When asked if the company’s achievements made during Stark’s time gave him any pressure, Engel answered, smiling, “I have taken over a well-managed company. There is no pressure. It’s a pleasure.”
In fact, when the outside world was still buzzing with the leadership shift, Engel has begun to lead BMW onto a new track.
“During the 6 months that I’ve been working here, I travelled a lot. I’ve been to over 20 cities and visited more than 60 car dealerships”. Obviously, this new president, with ample experience in setting up car dealerships, wants to start his new job by doing what he is good at.
With a phenomenal 40% growth rate in the past few years, BMW was forced to focus on expanding the number of dealerships. As of this May, the company has a total of 380 dealerships in China, including 87 that specialize in MINI.
During 2012, when global growth slowed down across the board, the existence and profitability of BWM dealerships was cast in doubt.
To Engel, the sure way out of difficulty is for the dealerships to become less reliant on new car sales and diversify their business. Specific measures include building after-sales service centers and new training centers, as well as selling second-hand vehicles, providing auto finance and securing big corporate clients.
At the BMW Brand Night Press Conference in April, Engel told reporters that second-, third-, and fourth-tier cities would be BMW’s next focus. The company would enter many emerging cities ahead of its competitors, and its marketing would shift from being product-oriented to client-oriented.
Compared with the explosive growth before, Engel is more looking forward to a 10% annual growth rate. “I believe, 10% growth is better for us than 20%, because with steady development, we can concentrate more on improving quality and service.” Of course, even a 10% growth rate is far higher than that seen in European markets.
The sales data of car manufacturers have already come out. As Engel wished, BMW has maintained stable growth in China, with total sales of BMW and MINI amounting to 182,800 units, a 15% rise year-on-year.
With China becoming BMW’s largest market in the world, the much criticized profitability of BMW dealerships has seen improvement. Engel revealed that an evaluation of mature dealerships operating for over two years has indicated that 90% can turn a profit. But their profit margin cannot compare with two years ago.
Among BMW’s business and strategic plans, localization is, without a doubt, an important foundation for gaining a foothold in the Chinese market. Thanks to BMW 5 Series Li, 3 Series and 3 Series Li and BMW X1, the company has been able to flourish in China.
When asked about BMW’s future localized production in China, Engel was reluctant to say more, merely replying that details would be disclosed in due course. What is certain, though, is that BMW will continue to race on the path of localization.
Last year, BMW’s new plant in Tiexi was officially opened and will begin to manufacture BMW X1 and Series 3 Li. Engel revealed that by the end of this year, the plant’s production capacity will reach 300,000 units, and may further expand depending on market conditions. And BMW Brilliance Automotive (BBA) is building a brand-new engine plant, with a desired capacity of 400,000 units a year.
“Considering our enormous investment in the joint venture, you have reason to expect more locally manufactured BMW products.” Indeed, at the inauguration ceremony of the Tiexi plant, Norbert Reithofer, President of BMW Group, announced that BMW’s localization rate would reach 2/3 from the current 50%, a far cry from Audi’s 80%.
And this is where BMW’s growth potential lies.
At the end of the interview, Engel told Auto.sohu.com, hardly able to conceal his happiness, his wife and two sons were coming to China in three weeks, and the family would start their life in Asia again. Maybe Engel has decided to fight in the China market for the long haul, just like his predecessors. To BMW, this should be good news.
Below is the transcript of the interview.