SUVs are the future for BMW

BMW is facing a tough year for sales in 2017, with over 3000 fewer vehicles sold than for the same period in 2016.

It's an across-the-board syndrome, with only the new 5 Series and the niche-appeal i3 electric car selling in larger numbers, year on year. If 2017 is not a happy time for BMW though, the company does look forward to better days ahead, and the sales slump in the current year is relative to its growth in previous years, BMW Australia CEO Marc Werner claims.

"In the last five years BMW in Australia has been extremely successful," he told local journalists during the launch this week of the updated 1 Series and 2 Series models.

Sales during that period have grown by 52 per cent, Werner says, and BMW finished 2016 up at around 28,000 units for the year.

"2017, so far, as far as sales volumes are concerned, is a bit of a correction, so we have definitely focused on reorganising some parts of our business..."

Werner laid blame for the lower sales in 2017 at the feet of "product life cycle issues", but the upside for BMW is the strength of its SUV sales.

"The SUV segment, in particular in Australia, goes from strength to strength.

"We believe that strength will continue; we believe that the SUV share – or SAV share, as we call it internally… will grow to 65 per cent or even more.

"We are extremely well positioned to exploit this business opportunity."

That is contingent on the launch of the X3 in November, according to Werner, who describes the new mid-size luxury SUV as "the most significant launch this year for us."

The X3 won't do it all alone, though, with both the small X2 and a redesigned X5 said to be on the way.

"We will launch this car in the first half of next year," Werner says of the X2, which he described as a "courageous step to go for a more youthful design."

And in 2019 BMW will roll out its heavy hitter, the X7. This car will go up against the Mercedes-Benz GLS and the both the traditional Range Rover and the seven-seat Range Rover Sport.

Toorak mums have apparently told Werner: 'My X5 is nice, but I want something new...'

Werner says that the X7 is "a car that the BMW Australia product management team has been fighting for, for many, many years," and it will be "as big as possible..."

"That's exactly what our customers want."

There's no word at this stage on pricing for the X7, which will be built at BMW's Spartanburg plant in the USA. But there will be a price ceiling that falls short of a high-priced model like the Bentley Bentayga – and for a very good reason.

"We still have another luxury brand in our portfolio, which is Rolls-Royce, so I believe we'll leave that [competing with Bentayga]... to Rolls-Royce."

Asked subsequently by motoring.com.au whether the 55 per cent SUV share pointed to brand confusion for BMW in Australia, Werner demurred.

"Not at all... we have actually created the SUV luxury segment, when we launched the X5 [in 1999] – and then the X3 and the X1. So we've always been at the very forefront, when it comes to introducing new concept segments for our customers. And our customers appreciate that.

"That's the basis of our success, I should say.

"And Australia is definitely an SUV market… in 2011 we were roughly at an SUV share of 28 per cent. Now we are travelling at 55 up to 60 per cent, and we believe going forward we'll definitely see an SUV share of 65 [per cent] if not even more.

"That's every second car will be an SUV. We're prepared for that shift, and there is definitely a shift in terms of consumer appetite for this kind of car. We've recently made the decision globally to further increase our capacity on the SUV side.

"And we are ready to provide sufficient capacity for what the Australian consumer wants."

But passenger cars still have a part to play, and that's principally where BMW struggles, currently. According to VFACTS, sales of Mercedes C-Class alone represent over 60 per cent of BMW's total passenger-car sales for the year to date. It's a massive sales tally for the mid-size Benz – approximately a third of Mercedes passenger-car sales. Werner makes the point, however, that BMW's SUVs are outselling their rivals from Stuttgart.

"We definitely have a higher SUV/SAV share than our competitor," he said.