Auto Sohu: You’ve been to China for more than half a year, you just mentioned that you need to fully understand a market and respect its culture if you want to achieve success here. Can you share with us your understandings about China and Chinese market during this time?

　　Mr. Engel: I was always on business trips in the past 6 months. I have been to more than 20 cities and visited more than 60 dealers. I need to learn from our dealers, partners and our staff as to better understand the market.

　　I has been overseeing the Chinese market 18 years ago. There were only 5 dealerships at that time and could rarely see premium cars on the road. The fast development of China’s auto market and the success of Chinese economy are amazing. I have recently visited cities in west region like Chengdu and Chongqing, the development there is unbelievable. I went to different places every week on business trips to get to know the local market. It helped me accumulate the understandings and feelings about the market.

　　We believe the overall trend of China market was very good in past years, although the increase became modest recently. The Chinese market will keep the increase momentum and a 10% growth currently is not bad.

　　Auto Sohu:Some media reported that BMW dealerships experienced profitability difficulties. Has the problem of dealership profitability improved since your appointment?

　　Mr. Engel：Regarding the problem of dealership profitability, we had an outstanding market performance and the dealership profitability in 2011. In 2012, many dealers experienced difficulties due to the fluctuation in the market. The development maintains good momentum so far this year. In average, the overall profitability of our dealers is satisfactory.

　　We learned from the fluctuation in the market that we need to develop diversified profit base to achieve diversified channels of profitability. As the fluctuation happens all the time in the market, if the business models are over dependant on the sales of new cars, the dealers may lose profit in the fluctuation.

　　The Chinese auto market has become more mature, which makes new requirements for the dealers. We need to diversify our profit base especially in after-sales service. There are more than 1.1million carparks of BMW and MINI in China, half of which were sold in the last two years. These cars need to get maintenance and other services, which provide stable and healthy business opportunities. Our dealerships must be well prepared for it and make sure we have sufficient service capacities and competent teams to meet the demand in the future.

　　Meanwhile, the business of used cars will be another new growth pillar in the future. There is still great potential in the market of used cars. With the growing numbers of used vehicles, this market will gradually develop like what other markets have experienced.

　　Besides, the retail auto financial service is also an important business growth pillar. Currently the penetration of our automotive finance business has reached over 30% and there is still potential in the future. So does the fleet sales businesses.

　　All the new fields I just mentioned play important roles in the future development. However, currently the business models of many dealers are over dependant on the sales of new models. We keep regular communications with dealers and partners and encourage them to make changes. They agree with this idea.

　　Auto Sohu:What is the percentage of profitable dealers among BMW dealership network?

　　Mr. Engel: A new dealer may not make big profit in the first 1-2 years, as the dealer needs to make large investment, explore customer sources and develop after-sales services. For the dealerships opened for more than two years, 90% of them have no difficulties in profitability.

　　Auto Sohu:Some media report that the price reduction of BMW 7 Series leads to the profit loss of dealers, is that true? How does BMW tackle it? How does BMW view the competition between 7 Series and Mercedes Benz S-class?

　　Mr. Engel: I have read the reports about BMW 7 Series. If I were the dealer, I won’t take big price cut as it will bring great loss.

　　We have done detailed research and analysis about the sales of BMW 7 Series in the first half this year. The BMW 7 Series is overall profitable although we cannot disclose the specific profit rate. We can say our dealers made profits in terms of sales of 7 Series.

　　Regarding the price cut by some individual dealers, we cannot intervene the retail price of our dealers, according to law and regulations. But we generally do not encourage dealers to sell cars at a loss.

　　The new Mercedes-Benz S-class is not available on the market yet. I saw the photos just like what you did. The S-class has long been a competitor for BMW 7 Series and we really respect it. I believe the new S-Class will be a good car. Of course we are confident that our 7 Series will continue its excellent performance in the market, as it has been the leadership among flagship models worldwide. The current generation of 7 Series is a LCI model, it is in fact a new car. We believe our 7 Series will continue its success in China in the next 3-4 years until the next generation comes out.

　　Of course every product has its life circle. The new S-class is expected to have good performance in the market but we are not jealous about it as we are confident about our 7 Series.

　　Auto Sohu:We know that the sales volume of BMW increased 15 times in the past 8 years. Will it become a pressure for you? What is your goal during your tenure? What position do you hope BMW achieve?

　　Mr. Engel: As you said, BMW is a company with excellent operation and management when I took over it. It is not a pressure but a pleasure if you have the opportunity to take over it. We have a young and passionate team, everyone is devoted to working hard every day to pursue success. I can see sparkles of passion in their eyes.

　　In the first half of this year, China has become the largest market of BMW Group worldwide. We follow the strategy of balanced development worldwide and expect to achieve balanced development in Europe, the U.S and Asia. The U.S market continues strong momentum, the most robust growth comes from China and the European market is a bit weak at the moment.

　　After 30-year fast development, there are a group of well-off customers in China now. According to the figures of analysis organization, families with annual incomes of USD 80,000 belong to the entry level customers for premium cars. In China, there are over 5 million this kind of families and this figure may triple to 15million in the next 15 years.

　　Besides, Chinese customers have a habit of upgrading cars. They often start with a small car and change to a better one or even a premium car over years. We anticipate the premium segment will see a 10% growth in the next 10 years. The growth rate is lower than that in the past few years, but we are happy to see it. For us, 10% is better than 20%. We can focus on quality and services at such a stable growth rate. As the base is pretty large in Chinese market, a 10% growth is really good. We are satisfied with the healthy, stable, sustainable and positive trend of development.