Statement by
Dr. Norbert Reithofer
Chairman of the Board of Management of BMW AG
6th Munich Economic Summit
Bayerischer Hof, Munich, Germany
June 21, 2007 2:30–6 p.m.
Panel 1: Grey New World –
Europe on the Road to Gerontocracy
Ladies and Gentlemen,
I am very pleased to see that so many guests accepted the invitation of BMW’s Herbert Quandt Foundation.
After all, the issue at hand is nothing less than our common future.
This is why I’m extremely grateful to the Foundation for having placed the subject of demographics on the agenda. It offers us the opportunity to conduct a real dialogue dealing with politics, science, and business practices, which is in line with the Foundation’s mission.
As we all know, no matter how old we are, we always perceive ourselves as young. I’m just in my early fifties – so I don’t really feel that I’m qualified to convey to you new ideas and concepts on age and ageing. At the same time, however, one of my most important tasks as a business leader is to think in ways that anticipate the future.
This applies to our long-term strategy just as it does to our future products. We invest many years of research and development before we put a new car on the road.
Professor Bovenberg and the other speakers have shown us how our world may change.
It’s a known fact that Europe’s society will age and become even older in the next decades. Therefore, we should ask ourselves one question:
Can we afford to continue regarding the issue of aging as a problem and a handicap, as it is often done in our working and consumer culture?
Here are some data on the subject:
- Germany’s Federal Employment Agency classifies people aged 45 and over as difficult to place.
- After turning 49, people are no longer targeted by the advertising industry.
- On average, people retire at the age of 61 in Germany.
What will happen to our society once the older population becomes larger than the younger one? This question is not limited to the financing of our social security systems alone.
How will our values change? How will we change the way in which we interact with each other?
Tomorrow’s society will definitely be different from the one we are experiencing today.
As a company, we are part of the society. Therefore, we have to adapt to these changes.
This is exactly why we at the BMW Group are always focused on a long-term growth strategy.
This means we intend to continue being successful as we go forward. After all, our company has been in business for over 90 years.
We must deal with demographic change, above all here in Germany. 80 percent of our sales are generated abroad. But, three quarters of our associates work here in Germany.
Against this backdrop, we are already tailoring our personnel strategy to meet tomorrow’s demographic needs. To do this, we have defined three goals:
- We want to continue recruiting the best-qualified, young talent.
- We want to maintain our performance and innovation power, despite the fact that our workforce is becoming older.
- This is why we must ensure that our employees remain fit for their tasks in their current capacity as long as possible.
Our employees are our most valuable asset.
Our present workforce is young, averaging 41 years of age. According to our present statistics, in only ten years, the average age will have risen to about 46. This will have an impact in various areas, especially in production.
I am firmly convinced that peak performance can also be delivered by older people. They are reliable and extremely loyal. Older employees are no less capable of performing well than their younger coworkers. They have a different capacity to perform. And our older associates have an enormous wealth of experience.
However, I am also aware of the fact that one can’t expect every single assembly or sheetmetal shop worker to keep delivering peak performance doing these tasks until they turn 65 or 67.
Therefore, ideally, younger and older employees should work together in teams, so that they can combine their strengths.
At our new BMW plant in Leipzig we were looking to maintain a balanced age structure right from the beginning: 20 percent of the employees working there are between 40 and 50, and about four percent of them are over 50. This means that a small share of the workforce retires every year.
We received very good media coverage for this approach. At the same time, however, this shows that hiring older people is the exception to the rule.
If we want to remain innovative and competitive as a company, we must ensure that our associates remain highly productive. Our “Today for Tomorrow” project helps ensure that our employees
- take preventive health measures,
- engage in lifelong learning,
- work in a favorable environment,
- can take advantage of personalized retirement models, and
- increase their awareness of demographic change.
Ladies and Gentlemen,
Our personnel policy is just one area in which we are affected by demographic change. Other areas include:
- the relationship we maintain with our customers
- and to adapt our product and market strategies accordingly.
Furthermore, the countries and regions that will age more significantly and rapidly than others are our most important sales markets as well:
- The EU, where we sell nearly 60 percent of our vehicles. (Memo: 786,783 units in 2006 = 57.3% of total sales)
- Japan, which is our most important market in Asia.
- The US, which is our largest single market in the world.
The overall ageing of Europe’s society could in fact be advantageous, especially to a premium manufacturer such as the BMW Group. Look at the following facts:
- Young age groups play a lesser role in the premium car market than older ones. This is why the world premium market ages more slowly than other consumer markets. The average age of premium customers will only post a marginal rise, increasing to 55 by 2050.
- At the same time, the premium car market is expanding nearly at the same rate as our population grows older, since premium cars are predominantly bought by older, well-off customers. Studies thus project the premium car market to double by 2050.
- Europe continues to be the most important market for premium products.
But, will our products and the values they represent continue to be the first choice of older customers?
BMW is considered a young brand. This is even more true for MINI. This very fact could be a key competitive advantage in the future once today’s younger customers become tomorrow’s older customers.
After all, the “new old generation” is not the same as former old generations. According to a BMW market research study, older generations will become more attracted to premium products than today’s “60 and older” generation. Furthermore, they buy more new cars than younger customers do.
Many “newly aged” customers will prefer young brands and dynamic cars. We are already seeing this trend, especially when it comes to sporty models such as our M-models and roadsters.
In the future, we do not plan to build cars specifically tailored to one specific age group.
A BMW should remain a BMW forever and stay attractive to all age groups. The same applies to MINI and Rolls-Royce.
Nevertheless, in the future, we plan to fulfill the wishes of our more senior customers, who are looking for convenience and functionality. Therefore, we will continue to work on innovations that make driving both easier and safer.
For example, driver assistance systems increase active safety like park assistance systems or automatic cruise control.
However, customers are growing increasingly interested in their cars’ environmental friendliness.
Our EfficientDynamics strategy already proves that sportiness and low fuel consumption do not contradict each other. We will continue moving on this path – from more efficient combustion engines, to hybrid technology, to zero-emissions mobility based on hydrogen.
After all, as we all grow older, we will want to live in a world that is well balanced both economically and ecologically – in a world in which individual mobility remains a justifiable proposition.
Ladies and Gentlemen,
As with all challenges, we at the BMW Group believe demographic change is an opportunity!
We are already setting the stage for our future. This applies not only to our human resources policy, but also to our product and market strategy. But this is an area in which we are just at the beginning of a long journey.
However, demographic change is neither sudden, nor surprising. In fact, it is a development that evolves over the long term and is predictable – which can’t always be said of events happening in our day-to-day business.
I look forward to the following discussion and hope you will have an inspiring conference.
Thank you very much for your attention!
