Economy

BMW Wants To Be Like Apple, Reimagining How Cars Are Sold

Come inside
Come inside
Andre Tauber

MUNICH Tobias Fröhlich no longer wears a suit and tie to work. The former BMW salesman dons a white polo shirt and blue trousers for his job at a new branch of the Munich firm where he greets customers with a smile, iPad in hand.

Fröhlich is a "product genius" and as such is part of the new sales concept BMW has been introducing to its German dealers for about a year. That’s another way of saying adviser. It’s a concept BMW learned from Apple, where there have long been young experts to advise clients without putting sales pressure on.

BMW's use of product geniuses reflects a larger shift in the way cars are sold. Cars haven’t been indispensable consumer goods for years, paticularly when it comes to young urbanites, who have other available transportation options, including car sharing.

The sector, as a result, is being forced to make buying a car more of an experience, something that — apart from the little scenes that some dealerships stage when they turn over the keys to a customer — is something car companies avoided doing for years.

Reading the writing on the wall

Dealerships may set themselves up in modern palaces, but behind the glass façade things usually proceed exactly as they did in the last century. Customers make an appointment with a suit-and-tie-wearing salesman who then closes the sale filling out all the papers like some kind of functionary.

Ian Robertson, the BMW’s group’s chief of distribution and marketing, is in the process of changing all that. "The car industry is 100 years old, and cars have changed a lot during that period. But the concept of how to sell cars has stayed the same for a long time," he told Die Welt.

The sector can no longer afford this, and has been aware for a while now that they are losing the young market segment. People who buy new cars are increasingly older. If young buyers decide to buy a car it’s often a second-hand one.

When the car market was booming, the sector could ignore the writing on the wall. Nowadays, competition has become cutthroat. Sometimes the dealerships can only sell by giving huge discounts. They make their money with replacement parts, service and used vehicles. There’s little profit in new cars, if any.

Resigned, many dealers give up. And what that means is that formerly independent dealerships belong to ever-larger groups. In Germany, the market leader is a Stuttgart-based group called Emil Frey followed by AVAG in Augsburg and Gottfried Schulz GmbH in Ratingen.

The future will see fewer and fewer dealerships outside cities — "car dealers will be concentrated in bigger cities with service facilities on the outskirts," says Willi Diez, director of the Institute of Automotive Business at the University of Applied Sciences for Economics and the Environment in Nürtingen-Geislingen.

Currently Daimler is seeking buyers for some of its dealerships and in the past few years BMW too has been looking to reduce the number of its dealers. Dealerships that stay in business simply represent more brands than before and thus increase their chances of turning a profit. "What’s important," says Robertson, "is that our dealers make a profit so they can invest."

Big fancy sales palaces in large cities such as Munich, Berlin, Cologne and Hamburg will probably continue to be important as they are showcases for brands. Their influence extends well beyond their immediate geographical area, which is probably why BMW invested 65 million euros in the new Kaiserdamm dealership that opened this spring in Berlin.

The company uses its new sales concept, which it calls "Future Retail," here as well. By the end of the year, 100 of the 527 BMW garages in Germany should be using it too, and all of them should be by latest 2016.

"The point is to get customers into the cars much earlier than we did before," says Nicolas Polydoros, sales head at the Berlin branch. "Their visit to the dealership has to be made more interesting."

Turning dealerships into boutiques

Tobias Fröhlich, who is one of the brand’s 1,380 product geniuses worldwide, is supposed to help with just that. His desk is near an electric BMW, the i3, and this is where he asks customers to take a seat. "I then find out exactly what they want a car for," he says.

After that, Fröhlich calls up relevant BMW vehicles on his screen so that customers can see them from the inside, outside, and every possible perspective. Resolution is so high they have no trouble telling the difference between raw and soft leather used for interior fittings.

He stresses that these are advisory, not sales, discussions. "I don’t get a commission if the customer buys," the product genius says. The pressure to close is thus reduced, and it’s only if the customer displays concrete interest that Fröhlich turns him or her over to one of the salespeople sitting at desks opposite his.

