Identity crisis BY TOM MURPHYAstormisbrewingin - WardsAuto
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
THE BIG STORY / AUGUST 2017
BMW’S
identity
crisis BY TOM MURPHY
A
storm is brewing in
Munich, and it won’t
blow over anytime soon.
Taking cover would be
advised, except the only
way to ride out this squall is with
leadership making bold decisions
to correct a series of missteps that
have angered dealers, disappointed
consumers, baffled analysts and
knocked the BMW brand on its heels.
THE BIG STORY
What’s most intriguing, the blue
and white roundel is doing fairly
well in most overseas markets
but now is suffering in two that
are the most important: Germany
and the U.S. For years, both have
been safe shelters for increasing
sales volume and profits.
Mini and Rolls Royce are doing
OK as small pieces of the BMW
Group, but ominous clouds clear-
ly are visible for the BMW flagship
brand:
■
EUROPEAN SALES
ARE SUFFERING.
Audi has outsold BMW every
year since 2009, and Mercedes-
Benz, the unmistakable luxury
leader in Europe, has increased
its lead. Meanwhile, Jaguar, Land
Rover, Porsche and Lexus have
more than doubled European
sales since 2009, newcomer
Powertrain culture runs deep at Infiniti has come on strong and
BMW, as seen in “four-cylinder” Volvo is gaining steam, according
headquarters building in Munich.
to WardsAuto data.
2 | AUGUST 2017
WARDSAUTO
WARDS AUTO
THE BIG STORY
U.S. LUXURY SALES is close behind.
BY BRAND Thirteen years ago, BMW utility
400
UNIT SALES, IN THOUSANDS vehicles outsold their Mercedes
Mercedes-
Benz rivals in the U.S. more than two
350
Lexus to one. It’s been downhill since.
300
BMW
Last year, Mercedes utes out-
paced BMW deliveries by 46%.
250
■
Audi
200 U.S. DEALERS ARE
150
Cadillac
FRUSTRATED, AGITATED.
At January’s NADA Convention
100
and Exhibition in New Orleans,
50 representatives of about 150
U.S. dealers crowded into a
0
'09 '10 '11 '12 '13 '14 '15 '16 closed-door meeting to vent that
Source: WardsAuto
Munich’s overly conservative
■ approach to interior and exterior
U.S. SALES HAVE styling has cost the brand many
FALLEN OFF A CLIFF. of its most passionate customers.
Virtually every luxury brand Dealers also complain about
expanded U.S. sales in 2016 at marketing messages that have
a faster clip than BMW. Since been weak or inconsistent, and
January, most luxury brands have they find showroom upgrades
continued that growth, but only demanded by BMW to be less
BMW shows a precipitous drop in than electrifying. One symptom:
sales through the first six months. Audi transaction prices are more
Mercedes remains the No.1 pre- robust than BMW’s, according to
mium brand in the U.S., and Lexus a dealer with both franchises.
surpassed BMW for the No.2 slot Without serious changes, deal-
in 2016, according to WardsAuto ers expect the BMW franchise
data. So far this year, BMW is back meeting at NADA in 2018 will be
in the second position, but Lexus even more contentious.
3 | WARDSAUTO
WARDS AUTO
AUGUST 2017
THE BIG STORY
■
CUSTOMERS NEED
TO FEEL SPECIAL.
Enjoying a glass of champagne
or being soothed with soft music
is part of the experience of shop-
ping for a luxury car.
Lincoln is making inroads by
treating customers like royalty
N55 inline 6-cyl. turbo in BMW M2.
and sending dealer representa-
tives to pick up vehicles needing driver, and chassis engineering
service. “I’ve personally shopped left nothing to be desired.
at several BMW dealers and even Today, the engines remain first-
owned/leased a couple, and rate, but sport sedans and coupes
I wouldn’t describe the sales/ are being replaced by heavier util-
service experience as that much ity vehicles that will never handle
different than at a non-premium the same.
brand dealership,” an industry The competition has spent so
analyst says. much time emulating BMW that
“Upping the level of service in consumers can find fun, sporty
ways that add value to the cus- luxury coupes and sedans in
PHOTO CREDIT © KARANDAEV/iSTOCK/THINKSTOCK
tomer’s life is something BMW other showrooms, generally for
should definitely explore.” less money.
