Why BMW Says It Won't Back Off Sedans, Even If Some Rivals Do

[0:03] BMW has for a long time called its cars the ultimate driving machine. [0:10] These are luxurious yet sporty German sedans. [0:14] And the 7 Series, now in its seventh generation, [0:18] has long been a kind of flagship model for that brand. [0:21] If you were a high roller and you wanted to drive or be driven in a top-shelf luxury German sedan, [0:28] this would definitely be one of your options. [0:30] And in a lot of ways, that is still true. [0:32] This car is a massive, high-performance machine. [0:36] It is the pinnacle of what we produce when it comes to luxury, [0:41] but obviously always, always performance because this is BMW. [0:45] You always have the ultimate driving machine. [0:57] The fastest version of the 7 Series right now has a 0-60 time of 3.5 seconds. [1:02] That is absurd for a car this large. [1:06] You know, the rear seats are as luxurious as the front seats. [1:08] BMW has unveiled the latest version of this vehicle in New York City in April, [1:14] and it calls this the most extensive update the company has ever undertaken on a single model. [1:21] If you look at the car with those clear lines, [1:25] it really has the presence of 7 Series needs. [1:28] I mean, this is not a car you sneak in and nobody notices. [1:32] This is definitely a car where you make an entrance or you make a grand entrance. [1:37] We have 500 different colors to choose from for the paint for your exterior. [1:43] Now, in the interior, between materials and colors and trim, [1:48] you have 700 different combinations how you can spec the car in the interior. [1:52] But this majestic class of full-size luxury sedans are no longer the only flagships in automaker's lineups. [2:00] Most of the big luxury automakers now effectively have two flagships [2:04] in the form of the sedan and the big three-row SUV, [2:07] and the SUV easily outsells the sedan. [2:10] But I think they build these these days more to prove that they can than anything else. [2:15] In the U.S., the full-size SUV, the X7, now eclipses sales of the 7 Series. [2:23] And that SUV is made in Spartanburg, South Carolina, [2:25] while the 7 Series is made in a factory in Germany. [2:29] All imports from the EU come with a 15% duty. [2:33] Trade pressures favor the U.S.-made SUV. [2:36] It definitely hurts the business case. [2:38] It doesn't completely debunt the business case. [2:41] Pearson said that when you get into the rarefied air of vehicles with six-figure price tags, [2:47] customers tend to be a bit less price sensitive. [2:50] You could put the price, and they have put the price of the car up, [2:53] and offset a lot of that tariff into the market. [2:56] And when you think about the competition for the 7 Series, particularly the S-Class, [3:01] that's also important as well. [3:03] So your competition will also be motivated to increase prices. [3:06] Tariffs are, in the end, a cost to us, like we have other costs in our overall value chain, [3:13] and then we have to deal with that. [3:15] It's not going to stop you from bringing a sedan like the 7 Series to the United States, as it is now. [3:20] No, it does not. [3:22] But the turn toward SUVs, even in luxury, [3:25] is very evident in the number of rivals that have dropped their sedans from their lineups. [3:31] Lexus, Lexus, Audi, Cadillac, Lincoln, a number of different automakers, American, European, and Asian, [3:39] have all decided to either withdraw sedans from the U.S. market or discontinue production entirely. [3:45] We always have been a very successful sedan brand. [3:49] We have a healthy share of sedan in our overall sales. [3:54] And we like sedans, a lot of BMW customers like sedans, [3:59] and we have no intention to stop offering sedans also in the future. [4:04] If you are just being very, you know, just purely economical about it [4:08] and not thinking about image and brand, just saying, well, is this model worth the return? [4:12] You might say no. [4:13] You might say, actually, we don't need it anymore. [4:14] It's not where the market is. [4:16] We're just going to do the XF. [4:17] But as I say, there is still this flagship sort of element to it. [4:20] It tends to be quite heavily used as a chauffeur-driven car. [4:23] You'll see a lot of them in the streets of Manhattan, [4:26] driving important executives around. [4:28] So it's quite a lot of, yeah, I guess, emotional attachment to it, maybe. [4:31] It's reputational. [4:32] The armored version of the 7 Series is literally used to carry dignitaries at G7 meetings. [4:38] This is something BMW builds for the reputational side of it more than for the sales side of it. [4:45] This is everything BMW can build. [4:47] So it's a showpiece. [4:48] Perhaps most significant in this update is the rollout of what BMW calls [4:53] Noya-class. [4:55] It started out as an EV architecture, EV platform. [4:58] But since then, BMW has taken a lot of those design and technology elements [5:02] and decided to spread them out across the company's entire lineup. [5:06] The 7 Series is going to be the first vehicle that they introduce a lot of these new features on. [5:10] So you can fold down the Series screen so you can adjust it to how you are seated so you have the best comfort watching. [5:19] Wow, that's incredible. [5:22] Oh, and there's an ottoman coming up. [5:24] Fasten your seatbelt ready for takeoff. [5:26] BMW is offering a number of different powertrains on this vehicle. [5:31] They've got ICE, they've got electric, they've got plug-in hybrids. [5:35] That reflects a lot of the fragmentation in terms of consumer choice lately. [5:39] EVs were supposed to take over the US market and really much of the world. [5:43] And they've really fallen short of those expectations for now. [5:47] BMW still offers an EV in this market, even though sales have been challenged and EVs are facing some headwinds. [5:52] But it's also got some gas versions. [5:54] We know from the customers who bought our vehicles in the past that a huge majority of them would like to have another electric vehicle afterwards. [6:04] And we see this as a growing segment of the market. [6:07] Probably it will grow slower than was predicted by many experts in the past. [6:14] But there's a clear future for electric vehicles also in the BMW lineup. [6:17] While the auto industry is facing a lot of challenges in terms of investments in EVs, [6:21] autonomous driving, and software-defined vehicles, [6:24] and has a lot of concerns about trade barriers around the world and competition from China, [6:29] the good news for the luxury segment in the US is that it is expected to grow over the next decade or so. [6:34] And BMW beat Lexus to take the top spot in US luxury in 2025. [6:40] Despite some of the headwinds that the sedan segment is facing, [6:44] a look at the 7 Series might give some ideas as to how BMW is going to maintain that lead. [6:49] Where do you want to improve? [6:50] We want to improve on all elements. [6:53] Customer treatment. [6:54] How do we go to market? [6:55] How do our dealers represent our brand even better? [6:59] How do we have more people decide themselves to say, [7:02] I really want to drive a BMW and not a vehicle from one of the other manufacturers? [7:09] I'm sorry I cannot talk about our sales plan for this year. [7:13] I have to ask. [7:13] But I can tell you it is ambitious. [7:15] Okay. [7:16] It is ambitious? [7:17] It is ambitious. [7:17] So you're bullish on luxury autos in the United States? [7:22] We are bullish on the BMW performance in the United States. [7:25] What if we go to