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Ian Robertson, BMW sales boss says ‘born electric’ range will help boost margins

Ian Robertson, BMW sales boss says 'born electric' range will help boost margins

When BMW first entered the premium SUV sector with its X range it used a novel offering to leverage improved margins. Now it hopes to do the same with its “born electric” i range at a time when, it believes, the global premium sector price war is easing everywhere except in Europe.

BMW brand head of sales and marketing Ian Robertson spoke to Automotive News Europe Editor Luca Ciferri about the company’s i strategy and provided some early insights into who has been placing orders.

Are the price dynamics of premium cars influenced by market trends or by automakers’ product cycles?

There is always a competitive model in the marketplace and all manufacturers are on different cycles. At the same time, being first to market with new segments, as we did with our X models, helps to grow margins. In this regard, the i3 and i8 are off to a strong start. In the run-out phases at BMW we normally increase specifications. This way of motivating a customer to buy a car at the end of its product cycle is far better than any normal incentive could ever be.

How do the major markets differ?

In Europe, the picture is skewed because the economic situation in individual countries varies so much. But if you look at a more normalized environment – such as Asia or, in recent times, the U.S. – you will find incentives there for the luxury market are significantly lower.

What about China’s evolution?

China is clearly maturing. We have sold more than a million cars in the last four years. This means a replacement cycle is starting. It also means that as well as a huge new car market a significant market in used cars is starting to appear.

So China is normalizing.

Not exactly, because there are other factors there. In Beijing, for example, last year only 240,000 new registration plates were allowed. This is a city with a far higher volume potential than that, which leads to a situation where thousands of existing cars have to be sold out of Beijing so that people can take their registration plate off in order to buy a new car. This means many used cars originally registered in Beijing are re-sold outside the city, which significantly distorts the market.

Is the i3 off to a strong start?

We have sold more than 3,000 i3s since the car went on sale in Europe last November. Sales are expected to rise as the car becomes increasingly available over the coming months. Customer deliveries in the U.S., a major market for the i3, only started at the end of April.

What is the current production rate?

In preparation for the U.S. launch, we increased daily output in April by more than 40 percent – from about 70 to 100.

How would you characterize the i3 customer base?

The base is very broad. The i3 sets out to appeal to new groups of customers who lead cosmopolitan, socially responsible and sustainable lifestyles. These buyers place great importance on design quality, innovation and durability. Clearly, we have a lot of new technology early adopters. Apart from this, when it comes to a purchase decision for an electric vehicle, government incentives also play a big role. In Norway, for example, the government offers a very comprehensive program to promote electric mobility, including removal of all toll fees, dedicated lanes on highways, the right to use bus lanes in the cities, free parking, free charging and a number of other purchase incentives. So it’s not surprising we have more orders in Norway than we do in most other European countries.

Is Norway your top European market?

In unit terms, it is currently a close run between the UK, Germany and Norway. But allowing for the obvious discrepancies in population and market size, Norway is where we have greatest i3 penetration at the moment.

How many i3 buyers are new to BMW?

About 80 percent, although their provenance is mixed. Some are coming from premium brands but a significant portion is from volume segments. Interestingly, some of them never owned a car before but decided to buy a zero-emission vehicle with the i3.

Are there similarities between the i3 and i8 order books?

Just like the i3, the i8 is already proving a success. Although deliveries are only just about to start, demand for the i8 is already exceeding the planned production volume during ramp up. But the make up of the order book is different, with lots of existing BMW customers looking to also add an i8 to their garages. Some i8 early adopters are similar to Rolls-Royce customers, with multiple cars in multiple garages.