■
THE BAVARIAN MYSTIQUE “For many years, BMW had a
IS FADING. crystal-clear brand identity:
For years, BMW was the brand The Ultimate Driving Machine. It
every automaker wanted to be. was a very understandable and
Its engines were the envy of the very well differentiated position
powertrain world, suspensions in the luxury marketplace. There
seemed to establish a telepathic was no mistaking a BMW for
connection between road and anything else,” says Ed Kim, vice
4 | WARDSAUTO
WARDS AUTO
AUGUST 2017
THE BIG STORY
After vintage
racing at
Mazda
Raceway
Laguna Seca in
2015, Ludwig
Willisch (left)
chats with
retired BMW
driver Brian
Redman.
president-industry analysis at “This is why BMWs do not sell
AutoPacific. themselves like they used to.”
“Today’s luxury customer has
a lot more choice when shop- SHAKING UP MANAGEMENT
ping for a performance luxury From the outside, BMW appears
vehicle,” Kim writes in an email to to be a company in turmoil. Karim
WardsAuto, noting Lexus, Infiniti Habib was head of BMW brand
and Cadillac all have models that design but “left the company of
stack up fairly well against BMW his own accord” in February after
entries. Other examples include less than five years on the job.
the new Acura TLX and Alfa In late July, BMW announced
Romeo Giulia. the retirement of two long-
“BMW products simply aren’t time pillars of the company: Ian
as well differentiated from other Robertson, a board member
luxury vehicles as much as they overseeing sales, stays on until
used to be. This creates a product 2018, while Ludwig Willisch, who
and market challenge,” Kim says. managed BMW Group sales from
5 | WARDSAUTO
WARDS AUTO
AUGUST 2017
THE BIG STORY
Bernhard
Kuhnt
takes North
American
reins from
Willisch.
Canada to Argentina and served different levels of the company,
until recently as president and “including the relationship with
CEO of BMW of North America, our dealers and the need for new,
makes a hasty exit Aug. 1 after 21 exciting models.”
years with the company. Dealers and customers may
Bernhard Kuhnt replaced want a rapid transformation
Willisch earlier this year atop BMW with breathtaking interiors and
of North America, and now he head-turning sheet metal by next
also assumes full responsibility for spring, but a freighter doesn’t
BMW Group Region Americas. turn that quickly in the harbor.
The automaker declined to This year, the all-new innocu-
make Kuhnt available to com- ously styled 5-Series sedan has
ment for this article. But a BMW arrived to yawns, inciting more
insider says “change is in the air handwringing, even though the
at BMW,” and that the challenges car drives well and benefits from
are being addressed at many much of the break-through tech-
7 | WARDSAUTO
WARDS AUTO
AUGUST 2017
THE BIG STORY
Critics nology installed on the pricier looking much like the model it
disappointed 7-Series more than a year ago. replaces, minus the character line
with styling
of new BMW
BMW hopes to stir the faithful that tapers down toward the front
5-Series. later this year when the redesigned wheels for a bit of sportiness.
sixth-generation V8-powered M5 A bolder styling statement with
launches with “about 600 hp” the new X3 would have been
and an innovative rear-biased understandable, given the outgo-
all-wheel-drive system whose ing model’s fall in the sector.
performance can be tailored In fact, BMW’s two most impor-
for multiple driving situations. tant offerings in WardsAuto’s
In November, the 6-Series Gran Middle Luxury CUV segment, the
Turismo goes on sale. X3 and X5, now occupy sales slots
Besides midcycle refreshes for seven and eight, respectively, in
the 4-Series and M4, the rede- this fierce battleground, trailing
signed third-generation ’18 X3 util- (in order) the Lexus RX, Cadillac
ity vehicle arrives later this year, XT5, Mercedes GLE, Lexus
8 | AUGUST 2017
WARDSAUTO
WARDS AUTO
THE BIG STORY
Redesigned
BMW X5s
go off-
road near
Vancouver
during
2013 media
launch.
