Why BMW, Mercedes, Audi have been forced to livestream debut of new concept cars

The cars from German luxury giants were scheduled to be unveiled during the Geneva Motor Show this week, which was canceled due to coronavirus outbreak.
By : Bloomberg
| Updated on: 02 Mar 2020, 14:30 PM
Screengrab from BMW i4 concept teaser
Screengrab from BMW i4 concept teaser
Screengrab from BMW i4 concept teaser
Screengrab from BMW i4 concept teaser

With the annual Geneva car show canceled for the first time since the World War II era, automakers are going virtual in a bid to wow the hordes who would otherwise descend on the Swiss city to inspect the latest models up close.

BMW AG will livestream the debut of its i4 battery-car concept on Tuesday, while Mercedes-Benz’s popular E-Class sedan and Audi’s A3 sportback and all-electric E-Tron S will also be touted in digital displays.

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Even as manufacturers have been pulling back from auto shows in recent years, the gatherings still attract media, suppliers and aficionados eager to run their hands over the latest upholstery or settle in behind the wheels of new vehicles.

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Audi parent Volkswagen AG used last year’s Frankfurt event to unveil its ID.3 electric car, and to spread the message that the world’s largest auto manufacturer was moving on after the diesel-cheating crisis and honing an image as a leader in the transition to battery powered-cars.

The Geneva showcase, which was scheduled to start this week, was called off due to the rapid spread of the coronavirus in Europe. Carmakers were forced into contingency planning, with online events emerging as a way to salvage part of their marketing efforts.

BMW was aiming to make a big splash for its i4, a car meant to help reassert the German company’s momentum in electric vehicles. The group is sticking to the same program on Tuesday, albeit with a “digital press conference" by Chief Executive Officer Oliver Zipse, speaking from BMW’s Munich headquarters.

Also read: BMW drops major hints about i4 Concept EV before unveiling

Even before being canceled, the Geneva show -- a luxury-car expo that’s typically dominated by glitzy rides from the likes of Ferrari NV, Porsche and Mercedes’s AMG unit -- was in danger of being overshadowed by industry woes.

The virus outbreak, which has depressed car sales in China and disrupted supplier lines, adds to the challenges. Trade wars and tariffs, and an economic slowdown sent sales into a tailspin last year in China, the world’s largest auto market and a key country for exports for the three big German manufacturers.

Also read: All you need to know about Audi A3 Sportback before global debut

‘High Risks’

At home, European automakers are saddled with tough emissions rules that have forced them to speed the expensive roll-out of new electric vehicles. Then there’s the lingering tension with the U.S. over trade policy that could bring additional tariffs.

“The state of the global economy and the situation of the auto industry are marked by high risks," Ferdinand Dudenhoeffer, a researcher at the University of St. Gallen, Switzerland, said before the auto show was called off.

Analysts have started to factor in the impact from the latest shock. RBC Capital Markets expects European auto production to drop as much as 4% this year, while LMC Automotive analysts have penciled in as much as a 4.4% global decline in auto sales in a worst-case scenario.

Stricter CO2 rules, the reluctance of diesel-car owners to trade in vehicles due to dropping residual values, and general macro uncertainty “cause us to remain cautious" on Europe, RBC analyst analyst Tom Narayan said.

Sneak Preview

The broader uncertainties have made it even more crucial for automakers to cut through the gloom and inspire car purchases.

Polestar, the luxury electric-car venture of Volvo Cars and its Chinese owner Geely Group, last week held a live video-conference to draw attention to its Precept concept vehicle, in what was billed as a sneak preview ahead of Geneva. The move generated media attention ahead of the formal event planned for Tuesday, when Polestar would likely have been crowded out by bigger carmakers such as BMW and Daimler.

The i4, targeted for release in 2021, is built on a new platform that can underpin electric cars, hybrids or combustion vehicles. The flexible architecture will be used to make a battery version of the popular X3 SUV this year, as well as the futuristic iNext. It gives BMW a weapon to fight back against Tesla Inc. after the U.S. upstart ate into its market share.

Lost Allure

Audi’s E-tron S similarly is aimed at scaling up the VW premium unit’s Tesla-fighting capabilities as Elon Musk prepares to open a gigafactory near Berlin. The Mercedes-Benz E-Class is a critical model for the carmaker in terms of global sales volumes and revenue per vehicle.

Manufacturers scouring their books for ways to cut costs and better target marketing had already scaled back spending on Geneva and other industry events, which have subsequently lost some of their allure.

This year at Geneva, for example, VW had done away with hosting the evening reception it traditionally used to kick off the media days preceding the opening of the trade fair to the public.

This pressure is unlikely to ease anytime soon.

“The current economic weakness in important markets amplifies the cost pressure and the trend toward consolidation," said Stefan Bratzel, a researcher at the Center of Automotive Management near Cologne, Germany. “Only a few automakers can stem the necessary investments in new technologies and business areas on their own."

First Published Date: 02 Mar 2020, 11:11 AM IST
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