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Hand-built by German engineers, the cars are more expensive than BMWs core line, but the cost is justified to the up-to-now limited number of buyers in the way of extra horsepower and other tweaks that add up to a lot more get-up-and-go. But this year, BMW is taking M from being just a small-volume bit of driving candy for hardcore enthusiasts to a product group that will sell 12, 000 cars this year-or 10 % of BMWs total mix-double last year's M sales. The M stands for Motorsports, but auto enthusiasts who vacation in Germany just to drive on the autobahn have sometimes said the M stands for Mmmm mm. M, as a brand extension of BMW, has been kicking around since the early 70 s. The M cars in the past had sort of a boy racer image, buy now BMW is using it to broaden the concept of performance, and our strategy of 'performance means safety.
The Power of M marketing tagline and all five M cars it has in production alM 3 sedan, M 3 coupe, M 3 convertible and, built off the successful Z 3 Roadster, the M Roadster and M coupe. M is intended to be a true sub-brand of BMW By attaching to M all the elements of the BMW brand positioning, it will probably work better than other similar attempts in the auto industry to simply tack on a new name and hope it sells. A critical aspect of positioning M as a real brand is making sure the dealers understand not only the product attributes, but as much about M as a brand as they do about BMW as a brand. While other companies have simply created super performance products, and sold them in small quantities to car club people and weekend racers, BMW may be the best positioned company to bring brand strategy to the track. From the standpoint of pure profit margin, high-performance cars are well-timed to the roaring economy. Though the Mercedes C 43 is priced at least $ 10, 000 more than a typically equipped C Class car, BMW holds the line on its M cars to between $ 5, 000 and $ 7, 000 above its typically equipped models.
One of the things we are very conscious of is not packaging or communicating the M cars too boldly for this broader audience we are seeking, said Danger. Its more of a brand package for the owners own satisfaction and feeling of some exclusivity, rather than one that shows it off to others. By propping up and expanding the M cars, BMW is adding polish to its zippy image that, until recently, had been throttled down a bit to broaden the brands accessibility. Compare the adrenalin promised by M Power to BMW ads that featured movie tie-ins, lower prices-of-entry, safety messages and those cute penguins sliding down an icy slope to tout traction control capability. The most advanced practitioner of the advertisement art may be BMW. The German automaker created BMW Films last year and signed up a group of new and established directors to create short films for its campaign.
The movies directed by Frankenheimer, Alejandro Gonzalez Inarritu, Ang Lee, Guy Ritchie and Wong Kar-Wai - are collectively known as The Hire and feature British actor Clive Owen chauffeuring characters in various BMW models. Filmmakers do not seem bothered by the idea of corporate sponsorship. The more financial sources we have, the better for us says John Frankenheimer, the director of Manchurian Candidate and Reindeer Games who made a short for BMW Films. Theres no difference in doing this for BMW than for MGM. Were always trying to sell something. It seems to be working.
According to Nielsen Net Ratings, BMWs site was the fastest-growing site for the week of May 27, spiking 55 percent. McDowell says the caretaker hasn't decided if it will fund a new round of advertisement. The films have an afterlife: They will be copied onto DVDs and mailed to BMW customers. The company also has a deal to screen them on the Independent Film Channel. To invert the clich&# 1081; , the fourth generation BMW 3 -Series deceives only to flatter.
It looks much less different than it is underneath the conservative skin, with an entirely new platform, a substantially improved 4 -cylinder base engine, and BMW's first essay in direct-injection (DI) diesel technology. The launch range numbers five models, starting with the 1. 9 L 318 i 4 -cylinder gasoline version, the only 3 -Series engine with two valves per cylinder (there is no longer a 1. 6 L). The DI diesel is a four-valves-per-cylinder 1. 951, BMW calls it the 320 d. Three 4 -valve inline sixes, all aluminum alloy with cast-iron cylinder liners, power the 320 i (2. 0 L), the 323 i (2. 5 L) and 328 i (2. 8 L).
