BMW Revs Its Engine The Ultimate Driving Machine Has Ambitious Plans to Drive U.S. Market Share
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Knowledge Base: BMW Buyer’s Guide
Washington, DC--February 20,2011: Marty Bernstein, AIADA Contributing Editor Reports the following:
Fifty years ago, Bayerische Motoren Werke AG, better known as BMW, was in dire financial straits and faced with bankruptcy. Competitor Daimler-Benz mounted an attack to gain control of the ailing company before an astute German investor, Herbert Quandt, bankrolled the development of the BMW's first midsize sedan - the 1500 model - and developed a plan to rescue the automaker.
Read the full story at:http://http://www.aiada.org/news-and-events/industry-news/1413">Marty Bernstein AIADA
Quandt's gamble paid off, and over the past five decades BMW's growth has been unprecedented. Since 2004, the BMW Group has been the world's leading supplier of premium automobiles. Its workforce has grown from 6,900 in 1959 to over 96,000 employees today. At the same time, the number of vehicles sold has climbed from 42,000 in 1959 to an estimated 1.4 million (BMW, MINI, and Rolls-Royce) in 2011. "The BMW Group," noted Ian Robertson - a member of BMW AG's Board of Management - during a recent interview, "is well on its way to reaching its target thanks to our ongoing product offensive. We are out-performing the market and were able to expand our market share worldwide once again."
Today "Bimmers," as they are affectionately known, are sold throughout the world, but the U.S. and Germany vie for top honors in terms of sales volume. Surprisingly, BMW is a fairly new member of the U.S. auto market, first establishing a corporate entity in 1975. Prior to that, it used a distributor. However, despite its recent arrival to U.S. roadways, "The Ultimate Driving Machine," is in the process of implementing an ambitious strategy to continue to grow its operations in North America.
BMW's U.S. Commitment
20110215_BMW5SeriesBMW has invested billions of dollars in the American portion of its operations, as evidenced by its dealer base and U.S. manufacturing operation. Its headquarters in Woodcliff Lake, N.J., like most BMW buildings in Germany, has eye-catching architecture, and underwent a three-year, $100 million expansion program that was completed in 2008. The campus covers 85 acres of prime corporate real estate and boasts more than 1,000 employees.
There are 338 BMW dealers in the U.S. Since 2000, the automaker's investment in dealer facilities is estimated to total $3 billion. Sales through November 2010 were 154,732 units compared to 143,943 in 2009, an increase of 7.9 percent. The 3-series vehicles accounted for almost 48 percent of BMW sales last year.
BMW's factory in Spartanburg, S.C. recently completed a $750 million expansion, bringing the company's investment in the facility to $4.6 billion. The plant's 7,600 employees currently produce up to 240,000 X3, X5, and X6 models. It is the largest single employer in the state of South Carolina. 70 percent of the vehicles produced at the Spartanburg plant are exported to foreign markets and account for $8 billion in sales, making it the largest exporting plant of U.S. built vehicles.
BMW's Plans for the Future
Just as they have for many of BMW's fellow automakers, economic conditions in recent years have taken their toll. It launched the Z4, 7-Series, and the X5 Diesel, although, according to one executive, "We're not exactly what the market was looking for."
Despite the past few years, BMW is now preparing to buffer its U.S. presence with aggressive new platforms, products, and propulsion technologies. And despite the existence and rivalry of competitors like Audi and Mercedes-Benz, "There aren't many market segments in which we're not dominant despite the fact we have not had the youngest fleet," Peter Miles, executive vice president of operations, boasted recently.
Front Wheel Drive BMWs
Rumors have swirled that BMW is planning several front wheel drive vehicles in the coming years, the first in the automaker's history. Peter Miles confirmed this fact at November's Los Angeles Auto Show. Automotive News also reports that four models are in development. They include a small crossover, a roadster, and a compact van. All share product architecture with BMW's fast growing MINI brand.
