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2004 New York Auto Show: BMW Executive Q&A
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| Tom Purves, Chairman and CEO, BMW North America |
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| Updated |
Mar 17, 2005 19:41:50 |
| Rating |
 461 ( 144 +31.23% ) | | Author | Tara Baukus Mello |
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Description:
Bayerische Motoren Werke's (Bavarian Motor Works) began as a manufacturer of aircraft engines and motorized bicycles in the 1910s and '20s. Its first car, the BMW 3/15 Wartburg Roadster, was produced in 1930 and very quickly the brand logged wins on the racing circuit.
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It became known early on as a technology leader, with its air-cooled radial engine in the 1930s and a car body made of aluminum or magnesium alloy in the 1940s. The company remains true to its heritage today, still building both motorcycles and cars, as well as focusing on pushing the technology envelope with its automobiles.
Tom Purves, chairman and CEO of BMW North America, joined the U.S. arm of company in May 1999. He oversees all the sales, marketing and distribution activities for the BMW Group, which includes the BMW, MINI and Rolls-Royce brands. Purves came to BMW from Rover, where he was in charge of global sales and marketing for Land Rover, Mini, MG and Rover. Prior to that, he was with BMW Great Britain, where he had several top management roles. An Edinburgh, Scotland native, Purves' got his start in the automotive industry at Rolls Royce Ltd. Car Division as an apprentice engineer.
Tara Baukus Mello caught up with Tom just after the media introduction of the BMW 6 Series coupe and convertible to talk about BMW's current and future efforts in the United States.
Q: The United States is one of BMW's biggest markets and BMW, like most automakers, is focusing on introducing new products that will increase sales further. What does this product offensive mean for U.S. customers?
A: For us, it is a matter of revitalizing vehicles as well as entering areas where we didn't have vehicles before and introducing new technology. We've introduced two new vehicles recently, redesigned several others and have more coming. Still, we are not in the volume car business. We specialize in building premium cars and we expect that the prestige luxury car sector will grow at a greater rate than the volume car market. This means that what the consumer will get are premium products that are always focused on being the ultimate driving machine. It is the strength of BMW's brand.
Q: One of those recent products is BMW's new small SUV, the X3. When it first went on sale, there was quite a demand, which created a waiting list. Is there still one?
A: It seems that the demand in the less expensive markets is quite instantaneous. Currently we have 2.5-liter models widely available, although you'd have to wait if you wanted a 3.0-liter X3 today.
Q: Both the X3 and the 3 Series aim to bring new buyers to the brand. Have you seen any cannibalization from the 3 Series now that the X3 has been introduced?
A: We certainly thought about this, but we haven't seen it happen yet. We had the same thoughts when we introduced the X5 (with the 5 Series) and we never saw it happen there.
Q: The X3 comes close to the X5 in terms of interior space and I've heard rumors that you will increase the size of the X5 now as a result. Is there any truth to that?
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A: What we are not in the business of doing is building too big a truck, because then we would not be building the ultimate driving machine. Our priority will be on the handling and dynamics and not the space. With that priority, there might be a limitation in how large a truck could be.
Q: The 6 Series just recently became available to U.S. customers. How has it been received?
A: We are very happy with the reception to it. We will have a higher demand than supply for some time to come. We are keen to try to build some more because the demand is higher than expected.
Q: A moment ago you mentioned the importance of introducing new technology. What accomplishments in that area stand out in BMW's newest vehicles?
A: The X3 has the new full-time all-wheel drive system, xDrive, and the 6 Series uses lightweight materials, such as aluminum and plastics. Then there is technology like Active Roll Stabilization and Active Steering.
Q: Other automakers currently offer diesel-powered versions of their vehicles here, or will soon. What are the plans for BMW to offer a diesel-powered vehicle in the U.S.?
A: We have some excellent high-performance diesel engines in Europe; in some cases they are 50 percent of the market. But the financial advantages that exist in Europe (for the consumer) don't exist here. Also, diesel is not as widely available and isn't as high quality in the U.S. This does not fit the image of the ultimate driving machine. We do believe that diesels are positive from a pollution point of view and in the end we believe that advances in diesel technology will help with pollution controls, but we will only bring it when the time is right.
Q: I know that BMW has been working on hydrogen-powered vehicles for a while. Will you bring a hybrid or alternative-fueled vehicle to market?
A: The cost and weight issue with hybrids is still not fully understood, but we continue to monitor the business case. We feel that hydrogen is the solution in the end and we will make a hydrogen-fueled internal combustion engine vehicle.
Q: You have hydrogen technology in a small fleet of 7 Series sedans now. We will see this in volume and, if so, when?
A: Yes, it will come in the current generation of the vehicle. Clearly there are a lot of external factors for this to happen, such as fueling stations.
Q: BMW is projecting an increase in sales over its 2003 numbers, yet the exchange rate between the dollar and the Euro isn't as strong as it's been in the past. Won't this make finances more of a challenge?
A: It doesn't have a major effect on our business. We are such a global company, with factories all over the world that we can offset those numbers by changing the mix of where cars are built to some extent. At an immediate operational level, we are careful with our costs and do what we can to make it work best for our business.
Q: There have been some changes recently to your used car program. Now dealers have the ability to certify a pre-owned car for a second or possibly even a third time before the mileage gets too high. What is the benefit to consumers who might be interested in purchasing a certified pre-owned BMW?
A: Historically, the image of a used car was that it wasn't the best. By having a certification program, where the vehicles are properly vetted and warranteed, the consumer gets the reassurance that the quality is upheld. Now, we have the confidence in extending that to cover a wider offering of vehicles because we are sure that the quality will remain high.
Q: Some dealers have expressed concern over bringing the 1 Series to the U.S. They are worried that it will degrade the brand as a luxury automaker and make it more challenging to sell higher-end models. What is your response to this?
A: Every time you stretch the brand it causes concern and rightfully so. The same expression was given to me when I started at BMW 19 years ago when we were introducing the second generation of the 7 Series. People said, "Won't that detract from selling the 3 Series?" Look where we are now. The reason that people might express concern (over the 1 Series) in the U.S. is really a concern that we're introducing a car that doesn't fulfill the expectation of the brand.
Q: So how will you ensure that a BMW 1 Series fills the brand expectations when it arrives in the U.S. in late 2005 or 2006?
A: At this point, we don't know what we'll bring, except that it won't be the five-door hatchback we'll have in Europe. Americans are used to a certain feel of power and torque and we will not bring any vehicle here that is not the ultimate driving machine in Americans' view. Any car that we bring here under the 1 Series banner would have to be of that ilk in order for us to bring it.
Q: With regard to future products, I've heard that there is discussion of a luxury coupe. Any chance that we might see a successor to the Z8?
A: The Z8 was a millennium car and we've got no plans to build another high-end coupe. We've already got a lot to do with our other cars at the moment.
Q: There's been talk of some minivan-like and pickup concepts floating around BMW. Are we likely to see BMW enter these segments in the future?
A: We are exploring lots of ideas. We are not above anything that relates to our brand. We would build a pickup, for example, if we could make it a BMW pickup, meaning an ultimate driving machine, and only if there is a market opportunity that makes it logical. We are not in the process of building boring products. |
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