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      06-22-2021, 04:21 AM   #1
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Interview with BMW CEO Oliver Zipse about future direction

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A really good interview with Oliver Zipse discussing a new device to be launched in July, the future engine strategy, the future of dealerships and plant locations.

Note the article is in German and you need to subscribe to read it all, however I have quoted it below:



We are standing here at a device that I am not yet allowed to write about. Why?
Oliver Zipse: Because it won't be presented to the world until the beginning of July.

If I am not allowed to write anything about it, then at least you can tell what it is about. So?
Zipse : I can reveal this much: It's our new electric star for the city. Because BMW Motorrad will be relying fully on e-mobility in the urban environment in the future. In the background are the BMW iX and the BMW i4, our two newest fully electric vehicles. The godparents, so to speak, for this new concept, with which we primarily want to address a young target group for whom the brand, design and technology promises are important.

You get the feeling that electronics are the new big thing at BMW. You were a pioneer in 2013 with the i3 and i8. However, without topping up.
Zipse : We were actually very early, which was quite brave. Even back then, we recognized the potential that e-mobility had and made a long-term decision - namely, to take a path that was as consistent as it was demanding: We didn't want to split into a division for combustion engines and a division for e-cars, we wanted to Enabling all of our segments and plants for electrification. For this it was necessary to build and scale the corresponding architectures.

As a result, we are today, among other things, the largest manufacturer of plug-in hybrid vehicles worldwide, and not just in the premium segment. On the outside, it may have seemed like we were slowing down with electromobility, but the opposite was the case. Therefore, now that the market is ready, there is a veritable fireworks display of e-cars from BMW.

A few years ago BMW was also on the road with a couple of hydrogen cars, but they disappeared without a sound. Now try your hand at hydrogen again. How come
Zipse : Something has changed both technologically and politically: in the mid-1990s, we operated internal combustion engines with hydrogen - which was not particularly energy-efficient. In the meantime, with the help of fuel cells, electricity is generated from hydrogen, which drives the vehicle electrically. In addition, because of the CO 2- Legislation is becoming increasingly important for the entire industry: From coal replacement in steel production to those areas of transport that otherwise have no possibility of electrification - for example in heavy goods traffic, air traffic or shipping. We are currently starting everyday testing of our new generation of technology and will be launching a small series based on the BMW X5 at the end of 2022.

For many customers, however, BMW is not a hum, but a rattle. What future does the combustion engine still have at BMW?
Zipse : Whether diesel, gasoline or hybrid - every type of drive has its fans and critics. Even the purely battery-electric drive has been criticized - if it does not only consume sustainably produced electricity. As a company, we must not allow such isolated criticism to deter us in our long-term economic decisions. We still deliver around half a million diesel vehicles because they are still the best solution for many customers today - including when it comes to CO 2 reduction: a modern diesel is more climate-friendly than an electric vehicle that is charged with coal-fired electricity.

BMW says of itself that it is open to technology. Doesn't it mean that you just don't want to make a decision?
Zipse: The real decision-makers in our industry are the customers. And you should never lose sight of them. A calculation example: Assume that in 2030 half of the vehicles sold will have a purely battery-electric drive - as we are planning for our own sales. If a manufacturer then no longer has any combustion engine offers, then half the market volume is lost and they are on an entrepreneurial downward path. Certainly there will be cities, regions and countries in the next 15 years in which the transformation process to electromobility will take place in full. But in the sum of the 140 markets worldwide that BMW serves, that will not be the case.

Will there be enough electricity for so much electromobility in the future?
Zipse : I assume so - but I am very worried that there will be enough sustainably generated electricity. We have come to a point where we have hot CO 2- Set goals without guaranteeing the appropriate framework conditions. To make this clear at this point: The bottleneck in achieving the target is not what the automobile manufacturers offer - European manufacturers in particular are outdoing themselves with new electric models. But especially with the charging infrastructure for electromobility, you can draw a line - from the northeast to the southwest of our continent. Especially below this line, the charging infrastructure is not developing at the speed that would be necessary to meet the demanding CO 2 targets and to keep pace with the growing range of e-cars.

When things develop, experts speak of revolution. But if no stone is left unturned, then there is talk of disruption. The latter applies to the automotive industry. In the case of BMW, what does this mean for the future of suppliers, workshops and dealers?
Zipse: In fact, a lot is happening in our industry right now: digitization, new technologies and new materials are making their way into the world. The core competence of a car manufacturer is system integration - the art of creating a complete work from a multitude of components from thousands of suppliers that is much more than the sum of its individual parts. And that fulfills a brand promise as well as legal approval requirements. At the moment, many new players want to take part in this - and some have had to realize that the barriers to entry into this industry are higher than expected. At BMW we know how to build and sell highly complex vehicles in the upper market segment. Of course, we need partners for this - also in the future. But of course their world will keep changing just as it changes for BMW. Everyone involved has to be prepared for this.

