During the 2023 Shanghai Auto Show, we interviewed Mr. Koerben, Senior Vice President of BMW Group, who is responsible for all BMW product planning. Regarding BMW’s product planning, especially in China, Mr. Koerben had a discussion with us.
Question from Garage 42:
Hello, I’m from Garage 42. We focus on new energy vehicles and electric mobility. My question is, what are the differences between Chinese and European consumers in their understanding of intelligent cars?
Our target audience is relatively young. Chinese society develops very quickly and is advanced in terms of the internet and digitalization. I personally lived in China from 2014 to 2016, so I can appreciate the country’s rapid development. In Europe and the United States, development tends to be more gradual. They may analyze trends and turn them into realistic products. In China, trends intersect. Trends turn into reality more quickly. Take the “outdoor” trend, for example. No one talked about outdoor activities five or six years ago. Now, the concept of “outdoor” is ubiquitous. Correspondingly, we need to make adjustments internally, keep up with this fast-paced and multifaceted trend, and do more localization work to adapt to these rapidly changing trends.
Question from Car News Network:
I would like to follow up on your comment that trends change quickly in China. What are the differences between product planning for the Chinese market and global product planning? I know that you are responsible for global product planning, and that the demand of different countries and regions is not the same. Global products do not necessarily meet the needs of the Chinese market. I understand that Chinese customers now like innovative products and high-quality localized digital functions and experiences. At the same time, I know that Chinese customers particularly like the BMW product range from Germany, as German products are considered a symbol of quality to some extent. I want to ask what is the positioning of the Chinese market in the global product planning process, and how you integrate it into the global product planning process while meeting the needs of the Chinese market.
Your question is very central. This brand has its own identity and can clearly represent what kind of brand it is. In this regard, we need to achieve consistency and unity globally. At the same time, when we are doing product planning, we need to consider different regions, such as North America, China, and the Middle East, and their respective demands.When it comes to balancing global brand consistency and localization, what does BMW do?
There are two aspects where BMW maintains consistency globally: brand design and driving pleasure.
First, in terms of external and internal design, we have a strong design force and the appearance of the design is very athletic and has a series of iconic design elements. Second, BMW has a unique driving experience; some markets cannot drive at 200 kilometers per hour like in Germany, but global customers still expect to know that BMW can achieve such speed and have this kind of driving experience, passion and pure driving pleasure. These two points are unique features of BMW worldwide.
Regarding local characteristics, there are three areas of change in the Chinese market:
Autonomous driving is evolving very quickly in China. There is now a trend towards L2+ and L3 autonomous vehicles in many major cities in China because customers want more driving assistance in daily city driving. In many regions of China, L2 autonomous driving assistance is what many customers hope to have.
Second, the pace of electrification in China is very fast, and now 25% to 30% of new car registrations are new energy vehicles. At first, people thought that this trend would quickly spread in Europe, because there are environmental regulations there, and small countries like Norway have already achieved 80% to 90% of new energy vehicles. However, from a large-scale perspective, China is leading the globe.
The third unique aspect where China can be a leader is in its understanding of cars as an extension of living space. In this aspect, we found that China has a unique point: BMW customers in China typically spend 1.5 hours per day in the car without driving, watching TV and experiencing entertainment. This is not the case with German customers, who might only make a call while driving from point A to point B. This behavior of Chinese customers brings many possibilities to the industry, such as some Chinese electric vehicle manufacturers making the car interior into a living space. This concept brings many possibilities in terms of functionality, such as seats, entertainment, and sound systems, and how to integrate the development of software and hardware capabilities and advanced technologies into this scene. This trend is happening in China and can be extended to more countries and markets. For example, the cinema mode of the 7 series now allows customers, even those in Germany, to enjoy sitting in the car and watch a movie on Sunday afternoon because of the strong immersive experience, lighting, and sound effects, even better than the living room experience at home. The extension of living space will bring many possibilities.Please translate the following Chinese Markdown text into English Markdown text:
最后一点，我们以中国为家这样一个策略也是非常重要的，因为中国这么多快速变化的趋势，还有一些中国引领的趋势。所以我们认为非常重要的一点，就是要在中国做本土的研发、设计。软件、工程、开发和音响设计，这些是我们没有办法在慕尼黑远程为中国做的，必须要在中国市场本土去更快速地做出反应，在本土进行开发。 **品玩提问：** 我有一个问题，从宝马 X5 国产之后，它在中国市场表现是现象级，主导着这个价格区间，这个成功会不会鼓励把更多高端车型迅速第一时间引入中国市场？ **柯博恩：** 我这边可能没有办法给到你具体车型的本土化生产的比例，但是我们现在在中国销售的车辆大多数都是在中国本土生产的，这是非常重要的。因为我们要更好响应本土市场客户的要求，就必须做本土研发和生产。 **品玩提问：** 宝马最近电动车销量取得比较明显的增长，尤其在中国市场也是增长很快，这个过程当中出现了一些降价的情况。有时候也许过于激烈的竞争也会影响品牌的形象。你们怎么看待在中国这样一个竞争非常激烈的市场取得销量的增长和保持品牌价值这样一个平衡关系？ **柯博恩：** 现在的情况，我 2014 年刚到中国的时候也有这样的情况，价格的波动跟当时经济总体环境、经济增长的前景是很相关的，我们并不能说现在情况就是一直会持续的长期趋势。现在在新能源车领域，25 万以下的区间的确竞争非常激烈。但是对于豪华和高端车型，情况可能有一些不同。当然我们也是需要去对市场情况进行响应，但是在我看来目前这个趋势并不一定是长期的、持续的，并不会变成明年、后年基本面的情况。 **路由社提问：** 我们看到第 9 代 (BMW) 操作系统在 X1 上面搭载应用。刚刚提到中国年轻用户会对车型有更多生活场景的使用。既然第 9 代 (BMW) 操作系统 70% 功能由中国本土团队开发，未来开发针对中国市场使用场景的产品时，中国研发团队是否会拿到更高的授权去独立开发？
Lastly, our strategy “Make China Home” is crucial, because of the many fast-changing trends and trends led by China. Therefore, it is vital to conduct local research and development, design, software, engineering, development, and audio design in China. These are something we cannot do remotely from Munich, so we must react more quickly and do development locally in the Chinese market.
