BMW forgoes glamour at Geneva as it prepares for revolution

The BMW innovations on display at the Geneva motor show include an estate version of the new 5-Series and the current 4-Series coupé with an upgraded interior. It's hardly the stuff to make a car lover swoon.

Yet the emphasis on its popular models instead of splashy new vehicles underscores the strategy of boss Harald Krueger, who's focusing on generating cash instead of buzz as the luxury carmaker gears up for the costly shift to electric and self-driving cars.

“We’re transforming BMW from a carmaker into a tech company and a mobility-service provider,” Krueger said. “During this transformation, there’s one constant factor: a rigorous focus on what helps our customers and what they desire.”

His low-key approach contrasts with that of his predecessor, Norbert Reithofer, who pushed the Munich-based carmaker into pioneering the i3 and i8 electric cars earlier this decade, only to see demand disappoint. It's also at odds with BMW's bigger German competitors, Volkswagen Group and Mercedes-Benz, which have both rolled out aggressive plans for developing battery-powered models.

Extended lull

BMW’s missing wow factor at the Geneva show, often a venue for showcasing the glitziest cars, such as Mercedes rolling out an ultra-luxury SUV, extends a lull for the German premium car giant. The flagship 7-Series saloon spurred tepid demand after its 2015 redesign, while a revamped 5-Series, recently arrived in Irish showrooms, is hardly distinguishable from its predecessor.

BMW seemed much more aggressive as recently as 2014, when it rolled out the futuristic i8. The two-seater sports car combined a 3-cylinder gasoline engine with plug-in hybrid technology in a lightweight body made of carbon fibre.

All carmakers are currently facing the pressure to invest in expensive new technologies with a questionable payoff.

Consumers have so far balked at battery-powered models because of costs and charging concerns, and it’s unclear whether customers will pay for automated-driving and connected-car features.

While electric-vehicle deliveries are set to increase, they’re likely to remain a small fraction of overall demand for years to come. IHS Automotive forecasts that by 2025 sales of battery-powered and plug-in hybrid vehicles will account for about 8 per cent of the current car market.

Krueger, who took over in 2015, likes to say that making electric cars is a marathon, not a sprint. He paused plans to add more costly “i” cars until 2021, when BMW is set to unveil the electric and self-driving iNext. A suite of automated models are set to follow, he said. In the meantime, the focus is on adding electric variants of mainstays like a battery-powered Mini and BMW X3 SUV.

“In future, we’re betting on maximum flexibility and scalability so as to bring electric mobility to a new and unprecedented level,” said Krueger.

Boot camp

To explain his strategy internally, the CEO had a temporary building roughly as big as seven basketball courts erected in Maisach, the site of an old airport and now a BMW driving academy near Munich.

Over a three-month period through March, the company will funnel some 14,000 managers through workshops where engineers explain electric powertrains and software specialists demonstrate new services in connected cars. The last time BMW summoned its leadership for such a boot camp was in 2008, after green-lighting a number of initiatives including the project that created the innovative i3 electric-powered city car.

“BMW’s decision to go for a gradual approach feels like the safer one in terms of investment outlay,” said Hendrikse. “There’s no evidence to suggest people need a special-looking electric car and won’t buy a 3-Series with a good battery range.”

– Bloomberg