(Bloomberg) -- BMW AG’s response to the challenge posed by Tesla Motors Inc.’s push into the luxury-car market will be ready in five years.
The BMW iNext, which will supplant the 7-Series sedan as the brand’s flagship model, is set to enter showrooms in 2021. The car will drive itself in many situations, feature a new interior and offer a cutting-edge electric powertrain, Chief Executive Officer Harald Krueger said in comments prepared for the company’s annual shareholders meeting in Munich on Thursday. The new car is the centerpiece of BMW’s effort to defend its position in the luxury-car market as changing consumer tastes challenge the German manufacturer’s focus on Autobahn thrills.
The iNext will be “our new innovation driver, with autonomous driving, digital connectivity, intelligent lightweight design, a totally new interior and ultimately bringing the next generation of electro-mobility to the road,” Krueger said.
BMW is in the midst of shifting strategy under pressure from Tesla as well as traditional rivals like Daimler AG’s Mercedes-Benz. In addition to the iNext, BMW is expanding into mobility services as owning a car becomes less important to city-dwelling consumers. The company started a car sharing service in Seattle last month that offers the option of a chauffeur service as well as people renting out their own vehicles.
Growth On Track
The Munich-based manufacturer is set to lose the top spot in global luxury car sales this year for the first time since 2005. Mercedes, benefiting from a rejuvenated product lineup and a host of all-new models, took the lead during the first quarter when sales rose more than twice as fast as BMW’s.
The battle to stay in the lead contributed to price cuts to entice buyers to BMW’s relatively older cars. The average price of BMW’s vehicles declined 5.9 percent to about 33,700 euros ($38,500) in the first quarter as demand for cheaper cars like the X1 hatchback powered past sales of the revamped 7-Series sedan, according to Bloomberg calculations. Still, BMW said it’s on course to meet 2016 targets of delivering slight increases in pretax profit and car sales for the seventh record year in a row, Krueger said.
“After our first quarter, we are on track for the full year,” Krueger said, who’s been at the helm of the 100-year-old company for a year. “We have always stressed that our centenary is a springboard to the future.”
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