Detroit Auto Show: BMW Chief Talks Hollywood, Ultimate Driving Machines and Cars of the Future
In a conversation with The Hollywood Reporter this week at the Detroit Auto Show, Ludwig Willisch, BMW's U.S. CEO, discusses the challenges of staying one step ahead of the technological changes rocking the auto industry even as sales soar.
With the auto industry buoyed by cheap gas and a surging U.S. economy, BMW finished 2014 with its best sales ever, up nearly 10 percent over 2013. But the path forward is anything but certain as new technologies such as self-driving cars, disruptive brands like Tesla and shifting demographics reshape the industry, as BMW's Ludwig Willisch made apparent in this interview with The Hollywood Reporter.
Does BMW have any kind of formal outreach to Hollywood?
Rather informal than formal--yes, we do.
Could you describe that?
We have some Hollywood people that we connect with. Some are being taken care of from Munich but the majority is really our local office in Los Angeles together with the local dealer taking care of Tom Cruise--twenty, twenty-five top-ranked stars that we have good connections with.
Do you give them incentives?
We lease them a car for a preferential rate.
To get the car seen around Hollywood, that sort of thing?
Do you do any formal product placement or outreach to TV shows and movies ?
We have done some product placement--Mission Impossible. But we are not at the forefront, that we say we have so many movies a year and so many shows that we want to be in.
What's the benefit of getting a celebrity to drive a BMW?
It's about championing the brand. We always try to be careful because if you really attach yourselves to a person this could go south any day.
So it has to be done carefully. But on the other hand we still think it's the right thing to do--the people that are top-ranked as far as popularity is concerned, if they drive a BMW that doesn't hurt.
What's BMW's position on self-driving cars? At the CES show in Las Vegas last week BMW demonstrated a 360-degree collision avoidance system using laser scanners that automatically stops the car if it senses an imminent collision, and also fully automated car parking that finds an open spot on its own, parks, then returns to pick up the driver.
We think still that the “ultimate driving machine”--in other parts of the world it's called “sheer driving pleasure”--should really mean what it is. So it's about active driving. The driver drives the car. So any of these devices should support the driver whenever he wishes. Meaning if he is in a traffic situation where they're crawling along at five miles an hour, obviously that's not what the ultimate driving machine should be all about, then he or she could leave that to the car. Then when the situation is over he or she takes over again. But we believe that the BMW is about experiencing the drive yourself.
How far away is that technology from appearing in production BMWs?
I wouldn't expect it next year. But it's not far away.
Do you have any formal surveys with BMW owners that confirm that they want autonomous cars?
How do you market BMW in an age people’s perceptions of what a car is and does are changing with these technological innovations?
We still have a very clear cut image, a very clear cut profile, and that's the ultimate driving machine. That's what we stand for and everybody gets it. If you look at some other brands that we are competing with, they have changed their tagline, they have changed their communication about the brand in the last twenty years three times. So I think that has not really helped. I think to stick to your guns and do what you do best helps. It's obviously not for everybody but this is also what premium is all about.
Like Audi and Mercedes, BMW has tested the lower reaches of the luxury market with the Series 2, priced at around $32,000. One school of thought is that it’s very dangerous line to tread because it can devalue the brand's luxury image.
I couldn't agree more. I think you need to be very careful there.
The flip side of course is that that's a way for you to capture a younger buyer and then keep him or her for life as they trade up to more expensive models.
Yeah, but bear mind we have another brand to begin with that is also about fun and driving.
Which doesn't mean that a BMW has to cost eighty thousand dollars but we do have models in the bracket of, let's say, realistically, between thirty-five and forty thousand dollars. We have the X1, our smallest SUV, and then we have the 2 Series Coupe. And they all start under forty thousand dollars and that works for us.
The SUV market continues to explode—U.S. sales of BMW’s X-class SUVs were up 15 percent last year and BMW overall was the top selling luxury brand, beating Mercedes-Benz.
Well I can tell you it would have even grown more if we had had more cars. We could just not satisfy the demand in the new X5 and the X3. It's a U.S. phenomenon. You can attribute it to all sorts of things. It's the versatility, it's the bad roads, at least in the east --
The west, too. Porsche has a seven-month waiting list for its Macan compact SUV.
