BMW Motorrad CEO Markus Schramm Interview Part 1

The year 2023 has seen BMW Motorrad celebrating its Centenary as a motorcycle manufacturer, while also for the first time in the company’s history breaking through the 200K barrier in terms of annual production entering its anniversary year. In 2022, BMW saw 202,895 motorcycles and scooters sold – an increase of 4.4% compared to 2021. Germany remained the company’s largest single market, with 24,129 motorcycles and scooters sold there, while France also registered record sales with 21,223 vehicles delivered, 6.7% up on 2022. North America was the German company’s third largest market, with an 11% increase to 20,295 units sold, helped again by a record number of bikes delivered, this time in the USA (17,690 units/+10.4%).

The man who’s spearheaded this healthy growth is Markus Schramm, 60, an able and experienced motorcyclist who took over as Head of BMW Motorrad in May 2018. He’d been with its parent company BMW AG since 1991, and was already a member of both the company’s main board of directors, and its Supervisory Board. Prior to assuming his new role, Schramm had been responsible for Corporate and Product Strategy Planning for the entire BMW Group, at a time when the company’s overall commitment to EV/Electric products was intensifying. Having reached the retirement age for BMW executives, his five-year stint heading up BMW Motorrad is now shortly coming to an end, so the chance to speak at length with him one-on-one in his Munich office unveiled some key pointers already set in stone for BMW Motorrad’s future direction, especially in its EV products.

[Editorial note: this interview took place in late Summer 2023. At the time, BMW had just confirmed it would be producing a new R 1300 GS, but it would still be a few months before the R 12 and R 12 NineT were officially introduced.]

Alan Cathcart: Markus, congratulations on BMW Motorrad’s record year in 2022, in which you broke through the 200,000 unit barrier. You’re on track to do even better in 2023, so does that mean that the negative effects of the Covid-19 pandemic are now completely behind you?

Markus Schramm: Yes, I think so. It’s true that after all the restrictions of the Covid era, more and more people nowadays are getting a rider’s license to feel once again or to discover for the first time the freedom of motorcycling. To be honest, I find it really astonishing how we came through this crisis with new record sales in 2021 and ‘22, and we are on course to add another record year in ‘23. So for sure we are benefitting from this in sales, while internally we created several great new structural programmes for greater flexibility in the way we do business, like refining our logistics process, our warehousing processes and suchlike. So at the end of the day, the net result of the Covid crisis is that it made us much stronger for the future, while remaining in first place in the global premium motorcycle and scooter segment.

AC: So in fact, did BMW, like so many other motorcycle manufacturers, actually benefit from Covid?

MS: Yes, I must admit we did. I would like to express my sincere thanks to our customers worldwide for the great trust they placed in us during this period.

AC: But this means a lot of those customers were new ones. Who are they?

MS: Well, in terms of the type of customers, they are not that different, it’s just there are more of them! We have the strongest brand, we believe we have the most attractive and broadest product portfolio of any of the major manufacturers, and we have a very good distribution network globally, so it is not one market which you can pick out, it’s all over the world. We’ve been elected both the Trendiest Motorcycle Brand in the world, and the one with the most innovative technologies, so I think putting brand values and innovation leadership together with this very broad product portfolio, that is the reason for our success, and in consequence more and more people want to have one of our products. Our clear goal is to position each of our different models as the best premium bike in each segment, and I think we are on a very good path to doing just that. And we are continuously expanding our market reach, so that for example last year in 2022, India was our fastest growing market with 7,282 units sold there, an increase of 40.3% from before. So many of our new customers are coming from fast-growing markets, meaning that overall I’m convinced we are on a good track down the growth path.

AC: Have you had to redirect your product development strategy to take account of these new customers?

MS: No, we did not have to redefine our market strategy at all as a reaction to Covid – there was no reason to do so. We simply kept focusing on having the best products in each segment we compete in.

