As the Chinese New Year of 2024 begins, the battle between “electric is cheaper than oil” and “oil is stronger than electric” continues. New energy vehicles in China are still seizing market share from traditional fuel vehicles, leading to intense competition. BMW and MINI, as leaders in the industry, sold a total of 187,452 vehicles in the first quarter of this year, a 3.8% decrease compared to last year. How will this traditional luxury brand respond to the endless competition in the market?
BMW Chairman Zipse presented answers in terms of technology development, localization cooperation, and long-termism at the recent Beijing Auto Show. The new generation models representing BMW solutions will be launched as early as 2025 and mass-produced in Shenyang in 2026. At the 2024 Beijing Auto Show, BMW Group showcased almost all of its products. On the eve of the auto show, MINI brand debuted the electric MINI Aceman globally and the electric MINI Cooper in China. BMW also presented the BMW new generation concept, the all-electric BMW i4, and the new BMW M4. Zipse announced that BMW Group will introduce more than 20 new BMW and MINI products in China in 2024.
If the compact entry-level cars to large luxury cars show the complete vehicle matrix that reflects BMW’s traditional luxury brand heritage and foundation, then the new generation of BMW represents BMW’s understanding and outlook for the future. Its importance can be seen from Zipse’s speech, “‘New Generation’ is not just a car, it represents the beginning of a new generation of BMW products.” In the next 24 months, BMW will launch 6 new generation models intensively. As a technical platform, the new generation of BMW focuses on the BMW Group’s understanding and planning for the future direction of the automotive industry in electrification, digitalization, and sustainable development. In this new generation of cars, BMW has applied the new sixth-generation BMW eDrive electric drive technology and cylindrical battery cells, increasing energy density by 30%, charging efficiency by 30%, and energy efficiency by 25%.
Zipse expressed that BMW’s new panoramic HUD technology, integrated with iDrive system, allows users to focus on driving and enjoy the pure pleasure of driving. The UI/UX design, combined with new technology, demonstrates BMW’s comprehensive considerations for future driving pleasure, electric experience, user interface, and smart connectivity. Localization is key to globalization. Just over a month ago, several car manufacturers announced a slowdown in the electrification process, no longer aiming for full electrification in the next few years. Zipse stated, “BMW’s development roadmap and timeline are very clear,” with the goal of 50% electric vehicles by 2030.
As a global enterprise, BMW meets market demands and regulatory requirements in different regions. BMW has established the largest R&D base outside of Germany in China, with over 3000 engineers collaborating with Chinese companies in various fields. The new generation of BMW models showcased at the press conference was designed by a team in Shanghai and Munich. BMW emphasizes flexibility in meeting customer needs in various cities, countries, and market segments. BMW believes in the coexistence of traditional fuel vehicles and new energy vehicles. BMW is advancing battery technology and production facilities for electric vehicles. The new cylindrical cell technology will be used in BMW models released in 2025 and mass-produced in China in 2026.
On the other hand, BMW will adapt solutions based on specific circumstances for regions lacking raw materials for electric batteries. Hydrogen fuel cars will be a key direction for zero emissions once hydrogen refueling infrastructure is in place. For hydrogen fuel cars, initial use will likely be for ships, planes, and heavy-duty vehicles before personal transportation. BMW’s 7 Series, 5 Series, and 4 Series are designed with adaptable power systems, making conversion to hydrogen power systems easy. With a global perspective, BMW emphasizes its “home in China” strategy in response to international issues like the EU’s anti-subsidy investigation on Chinese new energy vehicles. BMW, operating in China, exports products to Europe, positioning itself as a Chinese enterprise. So for the anti-subsidy investigation, BMW’s attitude is “China is a competitive market, Europe is also competitive, BMW does not support this investigation.” BMW represents a commitment. Entering the era of new energy, with fierce competition, domestic brands’ configurations are rising, even cars priced at tens of thousands provide high-speed navigation assistance, seat heating, ventilation, and massage. So at this time, how should luxury brands maintain their competitive advantage and leading position, without falling into the trap of price wars? BMW’s core is to adhere to a long-term strategic approach. Zipse believes “the current automotive industry is overly focused on new car sales,” but cars are long-term investments, fixed assets. He stated that the services provided after sales, including used car services and parts, are all BMW’s core strengths. In BMW’s view, cars are assets that last for 10, 20, or even 30 years, and the post-sales services required are also an underestimated profit point. Good service can win customer loyalty. Zipse emphasizes, “BMW has very high customer loyalty. People often forget this, but in the automotive industry, this is absolutely crucial.”
Perhaps this is the confidence of luxury brands, after all, those who choose you for low prices will also leave you for low prices. Gao Xiang emphasized another advantage of BMW, which is its vast dealer network in China. Only with an excellent and extensive dealer network can manufacturers provide timely support and meet customer needs. Facing the current industry situation, BMW has also noticed the fierce competition in the Chinese car market for prices below 300,000, with some sub-markets experiencing some form of overcapacity. When asked whether they would sacrifice a certain brand premium to support sales volume, Zipser said, “For the past 50 years, we have been continuously looking for a reasonable pricing point, and the future will be the same,” but this requires specific analysis of specific models. “BMW represents a commitment, a commitment that comes with investment and costs, it’s not a one-time deal, but a continuous service,” and Zipser emphasized again, “We will not increase sales volume by lowering prices.”