Paul Barker grabs a cuppa and a chat with one of fleet’s most influential figures – Rob East, General Manager, BMW Group Corporate Sales.
East moves from heading-up one premium brand’s fleet operation to another aren’t common, so a few eyebrows were raised when former Merc fleet boss Rob East departed the brand, emerging just before Christmas the new head of BMW Group corporate sales.
QHow have your first few months been on this side of the fleet industry’s premium marketplace?
First impressions are very positive, and there are two things I’ve been most blown away by. The first is the quality of the product. When you look at it externally and you hear about the ‘ultimate driving machine’, that’s quite intangible, but when you live with a product and get immersed in the DNA, I think it makes more sense.
The second element was not just the depth and the sheer amount of customer relationships but also the strength of those customer relationships. There is, within a number of our end users, a real passion for the brand, and our product is almost the default choice within those end users.
The huge diversity in BMW’s line-up means product development is always a hive of activity, but 2019 looks like it’ll be one of the German premium brand’s busiest yet. There will be 18 model launches in 2019; these are the ones we know about, with predicted arrival times, but more are on the way:
i3 larger battery April
New BMW 3-Series April
8-Series Convertible April
7-Series facelift May
3-Series PHEV July
X3 PHEV Autumn
2-Series Active Tourer
5-Series PHEV* Autumn
7-Series PHEV Autumn
3-Series Touring September
Mini Clubman facelift September
X5 PHEV Late 2019
Mini electric 2020
QYou’ve talked about being more bold and ambitious in a few areas. How do you intend to enact that?
Let’s talk about specific products. If I think about 7-Series, we know that this established segment is dominated by a particular product. When you try this car and spend time driving it, and – important for a 7-Series – spend time in the back of it, the car is simply amazing. It has got some great tech and all of the luxury features, and what I want to make sure of is that when customers are thinking about a large luxury car, whether it be CEO of a large PLC or a chauffeur company, that we are in consideration. We’re having those conversations and that dialogue because sometimes I think the market defaults to particular brands or products.
QMini was another area you mentioned, following the move to bring the brand within BMW’s fleet team?
We made a fundamental change this year. Historically, corporate sales with BMW and Mini were separate teams, but as of 1 January, my team looks after BMW and Mini so we take much more of a group approach to corporate sales, which I think is very positive. It allows us to talk to the market with one voice.
From a Mini perspective, where there has been a shift, particularly through last year and this year, it’s about making the experience of buying a Mini much, much simpler. Thinking back to the Chili pack, Pepper pack and various others, it’s fair to say customers often found making sense of them a bit of a challenge.
It’s now very straightforward. You pick your model, choose the desired level of performance, you then choose style, packs and any bespoke options. It’s about reducing option complexity and dependency, and now we can also make sure that where there are the packs and trim lines, they can be coded correctly in order to get the RV effect.
QHow much difference will it make having Mini in the fleet fold?
I think it’s fair to say that there wasn’t exactly confusion, but we were going out to the market talking with two separate voices. Now it’s fully integrated and a part of our product portfolio, and I’m really excited about Mini.
It’s such a unique proposition. Mini is probably the most premium car in that segment, but again we have got to make sure that people don’t forget about Mini. We are talking about hatch, we are talking about Countryman and we are talking about Clubman.
We have a unique opportunity. We’ve never had such a broad range of product from the Mini range that actually works well within corporate.
QIs part of the problem that both Countryman and Clubman changed size with the new models, moving up by half a sector to sit in the core crossover and lower medium classes respectively?
No doubt. It’s firmly on our agenda this year for our key account team to make sure we are explaining Mini and that we make sense of it. Our aim is to make it easy for customers to put it on the choice list, because I’m absolutely convinced that if it’s on that list there will be end users thinking “I’ll choose that”, having maybe not considered that particular model before.
I’m not being critical when I say that, historically, Mini sat with a separate team. Now if you have the person in from BMW Group, they are there to talk about and optimise the position of BMW on the fleet and also about Mini. So I think by definition it makes it simpler.
QHow much do you think the Government taxation uncertainty is harming the industry at the moment? Are the fleet ordering pauses caused by Brexit, people waiting for future taxation to pan out or other factors?
I think uncertainty around Brexit is a big element in terms of policy holds, but if you were a fleet manager trying to advise your drivers, it’s hard to know how BIK levels could change. Originally an announcement was expected in the spring statement – clearly they are all distracted by other things, so it feels a bit like a perfect storm at the moment.
You’ve got a lot of uncertainty, and don’t forget a lot of the large end users we’re dealing with are global businesses. That uncertainty is creating some nervousness. And I think a lot of businesses are working out how they will be affected in terms of their core operations.
QWhat do you make of the way the Government has approached company car taxation?
There is hope for electric vehicles with the recent announcement on benefit-in-kind; hopefully that will create a real long-term benefit for drivers to stay in a company car and benefit from favourable tax.
I think there is quite a lot of misinformation out there and it is surprising to us that quite so many myths have not yet been busted when it comes to fleets.
There is quite a lot of work to do to be able to sell the benefit of sustainable fleet management, particularly at the small fleet end of the spectrum, and I think we still have a role. It’s come at a time when there are lots of things buzzing around that have made it quite confusing – is diesel the right fuel, how does WLTP work, what are the implications of clean air zones. We’re in this increasingly confusing marketplace where there is a lot of things changing at a very rapid rate all at once.
In my opinion, the wider political sphere and business confidence is having a big impact on fleet buying decisions and that is unfortunate at a time when we need to be thinking about adopting the next round of technology, whether it’s very clean diesel vehicles or preferably electric vehicles.
QThe new 1-Series is on the way in September. How important is that car going to be to BMW later this year?
Having seen new 1-Series along with a few customers, I think it’s a real game-changer. The latest platform and powertrain addresses all the issues in terms of cabin space, and it has a very attractive design. When we showed customers they were blown away by it.
There has also been a lot of discussion about what happens in the shift from rear-wheel drive to front-wheel drive. The fleet managers I have been talking to see it as something positive, based on the amount of interior space it unlocks, and they don’t see any great sensitivity in moving from a rear-wheel-drive to a front-drive platform. The segment is dominated by front-wheel drive – the new car is a really positive product transition.
QHow important will the 330e PHEV be when it arrives this summer?
We do 26,000 3-Series saloons per year; we will do 8,000 330e and about 11,000 320d.
QIs that 8,000 plug-ins supply or demand limited?
I would say that we could probably deliver more than we have; we have to manage the used market to make sure these things hold up as well, but we planned for a good volume because all European manufacturers need to aim to be at 95g/km average. I keep hearing people saying plug-in hybrids are an intermediate route to BEVs, and I’m not convinced that they are. I think they can live side-by-side for a long time.
BMW winning the fleet Experteye award
“It was an honour, in part because this award is voted for by lease companies. It’s a really strong testament to how we approach the market, but more importantly how the retailers do.”