Automotive News - October 20, 2008 - (Page 24) 24 • OCTOBER 20, 2008 TA L K F R O M T H E T O P So far, BMW cruises above the credit crisis B MW still has access to credit for its dealers and for financing vehicles. Its rating remains top-notch. Norbert Reithofer, 52, chairman of the board of management at BMW AG, says the company’s conservative financial approach is why the luxury brand isn’t suffering during the credit crunch. But in an interview this month with Automotive News Group editors and reporters at the Paris auto show, Reithofer said BMW isn’t unscathed by the turmoil. He predicts that 2009 “will be a challenging year.” Because of changing tastes and the market, BMW killed the Q7 large SUV. But under Reithofer, the company has approved a crossover for Mini, a small crossover off the 1- and 3-series platform, and a vehicle the company calls the Progressive Activity Sedan. Reithofer became chairman in September 2006. He joined BMW in 1987 as head of maintenance planning. From 1997 to 2000, he was president of BMW Manufacturing Corp. in South Carolina. Are you optimistic about America? We said in the first week of August that we, the BMW Group, think the finance crisis is not yet over. We said during our quarterly press conference that we think the year 2009 will be a very challenging one … not just for BMW but the car industry. I hope you will be successful in your country with the $700 billion (bailout). It is not obvious that it is enough. We have not seen anything like it. I’ve been in the car industry for 22 years, and what happened in September is the first time that I’ve seen this in the market. Are you having any challenges with raising capital? No, not yet. In America, are you having problems financing your dealers and customers? We have very good distribution if it comes to financing us. We use sources in Asia. We use sources in Europe. We use sources in the United States. Until today, we did not have an issue. We have an A+ or A1 rating. A lot of people asked me last year, “What about your cash pile on your balance sheet?” I was very stubborn, as you know. It was good, though. BMW, from a financial point of view, was always a conservative company, and we still are. And now, it (appears it) was not so bad to be conservative. MICHAELA REHLE/REUTERS that reportedly was killed? We said we don’t need an X7 any more. We had part of the concept development phase already done. It was part of a modular system. With CO2 regulations and fuel economy regulations in America, where do you see things going? What is the long-term strategy? In the future we will not sell cylinders. In the future we will sell modern technology. We have to ask the future customer, “What is the value of a turbocharged four-cylinder engine (with) add-on brake regeneration, intelligent aerodynamics, stop-start and an electric motor?” Can you ask for the same price as in the past for a six-cylinder petrol engine without additional features? That will be the core question (for) the car industry. It will not be cheaper for a car manufacturer to put a four-cylinder turbocharged engine with all the add-ons into a car, compared to a six-cylinder engine. What about the residual value of your cars. Isn’t it a nightmare for your dealers? Looking at the residual values of the brand BMW starting from January 2001, since the drop in house prices, our residual values started to go down. We are still better than other luxury brands, but if you see the drop we could, of course, feel the financial crisis as well. We had a good sales flow, but it was more and more difficult during the subprime crisis to sell used cars. Don’t you have 132,000 used cars coming back this year? Aren’t many going to auction because the dealers won’t buy them all? We looked into the structure of the residualvalue development. And if I see a 525 in the United States, then the residual value is unchanged. If a see a 550, it has gone down. It is a structural issue as well. We have more than 1 million cars with efficient, dynamic features in the market — in Europe mainly — and in three years they will come back and have the package on board. Will BMW continue to expand the product portfolio? Does the market demand that there be more models and body styles? If we have a normal economic situation again, then I think it is still a very good idea to have more models. But you have to do it in an intelligent way with a modular system. Otherwise you will not do it economically. I use the example of our new six- and fourcylinder diesel engines. We use a modular system now. We did not have a good modular system in the past. In principle, you have the annual production figure of 700,000, and you have good economies of scale. You said you want to have more derivatives of the 3 and 5. What more can you do? The X1 is a derivative of the 1 and 3 series. It can use the current platform. Will there be a car below the 1 series? Not at BMW. Is your Project i city car approved? The megacity vehicle is on the way; we are working on it. Project i is a project group outside the normal organizational structure of the BMW Group. The first result of Project i is a Mini with an electric motor. We will give to special customers in the United States at the end of 2008 and the beginning of 2009 around 500 vehicles in New York, New Jersey and California; 50 cars in London; and 50 cars in Berlin. One year later, we will have results as a pilot project. The next step will be toward a megacity vehicle of the BMW Group. This is where a fourth brand comes up? I don’t know yet. c What can you tell us about the X1 small crossover? The X1 was a very quick decision at one board meeting at the end of 2006 during my first six months as chief executive. We realized as well from the year 2010 (on), we don’t have a very good growth rate. We have a good growth rate again from the year 2013 and 2014. We said, “We need quick decisions.” One of our quick decisions was the X1. The X1 will be good for a lot of cars per year. So it will be a big-volume vehicle? Yes, it will be a big-volume vehicle for our company. More or less in my first six months we decided the Mini Colorado (crossover) as a concept car, and we decided the Progressive Activity Sedan. And the Concept CS? Yes, the Concept CS car, but it is not big volume. The Progressive Activity Sedan, we are quite confident that this is the right product. But the X1 and the Mini Colorado, as you say in the United States, are really dead-on. Across the board, you do not see the mix moving downward? Norbert Reithofer Do you see customers moving to smaller vehicles? If you see the figures of our 5-series products, touring and the sedan, during the first eight months, the 5 series was very stable. You could not see a downgrading from 5-series customers to 3-series customers. We have a couple of interesting phenomena. One is X5 and X6. We expected we will feel the change of customer wishes, and we could not see that in the X5 and X6. The only explanation we have is that we use extremely efficient sixcylinder diesel and petrol engines. How far along were you on this large X7 SUV
