BMW Group’s retail community in Europe will endure main modifications within the subsequent few years because the automaker introduces a direct-sales company mannequin, below which the producer invoices clients straight and dealerships obtain a set price for the sale. The automaker’s gross sales and advertising and marketing boss Pieter Nota defined how the company strategy will work in an interview with Automobilwoche reporter Lennart Wermke.

A few of your rivals within the premium phase are planning to introduce company fashions to promote their automobiles or have already accomplished so. A couple of months in the past, you additionally offered plans to this impact.  Why?

Direct gross sales with brokers as gross sales representatives in Europe is a logical step for us. We are going to begin with the Mini model in Europe in 2024 and introduce an company mannequin for all BMW automobiles in 2026. However I want to emphasize one factor upfront …

What’s that?
The company mannequin is usually misunderstood. We won’t bypass sellers in taking this step. It is going to be a triad that advantages all three events concerned within the course of of shopping for a car.

What do you take into consideration particularly?
We are going to enhance the shopper expertise and supply a pretty enterprise mannequin for our brokers, and on the similar time acquire direct entry to the shopper. These are the three most vital facets in our plans.

Do you need to obtain that with a real company mannequin?
Completely. Once we go down this path, will probably be all the way in which. It is going to be a real company mannequin.

Why is that this step obligatory now?
Our buyer continuously experiences a swap between an offline and a web based world. The client begins wanting on-line, configures a car with us, after which needs to try the chosen mannequin on the dealership. That is at the moment making a systemic break, which we need to remove. Our net actions and the vendor techniques usually are not but linked. Sooner or later, we’ll introduce a uniform IT system.

So the shopper advantages. How does the vendor profit?
After intensive discussions, now we have developed a fee mannequin that takes into consideration the profitability of our sellers in recent times. On this approach, we will be sure that this profitability can also be maintained within the company mannequin sooner or later. You’ll be able to make sure that this would be the case.

What quantity of fee are we speaking about?
I used to be anticipating this query, however I’m afraid I cannot reply it. That is still confidential between us and our sellers.

Mercedes-Benz has agreed a fee of 6.5 p.c initially with its sellers and 6 p.c later. Do you suppose that’s truthful?
I’ll definitely not touch upon our rivals. It’s between us and the brokers, who’re in spite of everything our enterprise companions. This partnership strategy is the BMW approach.

How troublesome had been the discussions along with your sellers on this matter?
It helped us that we started discussions very early on and had been in talks since March. Our sellers had been concerned in your complete course of improvement. On account of this, now we have skilled a substantial amount of help for our plans. Lots of our sellers will affirm this!

The place do you see the largest issues in the beginning of the company mannequin?

Once we launch at Mini on January 1, 2024, Mini shall be fully prepared. Mini isn’t a guinea pig for something that we might then do higher at BMW two years later. All issues thought-about, we’re already very far alongside by way of IT improvement and the brand new constructions. From our standpoint, nonetheless, it nonetheless makes extra sense to begin with Mini after which convert the BMW model. That is why we’re taking our time, in order that we will then go into the start-up part in levels.

Will all nations begin on the similar time on January 1, 2024?

There shall be three waves. Germany’s flip will come within the first half of the 12 months. I can not say now how issues shall be at BMW in 2026.

Would the company even be conceivable for the U.S. sooner or later?

No, positively not. That might not be appropriate with the final circumstances within the U.S.

Your competitor Audi, like different manufacturers within the Volkswagen Group, initially will solely promote its electrical automobiles with an company mannequin. Why are you doing issues in a different way?

I believe this can be very vital to solely introduce an company mannequin with your complete car portfolio. The rest won’t work for my part, since you then begin competing inside your personal mannequin vary.

What do you imply?

If we introduce an company mannequin for our electrical autos solely and a buyer involves considered one of our dealerships as a result of he/she needs to purchase an i4, then below such an strategy it might occur that he/she leaves the dealership with a 4-series coupe. What I’m saying is that we are not looking for our clients to be pushed in any route on the dealership simply because the dealership has one other car in inventory. That’s the reason I believe such a step is basically unsuitable. There shall be no such separation with us.

Is that this a lesson discovered from the company mannequin in your electrified automobiles that you simply launched in 2013 and dropped by 2018?

The mannequin labored effectively in itself for the i3 and i8. In truth, the explanation we folded it again in anyway was due to the competitors with the traditional gross sales system. At BMW, the shopper and his or her wants are within the foreground, not what the vendor at the moment has on provide. The changeover now impacts your complete model. That’s totally different. And that’s the reason it can work.

Stellantis CEO Carlos Tavares needs to chop distribution prices at his manufacturers by 40 p.c by 2030. Do you additionally see potential financial savings within the company mannequin?

For us, the company mannequin isn’t a cost-cutting program. After all, new efficiencies will consequence from a extra data-driven administration of our gross sales. We shall be completely satisfied to take that on board. However we’re taking this step to enhance the shopper expertise and the model expertise. Sooner or later, the shopper will get the identical provide and the identical costs in all places. That’s extraordinarily vital for us as a premium model. We are not looking for the shopper to really feel that they’re being quoted a distinct value in all places.

However providing the identical costs in all places will also be a danger. For instance, a automobile is promoting effectively in an space similar to Tegernsee in southern Germany may cause demand to break down in different areas of the nation if retailers don’t have any scope for reductions. Do you settle for a lack of gross sales right here?