Code-named E 46, the new 3 -Series was four years in development. The company aims to maintain E 36 (the previous model) production levels, which means up to 400, 000 a year eventually subject to sustaining quality standards equal to the more exalted cars in the line-up, claims BMW. The 3 is BMW's main money-spinner, as the production figures show it is built in Munich and Regensburg in Germany. The new body, styled by a team led by BMWs design chief Chris Bangle, claims a drag coefficient between 0. 29 and 0. 27 Cd.
At least half of the body-in-white and all of the suspension sub frames are stamped in high-strength mild steels, and it uses laser welded tailored blanks for door inner claimed 10 % weight savings. The new body shell is claimed to be twice as torsionally stiff as before, at nearly 15, 000 lb-ft per degree. That compares with 17, 700 lb-ft / deg . for the 5 -Series and 18, 400 for the 7 -Series. The new 7 -Series makes a deliberate break with design cues that have defined BMW for the best part of 20 years. 10 years ago BMW basically built one car in three sizes: 3 -, 5 - and 7 -Series. Now he talks of a new BMW design language that is freer, more expressive, but anchored by consistencies in proportion, surfacing and detail that tell you not only that it is a BMW, but also what kind of BMW, and what particular model it is.
And it will not involve developing one style for sedans, another for coupes, a third for roadsters and one for SUVs, either. Why? Because BMW understands its future growth depends on dramatically broadening its product offering, and not just selling more 3 -Series sedans. Our marketing people think in terms of what could be called a chess board, says Panke, On one axis you have the hierarchy of size and the position in the market, and on the other you have the body styles. Analysts are skeptical that the exquisitely detailed new Mini; however, the 115 -hp Cooper version will be joined by a 164 -hp Cooper S, will make money for BMW.
Any new brand takes an extra effort because of the up-front investment in R&D, tooling and marketing, explains Panke. We can accept that we are not hitting our normal targets with the first generation Mini, but we will not lose money on it. Panke says the new Rolls-Royce, currently being developed under the direction of product development chief Karl-Heinz Kalbfell, will also be profitable, even though BMW is restrained from any marketing or pre-selling of the car before January 1, 2003, as part of its agreement with VW Group. We dont do projects where we lose money, he asserts.
With volumes restricted to 1, 000 units a year, even a profitable Rolls-Royce program will have a negligible impact on BMW's bottom line. And with the runaway success of the X 5 and the still solid margins in the SUV segment, the smaller X 3, which will be built in volumes of about 100, 000 units a year, is a no-brainer. But given the industry truism that small cars equal small profits, do plans to build at least 100, 000 new Minis and 100, 000 1 -Series BMWs constitute a risk? BMW has enjoyed the highest margins of any volume manufacturer -- said to average seven per contend used these to maintain high levels of R&D funding (usually about five percent of sales revenues) and capital expenditure (between six and seven percent). Our long-range plan indicates we will continue to have those margins, says Panke. We even expect that the margins for BMW Group as a whole will grow.
This, then, is the key to BMW's go-it-alone strategy. For the past 20 years BMW has financed its R&D, capital investment and brand strengthening activities completely from cash flow. We will continue to do that, asserts Dr. Panke. We will continue to spend to create the future. BMW plans its future as a fierce, focused independent.
Barely 12 months after wheeling loss-making Rover Group into the used-car lot, BMW AG is back in top gear. Sales and profits are up, with the half-yearly results even beating analysts bullish predictions. The U. S.
market might be jittery, and Germany and Japan still sluggish, but BMW is on track for its best year ever. And it is readying an arsenal of bold new products designed to underpin a new corporate strategy to ensure the company remains an independent premium automaker. Not bad for a business that many thought was a prime takeover target last year. The industry rumor mill buzzed with stories that General Motors Corp. had effectively offered the reclusive Quand family (which owns about 49 percent of BMW stock) a blank check for the company.
