BMW sees big growth potential in China for auto finance
BMW Group has received a big boost from its consumer finance company, AFC, which was launched in China in 2010, and the carmaker sees potential for the unit to grow further in the market.
China now is BMW Group's largest market worldwide, ahead of the United States and Germany.
In the first five months of 2014, the company sold 184,823 BMW brand and Mini cars in China, up 25 percent.
Last year, Uwe Stadtler was named CEO of BMW Automotive Finance (China) Co. after leading BMW's automotive finance operations in Japan and Thailand.
During the Beijing auto show in April, Automotive News China Managing Editor Yang Jian interviewed Stadtler about his plans for the China market.
How much progress have you made expanding your business in China?
We started offering financial services in China in late 2010. Now, for every three BMW cars sold in the market, one is financed by us and two are insured by us. We launched BMW Extended Warranty in China last year, and we are increasing penetration in this new business line.
Are you satisfied with your progress?
We had a good start. BMW Automotive Finance China is fully integrated within the BMW Group's value chain by now and generates a profit. Now, it is important for us to strengthen the organization, keep developing our staff and enlarge our product portfolio to manage growth...
You worked for BMW's auto finance unit in Germany, Thailand and Japan. What are the penetration ratios of BMW's retail finance in other markets?
In Germany, BMW has a penetration ratio of 60 percent; in Japan, over 50 percent and in the United States, more than 70 percent. The penetration of our retail finance in China reached 30 percent; it is one of the highest among all automotive financing companies in China. But there is still much room for [expansion].
What are the things about car buyers in China that impress you most?
The customers here are definitely young and they are really keen to explore new possibilities and are open to new ideas. The strong growth in all our business lines mirrors the change of mindset among Chinese car buyers, who are becoming more sophisticated about financing and insurance.
Also, I was surprised to [discover] that there are over 500 million Internet users in China and many of them have opened Internet blogs and use WeChat (a Chinese equivalent to Twitter). I believe this massive social media community provides great possibilities for us to get the word for our products and services out there.
What will BMW Automotive Finance China do in the near future to expand?
We have become the fastest growing BMW financial services company worldwide. To continue such growth and to be able to manage it, we invest in attractive products, services and sales structures. Having always focused on customer needs, we believe that premium service is key to attract and retain customers.
Therefore, we are upgrading our IT system in China, which not only make us more efficient but allows us to better interact with our customers and enhance loyalty. The new system will start operation later this year.
To further maximize customer satisfaction, we are preparing to launch a credit card for our customers. It is not only a common credit card but also a loyalty card, which will allow BMW and Mini car buyers to gain access to exclusive benefits such as golf events and special offers. The credit card will be launched in the first half of 2015.
We are also working with state-owned enterprises, medium-sized enterprises in China to develop our fleet car business.
BMW started taking orders for the i3 electric sedan in April. How do you plan to support its sales in China from the auto finance side?
We have developed the 'BMW Financial Services Electrify Program', which offers one-stop services and attractive possibilities exclusively to BMW i customers. This brand new financial services program includes attractive financing offers, tailor-made insurance products and reliable vehicle related services, like the extended warranty program.
One innovative component of the program is the BMW Add-on Mobility concept. This service satisfies all mobility needs of BMW i customers. If you wish to cover longer distances or need more space for a certain journey, you simply switch to an internal combustion engine BMW car for a short time.
Do you see any challenge to grow BMW's auto finance business in China?
One challenge but at the same time an opportunity for our team here, is to grow the organization and help our Chinese colleagues get proper training and grow professionally and personally. We employ 400 people in China now. To support the current and anticipated business growth, we need to significantly increase the number of our employees in the next years, which is a challenge as this young industry in China shows a scarcity of talent... I am very confident about the success of BMW Financial Services here in China.
You can reach Yang Jian at email@example.com.