No, completely not. We have now a really clear development technique at BMW, and we’re additionally gaining market share worldwide. In 2021, BMW was as soon as once more No. 1 within the world premium phase, and we need to stay in that spot. There are nonetheless alternatives to reply with costs, even within the company mannequin. Simply maybe not as domestically as is at the moment the case. Even the pricing right this moment might definitely not be excellent in all places, however within the new mannequin there’ll a minimum of be uniform costs.

However then you definately would possibly lose a buyer to Mercedes or Audi due to 500 euros…

I don’t see that taking place. We at all times have methods of reacting, for instance by our younger used automobiles. There are prospects that now we have now and can proceed to have.

Many automakers are utilizing the swap to company gross sales to skinny out their vendor community. Are you contemplating this?

There have at all times been and can at all times be community changes, whatever the company mannequin. We have a look at efficiency initially. However there can also be modifications on account of succession in household companies or as a result of a associate needs to develop and add companies. Our clients will at all times discover a BMW or Mini vendor close to them. That’s our aggressive benefit over newcomers to the market who would not have a vendor community. They’re scratching their heads and pondering how they will provide their clients correct service. There are rivals the place you as a buyer can not get anybody on the cellphone or must drive for hours to the closest location. That won’t occur at BMW.

Allow us to stick with service: Business insiders report that BMW is contemplating increasing the company mannequin to incorporate aftersales, particularly elements gross sales. Are you able to affirm this? Many sellers generate margins of round 20 p.c right here. It is apparent that BMW can earn extra right here.
No, we aren’t doing that. Components distribution, like the remainder of aftersales, stays outdoors the company mannequin.

What about almost new or “younger” used automobiles?
Younger used automobiles are a part of the company mannequin. As a producer, we additionally need to give clients the chance to purchase a younger used automobile straight from us.

The place do you draw the road at which automobiles stop to be almost new used automobiles?

There isn’t any fastened cut-off level, as it’s important to consider age and mileage. Most younger used automobiles are between 6 and 12 months, most 18 months. All different used automobiles stay unaffected by the company gross sales mannequin and can proceed to be the unique enterprise of sellers.

The authorized hurdles for a real company mannequin are daunting. They need to cowl all of the vendor’s entrepreneurial dangers, similar to investments in showrooms. On the similar time, BMW should pay a price for the agent’s brokerage companies. It should be very clear how a lot shall be paid and what’s going to qualify for funds. How will you implement this?

We pay the dealership a fee for each car that’s offered. This is applicable each to the automobile {that a} common buyer buys at his vendor and to autos that clients purchase totally on-line. On this case, they’ve to decide on an agent to ship the car. There shall be a fee in each circumstances. On this approach, we need to be sure that there is no such thing as a competitors between on-line and offline and that solely the shopper’s needs depend. Within the years the place this mannequin isn’t sufficient, we’ll step in and compensate the brokers’ losses to some extent. However what’s a minimum of as vital for retailers is that we as a model and a bunch are future-proof and have the very best product portfolio within the trade. Really, we’re taking over a few of the sellers’ danger. We due to this fact must make sure that we will generate development and enterprise for our brokers.

So you’ll use the fee to deal with each the remuneration for the brokers’ brokerage actions and the idea of their entrepreneurial dangers?

That is precisely how it’s. That’s all included within the fee.

This 12 months, BMW offered a brand new retail idea. Ought to this be seen towards the background of the company mannequin?
Showrooms are altering not a lot due to the company mannequin, however as a result of the digitization of the shopper course of requires it. Dealerships, for instance, provide quite a few digital instruments in order that clients can begin their configuration at residence and seamlessly proceed it later on the dealership. The salesperson can then digitally reveal each conceivable tools variant in razor-sharp element.

Because of digital instruments, will you then additionally want fewer automobiles within the showrooms?

There shall be extra session by way of digital instruments. The variety of autos within the shops might due to this fact be decrease, however it would not essentially must be — it will depend on the particular native scenario. Rumors that there might solely be X variety of autos in shops are false.

With the company mannequin, BMW takes over most of the sellers’ duties, similar to scheduling, advertising and marketing and pricing. Will you add workers for this?

After all  this can even be mirrored on the personnel aspect after we tackle the duties. However there won’t be a major enhance. We have now a variety of massive subsidiaries that may deal with these duties. 

Conversely, will the sellers have to chop workers?
That is one thing the sellers resolve for themselves as unbiased entrepreneurs. Some workers will definitely have the ability to tackle new duties because of additional coaching. However I do not anticipate workers reductions, particularly in gross sales. On-site consulting will stay vital sooner or later.

At your rivals Volkswagen and Mercedes Austria, prices haven’t fallen as promised to sellers following the introduction of the company mannequin. Are you able to give a assure that this shall be totally different for you?

I’m very assured that our plans will work out. As I mentioned, we’re largely in settlement with our sellers. Which processes will change and the way, and what staffing ranges shall be required shall be outlined intimately. That’s the reason this intensive preparatory interval with the retailers was and is so vital.

You’ll definitely keep away from the start-up difficulties that Mercedes had in Austria. Was that one purpose why you took your time, a minimum of with BMW?
We at all times put together our homework very effectively. We take sufficient time to keep away from one thing like this. It’ll work for us.