BMW exec: Alt-fuel cars to stay niche

By Mary Jane Grandinetti
Posted Sep. 7, 2010 at 12:01 p.m.

Ask Jim O’Donnell, president and chief executive of BMW North America, about the automaker’s plans for alt-fuel vehicles, and he assures that the  luxury nameplate will be there — with the 5-Series passenger cars and X3 crossover front and center.

But he also is convinced that hybrids, electrics and any combination will remain niche markets rather than supplant internal combustion for autos for some time.

“The price of gas in Newark (N.J.) was $2.38 a gallon when I left to come here this morning,” said O’Donnell, in town for the BMW Golf Championship this week at Cog Hill in Lemont. “Without a substantial increase in that, the U.S. market is not going to turn to alternative fuel vehicles.”

And he doesn’t see Congress acting anytime soon to impose European style taxes on gasoline that would be needed to make alt-fuel equally attractive.

“V-8s are in the DNA of American drivers,” O’Donnell said Tuesday at a Teen Safe Driving program in the parking lot at U.S. Cellular Field, reminding that hybrids, on sale in the U.S. since 1999, account for a “disappointing” 5 percent of the market.

Instead, he sees engines that have the same power and performance but with smaller displacement as the order of the day. “V-8s becoming V-6’s, 6’s becoming 4 cylinders and so on.

“That is where the fuel efficiency will come from,” he said — not from the much-anticipated Nissan Leaf or Chevy Volt, electrics that require charging stations and other logistics. “Even the Mini E requires cooperation of local authorities to provide the necessary places to stop for a quick charge. And that’s not cheap,” he said, noting that there are only 500 of the electric Minis in use to illustrate the needs of a  bigger electric fleet.

Besides, he points out, the Volt will be the second most expensive Chevrolet when it comes out this fall, another hurdle.

He is not concerned with the challenge to the Mini from the pending arrival in the U.S. of the Fiat 500. “Nothing against the 500, but Mini has established itself as the high-end subcompact.”

O’Donnell does, however, see gains being made by Cadillac as providing a challenge to BMW as a whole.  “The cars are there now,” he said, citing the SRX crossover in particular. But he said Cadillac has to make strides in its dealer network to really compete in the luxury segment. “They still have too many dealers to provide the type of service that luxury buyers demand.”

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One comment:

  1. Anthony Sep. 7, 2010 at 4:42 pm

    Perhaps Jim should speak to his bosses over in Munich about the future direction of the company. Every time you hear CEO Norbert Reithofer talk now he always mentions the future of the company is in “Efficient Dynamics” with the Megacity vehicle and the newly formed electric car division a key component in BMW’s continued growth.
    Sometimes I wonder if suits like O’Donnell are locked away in their offices so much that they don’t see what is going on in the real world and what people are talking about and what they want.
    The Volt and the LEAF are creating huge interest in Chevrolet and Nissan with people pre-ordering and even paying over MSRP in some cases.
    There are a lot of Americans that want off oil Jim and they will pay a premium for a car they like that can eliminate trips to the gas station.
    Keep living with your head in the sand and you won’t be sitting in the presidents chair for long….