BMW vs Tesla: BMW to sell 25% of its cars online in 3 years


BMW sells 2.5 million cars and 194,000 motorcycles annually, almost all in a traditional car dealership. But the 100-year-old car brand wants to sell cars online, just like Tesla.

Now BMW is embarking on a major project with Adobe to get “phygital” … to be able to do business seamlessly across apps, websites, and physical car dealerships, however its clients prefer. That means data, insights, software, and a complete rethinking of how its thousands of car dealerships interact with customers.

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And, of course, how customers interact with BMW … including before they buy, when they buy, and for years of owning their vehicles. In this TechFirst, we chat with BMW SVP Jens Theimer. Check out the Forbes article here, or keep scrolling for the video, podcast, and a full transcript …

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BMW vs Tesla: BMW wants to sell 25% of its cars online by 2025


Transcript: BMW is going “phygital”

(This transcript has been lightly edited for length and clarity.)

John Koetsier: E-commerce jumped more than 50% over the last two years, thanks mostly to the pandemic, of course. But it’s not just groceries and laptops, it’s also cars — big, massive expenses.

BMW is not unaware of this trend, and they are looking to enable sales of their entire fleet while still honoring the fact that they have a massive network of thousands of dealerships. How on earth are they going to navigate that? To chat, we’re talking to Jens Thiemer who’s a BMW Senior VP. Welcome, Jens.

Jens Theimer: Hi, John. Nice to talk to you. 

John Koetsier: So, Jens, soon I’ll be able to buy a Rolls Royce in an app? 

Jens Theimer: Well, first of all, our intention is to make the customer sales journey and the customer journey in general as fascinating as possible. So, as seamless as possible, of course in that context it’s very important to make it digital. So you’re already mentioning that… so every channel that we are managing has to be thought through from that transactional viewpoint. And therefore, of course, so being an automotive player nearly a hundred years legacy of working together with physical dealers on our side, with having a physical product. So our emphasis for the future is, of course, bring in the digital competence of selling the digital competence, also of kind of positioning the brand in our business. That’s what we are into and therefore, yes, we will be able in the next years to sell cars through the app, to sell cars through the web, to sell cars in whatever channel you can imagine.

John Koetsier: Excellent. So I’m guessing it’s not exactly an in-app purchase like you might have in a mobile game, but you will be able to buy online and in an app.

Let’s just pause for a second and think about that because, look, it’s the second biggest purchase that most people will make in their lifetimes. And yes, it’s happening now. It’s not common. It’s kind of a crazy thing if you think about it, you’re spending $50,000, $80,000, whatever the case might be … digitally, in an app, on a website to buy a car. How’s that work? How’s that feel? What’s driving that trend? 

Jens Theimer: Well, I would say it’s not a trend any longer. It’s already in the market. So, of course we are already having in certain areas people who want to do that purchase journey purely digital, and so far we are already offering that. It’s being used. It’s out there, and not even since COVID.

So there are multiple studies where we can really see that already now a third of all buyers can very clearly imagine to buy a car online. And we have to prepare ourselves together with our retail partners to make that possible.

So is it the second biggest purchase decision? Yes, it is, that’s very clear. But you always have to keep in mind the people out there, they are not cashflow rich. So therefore they are not buying the whole thing and have the whole sum in front of their eyes. So, we have financial services. We need to have financial services fully integrated, and therefore of course you break it down. And the purchase decision for a hundred thousand bucks is of course easier done than paying the whole sum at once.

John Koetsier: That makes a lot of sense.

Jens Theimer: That’s psychologically important. And therefore, I think, you can observe yourself… so what are we buying? So, more or less in every industry we are used to do that. And not only in the awareness space, searching for some things, configure some things, but especially then when it comes to the real purchase decision. So we need to be able to say, ‘Okay, here’s what we are having on stock. Here is your perfect car, based on data.’

So ideally we already anticipated who’s there clicking, who’s sitting there, with all the data with technology we have in our systems, so we can predict… we can definitely say, ‘Okay, with a high likeliness, we are going to propose that those cars are going to be the perfect offers for that person.’