Fröhlich takes his time. His agenda for the coming week is full, and he blocks up to three hours for clients. "If somebody tests a car they want somebody to talk about it with when they get back," he explains.

That sounds expensive, but remember, Fröhlich isn’t selling anything. The investment can still be worthwhile for BMW as Fröhlich also ensures that when the customers reach sales staff the latter can focus exclusively on the nitty-gritty: selling. He often brings clients over who just want to hear the financing details before signing, thus earning the salesperson an easy commission.

In some respects, little has changed since this vintage shot. Photo: Aldenjewell

On-site advice no longer has the importance it used to have. Anybody visiting a dealership today pretty much knows what car they want to buy, having researched it thoroughly on the Internet. "Ten years ago customers visited on average four times before they bought a car," says BMW distribution boss Robertson. "Now they often come just once 90% of them have already checked everything out on the web."

Dealers have to learn how to handle that. "Some dealers claim that fewer and fewer people are coming to the showroom," Robertson says. "I say, no, it’s still the same number of people. They’re just coming fewer times. Dealers who don’t want to lose their relevance for the customer have to change."

That also means creating a buying experience along the lines of what luxury brands such as Louis Vuitton provide. "We’ve looked at a few companies in the luxury industry," says Robertson. "They tell a story about their brand and their products. We do that too. We want to create a whole new buying experience."

Other brands have recognized this need as well — in big world cities Audi has created virtual showrooms where customers can configure their own car, and Mercedes has dealerships that function like boutiques.

But things can’t stay there. "We have to go to the client," says Ian Robertson when asked where the sector will be heading over the next few years. "That's why I tell our dealers not to build additional service space in their garages. Car maintenance in the future will be conducted on site, when the owner isn’t using the vehicle, for example in the evening when he or she is at home."

Should that become reality, car dealerships of the future will have even fewer people in them.

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Green

Ecological Angst In India, A Mining Dumpsite As Neighbor

Local villagers in western India have been forced to live with a mining waste site on the edge of town. What happens when you wake up one day and the giant mound of industrial waste has imploded?

The mining dumpsite is situated just outside of the Badi village in the coastal state of Gujarat

Sukanya Shantha

BADI — Last week, when the men and women from the Bharwad community in this small village in western India stepped out for their daily work to herd livestock, they were greeted with a strange sight.

The 20-meter-high small hill that had formed at the open-cast mining dumpsite had suddenly sunk. Unsure of the reason behind the sudden caving-in, they immediately informed other villagers. In no time, word had traveled far, even drawing the attention of environment specialists and activists from outside town.

This mining dumpsite situated less than 500 meters outside of the Badi village in the coastal state of Gujarat has been a matter of serious concern ever since the Gujarat Power Corporation Limited began lignite mining work here in early 2017. The power plant is run by the Power Gujarat State Electricity Corporation Limited, which was previously known as the Bhavnagar Energy Company Ltd.

Vasudev Gohil, a 43-year-old resident of Badi village says that though the dumping site is technically situated outside the village, locals must pass the area on a daily basis.


"We are constantly on tenterhooks and looking for danger signs," he says. Indeed, their state of alert is how the sudden change in the shape of the dumpsite was noticed in the first place.

Can you trust environmental officials?

For someone visiting the place for the first time, the changes may not stand out. "But we have lived all our lives here, we know every little detail of this village. And when a 150-meter-long stretch cave-in by over 25-30 feet, the change can't be overlooked," Gohil adds.

This is not the first time that the dumpsite has worried local residents. Last November, a large part of the flattened part of the dumpsite had developed deep cracks and several flat areas had suddenly got elevated. While the officials had attributed this significant elevation to the high pressure of water in the upper strata of soil in the region, environment experts had pointed to seismic activities. The change is evident even today, nearly a year since it happened.

It could have sunk because of the rain.

After the recent incident, when the villagers raised an alarm and sent a written complaint to the regional Gujarat Pollution Control Board, an official visit to the site was arranged, along with the district administration and the mining department.

