Steve Roberts explains how BMW MINI Group was expecting an orderly queue for its new hybrid ranges. Until events overtook it. John Griffiths reports.
IF accurate crystal balls were for sale, SMEs and other business car users would now be queuing round the block to see how the turmoil into which car markets and business users have just been plunged might eventually play out.
Less than two months ago, senior BMW and MINI brand managers, talking to journalists trying out the new iPerformance 5 Series BMW and MINI Countryman PHEV petrol-electric plug-in hybrids, were predicting useful but not necessarily spectacular growth for the new models.
Now it is heads down and back to the drawing board, along with the rest of the industry, as an environmental bandwagon against diesel cars, in particular, but also increasingly against purely petrol-powered cars gathers further pace.
As hacks climbed into the review cars in June, they were told that SMEs and fleets could sensibly look at integrating the new BMW and MINI hybrids with existing business car stalwarts like the 520D diesel, basing decisions on mileage and type of usage – capitalising on the iPerformance model’s potential to use mainly electric power for urban travel, for example, possibly leaving long-distance roles to the frugal diesel.
“Hybrid is definitely the way that the industry is moving. It’s not going to happen overnight. But it will grow steadily as business users and private buyers realise how readily they can be adapted to their own driving,” one executive told Car & Van Funding.
Steve Roberts, head of corporate sales and used vehicles for MINI – and former product operations manager for BMW, said that BMW MINI Group had been projecting sales of around 1,500 this year for the hybrid 5 Series, with perhaps 5,000 in a full year. That compares with current 5 Series sales of 15,000 a year, of which around 80 per cent are diesels. “Yes, there’ll be a slight substitution from 520D but overall there should be a slight increase.”
His prediction made due provision for the storm that diesel has endured from governments over the emissions scandal – but not for the deluge which has followed in the UK and elsewhere in Europe over the past few weeks: a declared ban on conventional diesel and petrol-powered cars from 2040, threatened driving restrictions and penalty charges for diesels in potentially dozens of cities, a more punitive car tax regime and other measures in a major ratcheting-up of diesel’s demonisation.
Statistics from the Society of Motor Manufacturers and Traders released in August show starkly just how major the problems and financial risks SMEs and other business users face in trying to determine a sensible way forward for their vehicle planning, as well as the confusion and uncertainty already settling in. Registrations of pure electric cars shot up by 105 per cent, year on year in July, lifting them to 50.4 per cent over the year’s first seven months.
Petrol-electric hybrids typified by the iPerformance 5 Series and Mini Countryman PHEV soared by 76.8 per cent to 5,310 units, further accelerating growth which has raised total registrations by 42.9 per cent, or nearly 30,000 units, over the first seven months.
But in sharp contrast, registrations of conventional diesels plunged by more than a fifth, to 69,157, in July, ominously accelerating a trend which has seen an 11 per cent drop over the first seven months.
And the SMMT’s stats suggest that SMEs, in particular, are becoming seriously rattled. The overall UK new car market fell by 9.3 per cent in July; the fourth straight month of decline. But those going to “business” users, embracing SMEs, plummeted 23.8 per cent – far more than the 10.1 per cent drop of big fleets and the 6.8 per cent of private buyers.
For SMEs, leasing companies – indeed, the entire automotive sector – the effect of residual values is becoming of much deeper concern. Auto Trader’s monitoring shows that while 71 per cent of used car searches at the end of last year were for diesels, the figure has already fallen to 54 per cent.
While BMW has yet to disclose any revisions to its ambitions for its new hybrids, its optimism about their prospects appears well justified. With both vehicles rated at sub-50g/km of CO2 and 9 per cent BIK “senior managers get a chance with the ‘i’ to have a really good vehicle but with the BIK greatly reduced,” says Roberts.
With similar hybrid development for the short wheelbase 7 Series, he believes there are lots of savvy managers and executives taking the hybrid because it will save them over £300 a month BIK as well as being able to drive a car with very few compromises.
As earlier-published car reviews on our sister title Business Car Manager have already shown, both acceleration and top speed are firmly in the high-performance category.
Roberts expects total business and fleet sales to account for over 80 per cent of sales, with almost one-half of that total accounted for by SMEs.
“We’re seeing a lot of companies, especially in London – the chauffeur companies, the taxi companies – who are buying into the technology. Mainly with 7 Series initially but now 5 Series joining in. There’s a long way to go still, but we’re starting to experience significant growth in that area. ”
Will there be new marketing initiatives tailored to hybrids?
“What we’re trying to do is market to the user-chooser so that they have a greater understanding of what’s available to them.
“The SMEs are already very switched on to it. They’ve structured what they want to do with their cars and how best to purchase them. Actually, SMEs are the area where we’ve seen the largest growth.
“They’re very important indeed. Growth in the SME sector been quite consistent over the past four years. We’ve seen annual growth in some areas of 20-plus per cent. A lot of it is down to SME’s generally creating well structured car policies. And the dealers have helped by getting themselves into better shape with structured product offers.”
Indeed, just last week, BMW Group announced a £2000 incentive scheme to encourage users out of Euro IV diesels and into newer BMW and MINI cars.
Read on Business Car Manager our story BMW announces Lower Emissions Allowance
It all suggests the move into hybrids and away from diesels will be quicker than any of us suspected.