AC: To accommodate this increase in production, did you have to hire extra staff for your Spandau factory in Berlin, and have you built new extensions to it? Or are you looking at expanding your production footprint to another location?

MS: Berlin is our lead plant, and it will be for the future. More than 80% of all our motorcycles are produced there, and we have more than 2,200 highly professional and passionate partners building them. We have very flexible working patterns and a double shift all week through, every week, with a triple shift for maintenance and for some components which require this – we are very flexible in adjusting the shift structure when necessary. We are also consistently investing in higher productivity, so we are growing our team in Spandau, and investing in their capabilities. Therefore, we are not planning to invest in another plant – we still have a lot of strategic potential there, as we keep growing.

AC: But did you consider opening a BMW Motorrad factory in the USA, given that your sales there have increased so much?

MS: That is not our plan, and when you look at the distribution of our sales volumes, I think we are organised very well with our current set up.

AC: BMW’s only other ground up manufacturing facility is therefore your partner TVS in India, who build the G310 for you. Have you been satisfied with this model platform’s performance in terms of overall sales?

MS: Yes, it’s a very important part of our success story. Since 2017 we’ve sold so far more than 140,000 units of the 310R and the GS, as well as the RR, which is only available in India at the moment. From our perspective, it’s a very strong worldwide success. The G310 models are always among the top five sellers in our sales chart, and we are expanding our partnership with TVS across new technologies, including electric. The CE 02 is now also being produced by them, so ours is a strong strategic partnership.

AC: TVS has had to develop its own electric range to meet the requirements imposed by the Indian government. Presumably this means you have a useful crossover of E-development with them?

MS: Yes, it’s a very good crossover. TVS is much more involved in the engineering of the E-bike, compared to the G310 which was mostly led by us, so they are on a really high level in terms of production quality and engineering capability. It’s really a win/win situation for us both.

AC: Do they have their own battery factory in India, or do they have to import these from China?

MS: No, they’re buying the cells from China and South Korea, just like us – we produce our own battery modules in Berlin, just as they do in India, but with imported cells.

AC: Will it be necessary to increase the capacity of the G310 to counter the launch of the new Triumph 400 single made in India by Bajaj, which will obviously be a potent competitor to the TVS-made BMW G310?

MS: We are very successful with the G310, which saw over 24,000 motorcycles sold last year between the two exported variants. This will obviously have a successor, but we are not yet discussing this early what that successor will look like. We have a clear long-term strategy for models like this, rather than as a short-term reaction to market developments. We are active, not reactive, in our strategic thinking.

AC: Are you planning to add a lower capacity 500-650cc Boxer twin to the range, presumably made in India, as a competitor to the Royal Enfield 650, which has been so successful globally? This would also provide TVS with a potent product to sell in India.

MS: No. From my perspective, that would be classic downsizing, which we are not interested in. Anyway, we also think that doing this will not pay off in this middleweight segment.

AC: Sounds like you have indeed explored it, though?!

MS: Yes, we looked at it, of course, we are always looking at this kind of strategy, but in terms of vehicle development a lot of people said years ago that the Boxer engine was dead, but the engine is more than alive, and it will be more than alive for several years. So in terms of models, in May we showed the R12 nineT, and we will shortly announce the R12 Cruiser version, which will be new to the market as a 2024 model, though we will present it and start production before the end of this year, so not long to wait! And it will come in different variations, as with the R18.

AC: You entered the Cruiser segment with the R18 during Covid, which can’t have been easy, but you now have five versions altogether. Has this Cruiser platform met your expectations, despite Covid?

MS: Up to July this year we have sold 23,000 examples of the entire R18 family including the Roctane, which was not that long in the market. That is on the same level as the RnineT where we have four models, so our Cruiser range is very successful, and is exactly on target for sales. From my perspective, we still have potential for greater sales in the USA, but it just takes longer in such a highly traditional market. Step by step!

AC: Do you think you might have obtained those extra sales in the USA if you’d employed a V-Twin engine for the range, rather than the Boxer?

