is always good for a surprise. In 2007, the year before I was appointed sales chief, we were only at 50,000 units. We had set our medium-term sales goal for China at 100,000 vehicles a year. In 2009, we sold 90,000 vehicles and just a year later our sales approached 170,000 vehicles. As the rest of the world suffered from an unprecedented crisis, we saw annual growth rates of 25 to 35 percent in China. We’re happy about that but we’re not fooling ourselves. This specifically means that, in our planning, we always consider the possibility that the market could normalize. I personally thought that it would do so in 2014, but that was not the case: Once again, BMW grew 17 percent, and single-digit growth is realistic for 2015 and subsequent years. China still has great potential. Its vehicle density per 1,000 inhabitants is still a fraction of what it is in mature markets like the US, the UK and Germany. It still has plenty of room for improvement.
Will the continuing growth in sales be accompanied by changes in the country’s dealer organization?Absolutely. Dealerships in China are still generating nearly 90 percent of their revenue with new vehicle sales. In the US, the used-car business and after-sales services are strong pillars of the business. This particular trend will inevitably take hold in China as well. Over the past six years, BMW has sold more than 2 million vehicles there, and they will gradually reach the market as used vehicles. This has consequences. Chinese dealers must align their business models with the new realities for customers, pricing models, and the service business. But this is not bad news at all. They can make good money in after-sales. The need for financial services will also rise. We’ll use them to add new customer segments.
Europe’s sales have recovered, and the US market is continuing to rise. In your view, are these stable trends?The trends are gratifying, but you have to put them in the right categories. The global markets remain volatile. It’s true that Europe has recovered, but that’s strictly speaking just in the last two years. It is far from reaching its pre-crisis level. We are trying to avoid dependency on particular regions and, as the BMW Group, to find a balance between the NAFTA, EU and East Asian economic zones. That is one of our great strategic goals.
In Germany, automobile sales seem largely antiquated. Conventional, greenfield dealer operations, boring configurations on the Internet, uninspired Facebook presences. Is the customer really king in this country?In recent years, we have tightened up our dealer network, placed more services online, and, with the Future Retail program, set our course for numerous new elements. For example, more and more specially trained BMW customer consultants are substantially revitalizing the sales process with their broad product knowledge, although it is not even their main job to write deals. There is a lot going on on the IT side as well: We keep finding new ways to prepare our legacy architecture, which developed over time, for new tasks with the help of latest cloud technologies. But our 360-degree view of our customers is still not complete at every point. While we do have substantial quantities of customer data from our business through BMW Group Financial Services, we have no legal basis to consolidate these two silos. But this is one of several key components needed to increasingly take customer management out of the physical world and into the digital world. This is an unstoppable trend.
But even today potential customers are overwhelmingly making their first contact online on the website...Yes, but that’s not all. At our sub-brand BMW i, it has been our experience that the customers definitely use several points of contact. The world was simple 10 years ago. Then, potential customers stopped by the dealership up to four times to gather information and then finally buy the vehicle they wanted. Today 97 percent of all BMW customers orient themselves on the Internet and visit the dealership and an average of just 1.3 times before their purchase. This shows how the weight of our sales efforts has shifted toward digital approaches. Car buyers have never been better informed than they are today. They intensively incorporate information on our websites and in online media and social networks into their decision-making. The classic car sales process is a thing of past.
What does this mean for BMW?Customer consultants should counsel customers and, first and foremost, provide them with all the information they need to make their decision. The selection of the right model and its individual configuration, and the feeling that they are in good hands, play a more important role in this phase than the signature on the purchase contract. To the extent that we are opening up more time for the consultation, we want to dramatically shorten the purchase process. With IT’s help, the process should become considerably quicker and, in the future, become a matter of minutes There can’t be any waiting time. Our model is the US, even if most vehicles there are produced as inventory, while customers in other parts of the world are happy to assemble their own vehicles. Nonetheless, financing, registration, delivery can all be highly standardized and automated, and take place in less than an hour.
That seems like it could be a record, Mr. Robertson. How do you plan to achieve this goal?By streamlining the sales process extensively and focusing on what is essential in all the phases. Look, it may be the case that nine signatures were previously needed to approve vehicle financing. But that doesn’t mean it has to be that way, if the process becomes simpler. We are working on that. And we are also examining the service process closely. Our standard has always been to minimize the dislocations relating to a service shop appointment. This starts with a very flexible appointment process and ends with the replacement vehicle that we make available. The fact, however, is that many customers would prefer not to be involved from now on. Like an app that is updated automatically, cars should always be kept up-to-date technically. Software updates over the air are just the start of a new generation of remote services.
Change of topic: Why is electric mobility so slow to getÂ rolling in Germany?Good cars alone are not enough. In our view, government incentives would be helpful in stimulating the market for electric mobility. The scrapping bonus in 2009 shows that these tools work. Even countries like Norway are good models. Using a combination of tax incentives and relief measures in everyday life that make driving an electric vehicle very profitable, the government and the people have jointly carried out a fundamental transformation in a short time. Electric vehicles have now reached a market share of 20 percent there. If Germany does not undertake similar efforts, its stated goal of having 1 million electric vehicles on the road in 2020 is probably not feasible.
Do we need a change in mentality?No, we are already seeing one. The significance of the automobile as a product is different from what it once was. The trend runs from owning to short-term leasing to temporary use when necessary. Mobility is being redefined. There is a reason that our car-sharing service DriveNow now has more than 500,000 active users in nine European cities, such as Munich, Berlin, Copenhagen and London, among others. They spend an average of 25 minutes per day in our vehicles. I would venture to predict that the majority of them will no longer own their own car in the future. Why is that? They are starting to enjoy premium mobility, which they really might not have been able to enjoy previously. And it is convenient: no insurance, no visits to the service shop, no lines for fill-ups. Our brand claim, innovative vehicle technology, and workmanship are naturally still the focus at BMW. Nonetheless, the way that people use our products is going to change. Our business model will change more in the next five to seven years than it has in the last 100 years.
Interview by Ralf Bretting and Hilmar Dunker