Tom Purves, Chairman of BMW of North America

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This is a partial transcript from Your World with Neil Cavuto, September 2, 2003, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: You’ve heard of the SUV (search) automobile, but what about the SAV automobile? The new sport-activity vehicle one of many new models that BMW will be launching at the Frankfurt auto show starting September 9. Could this high-speed rollout help or hurt the brand?

With us now is Tom Purves. Tom is the chairman and CEO of BMW of North America, a guy who spends a lot of time in the air.

Good see you, Tom. Thanks for coming in.


CAVUTO: Let’s talk a little bit about what’s happening here. You guys are doing a lot more all-wheel-drive cars. Why is that?

PURVES: Well, first of all, the sports-activity market is a substantial one. I mean we launched...

CAVUTO: Why did you never call it SUV, by the way?

PURVES: Because it’s a sports-activity vehicle. I mean BMW were criticized for being a bit late into the light truck sector, but we were late because we wanted to build a BMW light truck, one that actually handled well, one that went...

CAVUTO: But -- I thought -- your competitors say an SUV is an SUV is an SUV, they’re not calling it SUV, that but it’s an SUV.

PURVES: Well, ours is a sports-activity vehicle. I mean it’s much, much more interesting to drive than many of our competitors’. It doesn’t have a huge amount of additional space in it. I mean we compromise more towards handling and ride and excitement driving than we do towards utility, and, therefore, it’s a sports-activity vehicle.

And the new car that we’re introducing at Frankfurt next week, which will come to the States at the end of the year, the X3, is a very exciting development because, of course, the X5 is a substantially important car, but it’s actually quite highly positioned in terms of price. So the X3 will come in below that.

CAVUTO: But do you get confused or do you risk getting your fans and customer base confused when you have so many different models and so many different rungs offering rear-wheel and all-wheel?

PURVES: Well, we don’t believe so, and we’re being quite successful. I mean our sales were up 16 percent in July, 4 percent over this year. We’ve quadrupled our sales in the last 10 years. So whatever we’re doing, the recipe seems to work.

But, actually, what we are doing is giving the consumer choice, and, whether it is in engines -- I mean our 3 Series is available with three different engine derivatives, our 5 Series with three different engine derivatives, our 7 Series with two different engine derivatives, or...

CAVUTO: But that’s my point. It’s a mess! It’s a mess to figure out, isn’t it?

PURVES: Not at all. On the other hand, it gives choice. Our body styles -- coupe, convertible -- who else does that? We’re the exclusive tailor, if you like, in the car business.

CAVUTO: But it hasn’t stopped you, Tom, from having to give rebates and incentives, that sort of thing. Of course, you’re not alone in the business. But Lexus doesn’t have to give as many incentives or as pricey incentives.

PURVES: Well, you would know more about that than I would do, but what I would say to you is that the whole segment is extremely competitive because everybody wants to move into the top of the market because the top of the market...

CAVUTO: Does it worry you, though, that it’s getting crowded with Volkswagen now going high end and all these others going high end...

PURVES: No. So long as we stick to our guns, I think we can do pretty well. I mean you could ask Tiger Woods or somebody like that does it worry him that there are two or three more excellent competitors. I mean he’d say, listen, I’m worrying about my game, not about the competition, and a great brand does that.

We’re going back to this business of offering four-wheel drive. We’re simply offering choice to people. I mean the classic opportunity for four-wheel drive is in icy and snowy conditions. For most people, 95 percent of the year, they don’t need that. So you can make a choice.

I mean if you live in mountainous conditions, here’s the four-wheel vehicle. If you live elsewhere, you have your the rear-wheel drive one.

CAVUTO: Let me get your sense of the American appetite for cars. I mean it’s still there, but a lot of the manufacturers tell me, Tom, again and again but at a price.

PURVES: Well, I think, it’s a more and more competitive fight for the business that’s out there. That’s clear. I mean it’s been a relatively tough economy, as we all know, for the last two or three years. I think the car industry generally has played a tremendous part in keeping the economy going, the American domestic manufacturers particularly with their low interest rates and so forth...

CAVUTO: Are you bullish on our recovery? A lot of CEOs I ask this question.

PURVES: I am, yes.

CAVUTO: Do you think it’s real? It’s in there?

PURVES: Well, I repeat the numbers. We were 16 percent up in July, 4 percent up this year.

CAVUTO: So this American recovery the president talks about is real.

PURVES: We’re number one in the luxury performance segment, and we’re seeing more showroom traffic. So we’re pretty optimistic.

CAVUTO: All right. Until you next pop on a jet, Tom, thank you very much.

Tom Purves, the BMW North American chairman and CEO.

PURVES: Thank you.

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