October 1 1997 by Judith Rehak
Multi-cultural, multi-lingual, and sporting one of his trademark “lion” ties, Henrich Heitmann, chairman and CEO of BMW (US) Holding Corp., epitomizes the global executive. He joined the German luxury carmaker 12 years ago-not in Munich, but Singapore, where he had previously represented Volvo. From there, he covered 19 countries for BMW’s marketing group before returning to Germany, where he rose to oversee its non-German-speaking markets in Europe, from Great Britain and Ireland to Romania and Russia.
Now, Heitmann is on the move again. The 56 year-old executive arrived at BMW’s North American headquarters in Woodcliff Lake, NJ, last February to take on what may well be his biggest challenge: the intensely competitive American market.
To be sure, BMW’s American operation is riding high right now. It led the $70 billion U.S. luxury import market in 1996 with record sales of 105,761 units and is doing even better this year, with sales soaring 25 percent to 62,000 in the first half. The automaker’s snappy Z3 sports roadster, made exclusively in its Spartanburg, SC, plant, is a hit; its new, more expensive 5 series sedan, which starts at $38,900, is selling out; and it has a piece of the popular sports utility vehicle market through Rover, its British unit. “I knew I was joining a very good organization here,” says Heitmann. “That’s good on one hand, but on another it’s difficult because making one that’s already good even better isn’t easy.”
Indeed, BMW’s top spot in the U.S. makes it a target for a crowd of aggressive competitors, including arch-rival Mercedes-Benz, Japan‘s Lexus, and even American automakers like General Motors. Nevertheless, one of Heitmann’s goals is to raise annual sales to $150,000 by 2000, in a market that is relatively static.
To accomplish this, he is aiming for “a retail network that is second to none.” Not surprisingly, that’s the core of a revamping now underway at BMW’s 350 U.S. dealers, which calls for a single “car counselor” (“I hate the word, ‘salesman,’” says Heitmann) to cater to a single customer, handling all aspects of purchasing and servicing, with an emphasis on customizing from BMW’s broad array of paint colors, upholstery, and extras. Backed up by a computer system hooked into manufacturing, the approach has a dual purpose: cutting distribution costs by reducing dealer inventories to only a few cars, and boosting sales by delivering a customized car with only a brief wait. The popular Z3roadster, for example, could be delivered in as little as two weeks from BMW’s Spartanburg plant.
Just how successful the strategy will be with dealers and customers is not likely to be known for at least a year, say industry observers. Wesley Brown, an analyst with Nextrend, a California auto consultant, wonders whether it will appeal to car-shopping Americans. “People here love to see a lot of vehicles on the lot,” he says. “It’s difficult to visualize something from a paint chip.”
Meanwhile, Heitmann has other issues to contend with. Among the more worrisome is the growing number of previously leased BMWs that are showing up in second-hand car resale networks, stealing new business away from the automaker. About 60 percent of BMWs are leased, and while that isn’t as high as Jaguar’s 90 percent, “we’ve got to address the problem,” says Heitmann.
In a challenge of a different sort, Heitmann, despite his lofty title, does not have all U.S. operations reporting to him. Under BMW’s matrix system of management, for example, the head of manufacturing in Spartanburg answers to the chief of production in Munich, although Heitmann says diplomatically that he can “influence him in the best interests of the American organization.” Another example is Rover’s U.S. operation. “They don’t report to me, but I must make sure that what they do is in line with us,” he says. “This can’t be achieved by merely giving instructions. You’ve got to create an atmosphere where people are willing to cooperate.”
Heitmann is also responsible for Latin America‘s potentially huge market, which is just beginning to take off. Despite steep import tariffs, BMW sold some 5,000 cars in Brazil last year, and many of the same competitors it faces in the U.S., like Mercedes-Benz, are already setting up manufacturing. BMW has an array of dealer relationships from Chile to Brazil, and Heitmann must decide what its next step should be.
Perhaps due to his long experience in so many diverse countries and cultures, Heitmann is reluctant to set a specific overall strategy. He says he prefers a market-bymarket approach to his new job, which enables BMW to meet widely varying customer expectations, even within the U.S. “We’ll try to find the right BMW answer,” he promises. “We don’t just want to sell you a car.”
Chairman and CEO
Birthplace: Pustnik, E. Prussia (now Poland) Family: Wife, Renate. Five daughters: Claudia, Iris, Kristin, Barbel, Birgit. “I started men’s lib,” he jokes.
Education: Law degree and doctorate of law from the Universities of Fribourg and Munster.
Management Style: “I focus on my mission: will it help to sell cars?”
Favorite book: “I like modern fairy tales, like Lord of the Rings by J.R. Tolkien.”
Car: 1997 BMW 540 I, metallic black with onboard navigation system.
Leisure: Hunting for wild boar, deer, pheasant. “I’m a farmer’s boy. I like riding on my 1720 farm near Wurtzburg.”