www.acem.eu #20 July 2009 News from the Motorcycle Industry in Europe

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Interview with Hendrik von Kuenheim

BMW Motorrad CEO talks about the consequences of the economic crisis on his company

The global financial and economic crisis also hit the motorcycle division of BMW. In the first quarter of this year, the company could only sell 17,232 units. Compared to the same period last year, a decrease of 18%.

Question: In December you would still not hear anything about the crisis. Was your evaluation of the crisis incorrect? 
von Kuenheim: No one could forecast the impact of the financial and economic crisis. I have always stressed this. And now I'll not be able to say when it will end. But in some markets the outlook is better, e.g. overseas. In the U.S. we have a special economic situation... 

Question: ... the US market is moving slowly, though... 
von Kuenheim: Yes, but if your are experiencing even a slight sales’ increase, while at the same time, the market declines by an average of 30% or more, then this is a phenomenal achievement. 

Question: The decline in Southern Europe, where large markets are a guarantee for good sales, has hit you particularly hard.
von Kuenheim: Indeed. In Spain, for example, the aggregate market for models over 500 cc collapsed by 78%. And Spain is after Italy and Germany our third largest market. 

Question: In Germany, the minus of BMW is at around 35%. Does this drastic decline in your home market hurt in a particular way? 
von Kuenheim: The German motorcycle market has been reducing its volumes for some years now. A similar development does not exist in other European markets. Motorcycling today is in competition with many other activities especially among young people. 

Question: Maybe motorcycle riding has simply become too expensive, starting from obtaining a licence. 
von Kuenheim: Sure, it is prohibitively expensive. Depending on the region, you have to count between €1500 to €2000. In Portugal, you can get a licence for one tenth of the money. Motorcycling in Germany is made unnecessarily difficult by legislators and riding schools. 

Question: Last year you sold nearly 102.000 motorcycles, which corresponded to a decrease of 0,8% over 2007. What do you expect this year? 
von Kuenheim: I am an optimist. For me, the glass is always half full. After the first three months of the year, I assume that there will eventually be sunshine again. I hope that at the end of the year we’ll have only a 12- 14% drop. 

Question: So you are foreseeing sales of around 90.000 units? 
von Kuenheim: We are currently working with figures of just over 90.000 units. 

Question: Due to the sales slump, workers in the BMW plant in Berlin-Spandau had to take four days of reduced working shifts. Is this measure enough to deal with the crisis? 
von Kuenheim: From today's perspective it is difficult to say. But already in January we had planned prolonged summer and fall breaks. This way  much pressure will be taken away from production. And we will use the time for conversion and maintenance. 

Question: BMW Motorrad employs 2.000 workers in it Berlin facility. Are their jobs safe? 
von Kuenheim: There are currently no plans regarding job cuts. The intelligent combination of flexibility instruments (working models, time accounts, prospective vacation planning, short-time) gives us enough flexibility to address market fluctuations in the further course of the year. 

Question: Are employees facing wage cuts, should the crisis persist?
von Kuenheim: Our board, our managers and all employees are involved in the company's success - in both good and less good times. Therefore, this year, board members will receive about 40% less of their annual income. For a division manager the wage cut amounts to about one third, while a pay-scale employee will have to count on 10% less.

Question: Are you worried about your own bonus?
von Kuenheim: I know that I will get no bonus - and this is okay.

Question: Scrapping schemes for automobiles have boosted sales. Would this measure help the motorcycle industry?
von Kuenheim: Of course! Such a stimulus for the motorcycle industry would be helpful. I would hope for something similar to be set up for the two-wheeler industry.

Question: You are also President of the International Motorcycle Manufacturers Association, IMMA. Why is the industry so reluctant to call for government assistance?
von Kuenheim: In Germany, there are perhaps 20.000 people making a living with the motorcycle industry and generate approximately a two-digit billion turnover. Our sector is small compared to the automotive industry, but our industry also needs a greater voice. This will also help BMW Motorrad.

Question: In December, ACEM President and KTM CEO Stefan Pierer criticised the fact that medium-sized businesses were suffering from shrinking credit. Has the situation changed?
von Kuenheim: Unfortunately not. The supplier sector is not faring well at all. The small and medium-sized companies are suffering even more than the large ones. We at BMW Motorrad had to cope on short notice with several suppliers’ failures.

Question: Your criticism is therefore directed to the banks who do not supply small and medium-sized businesses with enough capital? 
von Kuenheim: In a functioning economy everybody plays his role - from the manufacturer on to the banks, up to the final costumer. I can only strongly urge banks, to provide the economy with the necessary capital. Only then can the economy be kept alive. I hear almost daily complaints coming from the dealer network, about not receiving enough money from banks. The middle class is the backbone of our economy. Credit institutionswhich must not forgot this.

R1200GSQuestion: Sales of the best of your models, the R 1200 GS, collapsed by around 40%. Are you thinking about stimulating sales through discounts?
Kuenheim: After revising this model in early 2008 the R 1200 GS reached its all-time sales record. The current decline, is related to the situation in  the main markets. Of course, we are thinking about ways to improve sales. But I find the word discount terrible. Something like this will not work for the brand BMW Motorrad. We still have very good ideas, on how to boost sales without resorting to rebates.

Question: Trends in the Ptw industry definitely show scooters as a growing segment. Do you suffer from the fact that neither BMW nor her daughter Husqvarna can offer this type of vehicles? 
Kuenheim: We are watching the trend closely. But competition in the scooter market is fierce and it is difficult to make this segment profitable. If we feel that we can make money, we will market such models. 

Question: And when would this be, from 2010?
von Kuenheim: It takes at least three years to develop a new model.

Question: But you admit that such a product might be interesting.
Kuenheim: I took my position in BMW Motorrad only one year and four months ago.  

Question: ... but you also had a predecessor who observed the market and did a good job. 
von Kuenheim: A very outstanding job, indeed. However I’d like not to make any statements about possible new products. 

BMW C1Question: How about a new version of the C1? Have you already reached a final decision on this?
von Kuenheim: Some days ago, I saw a C1 with 4000 kilometers on offer at a BMW dealer for  €6400. When it was launched, the C1 cost 9900 D-Mark. It is remarkable that a product that was not particularly loved by the specialized media, and barely found buyers in some markets, is to be found on the used market at a price higher than when it was new. This is a strong statement, but a decision is still pending. 

The interview with Hendrik von Kuenheim was led by Frank Mertens and was first published in April 2009 on © Autogazette.de

 

 

 

 

Hendrik von Kuenheim

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMW R 1200 GS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMW C1

 

 
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