BMW North America’s President Outlines Fleet & Product Strategies
The BMW i8 concept, part of the company's new i sub-brand.
By Mike Antich and Chris Wolski
TORRANCE, CA - BMW North America President Jim O’Donnell took the helm of the company during the earliest and darkest days of the economic downturn in 2008. In the years that followed, O’Donnell successfully built market share, and has overseen the launch of innovative programs and initiatives, such as the company’s Executive Preference Program, safety initiatives, and the expansion of U.S. manufacturing operations.
Jim O'Donnell, the outgoing president of BMW North America.
As he prepares to step down as BMW North America president, O’Donnell had a wide-ranging discussion with Automotive Fleet Editor Mike Antich, answering questions about the company’s fleet strategy, future product introductions for BMW and Mini brands, and the forthcoming launch of the “i” sub-brand — the i3 all-electric and i8 plug-in electric hybrid.
Automotive Fleet: Why did BMW North America launch the Executive Preference Program for its BMW and Mini brands of products?
Jim O’Donnell: The question should be: Why did it take us so long to launch the program? In Europe, BMW has been in the corporate sales business for years. My own background included working as the leasing and rental sales manager for BMW in Britain selling 80,000 cars in the 1980s. So, the fleet business is in my genes — it’s in my DNA. While I was with BMW UK, corporate fleet sales accounted for approximately 50 percent of our business.
Coming to North America and seeing that we’re not involved in fleet was a bit of a surprise. We had big corporations, based in the U.S., who had a corporate sales program with us in Germany and the UK, but there was nothing for them in the U.S. It was a bit of an anomaly. We looked at what the competition is doing — Mercedes-Benz and Audi — and we felt we had to be in the fleet market. Now that we’ve entered the fleet market, there’s no turning back.
In addition, we have a dedicated sales team in place with fleet experience, which we’ve never had before.
AF: What are your expectations for the Executive Preference Program? How many units do you anticipate selling?
O’Donnell: I’d like to grow it. I don’t see any reason why we shouldn’t hit the target of selling up to 5,000 cars per year over the next few years.
We’re also expanding our product line; we’re going into new niches, so from the bottom up, we are expanding. I think it’s natural to move into fleet sales. But, we’ll only do it on the basis that it’s profitable for us, and it makes sense. Our fleet sales will be done in a very controlled way, because we don’t want to damage the brands’ residual values, which is one of our strengths.
AF: What is your forecast of 2012 model-year sales, specifically for BMW North America and broadly for the industry as a whole?
O’Donnell: I’ll look at 2011 calendar-year rather than model-year because that’s how we operate our budget. I believe the entire market will come in around 12.5 million units, which is at the lower end of some forecasts, but it does take into consideration some of the setbacks that everyone’s experienced because of the Japanese supply disruption, resulting from last March’s massive earthquake and tsunami.
From BMW’s point of view, we grew between 10 and 15 percent, which is in line with the U.S. marketplace. Our mission is to be slightly better than the market. We’ve got new products that have been very well received, and we’ve got more to come at the back end of the year. We’re forecasting somewhere between 240,000 and 250,000 cars for BMW.
Mini is experiencing a supply availability issue. Originally, I would’ve felt we could’ve sold 60,000. But if the equipment constraint continues, which at the moment is on the automatic transmissions, we might not reach that goal for Mini. Despite this, it will be a record year for Mini.
AF: Calendar-year 2012 will be a big year for BMW with 60 percent of your products being new. Could you provide a glimpse of what we can expect next year?
O’Donnell: Our big launch next year will be the new 3-Series. The 3-Series is our most important model in the U.S., and it will be the start of another generation of 3-Series, so that’s why we are excited about 2012.
Plus, we’ll have good availability for the first time for the new year with the 5-Series. The 528xi comes out in October, and that’s a big car for us. It is going to give us a huge sales boost. On the other side of the line, we’ve got the M5 coming out and that’s always been a halo car. We’re moving from a V-10 to a V-8. The new M5 will be 25 percent more fuel efficient than the current M5.
AF: What is BMW’s e-Mobility product strategy?
O’Donnell: We started with the MINI-E. It was a two-door uncompromised offering, which proved that range anxiety wasn’t such a big issue. Also, it taught us several good lessons that we learned going with the ActiveE, which is based on the 1-Series Coupe and will come out in late 2011. One thing about the ActiveE, we’re expanding the market worldwide, but also it will have the same underpinnings that will go into the i3. So we’ll get some real-life experiences of how that works before we actually launch the i3 in 2013.
AF: Could you elaborate further on BMW’s ‘i’ Sub-brand?
O’Donnell: The “i” sub-brand will be the first in the market that will be designed from the tires upward as an electric vehicle. It will also use lightweight material. It will command the same position in the market as the Toyota Prius does in the hybrid market. Since 2005, the Prius has been — in terms of sales — 50 percent of the total hybrid market. In 2005, there were only five different hybrid offerings. Today there are more than 20 different hybrid offerings, and Prius still has 50 percent of the hybrid market. One of the reasons Prius has been so successful is its unique look. We’re going to bring in a unique car that is designed as an electric. We will create the “Prius” of the electric car market with the i3. It has an iconic look, with a very eye-catching interior and exterior. It’s going to set new standards.
AF: Will there be other ‘i’ sub-brand products following it?
O’Donnell: There’s going to be the i8, which will be the BMW Vision EfficientDynamics concept vehicle that was shown at the Frankfurt Auto Show in 2008. It will be a stunning car.
AF: Can you elaborate on BMW’s ‘Don’t Text and Drive’ campaign?
O’Donnell: Connectivity within the car is fine as long as you aren’t taking your eyes off the road. We’re all concerned about drivers bringing external gadgets in the car who then proceed to text message while driving.
If you look at the statistics alone, this is a big social issue that we need to address right now. In the second half of 2010, there were one trillion text messages sent. If you go back to the year 2000, there were only 124 million text messages sent. This is just an explosion.
Approximately 5,500 people were killed due to distracted drivers in 2009. These are the most recent figures available. Distracted driving is going to be a bigger social problem than drunk driving. This is why we launched the “Don’t Text and Drive” campaign to make people aware of the dangers.
In the next section, Automotive Fleet provides more background on BMW's new Executive Preference Program and other major changes at BMW North America, including information about the company's incoming president.