BMW is firmly targeting buyers in the US market with its new compact 1 Series Coupe. BMW CFO Michael Ganal told just-auto that he expects at least half of the model’s production to be sold in North America.
When pressed for an indication on volumes, he said that total annual production for the model of around 25,000 units would be a ‘suitable size’, implying around 13,000 units a year for North America alone. The numbers look conservative, but Ganal dryly observed that it is better to under-promise and over-deliver than the other way around.
BMW officials also stress that the new model takes BMW into new territory and much depends on how well the model is received in the market. But the arrival of a new entry-level compact BMW coupe comes at a time when oil prices are hitting new peaks and the EU Commission is targetting car companies for tougher average emissions limits. BMW maintains that through ‘efficient dynamics’ (high-tech innovations that improve fuel economy) it is able to successfully combine high performance with economy across its range and that average CO2 emissions are coming down.
A compact coupe like this is arguably a car just right for now, ticking plenty of boxes (diesels for Europe and a range extension at the right end for the US).
Introduced in 2004, BMW 1 Series production last year was around 147,000 units, mainly sold in Europe. The 1 Series range – a 3-door hatch, 5-door hatch and now the 1 Series Coupe – is exclusively made in Leipzig, in eastern Germany. A 1 Series Convertible will be added in 2008.
Speaking at a media launch event for the model in Copenhagen, BMW’s former sales and marketing head emphasised that he believed conditions are very good in the US for the 1 Series Coupe and that economic fundamentals are positive in terms of BMW’s overall retail prospects.
Responding to recently expressed concerns over the underlying strength of the US economy and the effects of sub-prime mortgage sector fallout, Ganal said: “For the time being we don’t see a negative impact on demand and if the Americans adjust interest rates [if needed] that will prevent the economy from a collapse.
“This is an exciting time [for BMW]. The flow of showroom traffic is okay and vehicle sales are okay. Sales volumes are not seriously affected.”
The 1 Series Coupe, which goes on sale in Europe next month and in the US in the spring, is seen by BMW as appealing to a new and more web savvy target group of young and affluent consumers, while also defining a new compact coupe segment in the US market.
The hatchback 1 Series was not seen as right for the US market and was not sold there.
The emphasis on the US market offering with the small coupe is on high performance. BMW will offer performance variants of the 1 Series Coupe in the US – the 135i powered by a six-cylinder twin turbo 3-litre engine to be followed later by a lower powered but still six-cylinder variant.
Two model variants on BMW’s four-cylinder 2-litre diesel are also offered for Europe – the twin turbo 123d and single turbo 120d.
New media marketing push
A feature of the 1 Series Coupe’s marketing activity has been the more prominent utilisation of so-called ‘new media’ channels, in addition to traditional media, by BMW.
Jörg Reimann, Head of Marketing Innovations at BMW, explained that the young and well-educated nature of the target market for the 1 Series Coupe meant that BMW had decided to seriously investigate new media channels such as blogs, networking communities like Facebook and podcasts.
He said that it was the first time BMW had integrated so many new media elements into one model’s media campaign, but acknowledged that the traditional/new media ratio in marketing was something that would vary according to customer profiles for different models and the marketing needs of different territories.
See also: DENMARK: BMW sets its sights on YouTube
Weak dollar worries
One problem for BMW in recent years has been a weakening dollar versus the euro to which currency hedging has given only limited protection.
More production of vehicles sold by BMW in the US certainly helps (BMW is planning to raise US vehicle production from 150,000 units a year to around 240,000 by 2012).
Michael Ganal recognises the need for more parts purchasing in the US, too.
“Increased production in the US has to come along with stronger local sourcing,” he said. “But it’s not the easiest thing to do,” he added.