BMW CEO’s strategy puts concentrate on EVs, luxury vehicles
MUNICH (Bloomberg) — BMW plans to roll out more electrical cars and add self-driving features swifter than rivals to help fend off growing threats to its status as the world`s largest maker of luxury vehicles.
The German carmaker will also roll out more SUVs including the full-sized X7 as well as more versions of high-end models like the 7-series sedan, the company said today in a statement . The two-pronged treatment is the centerpiece of a strategy review by CEO Harald Krueger and is aimed at maintaining pretax profit margins at a minimum of ten percent through 2020.
BMW said it will launch a roadster version of its i8 plug-in hybrid sports car, along with an fresh version of its i3 compact EV with enlargened battery capacity and a longer range, as well as a plug-in hybrid for its Mini brand.
A decade after taking the top spot in the global luxury-car market, BMW is at a crossroads. Years of rolling out fresh models ranging from coupe-like SUVs to seven-seat wagons have left the company with few niches that could spur growth. Rival Daimler AG has a chance to reclaim the crown as early as this year after catching up to BMW with a slew of fresh models and upgrades of its bestsellers.
«We need to manage our current business to perfection, while continuing to grow in a targeted style, in order to secure the necessary investment,» Krueger said in the statement.
The carmaker`s last major strategic shift was in 2007, when then-CEO Norbert Reithofer shoved the sporty brand to invest billions to reduce fuel consumption, produce its very first electrical vehicle and pioneer the mass production of carbon fiber. Krueger said today that he`ll add open-top versions of the I8 plug-in, while also broadening the range of cars that come with the optional M-high-performance packages.
Unlike rivals Mercedes-Benz and Audi, the holder of the BMW, Rolls-Royce and Mini brands isn`t part of a broader group, meaning it has to absorb the costs of developing these fresh technologies on the strength of its current suggesting. Growth however is slowing as Daimler AG`s Mercedes and Volkswagen AG`s Audi thrust for the No. One spot, and brands including Maserati, Jaguar and Alfa Romeo expand to give luxury-car buyers more options.
«There`s not much they can do in terms of adding more products,» Dominic O`Brien, a London-based analyst with Exane BNP Paribas, said before BMW released the strategy report. «The three key themes of emissions reduction, connected cars and autonomous driving will keep spending on research and development at an elevated level.»
BMW predicted another year of record sales volumes, revenue and earnings, while group earnings will rise only slightly this year, compared with a forecast of solid growth last year.
Revenue from the automaking segment will grow slightly, the company said, compared with a significant increase last year. BMW`s concentrate on conserving its resources was evident in its decision to refrain from an expected special payout for investors this year, as the company celebrates its 100th anniversary.
In addition to battling its traditional rivals, BMW also faces the emergence of fresh competitors like Tesla Motors Inc. and potentially Apple Inc. The company outlined its view of future luxury autos last week when it introduced a concept vehicle where the steering wheel and center console retract, enabling the driver to turn to face the front passenger.
«We need to act swiftly in the digital world and be ready to take risks,» said Krueger.
Automotive News Europe contributed to this report