BMW: Big thinking for Mini
03 November 2011
After successfully establishing itself in the private sector over the past 10 years, a growth spurt in size will hopefully lead to a growth spurt in sales, according to BMW's fleet boss Steve Chater. He talks to Paul Barker about the brand's progress
Mini has always been exactly as the badge says. Small. Which has predictably limited its appeal in a corporate sector that places practicality, mile-munching ability, the number of doors and space to carry people and goods significantly higher than driving dynamics, cuteness and showroom appeal.
Despite winning a deeply impressive nine BusinessCar Supermini of the Year awards, and the odds are in its favour for hitting double figures a few months from now thanks to permanently rock-solid residual values and kerb appeal, the brand hasn't been mainstream because its cars are too mini.
That's now all changed, and BMW's corporate operations manager Steve Chater is finally ready to let the brand off the leash in the fleet marketplace.
"Mini has been highly successful but very focused on retail private customers - it's where the car sat and had its biggest success," Chater tells BusinessCar.
The change has come in the form of the Countryman model. Sized to slot into the lower medium sector, the five-door model offers hitherto unseen practicality and space for the Mini brand. The range includes a
sub-120g/km diesel version, and at the other end of the scale an all-wheel drive 184hp Cooper S variant, while boot space of 350 litres matches the VW Golf or Vauxhall Astra. The car was launched last year, but only now is parent company BMW looking to make inroads in the corporate sector.
"We've put fleet demos out to end user and lease customers. It's just starting because the high demand for the car in retail created challenges - we didn't have the supply of cars," explains Chater, who says the company was left with the difficult dilemma 12 months ago: "Do you create a big bang and then not be able to supply vehicles? It's the balance of creating an order bank but not able to fulfill customer expectations."
The move into the fleet marketplace also means a change of mentality for a Mini brand that has previously focused on the more personal aspects of appeal. "We've talked for 10 years about the reasons for buying being emotional and suddenly we're into the fleet market," comments Chater. "It doesn't mean we have to detach the emotion but there's a much higher degree of rational decision-making. If all people have been sensitised to is the emotional TV-led image, it doesn't communicate the rational reasons to buy."
The education process will also be important. "We did 10,000 Mini units last year - it's not insignificant and with the introduction of the Countryman we've suddenly got a completely new vehicle," explains Chater. "It's a big car and I still have situations where people think 'Mini' and they think 'hatch' and they think 'small'. We talk to companies that say they don't have the Mini on their fleet - they're thinking hatch. Even when you say Countryman they're thinking Clubman, which is only slightly bigger."
Chater is hoping that the introduction of the Countryman will lead to greater retention of drivers, with people leaving the brand when they outgrow a supermini-sized vehicle. "The car was introduced to broaden the Mini portfolio, and you have to aspire to conquest new customers, but we also wanted to loyalise the ones we have and give them options," says Chater.
"I've had people in my family that didn't want to leave the brand. Rather than going out and buying a Golf, which is a good car, they can stay and have all the things they love about Mini but in a larger package."
According to Mini, the early growth is in smaller fleets, although Chater expects that to be overtaken by larger end-user fleets in time.
"I'm seeing significant growth in SME - it's faster to respond [than larger corporates]. But the bigger opportunity is with end user corporates," he says.
Chater claims that the appeal of the Countryman doesn't come at the expense of the other models. "We're not seeing a dilution in the figures. It's not substitutional, the hatch has grown year-to-date. There's maybe a bit out of Clubman but it's primarily new customers."
He likens the Countryman's task to that of the BMW 1-series, which took a while to gain a foothold in the corporate sector, but climbed to number 13 in the fleet sales chart last year despite it being the first generation model's final full year on sale before being replaced in summer 2011.
"The biggest issue is awareness - the car is first generation," comments Chater. "It's like the 1-series, we were renowned for 3-, 5- and 7-series then X products and the Z portfolio. The 1-series was something BMW wouldn't previously have operated in this territory and was initially outsold four to one by the A3." Fleet sales in 2010 saw the A3 placed in position 12, less than 1500 units ahead of the 1-series.
Chater is also looking to availability as a weapon for the Countryman. "We have better lead times than some others so we're saying to customers, try our Countryman," he explains. "We're not basing our strategy on other people's lead times, but with Minimalism [Mini's low-CO2 branding] standard across the range, and the continued success of our whole-life costs, it makes compelling argument.
"We've worked very hard across the industry to make ourselves a credible fleet offering. We've put a lot of effort into offering the right approach to market and customers as service levels are becoming more and more important to them," he concludes. "This car is well-placed, the reasons for buying are rational and solid."
Watching Mini's growth from mini to ambitions of becoming a major corporate brand will be interesting to watch. But given the success of both Mini in the retail sector, and BMW in fleet, the foundations are there for potential success.