The regional pollution board officer Bhavnagar, A.G. Oza, insists the changes "aren't worrisome" and attributes it to the weather.

"The area received heavy rain this time. It is possible that the soil could have sunk in because of the rain," he tells The Wire. The Board, he says, along with the mining department, is now trying to assess if the caving-in had any impact on the ground surface.

"We visited the site as soon as a complaint was made. Samples have already been sent to the laboratory and we will have a clear idea only once the reports are made available," Oza adds.

Women from the Surkha village have to travel several kilometers to find potable water

Sukanya Shantha/The Wire

A questionable claim

That the dumpsite had sunk in was noticeable for at least three days between October 1 and 3, but Rohit Prajapati of an environmental watchdog group Paryavaran Suraksha Samiti, noted that it was not the first time.

"This is the third time in four years that something so strange is happening. It is a disaster in the making and the authorities ought to examine the root cause of the problem," Prajapati says, adding that the department has repeatedly failed to properly address the issue.

He also contests the GPCB's claim that excess rain could lead to something so drastic. "Then why was similar impact not seen on other dumping sites in the region? One cannot arrive at conclusions for geological changes without a deeper study of them," he says. "It can have deadly implications."

Living in pollution

The villagers have also accused the GPCB of overlooking their complaint of water pollution which has rendered a large part of the land, most importantly, the gauchar or grazing land, useless.

"In the absence of a wall or a barrier, the pollutant has freely mixed with the water bodies here and has slowly started polluting both our soil and water," complains 23- year-old Nikul Kantharia.

He says ever since the mining project took off in the region, he, like most other villagers has been forced to take his livestock farther away to graze. "Nothing grows on the grazing land anymore and the grass closer to the dumpsite makes our cattle ill," Kantharia claims.

The mining work should have been stopped long ago

Prajapati and Bharat Jambucha, a well-known environmental activist and proponent of organic farming from the region, both point to blatant violations of environmental laws in the execution of mining work, with at least 12 violations cited by local officials. "But nothing happened after that. Mining work has continued without any hassles," Jambucha says. Among some glaring violations include the absence of a boundary wall around the dumping site and proper disposal of mining effluents.

The mining work has also continued without a most basic requirement – effluent treatment plant and sewage treatment plant at the mining site, Prajapati points out. "The mining work should have been stopped long ago. And the company should have been levied a heavy fine. But no such thing happened," he adds.

In some villages, the groundwater level has depleted over the past few years and villagers attribute it to the mining project. Women from Surkha village travel several kilometers outside for potable water. "This is new. Until five years ago, we had some water in the village and did not have to lug water every day," says Shilaben Kantharia.

The mine has affected the landscape around the villages

Sukanya Shantha/The Wire

Resisting lignite mining

The lignite mining project has a long history of resistance. Agricultural land, along with grazing land were acquired from the cluster of 12 adjoining villages in the coastal Ghogha taluka between 1994 and 1997. The locals estimate that villagers here lost anything between 40-100% of their land to the project. "We were paid a standard Rs 40,000 per bigha," Narendra, a local photographer, says.

The money, Narendra says, felt decent in 1994 but for those who had been dependent on this land, the years to come proved very challenging. "Several villagers have now taken a small patch of land in the neighboring villages on lease and are cultivating cotton and groundnut there," Narendra says.

They were dependent on others' land for work.

Bharat Jambucha says things get further complicated for the communities which were historically landless. "Most families belonging to the Dalit or other marginalized populations in the region never owned any land. They were dependent on others' land for work. Once villagers lost their land to the project, the landless were pushed out of the village," he adds. His organization, Prakrutik Kheti Juth, has been at the forefront, fighting for the rights of the villages affected in the lignite mining project.

In 2017, when the mining project finally took off, villagers from across 12 villages protested. The demonstration was disrupted after police used force and beat many protesters. More than 350 of them were booked for rioting.

The villagers, however, did not give up. Protests and hunger strikes have continued from time to time. A few villagers even sent a letter to the President of India threatening that they would commit suicide if the government did not return their land.

"We let them have our land for over 20 years," says Gohil.

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