Despite the reaction of some loyal BMW fans at news that front wheel drive is on the way, Miles argues that "They are less expensive to make." With new U.S. and European emission standards on the way, front wheeldrive delivers the space drivers demand along with a lighter vehicle weight.
BMW's Megacity Electric Vehicle
20110215_BMWMegacityEVDesignSketchAfter six years of planning and development, BMW announced it will market a small electric vehicle. It is expected to feature body-on-frame architecture, 100 percent recyclable materials and components including use of new light weight carbon fiber, and improved battery technology. It will also be built in a new $600 million factory in Leipzig, Germany. Regarding the Megacity Electric Vehicle, Miles commented, "We are expanding our product line-up, not cutting it down, by anticipating future potential, but how that's going to perform, no one knows."
New Engine Technology
BMW aficionados agree: What's under the hood is the heart and soul of every BMW, no matter the number or configuration of the cylinders. 2011 models will be the recipients of new engines and technology.
The new inline-6 engine is the first BMW inline-6 to combine turbocharged direct fuel injection and variable intake technology. It features a single, mid-sized turbocharger with "twin-scroll" housing to boost performance and minimize the response lag to produce the 300hp and 300 lb-ft of the previous engine. However, the fuel efficiency improves and the emissions are reduced. Select 1, 3, and 5 series models will receive the new engine which was named to Ward's "Ten Best Engines" list.
BMW is also in the process of developing significantly lighter, more efficient 4-cylinder engines to replace 6-cylinders. According to Miles, many consumers - car buffs included - can't tell the difference in the number of cylinders in their engine. "But they're getting more efficiency with lighter weight, more horsepower, and better fuel economy. It's win, win, win all the way down the line," said Miles.
No Changes to Top-Selling 3-Series
According to Auto Data, almost half - 48.6 percent - of BMW's volume in North America is in its 3-Series vehicles. Sales through November demonstrate that the series has gained in terms of sales volume, with the sedan version 3-Series leading the way with a 17.9 percent improvement. With the exception of the wagon version, however, no plans have been announced to change, freshen, or modify existing design.
Sport Activity Vehicles
20110215_BMWX3Although the industry may classify these vehicles as trucks, BMW prefers to designate several of its models - such as the X6 models - as "Sport Activity Vehicles" (SAV). Most consumers, however, classify them as SUVs for their looks, stance, driving characteristics, and mileage ratings. As a category, SAVs are the second biggest volume models in the current product portfolio. The X5 accounts for 83 percent of the category volume; the outgoing X3 amounts to 14 percent; and the X6 just 4 percent. But things are about to change.
A totally new X3 SAV was introduced last fall. According to Miles, the new X3 will compete more effectively with Audi's Q5 and Mercedes' GLK in a growing market segment. "Look what we've got: We've got a car that's priced $2,000 less than the old one, standard equipment is higher, it goes 0 to 60 in 5.5 seconds, an economical state-of-the-art engine, a beautiful luxury package, and the best fuel economy rating in its class."
The X5 SAV and its diesel cousin have been huge volume models according to Miles. "We had 6,000-plus volume in 2010 and an additional 6,000 more are planned for 2011." It's the hottest with dealers averaging only a six-day supply throughout the year.
5-Series Ambition
With just two models, the 5-Series accounts for 17 percent of current U.S. volume.
But according to Miles, the 5-Series category will be all new over the next year. "The new 535X1 was launched last fall and the big volume 528i is now in showrooms, while the 528xi comes to market in 2011. So once we're up to a full complement, we'll be back in business in this segment."
Bottom Line
When questioned as to where he sees the premium, luxury market heading, Miles was cautious and reflective. "We're fueling our growth now with new products," he said. "I believe the company's U.S. 2011 sales will increase even more than in 2010 on growth from new products, such as the redesigned X3 sport utility vehicle, the 5-Series, and the new 6-Series. We're confident about fulfilling the promise that BMW will deliver efficient, dynamic products - the ultimate driving machine."