John Koetsier: Interesting. Now, you can do this, obviously, as a brand-new car brand with no legacy, but you mentioned you have a hundred years of legacy. There’s four or five thousand BMW dealerships around the planet, never mind MINI dealerships … we mentioned Rolls Royce.

How do you integrate that with a business model that has dealerships? 

Jens Theimer: So, first of all, we are pretty proud about our working relationship and our business relationship with our retail partners worldwide. So they are the foundation of our business and they have the direct customer contact so far. So, for many, many people out there our retail partners are the main interface to our brand.

And of course I think it would be stupid to give that up, because it is, even if there’s a huge trend to direct sales, a huge advantage that we are having those contact people out there. And imagine, or keep in mind, there are many, many things in an automotive customer journey which will stay physical.

So, a test drive, you can do in the future, a test drive in the metaverse… I’m pretty sure that we can offer a fascinating immersive experience. I see those as an addition.

So that’s an add-on. Another thing is of course the vehicle handover. And the last thing is the vehicle physically additionally lead to services over the year, has to be from time to time serviced, and they are kind of unplanned incidents where a vehicle has to be touched. And therefore, I think, to have such kind of locations, physical locations run by very professional partners on your site, so that stays a huge USP.

And we see also brands in the automotive sector who are totally based on a digital purchase journey, on a direct sales model, they are now more and more investing into physical locations as well, because they are experiencing… probably the world, still need for a perfect customer journey those touch points. And I think in that context, it’s definitely important. The more digital now we are becoming, we have to do it together with the partners on our side. So it starts of course to make everybody to make it visible. So what’s on stock? What’s out there? So what are we having on demand? So, and to have a price.

You can’t sell something digitally when you are not having a price. That’s why, for example, everything in cars already 20 years ago, digital buying in our industry was starting with used cars, because used cars are of course having a fixed price.

Of course you can negotiate a little bit, but that’s not having that big impact as for new cars. And therefore I think those are the big, big triggers we have to manage. So, in whatever model you are, I see that business model agnostic. I’m pretty sure that the trend will go into digital, especially when it comes to the post-purchase phase.

So, talking about features on demand, talking about… we call it digital late sales. So X factory is one thing and then of course during the usage phase of the car, there are now technology-wise lots of possibilities in the future, and they can only be sold direct anyway. So you probably always have a combination of business models. And in that context, yes, absolutely true, we have to take our retail partners on this journey.

John Koetsier: I had to smile when you were talking about the physical locations, because I recently was talking to the CMO of a neobank. And a neobank of course is a bank that has no physical locations theoretically, right, it’s entirely a digital construct. And this neobank just acquired a traditional bank and they were moving into a new area, and they said it’s actually important whether there’s an actual branch there or not, to have a sign … to have a physical location that people drive by and they recognize. 

Jens Theimer: Yeah.

John Koetsier: And it makes sense in terms of what you’re saying. I drive a Model Y, it’s a little challenging to get service [laughing] … let’s just be upfront about that. So you are changing modality a little bit of how somebody might buy a car. What kind of buyer experience are you trying to create? What are the steps and how’s that work?

Jens Theimer: Buying experience, I think, has to be as easy as possible. So, especially when it’s digital, I think people are expecting that we have the perfect system. So ideally one digital front end where you’re not being bothered by the complexity of the product… that’s where it’s all starting with.

So I think, first of all, it starts with a configurator experience you are offering, and the more customer-centric your bundles are, the better it is. So things has to be understood. We are working, for example, with one methodology… we call it ‘pre-configured costs.’ Also here based on MBO/MBA individual customer data, what we have of course when the people are already somewhere in our system. So if it’s new people, you know, it’s a little bit harder. But we are finding ways also here to predict what people might want to see in terms of what options we offer. Second step then is in the perfect journey that directly we guide the people to what we are having in our system already. So, independent from, first of all, whether today it’s build-to-order or build-to-stock market.

