BMW partners with Allianz to offer branded car insurance
BMW will begin selling Allianz car insurance products through its dealerships, targeting leasing customers and aiming to boost revenue amid a challenging market.
BMW has announced a partnership with Allianz SE to sell auto insurance directly to its customers, expanding its service offering beyond car sales and leasing. The move comes as the German manufacturer seeks to increase revenue from each vehicle transaction during a period of industry-wide financial strain.
Under the new arrangement, BMW dealerships will offer Allianz insurance products alongside existing finance and leasing options. The insurance will cover standard motor risks, but also includes products that guarantee a car’s value in the event of an accident and provide payment protection if a customer’s financial circumstances change.
BMW’s focus is on leasing customers, who accounted for roughly 50 percent of its sales at the time of the announcement. The company expects the addition of insurance to its portfolio to make its packages more attractive, while also capturing a greater share of the ongoing costs associated with car ownership.
A response to industry pressures
The partnership was announced as carmakers across Europe faced the deepest crisis since the Second World War. With new car demand under pressure, manufacturers like BMW were looking for ways to secure more stable income streams. By offering insurance, BMW aims to reduce its reliance on the cyclical nature of vehicle sales and tap into the substantial sums drivers spend on insurance each year.
BMW said the Allianz deal would help it reach its medium-term profit targets. In 2008, the company’s automotive operating margin was just 1.4 percent. Management had set a goal to lift this to between 8 and 10 percent by 2012, with service products like insurance expected to play a supporting role.
BMW follows wider industry trend
Car manufacturers have increasingly sought to offer bundled services as a way to hold onto customers and generate new revenue. Daimler, for example, was expanding its car-sharing operations in 2009, while other brands explored finance and aftersales products. By integrating insurance with its sales process, BMW joins a wider shift towards mobility services as part of the core automotive business.
The deal also reflects a growing willingness among carmakers to partner with financial services firms to broaden their product range, rather than developing such capabilities entirely in-house. Both BMW and Allianz are headquartered in Munich, which may have helped facilitate the agreement.
BMW’s move into branded insurance was intended to help the company weather the downturn and position itself for stronger profitability as the market recovered.
