In the future, today’s BMW annual conference might well be seen as a turning point for premium car brands. This year, 2016, could mark ‘peak product’ for the hugely profitable German three as they run out of new markets, new customers and new product niches to exploit.
True, BMW sold a highly impressive 2.24 million cars in 2015, growth of a healthy 6%. Net profit was up by around 10% to 6.4bn euros (£5bn) and the company’s EBIT profit margin was very solid at 9.2%.
Perhaps the most interesting part of BMW’s statement this morning what the company calls "substantial risks and uncertainties" in the global political and environmental situation.
BMW lists these as "the high public debt in many countries, the current instability within Europe, the normalisation of the Chinese market and the difficult economic situations in some emerging markets".
If not for the fact that it's Budget day in the UK, I’m sure the national papers would be decoding BMW’s comment about Europe as being as much about the chance of the UK leaving the European Union as about the migrant crisis.
But BMW makes it quite clear in these four concerns just how big the hurdles are for the premium car makers. And while the instability in Europe and the emerging markets may calm in the short to medium term, the high debt and slowing of growth in China won’t.
‘Slight increase in automotive sales’
Indeed, despite BMW growing by just under 8% in the first two months of 2016, the official outlook for the whole year is just "a slight increase in automotive sales".
Rather than the usual announcements of new products and expansion into new niches, company CEO Harald Krüger’s offer was a modest one.
There’ll be an open-top i8, an i3 with a bigger battery pack and a plug-in hybrid Mini. And BMW will finally launch the on-off seven-seat X7 SUV. Aside from offering high-profit, high-end trim packages on more of its models, that was about it for the near term.
The company says its new strategy is known as ‘BMW VISION NEXT 100’. Krüger said it "offers a vision of how we believe mobility in the next 30 years and beyond will develop… a new era of mobility – a time that will be characterised by sustainability, connectivity and automated driving".
And while Krüger insisted that BMW would "continue to claim a leading position in the premium segment, as we see it, the mere number of vehicles sold is no sufficient measure of an auto maker’s future viability".
The short version is that BMW now sees a future where new sources of profits will come from offering live information services to drivers. In future, cars will drive along, hoovering up information and sending it up to a computing cloud, where it will be repurposed into everything from weather reports to booking a slot at an electric fast charger.
No wonder, then, that Krüger said BMW would have to manage its current business "to perfection" for it to generate the profits needed to turn future vehicles into semi-autonomous information hubs.
BMW began its massive expansion from Bavarian minnow to global player in February 1994 when it bought the Rover Group. Twenty-two years later, the golden years of new products in new niches delivering significant annual growth is probably coming to an end.