So in the future online sales instead of BMW dealers?
Zipse : It's not about an "either, or". The stationary trade does a lot more than just getting the signature for a sales contract. This ranges from professional advice to choosing the right financing. We want to sell around a quarter of our vehicles online by 2025 - but not everyone wants to simply order premium products like a BMW online. It is similar with designer fashion brands that continue to present high-quality clothing or handbags in elaborately designed showrooms. At BMW we speak of "phygital" - a combination of words between physical and digital. Retailers will continue to play an important role, but they will have to adjust to a world that will become increasingly digital.

An electric car, for example, does not need an oil change. Are the workshops threatened with an enormous loss of orders?
Zipse : Every year, an average of 15 million customers trust the service of our dealers around the world - they don't just come to the oil change. In the case of a BMW workshop, the core competence of the future will be that the downtime of a BMW for service must be minimal. Large construction machinery manufacturers manage to ensure the supply of spare parts worldwide within 24 hours. These are standards by which we orient ourselves.

And the suppliers?
Zipse : BMW is growing - and most of the added value takes place in our supply chain. In order to participate in this growth, our suppliers have to be adaptive and innovative, they have to invest and keep pace with our international orientation.

And what about the future of Bavaria and especially the Dingolfing location?
Zipse : The production of the electric BMW iX is currently starting in Dingolfing - our technology flagship, for which we see great market potential and which we are deliberately having produced in Dingolfing. Dingolfing is our competence center for electromobility. The next 5 and 7 series with their pure electric versions will also be produced here on the same line. By the middle of the decade, half of the vehicles produced in Dingolfing will be electrified. This makes the location our engine of electrification.

Dingolfing was once the largest location in the BMW universe. Today the plants in Spartanburg in the USA and Shenyang in China produce more vehicles ...
Zipse : In terms of employees, Dingolfing is still our largest plant. Especially since you can't just look at vehicle production: what was once a parts supply center is now the largest BMW location for battery modules and electric drives. The location is growing - I really wouldn't worry about Dingolfing.

But about other locations in Bavaria?
Zipse : No, not about any.

Despite high wage costs in this country?
Zipse: In the end, productivity counts. It is not a problem to produce at a high-wage location if other factors such as flexibility, education, technological progress, innovative strength and agility lead to high productivity and growth. Of course there is always room for improvement. However, I would like to express one point for Germany as a location: The range of regulation is immense, the formalities that are required today to erect an industrial building are enormous. Every single ministry, every department may be right with its respective regulations. But the sum of the regulations can quickly turn into a construct that suffers from productivity. However, prosperity and employment in one location always remain a result of productivity. Productivity decreases,

How afraid are you of the Greens becoming involved in the federal government?
Zipse : It wouldn't be the first time that we have a federal government with the participation of the Greens. Regardless of the ruling parties, it is important to me that the topic of growth regains importance. In other regions of the world growth is of great political importance: in China it is a national goal, and in the USA the current government is trying to stimulate growth comprehensively. I would like us to make this more of an issue - based on our values ​​and with our still outstanding technological possibilities. In the long run, growth is crucial for a society's prosperity. Incidentally, more growth does not mean less sustainability.

BMW has four plants in the UK. Brexit has been in place for six months. Can you already draw a first balance sheet?
Zipse : It was always clear to us that Brexit would not collapse the British or European economies. We are still in a transition phase, but we are already experiencing a significant increase in additional administrative work when it comes to cross-border deliveries. We always warned against this. While this won't automatically change our business model, it does have a certain impact on productivity.

The IAA is coming up in autumn - for the first time in Munich. What will it be - a car show or a political spectacle for the federal election?
Zipse : Visitors can look forward to experiencing the future of mobility up close. And we look forward to an open exchange with you. In a modern society, discourse is important, not the permanent defense of one's own position. The format of the IAA will allow that. And we have very convincing answers.

What will be "BMW's Thing" that you will come up with?
Zipse : We have placed sustainability at the center of our corporate strategy. And for me that goes far beyond reducing CO 2 emissions. I don't want to reveal any details yet, but we will make it very clear at the IAA how holistically we approach the topic of sustainability.

Source: https://www.pnp.de/lokales/landkreis...e-4019772.html
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      06-22-2021, 06:28 AM   #2
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Thanks for posting. Two points I noted:

- BMW is the largest producer of plug in hybrids. Impressive.

