Since entering the U.S. fleet market in 2011, BMW of North America has focused on the increased placement of BMW and MINI models on sales fleet selectors, expanding its penetration into management-level executive fleets, increasing its appeal as an award vehicle, and expanding its lineup of electrified vehicles to fulfill corporate sustainability requirements.
In charge of implementing this fleet sales strategy is Nick Baderschneider, corporate sales manager for BMW of North America, who manages the corporate fleet business for both the BMW and MINI brands. Originally from Germany, Baderschneider moved to the U.S. and joined BMW in 2017 to develop electric vehicle related initiatives for corporate customers and affinity groups. He transitioned into his current role in July 2019 and works with his team to continue growing BMW’s presence in the U.S. fleet market.
Recently, AF Editor Mike Antich interviewed Baderschneider to learn more about the company’s fleet strategies to increase the fleet market share of its BMW and MINI products.
Here are excerpts from the interview.
AF: What is BMW of North America’s outlook for the commercial fleet market for the balance of calendar-year 2020 and the first half of the 2021 calendar-year?
Baderschneider: The 2020 calendar-year has been a challenging year for our industry and the economy in general. I think we all agree that the simultaneous cutoff of both supply and demand as a result of COVID-19 was unprecedented. We have since seen a recovery that is better than anticipated. Despite the challenges of 2020, we remain cautiously optimistic and believe that we will still see favorable fleet order activity in Q4.
The market outlook for the first six months of 2021 is hard to predict. While our global production network will be able to accommodate fleet orders at pre-crisis levels, we still have a lot of uncertainty in the marketplace that will affect how fleet professionals make decisions. Without a return to “normal” business and travel activity, it is likely that replacements for field force and executive vehicles are further postponed reducing the overall potential in this segment in 2021. However, it is too early to tell, so let’s stay optimistic.
AF: What are BMW’s top selling models in the commercial fleet market? How do you see this evolving in future years?
Baderschneider: As a premium manufacturer serving mostly sales and executive fleets, we see that the model selection for these corporate fleets closely mirrors vehicle trends of the retail side of the business. For example, our compact and mid-sized sports activity vehicles (SAVs) such as the BMW X1 or BMW X3 are in high demand among retail customers and fleets alike. We also still see strong demand for our iconic 3 Series and 5 Series models despite the overall shift in demand to more crossover and SUV models.
We suspect that this trend will continue over the next years; however, with our newly expanded lineup of plug-in hybrid electric vehicles (PHEVs), it’s likely that the popularity of electrified engine variants will increase.
AF: Let me ask a follow-up question about the industry-wide migration away from sedans to crossovers and SUVs. If this is the case, what role will sedans play in future fleet applications?
Baderschneider: We believe that sedans will continue to play an important role in fleet. Corporate fleets with a selector model often offer a range of vehicles not just for economic reasons, but also to satisfy the diverse requests of their drivers. As a result, sedans will still find their way to customers as an alternative for individuals who find them more appealing than a crossover or SUV.
Additionally, sedans may become important as more and more companies incorporate MPG thresholds into their sustainability roadmap. Compared to their SUV counterparts using the exact same engine, sedans usually have both a lower curb weight and better aerodynamics which results in a higher MPG figure. Depending on a company’s MPG targets, sedans may fit better into their sourcing strategy.
AF: What is your strategy to increase and grow BMW’s commercial fleet sales in the coming years?
Baderschneider: Our growth strategy leverages both global BMW Group initiatives, as well as our own U.S. roadmap. For example, BMW Group introduced a concept called “The Power of Choice” meaning that our customers will be able to choose which drivetrain best fits their needs. Whether it is fully electric, hybrid technology, or internal combustion engine – our global production network will gradually be able to produce our vehicles on the same assembly line, independent of the customer’s drivetrain choice. This will provide additional flexibility to our fleet customers and make it easier for them to achieve their diverse sourcing requirements.
We also believe that we made valuable adjustments in our own organization to fully meet our fleet customers’ expectations. We are laser-focused on customer satisfaction, be it toward fleet managers or drivers, leasing companies or FMCs. Whether you purchase one unit or 500 – you matter to us. This approach will certainly support our growth strategy. In fact, I feel so strongly about this aspect that I invite everyone to reach out to me and share their feedback about our service.
We are just a phone call away and ready to assist you in any way we can. While we have an excellent dealer network, the direct line to the corporate fleet team adds an additional layer of support and simplifies the way corporate fleets do business with us.
We are also making investments to improve our ordering capabilities. For example, we are implementing a new ordering system to enhance how our FMC partners place orders for BMWs and MINIs.