I think people are more and more expecting a vehicle which is ready to go in a couple of days… when it’s a little bit more complex then a couple of weeks. So we have to keep that in mind.

So that’s belonging to the perfect customer experience. That’s why people love brands where the complexity on the one hand is not so big that you are getting lost, and on the other hand, where you still have the experience of building your own car and not buying something from the shelf which is more or less already there somewhere in the system. So when you, for example, we are having a brand in our ecosystem, MINI— the MINI brand — so I think we found the perfect sweet spot between having enough options to make your car as personal as possible, but on the other hand, have the full production system behind where we are using a template management.

So where more or less we can exchange, so, to an extreme extent, some days before the car is handed over, what kind of options we are putting on the car. And therefore, I think that’s the basis for digital, and then absolutely at the end it’s a five-click journey, something like this … so not more, and then ideally you are ready to go. And especially, I think, John, one thing comes in addition. So of course on demand, having a delivery to your home, not expecting that people come to a certain place for the handover, but offering at least then as an option to bring the new car or the used car bought online to your home.

John Koetsier: Super interesting. And that’s a delicate dance, right? Build my own car, but I want it tomorrow. [Laughs]

Jens Theimer: Exactly. So how to find that sweet spot and maybe also, yeah, so building a system where we are not giving up. I think that’s a USP, so that you are still knowing, okay, that’s a brand who can really build based on many, many possible combination, your perfect car. Yeah, so that it’s not a commodity, but it’s still your personal experience. 

John Koetsier: Yeah. And you don’t have to wait six months for it. I mean, shocker, [laughing]. Let’s talk about after buying, because you’re making the buying journey digital to a large extent. What kind of ownership experience are you trying to create and does the digital extend after the purchase? Are you looking to enable service and other things like that in an app and online? 

Jens Theimer: That’s one of the most, I think, fascinating points. So our industry was probably very much focused in the past years on the buying experience, on the handover experience — make that a once-in-a-lifetime kind of experience — but what happened afterwards? So, in the meantime, I think the [market] shifted dramatically.

And so, of course we not only want to keep the customers loyal, we want to keep them in our ecosystem that we want to really create the car always fresh. So first of all, from a technical standpoint in terms of maintenance, to do everything what’s possible over the air, updates, etc., upgrades.

But additionally there is now coming a functionality, a new channel, so where we have the possibility to offer digital services and functions on demand during the usage phase. And that all based on the combined car data we are having on the customer data and at the end, put those two data points together and say, ‘Aha, okay. If the customer is in a situation where, for example, a technical feature like a specific active cruise control in an advanced version would be great for the person to have,’ we play alternatively on your app, ideally in your car on the screen.

We offer that to you, we explain what’s the advantage. We say, ‘Okay, there’s a free trial period. Try it out. When you like, you can order that.’ So that’s done actually in less than a minute and you’re ready to go. So the car always stays fresh. It’s additionally very interesting also for used cars, so that creates other business cases in the future. Used cars aren’t necessarily from their nature old at a certain point, so you can keep them fresh. But for me, even more important, it keeps the customer journey alive. So we have the feeling ‘Ohh, the brand based on intelligent data usage is talking to me. They know me. They predict, they anticipate what I should try out, what I should need.’

And technology-wise, I think, yes, we are having the data points and more and more we are also having the functionalities on the car. Some things are pre-built in the hardware already. The rest is software, you just release it. And of course at the end, you pay per month or you pay per year, whatever. It’s an additional business field which is occurring there. It’s not to be underestimated. It’s very interesting for our whole industry in the future and we are expecting a really, a very good portion of sales also in that field in the future. 

John Koetsier: That brings up a good point, because as you go digital, you have to kind of navigate what I like to call this ‘identity paradox,’ right? Everybody wants the brand to know them. Everybody wants brands to know their preferences, to remember them, to never ask the same question twice, even if I’m talking to somebody here and somebody there in the app here and the dealership there … but also nobody wants to be tracked. Nobody wants their privacy invaded.