- online sales of vehicles are part of BMWs future. Heaven has answered our prayers to be delivered from the evil that is the dealership business model.
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      06-22-2021, 07:26 AM   #3
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Quote:
Originally Posted by chassis View Post
- online sales of vehicles are part of BMWs future. Heaven has answered our prayers to be delivered from the evil that is the dealership business model.
Don't get too excited just yet. Dealerships will still be part of the process, at least in the US (and, I imagine, most everywhere else). Notably, they will still have the ability to control important transaction details such as pricing. I think the biggest change will be a centralized queue for distributing allocations rather than customers "getting in line" at individual dealerships. I believe this is how the i4 launch is being handled, though I admittedly haven't dug very deep on that myself.
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      06-22-2021, 12:33 PM   #4
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Quote:
Originally Posted by mkoesel View Post
Don't get too excited just yet. Dealerships will still be part of the process, at least in the US (and, I imagine, most everywhere else). Notably, they will still have the ability to control important transaction details such as pricing. I think the biggest change will be a centralized queue for distributing allocations rather than customers "getting in line" at individual dealerships. I believe this is how the i4 launch is being handled, though I admittedly haven't dug very deep on that myself.
Franchise laws in the US give dealers immense leverage to push back on a broader change toward online. Even the cars across all brands where a customer "reserves online" still ends up subject to their local area dealer. In my experience franchisees rarely care about long term strategy or "rising tide lifts all boats"

An element that would have to be considered is dealer profit and vehicle pricing… the msrp is designed to allow the dealer some "give" in price while still making appropriate profit. If negotiation comes out of the equation it should in theory lead to relatively lower msrp and more consistent profits at the expense of dealers being able to gouge pigeons…. 9/10 a dealer will vote for the ability to gouge a pigeon over a more consistent model
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      06-22-2021, 03:40 PM   #5
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So according to Zipse:
"The real decision-makers in our industry are the customers. And you should never lose sight of them."

But then in an earlier interview with BMW Head of Design Domagoj Dukec, he said:

"You can see that on something as polarising like the kidneys on the 4 Series, 20 per cent of people are liking it. That fits to the type of customers we are targeting. Not all customers are going for the 4 Series."

So if BMW Chairman Zipse is saying customers are the decision makers and never lose sight of them, then why is the Head of Design only targeting 20% of them thus losing sight of 80%?
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      06-22-2021, 04:08 PM   #6
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Quote:
Originally Posted by Tacoma View Post
So according to Zipse:
"The real decision-makers in our industry are the customers. And you should never lose sight of them."

But then in an earlier interview with BMW Head of Design Domagoj Dukec, he said:

"You can see that on something as polarising like the kidneys on the 4 Series, 20 per cent of people are liking it. That fits to the type of customers we are targeting. Not all customers are going for the 4 Series."

So if BMW Chairman Zipse is saying customers are the decision makers and never lose sight of them, then why is the Head of Design only targeting 20% of them thus losing sight of 80%?
That's not exactly what he said. He said the 4 series appeals to the 20% of people that like the look. He didn't say the 4 series appeals specifically to only 2/10 of 4 series customers.
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      06-24-2021, 11:30 AM   #7
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Good interview, now we know why they open that plan in Mx, Euro regulations weighs heavily on every aspect of the business. It's just easier to do business elsewhere.
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      06-24-2021, 11:30 AM   #8
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Quote:
Originally Posted by Inductive View Post
Need to be careful here on the ambiguity.

Was Dukec trying to say that the market for coupes (vs all vehicle types) is only 20% and by extension, claiming that ALL coupe buyers like the retarded grills?
all threads just need to converge to talking about the new grilles.... and then a comparison to a p-car.

With the talks of electrification I was hoping someone was going to talk about the Taycan first. Obviously their Mottorad offering won't excite too many here, so bring on the Taycan slaying i5 M60.
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      06-24-2021, 11:30 AM   #9
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The new design pushed me on the edge already.
If everything will be electric, I wish BMW all the best in the future!
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      06-24-2021, 11:56 AM   #10
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Just graduated with my business sustainability degree. Awesome.
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      06-24-2021, 12:42 PM   #11
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Quote:
Originally Posted by chassis View Post
(…)

- online sales of vehicles are part of BMW's future. Heaven has answered our prayers to be delivered from the evil that is the dealership business model.

Don't cheer the onset of the online model just yet, especially until we understand the impact this will have on the pricing model. Consider the 'dealer contributions' (a.k.a. discounts). When I shopped for a new, to-be-produced car earlier this year, I was getting anything between 15% (lower spec 5 series) to 22% (7 series). My dad ended up with 18% discount on an X3 (new, custom specced, just got on the ship and it's on its way); I got 36% discount on a 7 series 'demo' (pick up date set for early October)

If such deals remain, I will quickly become a great fan of online; if they're gone, I'll root for the dealerships until the last one of them stands

Also consider that the dealers typically (I agree, not all and not always) do add value to the overall car buying and owning experience. And in time, when you become a returning customer, they do have some extra tricks up their sleeves which you can benefit from - hence strengthening your brand loyalty. For this reason, I expect the dealers to remain in BMW HQ's strategic model; however, I expect lots of tensions on the pricing front (HQ's goal of keeping consistency across channels, to which dealers will oppose fearing dropping volumes)
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      06-24-2021, 07:35 PM   #12
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I like that he said that a diesel car is more efficient than an electric one because of current infrastructure. This is such an important point that many miss - combine nickel mines and even waste disposal from a battery too, not good.

