Growth still to be found in premium segment: BMW

DESPITE slowing sales in the premium car segment, BMW Group Australia chief executive Marc Werner expects a quick return to solid growth from the Bavarian brand on the back of key new model launches such as the new-generation X5 large SUV.

Speaking to GoAuto last week at the launch of Mini’s facelifted hatch and convertible line-up, Mr Werner admitted the market has been tough for premium brands, with BMW sales increasing by only 0.5 per cent to 12,909 units in the first half of the year.

This is on the back of BMW’s 15.7 per cent downturn for the full year in 2017.

“At the end of the day, the premium segment compared to previous years is not growing double-digit-wise as it used to, so there is certainly a bit of correction in the segment,” he said.

“At the moment we see a lot of volatility in the premium segment, so we’re watching it carefully, and again, for us, it’s more important that we really have a balanced business.

“On the other side (of 2018), we are launching a lot of new products as we are going forward … one of the most important launches this year is the all-new X5, which will certainly put us, again, in a very good position to further grow our market share.”

At the halfway point of the year, Mercedes-Benz Cars maintains its clear leadership position among the premium brands with 18,196 sales. This is down 5.8 per cent down on the first half of 2017, although its vans division – now with the X-Class ute – is offsetting this with an increase of 36.3 per cent year to date, on 3614 units.

Like BMW, Audi is also only just managing to keep up with last year’s lower running rate – its 10,624 units sales are up 0.7 per cent YTD after falling 9.3 per cent for the 2017 calendar year – while Lexus (4799) is also lineball with last year, up 0.2 per cent after last year slipping 2.5 per cent.

Jaguar (1251) is down 14.7 per cent after last year falling 17.5 per cent over the 12-month period, and Infiniti (295) has dropped 30.1 per cent, continuing a downturn that last year saw it stumble 3.8 per cent.

Other prestige brands in negative territory this year include Land Rover (5896, -5.9%) and Porsche (2307, -16.1%), while positive contributors include Volvo (3026, +26.0%), thanks to its all-new XC40 small SUV, and Alfa Romeo (657, +25.9%), which has the Stelvio mid-size SUV and Giulia medium sedan to thank for the much-needed growth.

BMW Australia is now counting on the launch of the new X5 and the niche X4 crossover coupe – both due later in the year – as well as the next-generation 3 Series sedan, which is expected to be revealed late this year or early in 2019.

BMW’s range-topping X7 SUV is also due to launch in Australia early next year, while its reborn 8 Series Coupe is likewise expected to touch down around the same time.

While Mr Werner would not be drawn on BMW’s year-end sales tally, he said the rejuvenated product portfolio would see it return to a solid growth phase.

“Our market share, or segment share as we call it, has increased this year by close to one per cent versus previous years, so we’re certainly on track on the one side, and on the other side, we will have one of the youngest, if not the youngest, product portfolio in the Australian premium segment going forward that will put us in a very good position to further grow our segment share,” he said.

Asked by GoAuto if the premium segment bubble had burst, Mr Werner replied: “Not necessarily, I’ve seen similar developments in other markets before that I’ve worked in and I’ve been responsible for.

“I rather see this as a moment of plateauing off, or a stagnation maybe, but the fundamental economics are still very, very healthy here in Australia and I believe that there will be further growth opportunities in the premium segment in the coming years,” he said.

Across BMW’s line-up, the brand’s highest achiever is the X3 mid-size SUV (2954 units YTD), followed by the X1 small crossover (1807), 3 Series sedan (1560), X5 (1487) and 1 Series hatchback (1335).

Mirroring Australia’s overall market, the bulk of BMW sales are now made up of SUVs – 7649 of 12,909 units, or 59.2 per cent of its overall tally.

However, Mr Werner said there was no concern that BMW would place more of an emphasis on its SUV models at the cost of its passenger car offerings.

“At the end of the day, we are developing and producing cars that customers want, we’re a customer-centric organisation and the result that we currently see is a very high demand for the SUV range, our X range, that we are offering,” he said.

“I think it’s just showing the strength of the brand in terms of being able to cater for the various customer demands, and obviously the Australian customer demand is different to some of the other markets where we are operating.

“The Australian customer wants SUVs and this is what we can provide and deliver and offer and will continue to do so.”

Meanwhile, the BMW-owned Mini brand is up 12.6 per cent to 2184 sales in the first six months of 2018, with growth expected to continue after the launch of the facelifted hatch and convertible range that make up more than half the brand’s tally.

A new showroom is also expected to open its doors soon in Canterbury, Sydney, but Mr Werner said not to expect much bigger volume from Mini.

“We’re not going to overstretch the brand in terms of a volume push, but it’s good to see that Mini is in a pull position, as we call it, and customers loving and appreciate all the new cars and all the new products that we’ve launched over the last couple of months,” he said.

“Each and every product, be it the Clubman, the Countryman, the three-door hatch or five-door hatch, as well as the convertible, is experiencing an extraordinary demand from our customers in Australia, which gives it that natural growth that we wanted to see, so the strategy is paying off.

“We are here in order to grow the business and that is one of the reasons we are increasing our footprint on the dealer network side and making some significant investments.

“We do believe there is more room to grow for the Mini brand, but at the same time we are always conscious about not stretching too much and always make sure we maintain the customer satisfaction on the highest possible level, which is our ultimate goal.”