When I am not recording White Roof Radio or writing posts for MotoringFile, I work for a healthcare technology company doing product management, business development and commercial operations consulting. As such, some of my time is dedicated to helping our clients build and optimize their sales and marketing operations. To be frank, it is not always as challenging as I would like it to be, but for the past two months I have helped launch a major biotech blockbuster, and it was amazing. While it is not my first launch, it gave me a completely new appreciation for the difficulty of the undertaking given the financial and legal ramifications. Although the resources dedicated to launching a car versus a drug cannot be compared, I’m fairly certain the complexity of the task is similar across both industries.
Unless you live under a rock, you should know that MINI launched a new generation of cars with the release of the F56 Hardtop a year ago. There is a lot at stake for this new breed of MINIs with promises of unprecedented economies of scale, higher profit margins and increased sales volumes. However, the past 12 months have been tricky for the first FXX car, especially in the US. And while many so-called analysts along with some of our dedicated readers are quick to announce MINI’s impending doom, my view on the matter is quite different. Could MINI and MINI USA have done a better job at launching the F56? I believe so. Is our favorite brand on the brink of extinction? Not even remotely. But let’s step back and look at what happened since the end of 2013.
The date is November 18th 2013. It’s a big day for MINI. Not only because the day celebrates the birth of Sir Alec Issigonis, but also because it marks the unveiling of the F56 MINI. Unfortunately, celebrations are spoiled because five months prior to this event, a spy photographer captured the F56 completely exposed on the streets of LA. As with any photo taken from extreme distances the results didn’t look that compelling. Predictably, fans were up in arms, blaming MINI designers for “ruining the brand”. MINI responded with an official statement and even previewed the MINI with a digital Vision Concept. Despite this, the damage is done and the F56 was even caught undisguised again in September prior to the launch ceremony.
In a 2009 essay for Wired Magazine, J.J. Abrams wrote:
Spoilers give fans the answers they want, the resolution they crave. As an avid fan of movies and TV myself, I completely understand the desire to find out behind-the-scenes details in a nanosecond. Which, given technology, is often how long it takes — to the frustration of the storytellers. Efforts to gather this intel and the attempts to plug leaks create an ongoing battle between filmmakers and the very fans they are dying to entertain and impress. But the real damage isn’t so much that the secret gets out. It’s that the experience is destroyed. The illusion is diminished. Which may not matter to some. But then what’s the point of actually seeing that movie or episode? How does knowing the twist before you walk into the theater — or what that island is really about before you watch the finale — make for a richer viewing experience? It’s telling that the very term itself — spoiler — has become synonymous with “cool info you can get before the other guy.” What no one remembers is that it literally means “to damage irreparably; to ruin.” Spoilers make no bones about destroying the intended experience — and somehow that has become, for many, the preferred choice.
Everyone at MINI, especially designers and engineers, must have been devastated when these pictures hit the web. After so many years of toil and labor, their surprise to the public was ruined before prime-time. I may be stretching the parallel to the release of a movie, but J.J. Abrams’s point seems to resonate well in this case. Should MINI be held partly responsible for this? I think they should. Even though recent events have shown we’ve entered an era where global companies (e.g. Sony) and governmental organizations (e.g. NSA) can’t fully secure their proprietary intelligence, some continue to excel at secrecy. For example, who knew how the iPhone, the iPad or the Apple Watch looked like before Steve Jobs and Tim Cook unveiled them for the first time? No one. Granted cars have to be tested and photographed in the wild, it probably wouldn’t hurt the BMW Group to use tricks from Apple’s playbook. By revealing concepts during auto shows that are 90% production-ready, MINI also diminishes the importance of potential leaks, but there’s still room for progress.
Don Draper and a VP of Devil’s Advocacy
Successful ad man from the the sixties, Don Draper has everything going for him: success, women and health (despite being addicted to Lucky Strikes and Old Fashioneds). With sheer talent and inspiration, he brings brands long sulked by consumers back to life. He does it year after year after year regardless of economic or geopolitical conditions. Alas, Don Draper is a fictional character, which is unfortunate because MINI and its local branches could use his touch.
In 2014, we’ve seen a number of promotional activities, but I honestly don’t remember the last time I saw a great ad for MINI on the Web. Yes, the Web, the place where everyone from my generation – and coincidentally MINI’s target demographic – consumes the majority of their media content. In the US, the Final Test Test Drive seemed like a good idea, but the outcome was vaguely interesting and not fun at all. Surely, MINI USA must have known that dealers would not be inclined towards the Original Package Designs because as long as white, silver, gray and black MINIs are on the lot, people will prefer those to ordering a highly customized model. So in the end, the FTTD did not achieve much. It was talked about in MINI circles for a couple of weeks and quickly dismissed. The Motoring Tag is another project dead in the water. We first heard of it at the closing party of MINI Takes The States. DB and Gabe were actually two of the original four participants. We predicted it’s failure; proof that it doesn’t take marketing experts to see this wouldn’t work. The writing was on the wall: too many steps, too focused on hardcore fans, no responsive website, etc. To be honest, I still can’t figure what the Motoring Tag is about.
On the other hand, the Motoring Challenge was a great idea and I hope MINI USA repeats the experience next year. It gave fans and prospective buyers an opportunity to experience the F56 in a fun and safe environment, far from the anxiety and boredom of a dealer test-drive. It would have been perfect if only the Cooper S was originally placed against actual contenders. A Golf, a Fiat 500 and a Prius? People are not ignorant. They know the difference between a regular and a sportier car, plus MINI has nothing to fear from these manufacturers. The web site redesign was equally successful. Granted it took MINI USA almost seven years to let Flash go and jump on the mobile revolution train, the new configurator should serve as an example for the rest of the industry. Now if all other local MINI websites were willing to join the party, all would be well in the world. 2014 also marked the return of MTTS and similar to previous editions, MINI USA didn’t disappoint. With record attendance, great selection of roads and open access to MINI Execs, MTTS 2014 was an all-around success. MTTS is essentially the reason why I ended-up becoming a member of White Roof Radio and Motoring File. MINI will take the States again in 2016 and they can already count me in.