(aggressively designed) NX, Audi “This is only the beginning of
Q5 and Acura RDX. the biggest product offensive
BMW doesn’t even have a in our history,” a BMW insider
true 3-row Large Luxury CUV to tells WardsAuto. “You’ll start to
compete with the Acura MDX, hear and see more of this soon,”
Audi Q7, Infiniti QX60, Mercedes likely at this month’s Concours
GLS and Volvo XC90. In that d’Elegance classic car fest at
segment, BMW next year will roll Pebble Beach and “continuing
out the X7, to be built at its plant through to the Los Angeles auto
in Spartanburg, SC. show, where we’ll showcase sev-
Also coming next year is the eral new high-profile products.”
new 8-Series sedan, compact X2 All this upheaval comes after a
CUV (from Germany) and rede- decade in which BMW has flood-
signed versions of the X4 and X5 ed the market with new models:
utes, both from Spartanburg. 2-Series, M2, i3, i8, hybrids, plug-
9 | WARDSAUTO
WARDS AUTO
AUGUST 2017
THE BIG STORY
Lithe M2 at home on track.
in hybrids, X1, X4 and a seemingly a soft ride, room for Costco runs,
endless stream of variants of the a command-seating position and
3-Series sedan, which now is sep- Bluetooth phone pairing.
arated from the 4-Series coupe. BMW has participated actively
The 3-Series, the shining star of in the growth of luxury utes and
the lineup and longtime volume has provided access to popular
leader, is being outsold this year apps and new infotainment fea-
by the Mercedes C-Class, now tures, while continuing to expand
assembled in Alabama. its “M” performance variants.
Still, its core philosophy in the
SPORTS CARS home market of Freude am Fahren
IN A CUV WORLD (the joy of driving) seems less rel-
BMW finds itself in the unfor- evant as the automaker attempts
tunate position as the only auto- to grow its customer base beyond
maker in the world heralded enthusiasts who pay close atten-
for generations of lust-worthy tion to driving dynamics.
luxury sports cars with precise This dumbing down of the prod-
handling at a time when well- uct has rattled the loyalists, says
heeled buyers care more about a German industry analyst, add-
10 | WARDSAUTO
WARDS AUTO
AUGUST 2017THE BIG STORY
BMW 428i
came to
market in
2013 as
coupes
separated
from
3-Series
sedan
lineup.
ing that rival Mercedes-Benz has showroom. He says the push for
succeeded in turning traditional “downgraded interiors” in the
luxury cruisers into great drivers. 2-Series and 3-Series is probably
“I’ve even heard some BMW driv- designed to make those vehicles
ers switch to Mercedes because more affordable for buyers who
simply the handling is very good are considering a step up from the
and the cars come with aggres- Mini brand, which falls under BMW
sive design,” says the analyst, who Group ownership.
spoke on condition of anonymity At the upper end of the market,
and criticizes BMW interiors for the 7-Series sedan incorporates
styling that barely changes from impressive technology and was
generation to generation. In some redesigned a year ago.
cases, he sees cost-cutting efforts Yet, through July, 7-Series deliv-
resulting in downmarket materials. eries in the U.S. are down 25.4%
“I said to the dealer, ‘This is not from year-ago and are badly trail-
a BMW anymore,’” the analyst ing the S-Class, which introduced
says of a recent visit to a European a dramatic, breathtaking interior
11 | WARDSAUTO
WARDS AUTO
AUGUST 2017THE BIG STORY
BMW’s
Ulrich
Ströhle
discusses
design
philosophy
behind X5
interior.
design language two years ear- BMW X5s now “switching to
lier. The undisputed king of the Range Rovers, Porsches and
Upper Luxury car segment is the Mercedes” because they see few
all-electric Tesla Model S, which is stylistic differences from the pre-
outselling the 7-Series more than vious X5 to the current one.
3-to-1. Through July, BMW CUV sales
Another European analyst says in the U.S. are up 12.2% while car
BMWs simply have become less deliveries are down 14.9%.
desirable, referring to dealers Providing independent confirma-
offering shockingly low prices tion of BMW’s slide is Kelley Blue
for the freshly launched 5-Series. Book’s Brand Watch Survey, which
Such discounting usually doesn’t is conducted quarterly to see how
occur until later in a model’s life- models in specific segments stack
cycle. up to each other in multiple cat-
The analyst says he is aware egories, such as styling and safety,
of colleagues who used to drive based on consumer feedback.