Additionally, we introduced new processes to make it even easier for our dealers to serve fleet customers. This even includes a dealer program for small business fleets.
At the same time, we continue to fine-tune fleet delivery standards with our dealer partners to guarantee an excellent and efficient experience for all fleet customers. Equipping our dealer network with the right tools to best serve our customers has always been a focus for us and continues to set us apart from our competitors.
AF: How does fleet fit into the overall BMW brand strategy?
Baderschneider: I think it fits perfectly in our brand strategy. One of our guiding statements is to offer inspiring premium products for individual mobility. This applies to fleet clients as much as retail customers. In the end, our company’s entire efforts are geared at creating the best mobility experience for the person sitting in our car – whether it’s a company car driver or private customer does not matter.
Our global participation in the fleet business for many years attests to this. BMW Group is a strong partner for the global fleet community and sees fleet as an integral part of the business. We are committed to continuing on this path forward.
AF: How does the MINI brand fit in BMW of North America’s commercial fleet sales strategy?
Baderschneider: We want to offer our fleet customers the widest possible range of vehicles and MINI helps us accomplish this. MINI vehicles are an emotional product and an attractive alternative for fleet clients in search of a distinctive looking car. At the same time, these cars have made an impressive evolution and are more versatile than ever. This obviously supports the use case for MINIs in fleet. For example, there are customers that use MINIs for a unique delivery service model, as fun sales reward vehicles or to underline their own outgoing brand message.
AF: Are there specific fleet industry segments that tend to gravitate toward BMW and MINI products to use in their fleet operations?
Baderschneider: Our models are very popular in executive and management fleets as well as field sales fleets. We also see interest for BMW and MINI product as award vehicles rewarding exceptional professional performance. Besides that, our vehicles find application in certain government fleets. Service fleets usually focus on other brands. At conferences or trade shows, we are sometimes (jokingly) asked when we will come out with a van or pickup truck to enter the service fleet world, but, so far, we had to disappoint them.
AF: What is BMW’s strategy to expand its market shares in the plug-in hybrid and EV vehicle segments in the commercial fleet market?
Baderschneider: We believe that electrified vehicles are still considered a niche product specifically in the fleet industry, but they don’t have to be. A lot has to do with creating awareness of these vehicles and a better understanding of how they work. We acknowledge this current challenge, an example being to offer complimentary demos of our electrified vehicles to FMCs and leasing companies as well as prospects and clients. This gives them the opportunity to familiarize themselves with this technology before committing to it and decide if it fits their companies’ needs and goals.
We also try to help our clients with their EV adoption efforts. While many fleets would like to introduce electrified cars due to their reduced CO2 emissions and improved MPG(e), we also know that a total cost of ownership (TCO) calculation for these vehicles is not as straightforward as for gasoline-powered cars. To help alleviate uncertainty around TCO, we offer our clients assistance when modelling TCO and work with them on a competitive offer that lets them reap the benefits of these vehicles while staying within their TCO bands.
These and other initiatives are of course supported by the continued expansion of our electrified product lineup. For example, did you know that BMW and MINI offer eight electrified vehicles in the U.S. already? Globally, we will have 25 electrified models by 2023. I think this variety of electrified vehicles will set us up very well for continued growth potential in the fleet market.
AF: Could you provide a summary of the current BMW product portfolio that is comprised of PHEVs and EV models and your announced future product plans? What is the status of electrification in the MINI product portfolio?
Baderschneider: As you know, BMW was a leader in premium vehicle electrification with the BMW i3’s inception in 2013. The i3 continues to be our all-electric vehicle option and is available to both retail and corporate fleet customers. In addition to the BMW i3, we have a great portfolio of PHEV products, most of which were launched or reintroduced just this year. For the first time, we can offer a BMW X3 PHEV alongside the BMW 3 Series PHEV and BMW X5 PHEV, which were reintroduced as new model generations with more electric range.
Our BMW 5 Series PHEV that received a lifecycle impulse this year, as well as the BMW 7 Series PHEV which received one in 2019, round out our current PHEV lineup. In total, we now offer five plug-in hybrids, some with both rear-wheel and all-wheel drive configurations.
In addition to these models, we offer a MINI Cooper Countryman SE PHEV and, beginning in 2020, the fully electric MINI Cooper SE.
As mentioned, BMW Group will offer 25 electrified vehicles by 2023, so we have some exciting cars coming. For example, there is the all-electric BMW i4, a mid-size four-door coupe similar to the 4 Series Gran Coupe, and also the BMW iNEXT that will feature not only an electric drivetrain, but also more autonomous driving capabilities. The next couple of years will be very exciting as far as vehicle launches go, so our fleet partners can get ready for “electrifying” news.