BMW to Sell i3, i8 Directly Over the Internet
In a move designed to reduce costs, BMW will turn to the Internet to sell its i sub-brand of electrified vehicles.
When the i3 launches in late 2013, BMW is expected to offer it for sale through a direct online site. This setup will be unique to the i sub-brand and will represent BMW's first-ever effort to sell a vehicle directly over the Internet.
"There is considerable risk in BMW's approach of promoting the i brand so prominently," says Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Science in Bergisch Gladbach, Germany. "There is the image risk, if they don't succeed as quickly as expected, and then there's the main risk of costs, which can only be countered with high deliveries."
The BMW i3, expected to launch in late 2013, will carry a price tag of approximately $48,500, compared to the base MSRP of $29,388 in Germany for the BMW 1-Series. Meanwhile, the head-turning i8, expected to launch in 2014, will likely be priced above $120,000.
For the most part, marketing of BMW's i sub-brand will be focused at the world's major urban centers, says Linda Croissant, a BMW spokeswoman.
But will the Internet sales approach works? Ian Fletcher, an auto analyst at research firm IHS Global Insight, sees direct Internet sales as challenging, "Many customers will still want to go somewhere to look at and drive the vehicle before buying. With new technologies, there may be even greater skepticism about buying a car over the Internet, as in many cases you'll have to win the confidence of customers that it works and there is support for them."
Nissan and others initially took pre-orders of the LEAF via the Internet. Nissan's move to offer the LEAF in the US through the more conventional dealership approach has failed to spur sales. Tesla continues to rely on the web as a key sales strategy, and insists that it will never sell its vehicles in a conventional way. It's not yet known if web-based sales is a smart and cost-effective innovation to auto retailing, or if automakers may be unintentionally pushing EVs into a perpetual niche by not having readily available inventory in dealerships.
BMW's goal is to reduce expenses. Internet sales require roughly half the cost of dealership distribution, according to Ferdinand Dudenhoeffer of the Center Automotive Research. That alone should allow BMW to keep prices down on the i3 and i8. And for two vehicles that are already expensive, even a slight price reduction could make the vehicles accessible to a larger market.
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