Interview with BMW Head Norbert Reithofer: 'We Have Made It Our Mission to Be Sustainable'

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SPIEGEL: The German auto industry has had the opposite reputation until now. It is seen as an impediment to environmental protection. At first it rejected the catalytic converter, and later it opposed the soot particle filter. Toyota brought the hybrid onto the market.

Reithofer: This certainly doesn't apply to BMW. European carmakers pledged to reduce CO2 emissions by 25 percent from 1995 to 2008. We kept our word and reduced the value even more. This is not the result of short-term gimmickry. We decided years ago to develop the relevant models and engines, otherwise we wouldn't be able to offer them today.

SPIEGEL: Many people are changing their attitudes about the automobile. It is no longer seen as a measure of prestige, but more as a means of transportation. Isn't this change in values particularly threatening to BMW?

Reithofer: Prestige and premium will also play an important role in the future. But some people define these values differently today. I recently had a visit from the head of a major American bank. He said he would like to buy a BMW 7 Series. I asked him whether he wanted the eight-cylinder or the new 12-cylinder model. He immediately said that he would rather have a hybrid.

SPIEGEL: Hybrid vehicles have a drawback: Companies invest billions in their development, but are currently unable to make any money with them. Will shareholders become impatient when they have to do without higher dividends for the time being?

Reithofer: Those would only be shareholders who are interested in very short-term results. But if you want a company to still be successful in 10 years, you have to be consistent in this approach. For example, we will introduce an electric car by 2015. It will be a completely new vehicle concept for mega-cities. We would also have it developed if, contrary to expectations, it did not turn a profit in its first life cycle.

SPIEGEL: A promising outlook for the future doesn't do much good when a company is losing money in the present. Your competitor Daimler lost a record €2.6 billion ($3.5 billion) in 2009.

Reithofer: We are very confident that BMW will have achieved a positive result for 2009. We also benefited from the fact that we reacted to the financial and economic crisis early on. The first warning signs appeared in September 2007. At the time, we met with a dealer association in the United States, which warned us of a looming subprime crisis.

SPIEGEL: How did you react?

Reithofer: We cut back our planned production for 2008. The Lehman bankruptcy happened in September. We imposed an efficiency program that significantly reduced costs while at the same time advancing the development of new technologies. It was a huge effort, but without it we would not have ended the year 2009 in the black.

SPIEGEL: The auto industry has to invest in new types of engines. Can a relatively small producer like BMW do this alone?

Reithofer: Size alone is not a key to success, as we have seen recently…

SPIEGEL: …You are alluding to the nationalization of General Motors and the quality problems at Toyota. But there are also successful giants, like the VW Group. It can spread its development costs across six million cars, as opposed to only 1.1 million at BMW. How do you intend to make up the difference?

Reithofer: One doesn't have to be a large corporation to benefit from the advantages of volume. This can also be achieved through joint ventures. We are currently expanding our cooperation with the PSA Group, that is, Peugeot and Citroën. We worked with Daimler and General Motors on hybrid engines, and we are cooperating with Bosch and Samsung in battery development. We have been asked the question of whether BMW can remain independent for more than two decades. Everyone knows the answer.

SPIEGEL: Now VW subsidiary Audi is challenging you. Audi intends to be number one in the luxury class by 2015, ahead of Mercedes-Benz and BMW, and sell 1.5 million cars. Is this realistic?

Reithofer: I take a very relaxed approach to this. We assume that we will already be selling about 1.6 million vehicles by 2012. It's a matter of how strong a company and a brand are. According to a study by Interbrand, which examines the value of brands, the world's 30 top brands in 2009 included only three German brands: SAP, Mercedes-Benz and BMW.

SPIEGEL: But the industry currently faces a technology jump that could possibly put entirely new company at the top: electronics companies that have both battery technology and engines. They would then use carmakers as suppliers of bent sheet metal.

Reithofer: That won't happen. But you do have to do your homework early on. The manufacturers of mechanical typewriters believed that they had developed sufficiently when they introduced electric typewriters. Then came the PC, and the deeply traditional makers of typewriters disappeared from the market.

SPIEGEL: In other words, the auto industry could face a similar fate?

Reithofer: It isn't a given that the companies that provide mobility today will also be the ones to do so tomorrow. Every company has to work hard to make this happen. But I'm convinced that BMW is one of those companies.

SPIEGEL: Mr. Reithofer, thank you for this interview.

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• Part 1: 'We Have Made It Our Mission to Be Sustainable'
• Part 2: 'Prestige and Premium Will Also Play an Important Role in the Future'