Quick innovation is the key to staying alive
Mark Smyth spoke to BMW’s top executives about adapting to a rapidly changing motoring market
If 2018 was an interesting year for the car industry, it was even more so for its CEOs. Sadly one of its greatest, Sergio Marchionne, died, leaving behind a legacy at Ferrari and the Fiat Chrysler Group.
But the big headlines were generated by the arrest of not one global car industry CEO but two. First, it was Rupert Stadler, CEO of Audi in connection with the Volkswagen Group Dieselgate saga. After serving four months without trial Stadler was released but meanwhile he was replaced as the head of Audi. Then Renault-Nissan-Mitsubishi Alliance boss, Carlos Ghosn was thrown in jail in Japan after allegations of financial misconduct within Nissan.
So it’s no surprise that when we spoke to global boss of BMW, Harald Krueger, he described the role of being a car CEO at the moment as “challenging.” Fortunately his challenges are more about strategy and shifting the enormous family-owned BMW Group towards a future full of electric vehicles and more SUVs.
Steering such a big group in an alternative direction is a challenge in itself of course, but Krueger also has to deal with political issues, not least of all Brexit and Donald Trump. Krueger told us that the company is expecting a record year of production at its Plant Spartanburg facility in the US in 2019 and that he remains a “clear supporter of free trade”.
Brexit is another matter. Krueger says he is “sorry that the UK is leaving” Europe and that the compromise thrown out by the British parliament recently was something “I can clearly support.” He stresses however that without a EU customs agreement, the company’s operations in the UK “would not be sustainable”.
Whether it is the US, UK or even SA, Krueger says that additional localisation, such as that required by the post-2020 Automotive Production Development Programme approved in SA late in 2018, will depend on economies of scale. In some locations this could mean increased investment, such as a hint that there might be the option of a new engine plant in the UK but he ruled out an engine plant for SA.
A key question for the future though he says is speed. “Corporations are not always speedy. Co-operation sometimes makes more sense.” This is one of the reasons why we are seeing collaboration on electric vehicle charging points between BMW and Nissan in SA and BMW teaming up with Mercedes-Benz and Audi in their purchase of Here digital mapping for navigation from Nokia.
In a rapidly changing market, Krueger appears to have it all figured out. He acknowledges that while the arrival of its new 3 Series is very important to the company and to the market, BMW is prepared for further declines in the sedan market, particularly in the US. Sedans, including the 3 Series, remain very important in China and he says “we definitely will invest in sedan market for the future”.
But it’s electric vehicles (EVs) where the big investment is happening. BMW will have 25 EVs by 2025 and its Vision I-Next in 2021 will be the “spearhead of innovations within the Group”.
While Krueger is firmly behind the wheel at BMW, it is people such as Klaus Frohlich, the brand’s head of research and development, and Robert Irlinger, head of BMW i, that are responsible for ensuring the company has the technology and the products to move forward and to do so at a quicker speed than in previous years.
It’s a common misconception that BMW’s i brand is all about its EVs, but the i actually stands for innovation and Irlinger stresses that i has always had a role as a think tank, a pioneer within BMW. The Vision I-Next revealed at the end of 2018 is a key part of the next stage of innovation for the company. Irlinger said that the I-Next will be the first model with a brand-new drivetrain developed entirely by the BMW Group.
“I-Next will serve as an accelerator, demonstrating our expertise,” says Frohlich. He says new batteries are under development, essential if the I-Next will be able to achieve the company’s claim of a driving range of about 700km. But Frohlich says that customers will be able to choose the range of their batteries, so there will be various battery and cost options in the I-Next in 2021.
A key year for BMW is 2021, when it will not only roll out the I-Next but utilise the powertrain technology for other models.
“Everything is changing with new products in 2021,” Frohlich said. Another big model will be the i4, which again will use BMW’s new compact batteries. Irlinger says it will be a “sportier car” too, but both executives hinted at even more to come.
An upcoming new luxury model will have elements of the I-Next including its powertrain and autonomous driving capability. Performance enthusiasts will be catered for by a new supercar, with Frohlich stating that they are looking at a model above the i8, a halo performance model that will take on some of the more exotic brands.
The first Mini E test models were registered in Germany in December and the car is expected to be launched later in 2019 before going on sale in 2020.
“EVs are already the new normal for us,” says Frohlich, but adds that one of the priorities for BMW is the electrification of regular models. This will see 48v mild hybrid architecture and more plug-in hybrids such as the upcoming 330e under consideration for SA.
It will also mean electrification in the performance M division.
“M will also be electric in the future, but partial electric,” says Frohlich.