TRAVERSE CITY, MI ‚Äď The chief ofAG‚Äôs U.S. operations predicts an optimistic future for the recession-battered premium-vehicle sector, forecasting low double-digit growth for this year and the following two years.
Sales could grow even more after that, he says, especially as the large emerging markets of China and India begin to create millions of affluent consumers hungry for luxury.
But Jim O‚ÄôDonnell, president ofof North America LLC, cautions today‚Äôs ‚Äď and tomorrow‚Äôs ‚Äď luxury consumer is changing, and premium vehicles will have to adapt to new values and perceptions about what makes a luxury car.
‚ÄúIn 10 years, premium automobiles will be desired for more than size and stature, he says. ‚ÄúPremium vehicles in a wider range of sizes will be desired for the emotional experience. They will be desired not for how fast they go but how they feel going whatever speed one wants to go.‚ÄĚ
And that includes BMW. O‚ÄôDonnell says the ultimate driving machine may not always be defined by its flawless internal-combustion engines in the future. The days of selling 16-, 12- or even 8-cyl. engines as ultra-luxury cars may be numbered.
‚ÄúAt BMW, we will not be selling cylinders,‚ÄĚ he tells attendees at the CAR Management Briefing Seminars.
‚ÄúFormer 12-cyl. performance already comes from 8-cyls.; 8-cyl. performance comes from 6-cyls. And 4-cyl. (engines) could become 3-cyls., he says. ‚ÄúBut if our customers want an 8-cyl., we should have one and will.‚ÄĚ
The typical premium vehicle likely will be smaller, and it simply will not have some technology and design cues that signal today‚Äôs uber vehicles, O‚ÄôDonnell says. ‚ÄúIncreasingly, premium will be defined by the overall experience rather than the shape, size, method of propulsion, number of cylinders and, yes, even price.‚ÄĚ
‚ÄúIt will no longer be about the number of cylinders, or cylinders at all, perhaps. But rather how what‚Äôs under the hood performs and how it provides a seamless driving experience filled with delight and joy.‚ÄĚ
BMW will continue to emphasize performance and technology, but these characteristics may be manifested in new ways. Technology is becoming increasingly democratized, he says, so auto makers must find more innovative ways to apply it, refine it and integrate it into a vehicle.
‚ÄúNot everyone can and will be able to do this,‚ÄĚ he says.
‚ÄúRegardless of the configuration, BMW will continue to be about performance and dynamics. And we will create and develop more solutions than ever before to ensure sustainable efficiency. Environmental responsibility will become brand strengths equal to superb dynamics. All will still support the feel of the ultimate driving machine.‚ÄĚ
As an example, O‚ÄôDonnell points to a concept car called Vision EfficientDynamics. It features a 3-cyl., diesel hybrid powertrain that has the performance of an M3 and travels 0-60 mgh (100 km/h) in 4.8 seconds but achieves roughly 62 mpg (3.8 L/100 km) and emits just 99 g/km of carbon dioxide.
Despite today‚Äôs challenges, O‚ÄôDonnell says the premium market will continue to grow around the world.
‚ÄúFive years ago, there were about 3 million of what would be considered affluent consumers in China. In another five years, that number is expected to reach nearly 10 million, a majority of these today only being in the three main cities of Beijing, Shanghai and Guangzhou. So just wait until all these multi-million second-tier cities start to catch up.
‚ÄúIndia is on a slower but equally impressive growth curve. In 15 years, the number of its affluent citizens will be equal to the entire population of Australia (about 22 million).
This growth is being repeated all over Asia, O‚ÄôDonnell says. ‚ÄúBy 2015, China, India and the other top-10 Asian markets will boast 70 million affluent households with discretionary spending of more than $600 billion.‚ÄĚ
‚ÄúAdd that to the established bases of wealth in Western Europe and the United States, and there‚Äôs incredible potential for premium-brand companies.‚ÄĚ