12 | WARDSAUTO
WARDS AUTO
AUGUST 2017THE BIG STORY
Kelley Blue
Book’s
Brand
Watch
Survey
finds scores
sliding
for BMW
3-Series.
At the end of 2016, the previ- mance, reputation and sophisti-
ously bulletproof 3-Series topped cation. One quarter later, the pre-
all rivals in the areas of driving mium sedan lost leadership in all
performance, reputation, inte- those categories and also showed
rior layout, technology and fuel sizable declines in the areas of
efficiency, the Kelley Blue Book safety, affordability, interior lay-
survey found. By second-half out, exterior styling and fuel effi-
2017, the 3-Series led in only two ciency.
categories (driving performance
and driving comfort), and it also ADAPTING TO A
showed considerable drops in the CHANGING WORLD
areas of reliability, affordability, Complicating BMW’s position in
technology and fuel efficiency. the market is a global regulatory
The 5-Series is faring even environment driving automakers
worse in the KBB survey. In the toward electric vehicles to reduce
first quarter of this year, it led in tailpipe emissions, even though
the categories of driving perfor- consumers are not enthusiastic
13 | WARDSAUTO
WARDS AUTO
AUGUST 2017THE BIG STORY
BMW’s
quirky i3
electric
vehicle.
about driving them (Tesla’s fanat- a retractable steering wheel. The
ical following not included). iNEXT will be built in Dingolfing,
The BMW Group has set a goal Germany.
of selling 100,000 electric vehicles Exotic performance cars from
or hybrids, supported by a plan Porsche, Lamborghini, Ferrari
to electrify each brand and each and even race cars now are inte-
model as well. Arriving this sum- grating electrification, and BMW
mer is the new Mini Countryman tried to get ahead of the trend by
Plug-in Hybrid, to be followed launching the (oddly shaped but
next year by the BMW i8 Roadster, affordable) i3 EV and (pricey but
in 2019 with an all-electric Mini gorgeous) i8 plug-in hybrid.
and in 2020 with an all-electric But that was three years ago
X3. and the cars have not been run-
In 2021, BMW plans to launch away successes. Another con-
the iNEXT, a self-driving electric sultant who spoke on condition
vehicle with a larger footprint and of anonymity says BMW missed
14 | WARDSAUTO
WARDS AUTO
AUGUST 2017THE BIG STORY
a great opportunity to follow up merely one of the radical changes
the i3 and i8 sooner with a long- coming in transportation – from
range Tesla type EV and dominate ride sharing to autonomous cars
the space for premium EVs. and self-driving shuttle buses.
“I’m sure some other OEMs These trends put people in
are coming with 400- or 500-km the passenger seat rather than
(249- to 310-mile) full EVs earlier behind the wheel, leading to
than BMW,” he says, predicting the inevitable dilution of driving
electrics will make up 5% to 10% enjoyment and BMW’s lifeblood.
of BMW’s vehicle sales globally It’s too early to predict how
within five years. BMW responds and adapts to
The consultant points to the these seismic shifts, but either
automaker’s legacy for innova- way the automaker may need to
tive technologies and cultivating recast its famous advertising tag-
bright minds. “They are sitting in line by heralding The Ultimately
Munich, the most expensive city Self-Driving Machine. WA
where you build cars in Europe.
They have very smart engineers
and high schools that attract the
best people. BMW is known for
innovation, and they can’t lose
that brand characteristic.”
EVs represent another challenge This story was
to the BMW brand’s core attri- written by
butes: No matter how good the Senior Editor
electrified drivetrain, can it deliv- Tom Murphy.
er a sustained exhilarating experi- Murphy has
ence without high revs and spir- worked at WardsAuto for 20 years,
ited exhaust? Can the Ultimate covering technology and leading
Driving Machine be impervious to selection each year of the Wards 10
range anxiety? Best Engines, 10 Best Interiors and
The popularization of EVs is 10 Best User Experiences.
15 | WARDSAUTO
WARDS AUTO
AUGUST 2017You can also read
