Sustainability in the Auto Industry: BMW vs. Ford

Last week’s Sustainable Brands conference was stimulating and inspiring as usual. I hope I will come around to posting a series of observations from the conference, but I’ll  start with this one: the contrast between how BMW and Ford presented their green product strategies.

BMW was represented by Uwe Dreher, the global head of marketing for BMW i, the company’s new electric-vehicle sub-brand. Dreher opened his presentation by sharing some findings from BMW’s ethnographic research that the company found troubling. In the affluent neighborhoods around the San Francisco Bay Area it is not uncommon to find a Toyota Prius in the driveway of a $5 million home. If affluent consumers, who could afford a BMW, were buying the relatively affordable Prius instead because of its environmental caché, this presented a threat to BMW. Meanwhile, in Tokyo, the company found young people are no longer enthusiastic about getting a driver’s license and less keen to drive than youngsters of prior generations. (General Motors has found something similar in the U.S.) The streets of Tokyo are too congested, said Dreher; it’s no longer fun to drive there. And public transportation presents far less hassle. If the young no longer saw driving as fun, what did this say for the future of BMW in Japan?

These threats were an impetus behind BMW’s electric vehicle strategy, which is intended to appeal to the affluent and the young, by combining the sex appeal and prestige of a BMW with the superior environmental performance of a next-generation all-electric vehicle. The strategy is a sound response to what the company’s research turned up, except for one detail: the company’s green strategy is intended to increase consumption, from the moderately priced Prius to the luxury-priced BMW i8 and from parsimonious and efficient public transportation to the sexy BMW i3. Is this in fact a green strategy?

As a mass-market automaker, Ford has taken a different course, embracing a more populist and inclusive strategy. John Viera, Ford’s global director of sustainability and vehicle environmental matters, described the company’s broad line of electric and hybrid vehicles, which will include seven models by early 2013. Then Viera acknowledged that the migration to electric vehicles is not going to happen overnight. For quite some time people are going to buy internal combustion engine vehicles. Ford’s strategic response: a commitment to offer the most fuel-efficient vehicle (or one tied for most fuel efficient) in every automotive category. The idea being: no matter what kind of car you need, you can have the most fuel-efficient one if you buy a Ford. That’s an impressive brand promise, one that requires a significant commitment.

The paths chosen by BMW and Ford will be more significant for the impact they have on the industry today and in the future than for the vehicles that roll off their assembly lines over the next couple of years. BMW produced just 1.7 million cars in 2011, less than 3 percent of global car production; the BMW i brand will likely account for tiny fraction of its sales in 2013-14. But the BMW i series may help popularize the use of ultra-light-weight materials–such as the carbon composite to be used in the new line’s passenger cabs–in production vehicles, which will help the industry improve fuel efficiency over time. Ford, meanwhile, sold about 5.7 million vehicles in 2011. Its competitive positioning around fuel efficiency should help spur innovation among automakers as well.

What are your thoughts?

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