How do you navigate that? 

Jens Theimer: I think for that perfect journey we are talking about, so that’s the basis. Of course you need the customer data, you have to get all the content of usage of the data. So additionally, we have some laws here, some regulatory things.

So, you need to build trust first of all. That comes of course out of a brand like BMW, so we are used to deal with customers already today in a very trustful way. 

I think first of all, from a psychological standpoint, that’s a good situation. But here it starts to where we see the challenges. So first of all, I think we have a beautiful instrument in our hands, and this instrument is the My BMW or the MINI App. So, in former years when those apps were occuring, they were kind of remote controls for your car. Today, those apps are your bloodline to the brand. So we are creating a community system there. Of course you can back and forth send data from the car to the app, or from the app into the car, or just addresses.

But also when we talk about transactional things, you can upgrade your car. Additionally, of course it is not just a transactional channel, it’s also an interaction channel with a brand. And I think in that context, not only for power users, when people understood the benefit of such an app they give you every consent you can imagine, because that’s the magic of data combined with human centricity.

And that’s, by the way, also the two most important brand principles in our brand identity, the perfect combination of Tech Magic and Human Centricity. That’s creating the most impactful system. But we need to explain that, so it’s not self-explaining when you are not used to work with such a system. And also here, our retail partners play a huge role during the handover of the car… or even before in the pre-purchase phase. Imagine you see some benefit to using the app already when you are doing a test drive, or getting your offer.

So then at a very, very early stage, we are getting that customer data. People understand why, and at the end, we get permission to stay in the system and to work with that data also in the future. That is high level. That’s nearly hypercare of customer data and customer interaction, but as I said, it’s the foundation of everything what we are having in our plans.

John Koetsier: It’s another good segue, because as we go digital, it’s still important to have some personal relationship, potentially. As you continue to make it easier for somebody to buy and own their vehicle, in an app or online, what needs to stay personal about your experience?

Jens Theimer: I think even the best digital system is not replacing physical and one-on-one kind of encounters … so, experiences. That’s why, by the way, we are also building in the future on partners on our site.

But also you can enhance the digital journey by, of course, very intelligent bots. You can make the journey even better. You can bring in consultants from time to time in the consultant phase.

But I think first of all, people want to get in touch from time to time with real faces. For me, that’s very, very clear. And again, now we are coming back … it is the second biggest purchase decision for many, many people, and there are touchpoints to human beings.

And I think the trigger points should be set by data, digitally. We, for example, have a beautiful system, we call it ‘Proactive Customer Care.’ We’re already contacting our customers when we see in the data of the cars something will come in the next days or weeks, we’ll create a kind of check control message. But even before that message is occuring — ‘You should come into the workshop’ or something like that, or ‘There’s a system failure’ or something — we contact the customer already and that’s always done by a human being, by phone. If it’s not so important, it’s a push notification in your car or on the app, but normally it’s the physical phone call. And then we are explaining why we are calling. We say, ‘Don’t worry. We are on your side.’

And there you see the combination is that what probably in the future we’ll create, USPs for premium and luxury brands. We’re talking at the very beginning about Rolls Royce, for example, and in that context I think it’s nearly a concierge kind of thing. It’s your personal partner on your side who is on service at every point 24/7 when you have a wish or when you have a demand in the context of your mobility system. So, yes. There are a lot of things staying important in the one-to-one human customer relationship… pretty convinced about that. By the way, another reason why I’m so clear about our brand principles, our brand values also here — Human Centric meets Tech Magic — only then you will have probably the best combination.

John Koetsier: I like it. I mean, honestly, when there’s a defined flow and everything is operating according to that flow, technology’s totally fine. When there’s something a little bit out of the box or when you’re just having a problem and you can’t figure it out, having a human voice, having a human face is super helpful. Well, Jens, I want to thank you for this time. I know it’s late in your day … do appreciate your time. 

Jens Theimer: Thanks, John, appreciate it as well. Thank you. Take care.

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