Not that I'm anti-electric car. I just want to see the best technology win for the right reasons.

What about purchasing a car online? Who's paying sticker for a BMW?
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      06-24-2021, 07:46 PM   #13
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Quote:
Originally Posted by unfoundnemo View Post
all threads just need to converge to talking about the new grilles.... and then a comparison to a p-car.

With the talks of electrification I was hoping someone was going to talk about the Taycan first. Obviously their Mottorad offering won't excite too many here, so bring on the Taycan slaying i5 M60.
..if Porsche produces a e911 coupe....
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      06-25-2021, 04:10 AM   #14
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Quote:
Originally Posted by Tacoma View Post
So according to Zipse:
"[COLOR="Sienna"]The real decision-makers in our industry are the customers. And you should never lose sight of them.[/COLOR]"

But then in an earlier interview with BMW Head of Design Domagoj Dukec, he said:

"[COLOR="sienna"]You can see that on something as polarising like the kidneys on the 4 Series, 20 per cent of people are liking it. That fits to the type of customers we are targeting. Not all customers are going for the 4 Series.[/COLOR]"

So if BMW Chairman Zipse is saying customers are the decision makers and never lose sight of them, then why is the Head of Design only targeting 20% of them thus losing sight of 80%?
I think the response to that is they'll have other products they can buy. I didn't want a G80 so I got a F87 CS. BMW still wins.
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      06-25-2021, 05:33 AM   #15
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Maybe I missed it, but any guesses around this new 'product' in the electric sphere that they're introducing in July?

... I really hope BMW isn't entering the OEM smartphone market.
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      06-25-2021, 01:56 PM   #16
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Whatever. Enthusiast cars are dying. The future js appliances.

I understand the shift. I just hate it.
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      06-25-2021, 03:24 PM   #17
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Quote:
Originally Posted by Jimjamz View Post
I think the response to that is they'll have other products they can buy. I didn't want a G80 so I got a F87 CS. BMW still wins.
Or they will leave the brand and check out the competition.
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      06-25-2021, 03:33 PM   #18
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Quote:
Originally Posted by SteveinArizona View Post
Quote:
Originally Posted by Jimjamz View Post
I think the response to that is they'll have other products they can buy. I didn't want a G80 so I got a F87 CS. BMW still wins.
Or they will leave the brand and check out the competition.
It is a risk. I was exiting for Porsche until the M2 CS was released. As long as there's a G87 there's something for the enthusiasts. Stuff that up and there will be a departure. But for now they have the bases well covered.
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      06-25-2021, 06:47 PM   #19
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Quote:
Originally Posted by Jimjamz View Post
It is a risk. I was exiting for Porsche until the M2 CS was released. As long as there's a G87 there's something for the enthusiasts. Stuff that up and there will be a departure. But for now they have the bases well covered.
I agree. the real 2 series is the best of BMW for performance. But BMW won't let persons buying the 2 series get nice things like Nappa upholstery. Why? I. for one, am willing to pay for it (and did on my 530e).
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      06-25-2021, 10:00 PM   #20
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Quote:
Originally Posted by SteveinArizona View Post
Quote:
Originally Posted by Jimjamz View Post
It is a risk. I was exiting for Porsche until the M2 CS was released. As long as there's a G87 there's something for the enthusiasts. Stuff that up and there will be a departure. But for now they have the bases well covered.
I agree. the real 2 series is the best of BMW for performance. But BMW won't let persons buying the 2 series get nice things like Nappa upholstery. Why? I. for one, am willing to pay for it (and did on my 530e).
It is a good point. They should do a Porsche and allow customers to option up if they want. I love the 2 series for its size not its lower price point.
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      06-26-2021, 07:04 AM   #21
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Interesting article - thanks for posting!
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      06-26-2021, 10:02 AM   #22
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Quote:
Originally Posted by MachinesWithSouls View Post
I like that he said that a diesel car is more efficient than an electric one because of current infrastructure. This is such an important point that many miss - combine nickel mines and even waste disposal from a battery too, not good.

Not that I'm anti-electric car. I just want to see the best technology win for the right reasons.

What about purchasing a car online? Who's paying sticker for a BMW?
I’m not sure he was speaking about a cradle to grave scenario. I wonder, if you factor in the energy required for oil extraction, refinement, transport by ship and truck to some other corner of the world etc, would his statement still be true?

It’s not like gasoline or diesel simply sprouts from the pump at the gas station.
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