Aussies buying up BMW’s LCT-limboing BEVs
BY TOBY HAGON | 29th Apr 2024
BMW is preparing for a battery electric vehicle (BEV) sales onslaught courtesy of sharp pricing across six of its BEV models – but there may be price rises in the offing.
As the most aggressive on early BEV sales of the three premium German luxury brands – this year 24 per cent of its first-quarter sales in Australia were electric – BMW expects the growth in electric vehicles to continue with the arrival of the iX2 coupe-SUV and the continued popularity of its wagon-bodied iX1 sibling.
However, the company could be staring down the barrel of price rises as it looks to better separate the six BMW models that slide in under the $89,332 Luxury Car Tax (LCT) threshold, in turn enabling the brand to leverage the federal government’s generous fringe benefits tax (FBT) incentive that can save drivers thousands each year.
Speaking at the media launch of the new iX2 BEV and petrol-powered X2, BMW Australia product and pricing manager for X-badged cars, Daniel Silverwood, said it was possible prices could increase on some BEV models within months if the government decides to lift the LCT threshold – as it has done for the previous four financial years.
“Once we know what the likely Luxury Car Tax change is then we do need to consider what that means for the portfolio,” said Mr Silverwood of a potential change for pricing on the iX2, especially the dual-motor xDrive30 model that at $85,700 plus on-road costs commands a slender $2800 premium over the single motor eDrive20.
The challenge for BMW in Australia is this slim price difference between the two variants, with most markets not only charging more for the iX2 generally (once exchange rates and taxes are factored in) but also a steeper price incline between grades.
In the UK, for example, there is an 11 per cent gap between the iX2 eDrive20 and xDrive30, whereas in Australia it is just 3.3 per cent.
BMW Australia head of product and market planning Brendan Michel described the iX2 pricing as a “mega deal” and one that required significant negotiation and wrangling with head office in Munich.
This was all about taking advantage of the FBT incentives that allow salaried employees taking out a novated lease to finance a BEV from their pre-tax income and use it purely for personal driving.
Mr Michel stopped short of suggesting price rises are inevitable if the federal government raises the LCT threshold but he conceded that the company “will look at separation” between the two variants.
With no room to move down for the entry grade – profits on the iX2 are understood to be slim – this only leaves one way to go.
“We haven’t planned anything like that, we just have to wait and see,” said Mr Michel.
“We’ve got a strategy in place with what we currently know. Until further changes, then that’s when we’ll change our strategy.”
It is perhaps no surprise, then, that BMW is forecasting big things for sales of the iX2, predicting that as many as half of X2 sales will go to the iX2 variants, the first variant of which has just gone on sale with the second arriving within months.
That gels with early demand for the X1; in the first three months of 2024, 45 per cent of X1s sold were the iX1.
“They’re cracking prices within our own internal hierarchy,” said Mr Michel, reinforcing that it was a crucial component of the brand’s broader BEV strategy.
“We had to be very aggressive with our pricing and our spec level in our new electric cars and that’s what we’ve been able to achieve.”
It has BMW looking at a swift ramp-up of its BEV sales, something intensified by the anticipated 2025 introduction of fuel efficiency standards that mandate a circa-60-per-cent drop in CO2 emissions by 2029.
Mr Michel said these standards and the upcoming 3-Series and X3 replacement – shown as the Neue Klasse concepts that introduce new BEV technology and underpinnings – could see BMW BEV sales topping 50 per cent of the brand’s overall volume in Australia within a few years.
For now, though, the challenge for BMW is keeping up with early BEV demand. BMW is experiencing record interest in its iX3, for example.
Currently more than one third of all X3 sales are for the China-sourced iX3 that is only available as a rear-drive, single motor model.
Mr Michel said demand is running ahead of supply, prompting a request to head office to produce more for Australia.
“We’re selling every single one we can get our hands on … the car’s going very, very well,” he said. “We’re trying to secure more.”
While most of BMW’s BEV strategy has so far revolved around adapting internal combustion engine platforms to accommodate electric car components, Mr Michel believes familiarity is one reason for early buyer acceptance.
“The car looks the same, the interior is the same, all the tech in the car, it’s the same operation from our internal combustions … infotainment’s the same,” he said.