The strategic importance of MINI's transformation lies in paving the way for the transformation of the larger BMW brand.

At the end of October last year, BMW MINI employed a textbook price reduction strategy, transforming two all-new electric vehicles from market obscurity into the price benchmark for premium electric compact cars.

Unfortunately, MINI's strategy did not hold. What went wrong?

By Cao Lin

Edited by Mao Shiyang

Auto Pixel (ID: autopix) Original

01.

Strategy Adjustment

BMW MINI has adjusted its electric vehicle product plan.

In July and August 2024, BMW MINI consecutively launched two brand-new all-electric models: the COOPER E (J01) and the ACEMAN E (J05). There were initially plans for more new cars, including an all-electric convertible with the codename J03. J03 was originally scheduled for development based on J01, with a launch date set for 2027. However, this project has now stalled.

We have learned exclusively that along with the new J03 model, MINI's overseas "replication line" project for electric vehicles has also been suspended.

The sole global production site for the MINI electric vehicle J0X series is the Zhangjiagang plant of Beam Auto in Suzhou, Jiangsu. Prior to supplying Beam Auto, this site was primarily responsible for producing the Great Wall Ora's Lightning Cat.

Unlike J01 and J05, which focused on the domestic market, J03 was originally planned for sale primarily in North America. MINI had hoped that overseas factories would take over J03 production, with modifications to the Oxford plant.

▍MINI COOPER E (J01)

The Oxford plant, with over 110 years of history, is the birthplace of the MINI brand and a significant part of the already weakened British automotive industry. Therefore, when MINI decided to produce its electric vehicles in a joint venture in China, it caused considerable stir among local public opinion. In response, BMW originally planned to build a "replication line" similar to the Zhangjiagang plant in China at the Oxford plant to undertake some J01 production and future J03 production.

Both of these adjustments are tied to the sales performance of the J0X series. A person close to BMW China told us that the total deliveries of the J0X series in China in 2024 were close to 10,000 units, with around 6,000 units of J01.

Sales did not meet MINI's German headquarters' expectations. A person close to Beam Auto told us that sales forecasts for the two electric MINIs were primarily handled by MINI's German headquarters. In 2023, before the new cars were launched, MINI significantly increased its forecast values. However, after the new cars were actually launched in the second half of last year, the forecasts were drastically reduced based on actual sales, with a nearly 60% decrease.

We have learned exclusively that MINI's total domestic deliveries in 2024 were close to 20,000 units, a slight increase from 2023.

Before the J0X series, MINI's sales in China were almost entirely from imported gasoline vehicles, a market that has been continually eroded. Over the past few years, MINI's sales in China have been declining, from 34,100 units in 2019 to 28,700 units in 2022 and further to 18,200 units in 2023.

Without the J0X series, MINI's total sales in the Chinese market would have been even lower in 2024.

MINI hopes to sell well with these two models. A person close to MINI China told us that MINI China's sales target for this year is likely to double the 2024 figure. With the decline of gasoline vehicles difficult to reverse and no new models in the J0X series, the current J01 and J05 models need to shoulder most of the incremental sales.

02.

Delayed Correction

In late October 2024, MINI officially announced significant limited-time discounts. The price reductions for the J0X models ranged from RMB 40,000 to RMB 70,000. Specifically, the starting price of J05 dropped to RMB 163,900, while J01's starting price was even lower at RMB 148,800. These were unprecedented prices for the entire MINI brand.

At this point, nearly a quarter had passed since the launch of the first model in the series, the J01. Competitors in the compact car market began to emerge. Although the price reduction did not come swiftly, it immediately enhanced the influence of the two products.

In the industry, the price-adjusted pure electric MINIs leaped from obscurity in the new energy vehicle market to becoming the price benchmark for premium electric compact cars. NIO's Firefly announced the pre-sale price of its first car at the end of last year's NIO Day, also setting it at RMB 148,800, identical to J01. ZEEKR launched the slightly lower-positioned pure electric compact car Lynk & Co Z20 at the end of last year, with a starting price of RMB 135,900, over RMB 10,000 lower than MINI's J01.

▍NIO Firefly

The price reduction immediately boosted sales. A person close to BMW China told us that over 70% of the nearly 10,000 sales of the J0X models last year came from the month following the price reduction, with the remaining three to four months seeing monthly sales often in the hundreds.

November last year was MINI's busiest month for orders, forcing many MINI dealerships to increase staff. A BMW China executive told us that BMW Lingyue mobilized an outsourced team similar to a "middle platform" in its Beijing office to specifically support dozens of understaffed MINI dealerships.

The outside world generally viewed MINI's decision to reduce prices positively, considering it a reasonable correction to product positioning. When the two models in the J0X series were launched, their main sales range was set above RMB 200,000, with J01 priced at around RMB 189,800 to RMB 266,800 and J05 priced at RMB 209,900 to RMB 279,900.

