INTERVIEW | Chewing the fat with BMW SA CEO Peter van Binsbergen

In 1994 BMW Group South Africa had just three vehicles in its line-up.   

If you want to get technical, you could also cite the E31 8-Series, of which a tiny volume was produced locally at the Rosslyn, Tshwane plant.    

But the main portfolio consisted of the 3-Series, 5-Series and 7-Series, a far cry from the breadth of the current range, where just about every single-digit number is covered – with letters in some cases as well.    

The year 1994 was also when Peter van Binsbergen joined the manufacturer, starting a career within the brand that would take him as far as Japan, Germany and China in various leadership roles, before returning to Mzansi to take up the position of CEO.   

He is the first South African CEO in the group’s history on the continent and grabbed the reins in January this year. We sat down with Van Binsbergen for an hour-long interview to discuss the current and future plans for the automaker.    

Coming from an engineering background, Van Binsbergen can truly lay claim to have seen the complete timeline of technology in the modern BMW era unfold.    

He was there when traction control made its appearance in the 1995 E38 flagship, he oversaw the transition to engines that required unleaded fuel, the proliferation of xenon lighting technology and of course, the increasing shift towards autonomy and electrification.   

Our virtual meeting took place as the country bore witness to dramatic scenes of civil unrest that had begun in KwaZulu-Natal – and even BMW was not spared, as seen in footage of a carrier transporting new X3 units being torched on the N3.    

Van Binsbergen confirmed that the looting and disruption had a direct effect on operations, adding that the events had left him saddened and disappointed.    

He said logistics had ground to a halt, since Durban port is where BMW receives most of its parts and is where vehicles are loaded for export. Dealers had closed their doors out of concerns for the safety of their staff and stock.    

Amid the tumult of a pandemic, Van Binsbergen aims to roll up his sleeves and rally the proverbial troops to foster a revival for the brand, which, according to him, is desperately needed.   

“Last year we did less than 10,000 units. That is not sustainable. We need some short-term results. That is where my knowledge of the market can help to bring some short-term effects.”   

And though he tells us that he would not be so arrogant as to claim he is better primed for success than any of his foreign predecessors in this role, he does believe his nationality will make him an asset.    

“Everybody who has been sent into this role has been sent for a particular reason. For a particular goal, objective and a different reason at a different time.”   

“Having grown up here, having worked here in the beginning, I understand the culture of SA, I understand the structures, like for example, the Automotive Production and Development Programme (APDP), I know our partners well, whether it be our suppliers or our retail partners, which means I can hit the ground running.

“I am here with a long-term commitment, not passing through to fairer pastures, nor hankering to return to my home – because it is my home. So I think a long-term commitment I can make to South Africa is also a value at this particular point in time.”    

A significant part of his agenda is addressing and expediting the journey towards meaningful transformation and inclusivity.    

“So I would say I am the right guy for the current tasks at hand. And if I was not, I would not have accepted the job.”   

Returning to the country, Van Binsbergen said he was reminded of the resilience that defines the South African character – and of our connection with the automobile.

“South Africans have always had a special relationship with cars, an emotional one. Coming back after 18 years, it has not changed, a car is not just a commodity to get from A to B, South Africans still love their cars.”   

He references the indomitable, pedigreed E30 325is, a specimen he lusts after personally, with dreams of having an example in his own garage. But despite the grip of nostalgia and the passion for tradition, he forecasts a greater shift towards digitisation for our market, particularly where the purchasing process is concerned. But more on that later.    

What was on the to-do list during his first months at the wheel?   

“The first item on my list was to navigate through the second and now third wave of the pandemic, protecting our associates, ensuring that their health is protected, plus trying to optimise our performance – trying to find a balance between the two.  

“That was the first priority and it remains the priority. The second key priority is growth.” One component of this, according to Van Binsbergen, is optimising the new retail sales model adopted by the carmaker, underpinned by an online portal.     

Lastly, he devoted time to examine the culture of the company he has taken management of, its spirit, understanding of the leadership and the aspirations of the people it employs.

Sustainable growth over a longer period, stability and profitability will strengthen the impetus to adequately address transformation, Van Binsbergen believes.   

“There are a number of facets to meaningful transformation. Looking at the whole value chain, starting with ourselves, we already do a lot, BMW is a Level 4 BBBEE contributor, so we definitely focus on all facets of the spectrum.

“But that does not mean that there is not a lot more we can do, for the entire industry. So we are focussing on what we can do within the company, whether it is a topic of employment equity or management control.”

Van Binsbergen added that the company is a supporter of the Automotive Industry Transformation Fund (AITF).    

As described in a 2020 statement by the National Association of Automobile Manufacturers of South Africa (Naamsa), the AITF is “a R6bn industry-wide initiative, earmarked to transform the industry by broadening and deepening the participation of black and historically disadvantaged entrepreneurs, in efforts to grow and develop the South African automotive industry”.    

Van Binsbergen says monetary investment is only part of the initiative.

“We are also responsible with the AITF to build up suppliers and then purchase from those suppliers. We need to take responsibility for it because we are going to consume parts, accessories and services from them. It is an area where we need to put a lot of focus and a lot of attention, because it is, of course, to deliver sustainable businesses within the supplier network.  

