The fleet strategy of BMW North America has focused on increasing the placement of BMW and MINI models on sales fleet selectors, expanding its penetration into management-level executive fleets, and to aggressively push deeper into the driver reimbursement/allowance market since it entered the U.S. fleet market five years ago. In the longer term, BMW wants to increase its sales to become the luxury brand fleet leader with a reputation as an OEM with whom it is easy to do fleet business.
To learn more about how BMW will achieve this fleet sales strategy in the U.S., Automotive Fleet interviewed Clem Ciufo, corporate sales manager for BMW North America and MINI USA. Here’s what he told us.
AF: What message would you like to convey to fleet managers about yourself and your philosophy toward fleet sales?
Ciufo: BMW Group has been doing fleet business for decades and is a global fleet provider with operations in almost every country.
We entered the U.S. market five years ago and have built a team (both in terms of fleet experience and operations support) and feel we understand both the needs of the marketplace and the opportunities available to a luxury brand manufacturer. I think more importantly, we are committed to significantly growing our business and enabling the necessary systems and processes to accomplish this. Our philosophy is to leverage the BMW brand, which has a compelling TCO (total cost of ownership) and offers clients the opportunity to create a sense of excitement and reward among their fleet drivers.
AF: What is BMW North America’s fleet strategy for the U.S. market? What are your short- and long-term goals to grow commercial fleet sales for BMW?
Ciufo: Our primary focus will be strong growth in the sales selector channel. We feel there is a great fit between our products and fleet capabilities and the needs of this channel. We are working with several of the fleet management companies to refine our capabilities around the critical processes of ordering, order status updates, and the delivery process. We have had some early success with sales fleets and see great opportunities to continue to expand our presence. We also have a strong presence in the reimbursement/allowance market channel and will continue to support that. In the longer term, we strive to be the luxury brand fleet leader and to be viewed as a manufacturer that is easy to do business with.
AF: How does fleet fit into the BMW brand strategy?
Ciufo: A strong and aggressive fleet approach in the U.S. is certainly in line with our global capabilities.
The BMW brand is recognized for excitement and being the new player in the U.S. fleet luxury brand segment. As we look at the needs of the fleet buyer, we believe BMW offers strong value through good TCOs, safety, and using fleet to create excitement with critical sales professionals. The impact our brand can have on attracting and retaining key personnel is an important reason sales fleets select BMW today. We have seen success already with the 3 Series, 5 Series, X1, and X3 products. To date we have seen a small, but growing interest in our electric and plug-in hybrid products.
AF: Which segments of the fleet market is BMW targeting?
Ciufo: While we have not limited ourselves to any specific segments or industries, we do understand that some industries are more accepting of a luxury brand selection that meets their selector criteria.
We have had success at the upper levels of vehicle selectors and will have much more focus around some of the mid-tier vehicle selectors. We feel there are segments of the industry that have a growing interest in the electric and plug-in hybrid vehicle.
AF: What is your assessment of the current fleet market?
Ciufo: We see a strong and stable fleet market. Our business across all our fleet market channels has seen strong growth. As BMW is fairly new to the fleet opportunity, we see a growth opportunity for us in the sales channel marketplace.
AF: BMW is a trusted name in automobile market. How are you leveraging that brand image to expand your share of the commercial fleet market?
Ciufo: We really feel comfortable in our current position. As the newest entrant to the market of the luxury brand manufactures, we provide a fresh and exciting option. We see the sales selector channel for BMW and MINI with strong sales growth for the next five to 10 years.
AF: What are the strengths of BMW in the commercial fleet market?
Ciufo: A great and exciting product that supports reward and attraction. As a top global brand, the opportunity for true global partnerships, allowing clients to leverage their global fleet volume and create global fleet standardization. We have great exposure to the marketplace as a result of our success with the higher level executive.
We have a good, experienced team that enjoys strong relationships in the industry and understand the necessary sales process. Just as important is the support of both our global and U.S. leadership towards a top-notch fleet capability.
AF: What areas of your fleet operations are you looking to enhance?
Ciufo: We currently process direct orders, provide status, and an effective delivery process for fleet buyers. We are looking for near-term enhancements to these key processes to continue supporting our clients’ needs.
AF: As an industry-wide issue affecting all OEMs, what is BMW doing to make its dealers more fleet-minded in terms of fleet maintenance turnaround times and fleet driver satisfaction during the courtesy deliveries process?
Ciufo: Before we decided that we could fully pursue the sales channel, we needed to spend a significant amount of time around dealer engagement.
We understood from our fleet customers that they experienced challenges with luxury brand deliveries, such as allocation issues, bad experiences with deliveries, etc. For the past three years we have been heavily engaged in a dealer strategy that works toward program understanding and the necessity of an outstanding delivery experience. We knew that we could do everything right, but the moment of truth would be when the sales or executive person picked up his or her new vehicle. The delivery experience has to be right or the rest or the process doesn’t matter. On that note, we have had very encouraging feedback from our fleet customers. We are currently working on dealer certifications for our preferred fleet dealers. These dealers will agree to dealer standards that address the delivery experience, timeliness of fleet documentation, and ongoing maintenance of those vehicles. As an example, these dealers would provide pick up and drop off for routine maintenance needs.
AF: What segment of the BMW product portfolio do you see having the greatest growth potential in the fleet market?
Ciufo: Our results indicate the strongest fleet products are the 3 Series, 5 Series, the X1, and X3. We have noted an increase in discussions and interest in a hybrid or all-electric product in certain situations.
MINI has also seen much stronger fleet interest this past year.
AF: What is BMW’s electric vehicle strategy and how do you plan to grow this segment share in the fleet market?
Ciufo: Since the market launch of BMW i three years ago, 100,000 electrified BMWs are on the road today worldwide. BMW has embraced electrification and is continuing to expand it through the lineup.
Harald Krueger, chairman of the board of management of BMW AG, has already announced some future electric models such as:
- The BMW i8 Roadster from 2018.
- A fully-electric BMW X3 from 2020.
- A fully-electric BMW iNEXT from 2021.
- BMW i technologies, such as li-ion batteries, PHEV and eDrive, have been successfully transferred to our BMW iPerformance models (PHEVs).
Currently available in the US, BMW of North America features three iPerformance vehicles:
- BMW X5 xDrive iPerformance.
- BMW 330e iPerformance.
- BMW 740e xDrive iPerformance.
- BMW 530e and 530e xDrive iPerformance (available in 2017).
- MINI Countryman PHEV (available in 2017).
As fleet users continue to adopt the use of electric and plug-in hybrid vehicles, we expect increasing demand for these vehicles with our fleet partners.
Regulatory changes also benefit fleet electrification. For example, the Massachusetts Senate has passed the legislation H.4282, “An Act promoting electric vehicle adoption” requiring among others that 25% of the state government’s fleet purchases of motor vehicles be electric by 2025.
AF: What is the fleet marketing strategy for the MINI brand?
Ciufo: MINI is a high recognition brand and we have found that companies with strong brands like to leverage that with the MINI. The MINI has a broad product range with the MINI Clubman offering a surprisingly large cargo capacity. Our specific strategy is simply that the MINI brand broadens the product lineup for us with all customers.