Let's say even five years ago, if anybody told you that Porsche would sell more trucks than 911s you would think oh yeah, sure.
The success of the Tesla Model S has been an interesting phenomenon. Tesla co-founder Elon Musk has really captured people's imaginations. Somebody from BMW was quoted grudgingly saying it was good that this guy came along because he woke everybody up.
It could have been me.
Tesla has challenged the traditional business model by selling cars directly to consumers instead of through franchised dealerships, which are protected by state laws.
It is really rattling the cage as far as franchise law is concerned. And that's a positive. I think the whole way cars are being sold is changing. And consumers will not have the same patience that I had when I bought my first car. The industry is changing and people have different expectations and that will help the change in the future because right now obviously even the local dealer is very much backed up by the local politicians.
BMW’s i sub-brand launched last year—a tremendous, multi-billion gamble on electric and plug-in hybrid cars made from sustainable resources. When did BMW begin developing the cars that became the i3 and i8?
Almost eight years now.
Volkswagen has also spent billions on similar technology, but BMW is a much smaller company than Volkswagen.
Yes. We don't get a discount.
So this is a very risky. Why was it so vital for BMW to do this?
Because we think the world is changing and we need to address these changes. How the population is moving into the cities, which means they have different needs as far as their mobility is concerned. If you go down the road five years, you find that more and more cities will restrict mobility in terms of emissions. It started a couple years ago in London with the congestion charge. But I think more and more it will be the case that the administration will say, in certain parts of the city you will not be able to drive non-electric cars--you have to drive emission free. This can either be captured by hybrids--we will have a full range of plug in hybrids--and then on the other hand you have a fully sustainable, fully electric car like the i3. We just wanted to be at the forefront to tell people BMW is not only, so to say, pedal to the meta. It is also a very responsible car company that has answers for those who are looking at things differently.
The i8 launched in September and the i3 in June. Are you happy with their sales?
The i8 is phenomenon--we are sold out basically for the whole year. And the I3 is doing okay. It’s obviously not the United States as a whole that's interested in electro mobility but where there is a market for electro mobility we do sell.
In Los Angeles, I3s have been cropping up more and more. Where else is the car gaining traction?
We see there are pockets in the country where the I3 concept has been really embraced by people and it's doing well. Los Angeles, the Bay Area, San Francisco, Portland and Seattle,Austin, parts of southern Florida, Houston--
We also were very much surprised. But that's where we really sell significant numbers. On the other hand New York and a major part of the east coast doesn't want to have any part of it. And then obviously the Midwest--it's more Cadillac country. In some of those states Cadillac is our biggest competition. If you tell that to someone in Europe people are really surprised because a Cadillac doesn't have any meaning in Europe anymore. At least in my youth in Europe both a Lincoln Continental and a Cadillac El Dorado were the ultimate luxury cars. People that could afford a Rolls Royce in those days may also have been open to a Cadillac.
Speak to the convergence of technology and automobiles. What do you see happening there and the appeal, especially for younger people.
They expect the car to do a lot to what they do today with their mobile device--the car should just incorporate that. Today's kids think differently. They want to have all sorts of connectivity. There is still a very important clientele that's about the sheer driving pleasure but on the other hand, If you have an electric car that tells you where there is actually a charging station that's free and things of that nature, I think become more and more important.
Younger potential car buyers are far less emotionally involved with driving and car ownership than their parents--they'll choose Uber or Lyft or BMW's Drive Now car-sharing program over owning their own cars. How does affect BMW's future?
We know from car sharing models that we have launched very successfully in Europe, now starting in the U.S. too, is people like the car sharing model. We're entering the fourth year with Drive Now in Europe. [Subscribers] have a little chip on their driver’s license, the car opens up. It's either a BMW or a Mini--and it's charged by the minute. And eventually an important part of that clientele will move out of the city into the suburbs. And guess what? People do think about, Well, what car am I going to buy now? And it's going to be a Mini or a BMW because they like that experience so much.