Wolfgang Schlimme, general director of BMW Russland Trading, has been with the German automaker since 1988. Over more than a decade with the company, he also served as a marketing manager at BMW South East Asia in Singapore and a sales director at the BMW Leipzig subsidiary. He was appointed to his current position two years ago. He talked to The Russia Journal about his company’s operations in Russia.

The Russia Journal: Russia’s imported car market has been growing. What effect does this have on BMW sales?

Wolfgang Schlimme: We see an increase in demand. We started the year stronger than last year, but since April there’s been an even bigger increase in sales.

RJ: What’s your view of the general situation on Russia’s car market?

WS: I think there are several movements. Customers have become more and more critical, not only about cars but also about the level of service. They no longer accept long waiting times for spare parts, and that’s fair — if you buy a top-class brand, you have all the right to be very selective about the level of service. At the same time, there is a demand for transparency. People ask questions like "Did I get the right price?" "Have I made the right choice of dealer?" Therefore, we’re issuing one unique price list for Russia. Our cars in Moscow are sold at the same retail price as cars in Novosibirsk. The same applies to parts.

RJ: Tell us more about BMW operations in Russia.

WS: We formed BMW Russland Trading in June 1999, and we started the production of our cars in Kaliningrad together with Avtotor in October 1999. In 2000, the first year of full production, the 5 series became the best selling car in its segment. Our production volumes are continuously growing. We started in 1999 with only two models, and now we’re producing more than 11 different models, with different specifications, different gearboxes.

RJ: Do you have any output figures for the BMW assembly at Avtotor?

WS: We started in 1999 with slightly more than 700 cars. Last year we produced 1,200 cars. This year we’re going to produce roughly 2,100 cars.

RJ: What percentage of your sales corresponds to cars assembled at the Kaliningrad plant?

WS: This year it will come to roughly 80 percent. Our customers really see that they can get the same level of quality from a Kaliningrad-assembled car with a price advantage of about 20 percent. Based on our internal quality survey, after three months of operation, the Kaliningrad factory achieved the leading place in our network of 22 factories all over the world and is still maintaining it.

RJ: Are production facilities at Avtotor in line with BMW requirements?

WS: Avtotor is continuously investing in that plant to keep the leading position within the BMW network, and we’re satisfied with that. For us it makes no difference if a car is made in Germany, America or Russia.

RJ: You’ve mentioned customers’ increased demands for service. What are BMW requirements for its dealers?

WG: We have 21 official dealers in 16 cities in Russia. There are three main requirements. The first one is customer-orientated management. The second is its location in an area where market potential is sufficient to establish investment, and investment for a BMW dealer starts roughly at $2 million to $2.5 million. The third one is compliance with BMW international standards – the ability to provide adequate training for its technicians and the whole organization, as well as corporate identity.

RJ: Many importers are complaining about the so called "gray" or unofficial dealers. Does BMW have to deal with this problem in Russia?

WS: In the past, we did. But now, since we’re operating out of our local assembly plant, the price difference between a gray-market car and ours is not as big as it was before. So, our customers prefer to have not only a good car but also good documents. There are some cars made by BMW elsewhere and brought to Russia, but they are not equipped with our "Russia package" – for bad roads and cold weather. A car that is designed for hot climate, like in the Emirates or in Asia, cannot work without problems in cold weather conditions. In any case, I don’t see gray dealers as competitors to BMW. We don’t supply spare parts to gray dealers, and we don’t support them with training.

RJ: What problems does BMW have to deal with in this market?

WS: The biggest problem is the continual surprises such as the changing of laws, rules and regulations. You have to be extremely fast and flexible in your internal organization to adjust to that. But this is not specific to Russia only; it exists in every country. I don’t consider Russia to be a more complicated market than any other in Europe.

RJ: In what way is the Russian car market unique, compared to, say, other markets in Europe?

WS: The Russian car market is not as settled. It is not based on a 25-year tradition of selling cars and providing services. So, we have the opportunity to establish new tools and new instruments. We can tailor our young structures exactly to the needs of the customer. Another unique thing is all the different climate zones and long logistical ways.

RJ: What’s your prediction about the development of Russia’s car market?

WS: I think, the biggest change in the Russian car market will be the introduction of local-assembled or local-made foreign cars. I’m looking forward to the moment when some of our competitors will bring their long-discussed projects to life and say "Yes, we’re ready, now we can go."