It’s not all doom and gloom for MINI USA Marketing and I’m confident great things are in the pipeline. However, it is important to reflect on failures because the rest of the industry is moving forward with viral campaigns. Jaguar cast a group of talented British movie stars, Jerry Seinfeld wrote commercials for Acura and Matthew Mcconaughey went all True Detective for Lincoln. Each of these ads have been on the air for some time and people keep talking about them. SNL and Jim Carey even spoofed Lincoln’s. To achieve this, I’d recommend not only finding a Don Draper, but also naming a VP of Devil’s Advocacy to think with the assumption that everyone else is wrong when projects like the FTTD and the Motoring Tag are put on the table.
Always Be Closing?
Reading the automotive press, journalists and observers assume that MINI sales are stuck in a downward spiral in the US and that a sales speech pump-up would profit MINI Execs. These views, propagated across the industry with click bait headlines, are shortsighted because they primarily focus on sales figures for a given month rather than taking a holistic view (i.e historical US sales, worldwide MINI sales). The BMW Group is very effective at predicting how many vehicles they will sell years in advance. And while some of the issues MINI encountered in the US were difficult to anticipate, and to account for in BMW’s forecast, I don’t think the total number of F56 sold is far off target.
To understand how sales volumes are supposed to trend during a launch period, we went back to the release of the R56 and compared it to the F56:
- The car was announced in the fall of 2006 and went on sale in the US in February 2007. At the time of the announcement, MINI USA sold approximately 3,029 R53s/R50s and the car accounted for about 83% on average of all MINIs sold (i.e. at the time, only the Hardtop and the Convertible were part of the lineup). Between the announcement and the availability in showrooms, sales decreased by 35%. Four months after the car went on sale, volumes had grown by an estimated 76%.
- When the F56 was unveiled on November of last year, MINI USA had sold 1,727 R56s and the model accounted for 38% of all MINI sold. Between the announcement and the availability in showrooms, sales decreased by 30%. Four months after the car went on sale, volumes had only grown by 31%.
- Even if volumes then and now cannot be compared (i.e. more dealerships and models), the launch trends for the R56 and the F56 are similar. However, they differ in two aspects; the velocity at which sales of the Hardtop decreased between M-4 and M-2 and the opposite trend starting in M+4.
As mentioned above, the Hardtop used to account for more than 80% of MINI USA’s sales volume back in 2006/2007. Therefore, it didn’t make business sense to drain the pipeline of cars coming from England as quickly as it was done this time around. There’s also the fact that the period of time between when the model became available for sale in Europe versus the US was greater for the F56 switch (11/2013 vs. 04/2014) than it was for the R56 switch (10/2006 vs. 02/2007). And since all Hardtops come from the same factory, Uncle Sam felt a stronger and longer shortage of MINIs than the Old Continent did. I also think MINI has become more proficient at managing its supply chain allowing them to increase or decrease volumes of any given model in a more controlled fashion.
But what explains the slower uptake of F56s compared to its retired sister? It is certainly not the lack of interest from consumers, otherwise MINI would not have decided to increase the output of the new model. Remember, the BMW Group is very good at predicting future demand. It is not bad press, journalists praise this new generation and awards are being distributed only 10 months into the car’s existence. It is also not the stronger competition, the F56 has less to worry about in the US than it does in Europe. The answer is rather straightforward. Sadly not everything always goes accordingly to plan, especially when starting from a blank sheet (i.e. the UKL platform), and a series of somewhat unexpected events plagued the launch of the F56 on US shores:
- Recalls and delays due to a defect
- Delays of key options
- Bad publicity from Consumer Reports
- An EPA certification snafu
Initial delays and recalls are inherent risks of a new product roll-out, and the story of the shifter coming off was talked about for no more than a week. What killed the F56’s momentum in the US is the EPA issue. Without much insight besides MINI USA’s official comment on the matter, it is difficult to assess exactly what happened and who (the EPA or MINI) bear most of the responsibility. I just can’t help thinking this problem could have been better mitigated.
All in all, the reasons for the F56’s sales slump are rather simple and everything seems to indicate the storm has passed. In fact, US sales for the last two months of 2014 are already showing signs of improvement and should soon be in line with global F56 volumes. I’m not taking any risks in believing that 2015 will be MINI’s best year in the US yet, with forecasted 12-month sales between 67,000 and 71,000 vehicles.
2014 has indeed been a bumpy year for MINI USA and the F56. Knowing that I have a limited knowledge of MINI’s US branch inner workings, I still believe some of those bumps could have been avoided with better preparation and focus. Did it make sense for David Duncan to inherit Jim McDowell’s position right at the launch of the new Hardtop? Maybe not. I would have preferred to see him arrive at the helm of MINI USA a least year before. In addition, MINI has always been about doing more with less, but the inability to say no to certain marketing initiatives is wasting these precious resources. Despite all that, the 2015 outlook for MINI in the US is quite positive. The F56 is picking up steam, the F55 will become MINI’s best seller and by year-end, half of the lineup will have been renewed. I’m really looking forward to the next five years to see how MINI, and its parent company BMW, will answer the challenges posed in the areas of mobility (e.g. car sharing, autonomous vehicles) and energy (e.g. CAFE Standards).