BMW’s national sales director Sean Green talks exclusively to Fleet News on why the industry should be optimistic for next year, why small fleet business is high on his agenda and why BMW has, for the first time, begun dipping its toe in short-term rental business.

BMW has said sales of new cars to businesses and fleets are showing the first signs of recovery.
The latest figures for September show fleet sales fell again - by 13.6% - bringing the year to date figure down by 25% compared to last year.

Business sales to fleets of less than 25 cars also fell, by 11%, bringing the year to date figures down by almost 30%. Just 762,851 new cars have gone to fleets so far this year, compared to 1,025,465 over the same period last year.

However, Sean Green, sales director at BMW said all the signals point to the first signs of a recovery in sales.

“There is a growing degree of confidence, buying signals are now coming from fleets, especially the larger fleets” he said.

BMW is highly attuned to fleet sentiment and it needs to be – 60% of its new cars are bought with business money.

However, this year the number of cars going into fleet has fallen to closer to 50% as the decline in business sales has hit home and private sales as a result of the scrappage scheme have countered the fall in fleet sales.

“The first six months were very tough,” said Green. “But we are now starting to see buyers come back – there is pent-up demand and we are starting to see positive signals from the bigger lease companies.”

The German marque’s decline in fleet sales has been buffered by the surprisingly high number of private sales of Mini and smaller BMWs that have resulted from the scrappage scheme.

But even with these 8,000 or so scrappage sales, it is still vital that BMW grows its share of fleet sales.

Bespoke for business

It recently established a bespoke Business Partnership initiative that has seen its dealers given support and training to target small and medium-sized local businesses.

It is early days – the initiative has only been running for three months – but the signals are positive said Green.

“It is fair to say we may have ignored the SME sector in the past – it was a bit hit and miss - but this has changed. Our dealers are now focused and have the support – we have given the financial backing – and we are seeing renewed confidence from the SMEs. They are now coming back, albeit slowly.”

BMW’s target for SME sales is conservative – just 2,500 cars this year – but that target rises to 7,000 next year, which is a significant portion of its total fleet sales of 60,000 cars.

Key to fleet success is the quality of a manufacturer’s vehicles. And this is where BMW has the upper hand.

Its multi-award winning range of cars is packed with fleet favourites – they retain strong residuals, feature fuel-efficient technology and are attractive to user choosers.

In the Fleet News Awards 2009 BMW and Mini vehicles won five of the possible 11 awards. The Mini range was recognised as ‘Best Residual Value Star’, while the BMW 1 Series and 5 Series were awarded ‘Best Small Premium Car’ and ‘BMW Executive Premium Car’ respectively. The new BMW 7 Series won its first UK award being crowned ‘Best Luxury Car’ and the BMW X5 won ‘Best Large SUV’.

Fuel efficiency is a major driving force for BMW’s next generation of vehicles.

Hybrid 7-Series and X6 models are on their way (although currently only left-hand-drive models have been confirmed for production), as is an all-electric BMW – the Project I Mega City Car - that will arrive in 2014/15.

Trials of the all-electric Mini are already on-going in the US and about to start here.

But it is the models that are already on the market that have propelled BMW onto the leader board of fuel-efficient vehicle manufacturers.

Cleaner and cleaner

BMW’s Efficient Dynamics technology has lifted sales and broadened the German premium manufacturer’s appeal to company car drivers obliged either through CSR policy or from tax incentives to drive down their CO2 emissions.
The new 320d ED is a compact car that emits just 109g/km of CO2.

“We have hit the nail right on the head with this car – it is the perfect fleet car,” said Green. “It has the perfect balance of performance and economy and has given us huge confidence in the fleet sector.

“There is more that can be done – a sub-100g version would be our medium-term goal – although it will be very difficult to bring it down further without compromising performance and that’s something we will not do.”

It is likely that the 320d’s efficient technology will be carried across to the 5 Series, which could see this larger car have emissions as low as 120g, but there are no firm plans yet according to Green.
Diesel is still king in the BMW range, but that will also change said the German carmaker’s sales director.

“We have followed a very intensive development path for diesel over the past 10 years and that has made sense,” he said.

“Now we are developing advanced small-capacity petrol engines with turbo chargers, we are not stepping away from diesel, but we are also concentrating on petrol. You are likely to see a turbo-charged four-cylinder petrol from us in a few years.”

Short-term strategies

With the decline in fleet sales, BMW has been looking at areas it has not considered before.
As a result it has ‘dipped its toe’ into the short-term rental market – a tactic that some carmakers have resisted.

Intelligently, the manufacturer has placed its short-term cars with an accident management company that provides like-for-like cars when its clients are involved in a crash.

This strategy means drivers of competitor vehicles – Audi and Mercedes-Benz – are provided with a BMW.

“It is a conquest opportunity for us,” said Green. “This is an area we hadn’t looked at in the past and we are now putting our toe in the water.”

The manufacturer is also putting cars with a rental company that provides BMW owners with replacement cars.

It is happy to get drivers of competitor cars behind the wheel of its vehicles but is ensuring it is not as easy for its competitors to do the same.
It is a relatively large toe in the water – up to 4,000 BMW cars will be put into short-term rental this year. These short-term cars are provided to the two companies on both buy-back and own-risk deals.

“Short-term deals can be potentially dangerous to RVs (residual values),” said Green. “So we will evaluate at the end of the year before deciding on the future.”