MS: No, definitely not. You know us well, Alan, we are not strong in copying others and being reactive, we are strongest in going our own way, and we have a big advantage in that for nearly all the different capacity segments we have both four-cylinder inline engines, and Boxer twin engines available – so our competitors can only defend from us with one weapon, whereas we have two attack weapons! And therefore, I think in this segment where heritage is so important, where customising potential is so important, and the heritage of BMW is such an asset, using the Boxer engine that’s been around for over 100 years is certainly not something to regret.

In 2022 the USA was among the top three markets for BMW, with nearly 18,000 units representing over 10% growth year on year, which is excellent. For a long time they were selling around 13,000 bikes annually, and now in 2023 we will see another record year. That is always the most important thing for me – sustainable growth is better than just making spikes in a sales chart. So in North America we are in a good way, and I think the current model range is perfect for the USA. The GS is highly appreciated there, so is the R18, the R12 surely will be, but besides these twin-cylinder models which you might expect to appeal to American customers the four-cylinder RR is also very successful, so the whole product portfolio is growing.

AC: You introduced the R nineT Retro range 10 years ago, and it was initially very warmly received, and I guess it’s just kept on ticking over since then. So is it very much due time to give it a big boost?

MS: It’s true, we have been offering the R nineT for coming on ten years now, and we sold more than 110,000 units of the four different variants, plus one or two special models in between, so basically it’s been a great success. And as I said to you before, we already showed the new R12 nineT that’s coming later this year, and we will soon see further variants, including the R12 Cruiser I mentioned. So, we’re giving a boost to a very successful family – and stay tuned for more! This family of models has really created lots of passion and emotion around the BMW brand, so the RnineT is a very important segment for us.

AC: You’re in the process of launching an all-new version of your core model, the R1300 GS. Will this new engine be applied to all the other large capacity Boxer motors like the RT for example, and so on?

MS: Yes. You know our strategy, Alan – we never produce a new engine for just a single model.

AC: So when can we expect the R1300 RT, which is probably the next most significant variant?

MS: Yes, but before that the first variant to come will be the GS Adventure, but then together with the RT we’ll also deliver the RS and the R, which are also important models for our customers.

AC: Will these all come next year?

MS: Some, but not all – the others will come subsequently.

AC: Given the current global sell-out success of single-cylinder Motocross and Enduro competition off-road models for each manufacturer which produces these, besides your friends in Austria we now have Triumph coming to off-road competition very seriously, and they will soon be joined by Ducati. Do you regret that BMW pulled out of that sector ten years ago? Is it something that you want to be involved with again?

MS: No, there is certainly nothing planned for this. We always think strategically about our product portfolio, but when you look at the Enduro segment from a customer’s point of view, the strongest brand in terms of viewing is our own series, the GS Trophy. When we were in New Zealand in 2020, we had 30 million people watching the GS Trophy via social media, an absolute world record. So we set ourselves a target for Albania in 2022 of 60 million, and we ended up with more than 100 million followers for a seven-day challenge that demanded lots of courage, great skill and perseverance from the 57 participants. So why on earth should we invest in a low pay-off segment for Enduro sports? You have to maintain your focus. We have the market leading product for the next generation as well as today’s customer, so I don’t want to dilute any of this. We leave it to others to try to emulate us, rather than have us copy them.

AC: However, is one of the issues perhaps the fact that the profit margin on each individual unit in a single-cylinder range of 250cc to 450cc capacity models is not as great as for a 1300cc twin?

MS: Exactly so. We have a very broad product portfolio, but you need to focus on models which are already very beneficial commercially. Anyhow, with the transformation to electric mobility, you cannot accomplish everything, and the worst thing you can do is to dilute the impact of your involvement in a particular market segment. You need a clear view of what is the most important strategy in terms of volume, and to generate enough profit to stay in the leadership position in terms of innovation, with your brand as number one.

AC: So pick your wars?

MS: Yes – exactly so!