Table of Contents Feed for the Digital Edition of Automotive News - October 20, 2008 Automotive News - October 20, 2008 Amazingly, vehicle inventories are low An upside of the big slide: Raw material prices dip â for now With GMAC out, banks trickle in Get your daily Automotive News - in video form, starting Nov. 3 Honda's Fukui favors fed loans, confirms V-8 To move the metal, Mike Kahn moves the store Hyundai airbag flaw tied to drink spills Texas promo: Buy a GM vehicle, get GM stock Chrysler's uphill road in China GM/Chrysler? Anything's possible GM/Chrysler deal? Companies' pension plans may need cash Acura dealers: A V-8 engine is on the way Buyers pursue former Heard stores Honda: We're still lending Gilles, Ligocki will speak at congress Fed list promotes high-mileage cars Party time: Saturn turns to grass-roots marketing Online inventory service aims to cut dealer costs Document fees must not become a dirty little secret Just put up a 'For Sale' sign Cash for clunkers? Scrap the idea Arbitration can work for everyone It's time we control our own destiny GM missed boat on Cheyenne, Volt Sept. truck sales fall 7.4% Microheat seeks Chapter 11 At Bosch, r&d spending remains strong GM's new diesel opens up, loses weight Urea must flow or new diesels won't go Hankook plans to bring fuel-saving tire to North America Odell: I can help Volvo tap more potential So far, BMW cruises above the credit crisis Jatco builds China plant to meet expanding CVT demand 10 appointed at American Axle Personnel Milestones Obituaries Supplier Personnel Biking buddies Ford targets fleets with parental control key European sales fall; VW group bucks the trend 11 innovators win honorable mention 25 finalists selected for 2009 PACE awards Suppliers to the 2009 BMW X6 GMAC's loan cutbacks cost GM thousands of auto sales Credit tops agenda for NADA chief 'Flash' draws modest cash at theaters Booth's new berth sparks CEO speculation at Ford Economy's skid sends ritzy toys to eBay Report: Mazda scraps plan for U.S. plant GM's quandary: Finding loans for the imperfect Taylor to Hummer - and then ... ? Tough times at Tesla Automotive News - October 20, 2008 Automotive News - October 20, 2008 - (Page Intro) Automotive News - October 20, 2008 - With GMAC out, banks trickle in (Page 1) Automotive News - October 20, 2008 - With GMAC out, banks trickle in (Page 2) Automotive News - October 20, 2008 - Texas promo: Buy a GM vehicle, get GM stock (Page 3) Automotive News - October 20, 2008 - Companies' pension plans may need cash (Page 4) Automotive News - October 20, 2008 - Companies' pension plans may need cash (Page 5) Automotive News - October 20, 2008 - Gilles, Ligocki will speak at congress (Page 6) Automotive News - October 20, 2008 - Gilles, Ligocki will speak at congress (Page 7) Automotive News - October 20, 2008 - Online inventory service aims to cut dealer costs (Page 8) Automotive News - October 20, 2008 - Online inventory service aims to cut dealer costs (Page 9) Automotive News - October 20, 2008 - Online inventory service aims to cut dealer costs (Page 10) Automotive News - October 20, 2008 - Online inventory service aims to cut dealer costs (Page 11) Automotive News - October 20, 2008 - Arbitration can work for everyone (Page 12) Automotive News - October 20, 2008 - Arbitration can work for everyone (Page 13) Automotive News - October 20, 2008 - GM missed boat on Cheyenne, Volt (Page 14) Automotive News - October 20, 2008 - GM missed boat on Cheyenne, Volt (Page 15) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16A) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16B) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16C) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 16D) Automotive News - October 20, 2008 - Microheat seeks Chapter 11 (Page 17) Automotive News - October 20, 2008 - Hankook plans to bring fuel-saving tire to North America (Page 18) Automotive News - October 20, 2008 - Hankook plans to bring fuel-saving tire to North America (Page 19) Automotive News - October 20, 2008 - Hankook plans to bring fuel-saving tire to North America (Page 20) Automotive News - October 20, 2008 - Hankook plans to bring fuel-saving tire to North America (Page 21) Automotive News - October 20, 2008 - Odell: I can help Volvo tap more potential (Page 22) Automotive News - October 20, 2008 - Odell: I can help Volvo tap more potential (Page 23) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24A) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24B) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24C) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 24D) Automotive News - October 20, 2008 - So far, BMW cruises above the credit crisis (Page 25) Automotive News - October 20, 2008 - Obituaries (Page 26) Automotive News - October 20, 2008 - Biking buddies (Page 27) Automotive News - October 20, 2008 - Biking buddies (Page 28) Automotive News - October 20, 2008 - Biking buddies (Page 29) Automotive News - October 20, 2008 - Biking buddies (Page 30) Automotive News - October 20, 2008 - Biking buddies (Page 31) Automotive News - October 20, 2008 - European sales fall; VW group bucks the trend (Page 32) Automotive News - October 20, 2008 - European sales fall; VW group bucks the trend (Page 33) Automotive News - October 20, 2008 - Suppliers to the 2009 BMW X6 (Page 34) Automotive News - October 20, 2008 - GMAC's loan cutbacks cost GM thousands of auto sales (Page 35) Automotive News - October 20, 2008 - Credit tops agenda for NADA chief (Page 36) Automotive News - October 20, 2008 - Credit tops agenda for NADA chief (Page 37) Automotive News - October 20, 2008 - Tough times at Tesla (Page 38) Automotive News - October 20, 2008 - Tough times at Tesla (Page 39) Automotive News - October 20, 2008 - Tough times at Tesla (Page 40)
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