Question from PingWest:
I have a question, after the production of the BMW X5 in China, it has become a phenomenon and dominates this price range in the Chinese market. Will this success encourage the introduction of more high-end models to the Chinese market at the first opportunity?
I may not be able to give you the specific proportion of localized production of a particular model, but most of the cars we sell in China are produced locally, which is essential. Because we must respond better to local market customers’ requirements, we must conduct local research and development.
Question from PingWest:
BMW’s electric vehicle sales have grown significantly recently, especially in China, resulting in some price cuts. Sometimes, overly fierce competition may also affect the brand image. How do you balance sales growth and maintaining brand value in such a fiercely competitive market in China?
Regarding the current situation, I also encountered this situation when I first arrived in China in 2014. Price fluctuations are closely related to the overall economic environment and prospects for economic growth at that time. We cannot say that the current situation is a long-term trend that will continue. Competition in the less than 250,000 CNY range in the new energy vehicle sector is indeed fierce. However, the situation may be different for luxury and high-end models. Of course, we also need to respond to market conditions, but in my opinion, the current trend may not be long-term or sustainable and will not become the basic situation in the next year or two.
Question from HUXIU:
We saw the 9th generation (BMW) operating system being installed in the X1. Just now, it was mentioned that young Chinese users will have more life-scenario use of car models. Since 70% of the 9th generation (BMW) operating system’s features are developed by a Chinese team, will the Chinese R&D team receive higher authorizations for independent development of products for the Chinese market in the future?Krause:
You just mentioned that 70% of the ninth generation operating system’s functions are already developed in China. In the future, more functions will be developed locally in China, while the overall architecture will have a globally unified structure. This is to keep up with the development trends and speed of the Chinese market. Currently, China’s research and development capabilities are at a level where they can develop and produce from functions to complete vehicles, including both software and hardware. We can already see that Chinese models, not just the long-wheelbase versions, are fundamentally localized for the Chinese market. For example, the iX3 was developed in China but is now being sold in other markets because our brand’s influence and innovation capabilities in China are very strong. In the future, there will be more cases of models being developed in China and sold in other markets.
Recently, in the earnings conference calls, Porsche, Mercedes-Benz, and BMW have all emphasized focusing more on the high-end series to cope with new market competition in the future. However, in the entry-level market in China, young users are enthusiastic about BMW models. How do you consider these two aspects?
My question is also related to the previous one. There are currently no successful players in the field of 1 million pure electric vehicles. After launching the i brand more than ten years ago, BMW has done a lot of work on lightweighting and batteries, while China’s development in the cabin and autonomous driving is progressing faster. As a leading luxury brand, how can BMW increase its competitiveness in the 1 million sub-segment market? Or, like the impressive performance you showed us last night, can you give us another stunning performance? Your expression of digitalization and youthfulness was impressive last night. How can you bring stunning performances to more sub-segments in the high-end field?
In terms of innovation targeted at the younger generation in the entire Chinese market, although this market has developed very rapidly in recent years, there is still enormous potential to be tapped because of the rise of the middle class. This group will continue to expand in the future. The buyers of luxury cars will also double. These people are not only in China, but they are also the core target audience for the BMW brand worldwide.
We have made significant progress in the new 7 Series, achieving enormous progress compared to the previous generation product. We have strong products in different sub-segments, including XM and X7 in the high-end market, as well as the Rolls-Royce brand in the ultra-luxury sub-segment market. Therefore, the ultra-luxury sub-segment market is not unfamiliar to the BMW Group. In the compact car segment, we also have the MINI brand and BMW compact cars. With more years to come, we will continue to launch highly competitive products in each sub-segment market.Moderator: Thank you, teachers. Due to time constraints, we will end here today. If you have any further questions, please send us an email and we will be happy to convey your message.
Cohen: Thank you, everyone.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email firstname.lastname@example.org.