FRANKFURT: BMW AG’s new leader comes to this year’s Frankfurt car show carrying some old baggage.
CEO Oliver Zipse takes over at a perilous time for BMW and the car industry. Mounting trade tensions between the US and China have weighed on profit, and the unresolved political future of the UK, where BMW makes Mini and Rolls-Royce cars, adds to the complicated picture.
By equal measure, the shift toward electric cars, a category where BMW was an early leader, puts pressure on the CEO to lay out a clearer strategic vision than his predecessor, Harald Krueger, was able to define in his single term at the helm.
Symbolising the hesitant stance that contributed to Krueger’s departure, BMW presents a model at the show that looks stuck halfway between the past and present: a retooled Mini based on the popular combustion-fueled Cooper SE but with the technical underpinnings of the all-electric BMW i3 first unveiled half a dozen years ago.
“Along with everybody else, BMW is embarking on the second phase of its EV strategy, but with clenched teeth and the handbrake still slightly on,” said Matthias Schmidt, a Berlin-based independent automotive analyst.
Zipse, a BMW lifer who was previously production chief, makes his debut in Frankfurt at a press conference on Tuesday. A few years ago, Krueger experienced first-hand the treacherous territory of an auto show. At his first-ever expo as CEO in 2015, Krueger fainted shortly into his presentation, and the images of aids helping their stunned boss off stage haunted the executive throughout his tenure. Krueger said in July that he won’t seek a second term, preempting mounting speculation over his future.
The new CEO has long championed a wait-and-see approach on electric cars and a flexible production system that can make all variants of cars on one line. It’s an approach also favoured by Krueger, who was production chief before Zipse, giving both men key insights into the work on the factory floor and how the different engine types can co-exist. Still, such flexibility can come at a cost, said analysts at M M Warburg & Co in Hamburg.
“The company is betting on fully flexible platforms allowing it to respond opportunistically to actual customer demand, which is still highly uncertain,” analysts Marc-Rene Tonn and Franz Schall wrote in a preview of the Frankfurt show. “Nevertheless, flexible architectures are compromises in terms of quality and cost-efficiency.”
BMW plans to add more electric models in the next six years, hoping to regain a leading role in the battery-powered engine race that it helped pioneer with the i3 and the i8 roadster. But the cars, with their avant-garde design and innovative use of advanced lightweight materials, never managed to outgrow their niche, and Krueger failed to build out that segment in his years at the top.
By 2023, BMW wants to have 25 electrified models, more than half of which will be fully battery powered. But the competition is catching up.
Volkswagen AG unveiled the ID range at the show, a major bet on making electric cars an integral part of its portfolio. Porsche already revealed its Taycan sports car last week, and Daimler AG is showing a prototype of the electric EQS luxury car and a close-to-production model of the EQA compact.
BMW has long said that it needs to keep one foot in the established market for powerful combustion engines to help shoulder the huge outlays needed in a battery-powered future. Proving that point, the company will showcase a new version of its X6 SUV in Frankfurt, highlighting how the company still depends on its biggest, most powerful cars for cash.
Unit sales at BMW’s electrified segment dropped 3% through August and 7% last month alone, according to figures released this week. By contrast, the bulky SUV models accounted for almost half of all sold vehicles last month, with sales surging by more than a third.