Even though it has years of fleet experience in the UK - at one time accounting for half of its business there - and Europe, BMW didn't enter the U.S. fleet market until 2010.
The irony of this situation was the fact that there were numerous U.S.-based corporations that relied on BMW for its fleet needs in Germany and the UK "It was a bit of an anomaly," said Drew McClelland, corporate sales manager, BMW North America. "We looked at what the competition was doing - Mercedes-Benz and Audi - and we felt we had to be in the fleet market. Now that we've entered the fleet market, there's no turning back."
EPP Lifts Off
In 2010, BMW North America launched its Executive Preference Program (EPP) as its official entry into the fleet market.
The EPP is a fleet program for the U.S. and Canadian markets, which allows eligible fleet drivers to order BMW- and Mini-brand products. Benefits of the EPP include BMW Ultimate Service, which is no-cost maintenance for four years or 50,000 miles and roadside assistance for four years and unlimited miles. The EPP is open to both companies and employees on reimbursement or car allowance programs.
Helping build the program is a dedicated sales force (see sidebar, "First-Ever Dedicated BMW Fleet Sales Team").
McClelland expects to see the program grow over the next several years with a target of selling up to 5,000 vehicles per year.
What may help popularize BMW with U.S. corporate fleets is the automaker's expanded product line. "We're going into new niches, so from the bottom up, we are expanding," explained McClelland. "I think it's natural to move into fleet sales. But, we'll only do it on the basis that it's profitable for us, and it makes sense. Our fleet sales will be done in a very controlled way because we don't want to damage BMW's brands' residual value, which is one of our strengths."
Model-Year 2012 Forecast
With about 60 percent of its 2012-MY products being new, this could be a big year for BMW in the U.S. market.
The company's next big launch is the new 3-Series, which, according to McClelland, is the automaker's most important model for the U.S. market.
There also will be availability for the first time of the 5-Series. The 528xi will be available sometime in October. "That's going to be a big car for us," predicted McClelland. "It is going to give us a huge sales boost. On the other side of the line, we've got the M5 coming out and that's always been a halo car. We're moving from a V-10 to a V-8. The new M5 will be 25-percent more fuel efficient than the current M5."
Showing its commitment to the U.S. market, BMW recently added 1.5 million sq.-ft. to its Spartanburg, S.C., manufacturing facility, BMW's first assembly plant outside Germany and its first in the United States. The $750-million addition is dedicated solely to the production of the BMW X3 Sport Activity Vehicle. The plant now produces about 1,000 X3, X5, and X6 models per day.
Next calendar year looks to be exciting, but 2011 has been a good year as well.
McClelland predicts that the entire market will be about 12.5 million units - which is a little softer than what had been predicted and is due, in part, to March's earthquake and tsunami in Japan.
BMW has seen healthy growth of between 10 and 15 percent, which, according to McClelland, is in line with the U.S. marketplace.
"Our mission is to be slightly better than the market," said McClelland. "We've got new products that have been very well received, and we've got more to come at the back end of the year. We're forecasting somewhere between 240,000 and 250,000 cars for BMW."
The only supply availability problem BMW has been experiencing is with the company's popular Mini brand. Originally projected to sell 60,000 units - because of equipment constraints with the automatic transmissions - this target may not be reached, but the brand is still on track to post a record year.
E-Mobility is Around the Corner
Similar to several other major OEMs, BMW is in the process of entering the electrics market. Its first electric vehicle was the MINI-E, a two-door, uncompromised offering, which, according to McClelland, was significant because it showed range anxiety wasn't as big an issue as was first expected.
"Also, it taught us several good lessons that we learned going forward with the ActiveE," he said.
The ActiveE, which is based on the 1-Series Coupe, is expected to hit the market in late 2011. The vehicle will be available worldwide.
The new ActiveE is just the beginning of BMW's foray into the electric market. The ActiveE will act as the precursor to a new line of electric and hybrid-electric vehicles slated to roll off assembly lines beginning in 2013 - the i sub-brand.
'i' Follows 'E'
The initial offering of the i sub-brand will include the BMW i3, fully electric vehicle, and the BMW i8, a plug-in hybrid.
Both will be built at the company's so-called "e-plant" in Leipzig, Germany, which will undergo a $500-million expansion.
Both vehicles feature environmentally sustainable materials and innovations. The completely original "purpose design" i models are not built using existing BMW technologies or design platforms. Each consists of two sections, the drive and the life modules.
The drive module, an aluminum chassis, is a single, lightweight compartment that combines the battery and drive system. BMW designed and is building the electric motor that will be featured in the vehicles.
The life module is the passenger section, which is made completely from carbon fiber reinforced plastic (CFRP), which is corrosion and rust resistant and 50-percent lighter than steel, giving the BMW i vehicles a longer lifespan than conventional automobiles.
The BMW i3, formerly known as the MegaCity Vehicle, is designed to be a means of local conveyance and integrate into public transportation systems. The i3's electric motor will be able to generate 100kW, and features regenerative braking or "regen," which transforms the motor into a generator, producing energy and charging the battery - increasing its range by up to 20 percent. The i3 is particularly significant because it "will be the first in the market that will be designed from the tires upwards as an electric vehicle," according to McClelland.
The plug-in hybrid BMW i8 features the same overall design concept as the i3, including the CFRP life module. The biggest fundamental difference between the two vehicles is the i8's hybrid drive module - which features a plug-in hybrid power plant - giving the driver the option of a gasoline-powered engine for longer trips.
McClelland is bullish on the impact these two vehicles will have on the market. "The i3 will command the same position in the market as the Prius does in the hybrid market," he predicted. "One of the reasons the Toyota Prius has been so successful is its unique look. We're going to bring in a unique car that is designed as an electric. We will create the 'Prius' of the electric car market with the i3. It has an iconic look, with a very eye-catching interior and exterior. Likewise, the i8 will be a stunning car."
First-Ever Dedicated BMW Fleet Sales Team
When BMW launched its Executive Preference Program (EPP) last year — its entry into the U.S. fleet market — the company committed to having a dedicated sales force to support and grow the new program.
BMW named Tom Lauer and Roger Setzke to the newly created positions of key account managers for corporate fleets.
Lauer was hired as key account manager, corporate fleet, East. His responsibilities include new business development and relationship management for the BMW and Mini fleet programs. Lauer joined BMW from PHH Arval where he worked for the last two decades, primarily in sales and account management with the business development group.
Setzke was appointed key account manager, corporate fleet, Midwest. Like Lauer, his responsibilities include new business development and relationship management for the BMW and Mini fleet programs. During his 20-plus-year career in the fleet industry, Setzke has worked in sales, customer service, and client relationship positions at PHH Arval, Donlen Corporation, and Pep Boys.
Both report to Drew McClelland, corporate sales manager, BMW North America.
Originally posted on Fleet Financials