“It obviously takes time finding the right partners, to help develop them to the quality we need, then continuing to work with them as a long-term supplier. And you see in our industry we believe in long-term relationships.”

Further down the value chain, Van Binsbergen promises that transformation at retail level will also receive careful focus.    

“This is a topic that takes time. If you invest with the right intention, it can have a very sustainable, long-term effect, which is what transformation is about.   

“It is not about a scorecard, BBBEE points, it is about enabling and building up a supplier base that can deliver to our industry, not just BMW, but the industry, over a long period of time.”   

We arrive at the inevitable Covid-19 question and like all local production facilities, the output of the Rosslyn plant was affected. Van Binsbergen says low levels were as a result of not being able to run the usual three shifts while adhering to safe social distancing protocols, but also because of reduced demand, since most export markets faced lockdown measures too.

Luckily, he says the company was able to retain its staff and pay them a sustainable wage, while he hopes that as the infection rate decreases, production could be ramped up again.    

But despite the foreboding elements clouding the market, Van Binsbergen claims BMW is doing relatively well in tough circumstances, explaining that a decline in the premium segment overall is a factor for which there are solutions.    

“We have to give our customers a reason to buy into the premium segment, we have to exceed customers’ expectations of the service delivered to them.”   

He concedes that consumer affordability deserves serious consideration, striving to make offerings more attainable, despite financial pressure and a reduction in disposable income.    

But that statement comes with a stern disclaimer.    

“I do not mean make cars ‘cheap’ – I mean looking at the total cost of ownership, looking at clever financing tools that give the customer accessibility to our product, with peace of mind at the end of ownership, without fear of a balloon payment.”   

BMW Select is an offering that gives the assurance of a guaranteed future value, in addition to comprising maintenance costs and the option of insurance coverage.

“Then there is our new retail sales model, which can play a wonderful role in gaining segment as well.

“The customer sees all the stock for sale in the country. They can get the car they want, not just the cars available at the dealer they are standing at. Secondly, there is no need to haggle with dealers, the first price shown on the transaction portal is the most attractive price, including an opportunity to buy on Select, with an affordable instalment.”    

“It is open 24/7, wherever you are. This is premium. I compare it to a different brand: Apple. They offer a similar kind of environment ... you know the prices, you do not have to worry about haggling, you can buy an Apple product wherever you are.”   

Van Binsbergen said the portal was developed after studying global benchmarks offering similar user experiences.

In terms of fresh metal, be prepared for an electrified onslaught from BMW over the next 12 months.    

“BMW made a very bold statement, worldwide, we are going to have 25 electrified models on the market by 2023 – that means plug-in hybrid (PHEV) or battery-electric vehicles (BEV).”

Quoting chairperson of the management board at BMW AG, Oliver Zipse, Van Binsbergen discussed the “power of choice” strategy, where the firm would continue to build internal combustion derivatives in addition to electrified powertrains.    

“And the best example of that would be the X3. You can buy a petrol X3, a diesel X3, an X3 M, an X3 PHEV or an iX3 soon – whatever choice on one platform.” Also imminent is the X5-sized iX sport-utility vehicle and i4, an electrified 4-Series Gran Coupé. 

“Of course, we will continue to work on the entire portfolio, across the entire five categories, from X1-sized vehicles to 7-Series-sized vehicles, you will see electrification across the portfolio.”   

That includes Mini and Motorrad.    

“Electric mobility is part of the future, it was not a phase or a fad, but an integrated part of our strategy. On the other products, I cannot say too much right now - M has a few things, the X3 LCI looks great, the new 2-Series looks great and across the full spectrum of product, there is much to look forward to.”   

Back to the electric agenda – a rather important one not only for BMW, but also the future of the automotive manufacturing industry in SA, Van Binsbergen declares. Vehicles with emotional appeal, usable range, affordability and charging infrastructure are the points that are essential to success of electric mobility, he says.    

Talks with Naamsa and the department of trade, industry and competition (DTIC) are ongoing, with a view to cementing an electric vehicle framework in the country. The DTIC in May released its Auto Green Paper on the advancement of New Energy Vehicles (NEV) and Van Binsbergen says BMW is very much instrumental in affairs.    

“What is really necessary are incentives. In Germany, volume tripled when the government announced electromobility incentives. And in this country right now, there are no incentives, in fact there are even higher import duties on an electric car.    

“That is why we are working very closely with the ministry right now. We are making it very clear that of course we want to future-proof our industry. On the one side, the industry is very focussed on production, but equally important is that we have a market for those in SA. And that we do not just produce e-mobility for the rest of the world and leave our market to lag behind with old technology.

“Just a simple fact is, about 60% of production in this country is exported. For us it is over 90%, around 70% of that is to Europe and the UK. As they switch – and the UK is clear that from 2030 onwards they do not really want combustion engine cars, as they switch to e-mobility, if we do not produce locally, our demand for our production will decline.”   

He said the discussions with Naamsa and the DTIC have been positive.    

“Because we all have the same objective, future-proofing our industry. The first step is securing the volume, producing electric cars, securing jobs and localisation, which is part of the Green Paper. The long-term vision would be bringing high-voltage battery production to South Africa.”