Judging from the price range chosen for these two products, MINI originally intended to replicate the positioning of gasoline vehicles and carve out a market for premium electric compact cars above RMB 200,000. In the mature gasoline vehicle market, MINI succeeded by relying on its unique "toy attribute." However, in the fiercely competitive and rapidly evolving electric vehicle field, the niche market consistent with MINI gasoline vehicles' positioning has not yet taken shape.

If the new pricing strategy had been maintained, the J0X models could have sustained their popularity. Unfortunately, even though the price reduction was proven effective, it only lasted for over 40 days and ended as planned at the end of November last year.

Since December last year, promotions for the J0X models with the largest discounts have begun to tighten. A MINI dealership executive told us that some models that were previously popular due to promotions can no longer be ordered.

We understand that unlike the agile decision-making of new forces, neither the marketing nor manufacturing ends of MINI have quickly absorbed the results of this price reduction.

An executive close to Beam Auto told us that an important reason for the price reduction was to clear inventory, and once inventory reached a reasonable level, the urgency of price reductions lessened.

The annual production capacity of the Beam Auto Zhangjiagang plant is planned at 160,000 units. An executive close to Great Wall told us that over 60,000 J0X series vehicles were produced at the plant last year, with approximately one-quarter expected to supply the domestic market.

Although the two models became popular after the promotion, MINI canceled a large number of orders to Beam Auto in the fourth quarter of last year. In December last year, the Beam Auto plant was closed for nearly half a month.

Compared to many automakers with more flexible manufacturing systems, MINI follows a strategy close to "build-to-order," with a disconnect between production and marketing.

MINI's decision-making chain is long and complex. An executive close to MINI China told us that within BMW China, the MINI marketing team consists of fewer than 100 people, and many decisions require approval from the German headquarters. Whether and when the price reduction will be restored does not depend solely on BMW China.

For MINI China to achieve its sales target of doubling this year, resetting the prices of the two J0X models is almost a necessary decision, and sooner is better than later.

03.

Paving the Way for BMW's Transformation

A BMW China executive told us that the greatest significance of MINI's transformation is to provide experience for the transformation of the larger BMW brand. BMW plans to launch its new generation of electric vehicles in 2026, at which time both its products and sales system will change. We understand that some talents from MINI's direct sales system have already transferred to the BMW brand within BMW China.

We understand that an important task for BMW China in 2025 is to optimize the operational efficiency of the MINI direct sales system.

Coordination between production and sales systems was something MINI aimed to achieve. Starting from March 1, 2023, in anticipation of the new electric J0X series, BMW China initiated a channel transformation for the MINI brand. Modeled after new forces, MINI transformed all its dealers in the domestic market into an agency system under a direct sales model.

Similar to the direct sales model of new carmakers, the transformed MINI models have a unified national sales price, and dealers can no longer independently determine the discount margin. All new cars belong to BMW China before being sold, and consumers purchase directly from BMW China.

▍BMW Concept Vehicle of the New Generation

Although the framework is in place, BMW China is still exploring how to make this system truly operate like new forces.

A BMW China executive told us that although MINI has initially established a direct sales system, many rules are still lacking. There is still significant room for optimization in various aspects such as sales lead collection and conversion, as well as coordination between the direct sales system and manufacturing.

For example, an important aspect of the direct sales system of new forces is the mining, distribution, and incentivization of sales leads. MINI is either just starting to establish these rules or is still perfecting them.

Both production and sales systems have work to do.

To facilitate the price reduction, MINI is urging the production system to prepare for cost reduction. We have learned exclusively that BMW MINI hopes the supply chain will further reduce the prices of some J0X model parts on top of the annual price reductions, with the goal of reducing the BOM cost per vehicle by a few thousand yuan more in the first quarter of this year.

Although the magnitude of MINI's request for supply chain cost reduction is far less than that of domestic autonomous brands, it is still challenging. For suppliers, the manufacturer's sales forecast is the basis for inputting capacity. MINI's forecast for J0X deviated significantly from actual market conditions, and the subsequent drastic reduction in supply chain orders caused losses for many suppliers, with some expressing dissatisfaction.

An executive close to BMW China told us that the BMW system attaches great importance to relationships with suppliers, which may be one reason that prompted MINI to make the decision to reduce prices in October last year, "essentially having the OEM bear some of the consequences of incorrect forecasting."

The electric vehicles in the J0X series are all developed by Beam Auto. Similar to the collaboration between Mercedes-Benz's Smart and Geely, BMW chose to collaborate with Great Wall Motors to develop electric vehicles. Beam Auto's equity is split equally between Great Wall Motors and BMW.

Although product development is entrusted to Great Wall and Beam Auto, MINI sets the product standards, and both the product and supply chain ultimately need to pass BMW's verification process.

An executive close to Beam Auto told us that J0X is a global model, and the current component certification requirements for the two J0X models in China are identical to those overseas. To reduce costs, BMW is considering relaxing some unnecessary certifications unrelated to quality in China.

There is still over a year until the launch of BMW's new generation of electric vehicles. BMW China's changes are in a race against time.

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