Ford, too, was said to want BMW, and CEO Jacques Nasser's hiring of former product development chief Wolfgang Reitzle to head the Premier Automotive Group seemed a prescient move. As BMW's stock price bounced back from a low of 23. 04 Euros ($ 20. 80) in late 1999 just before the Rover divestment to a high of more than 41. 05 Euros ($ 37. 06) six months later, it was difficult to tell whether it was a sign the business had recovered, or that the speculators were circling. Dr. Helmut Panke, BMWs affable board member responsible for finance, laughs off any suggestion the company is for sale or a takeover target.
Of course there will always be speculation of a sale, he says. But this has been around since I joined the company almost 20 years ago. I think the stock price now is reflecting satisfaction with BMWs performance. Although global sales are up nine percent with market increases ranging from one percent in Germany to 21 percent in the U. S.
and profits before tax are up five percent year on year, Panke is careful to dampen expectations for the second half of 2001. He says annual production will crack 900, 000 units for the first time, but that BMW will face pressure on costs, mainly due to new model launches. Profits before tax are expected to remain at last years level of 2. 38 billion Euros ($ 2. 15 billion). That's a view shared by securities analysts, who note that BMWs new small car brand, Mini, is in an expensive start-up phase, and that earnings from the current 7 -Series will fall dramatically before its bold new E 65 successor hits the market in early 2002.
But even so, their short-term assessment of BMW remains essentially upbeat. The third and fourth quarters are expected to show negative year-on-year growth, says Deutsche Banks top executive. But we think the official outlook is too cautious and expect profits before tax of 2. 6 billion Euros ($ 2. 34 billion). It is the long-term scenario that has analysts and industry insiders eagerly watching BMW.
After the Rover debacle, which along the way claimed the careers of two of the companys most senior and talented executives, former CEO Bernd Pischetsrieder (now at Volkswagen AG) and the mercurial ReitzleBMW has shrugged off the current auto industry mantra that bigger is better. Its now determined to go it alone. GM, Daimler-Benz, VW and Renault have all gone chasing volume and synergies through mergers and acquisitions. BMW though, is betting it will not only stay in business, but remain ahead of the game, building about 1. 5 million autos a year. Behind the upbeat mood in Munich, the reality is BMW successful, focused, the automotive zeitgeist of the sleek, moneyed and thrusting 1980 s and 1990 sis at a crossroads. Milberg has said once that he most valuable asset of BMW is its employees.
Human resource management is of the great importance for the company. The way BMW treats its workers can serve as a great example for other companies. If you ask employees at the Bavarian Motor Works in Munich about manufacturing costs, and they become defensive and defiant, though still polite. Siegmund Engel, 35, who puts together 3 -series BMWs, is typical: People say that costs are too high.
Its true that other countries are cheaper. That is bad news for us. But I think our costs here are... (He pauses)... Appropriate. Siegmund says he cannot imagine getting less than the basic euro 800 a week he now earns.
His opposite numbers at Rover in Long bridge would no doubt be pleased to trade places. Siegmund himself readily admits that BMW, in common with the rest of the German economy, is not run on the cheap. According to BMW, all but a few per cent of its workers earn more than euro 30, 000 a year. The BMW workers enjoy a holiday entitlement which starts at six weeks a year. Plus there are the standard public holidays, which Catholic Bavaria is especially keen on 12 or 14 a year depending on how you count them. Then there is Urlaubsgeld, or holiday money approximately an extra months pay, towards the summer break in Majorca or Miami.
And Weihnachtsgeld, or Christmas money - the same again, for presents all round. Those two bonuses have long been standard across Germany. In addition, BMW workers get a further 15 th months salary as part of a profit-sharing scheme. On top of that, there are generous health insurance and pension payments. Bernd Pischetsrieder, chairman of BMW, reckons overall German wage costs to be about twice those in Britain. The employees certainly pay back.
Milberg has said that the BMW Group sees developments in the year 2003 in a positive light and that the company expects ongoing growth and a further positive development of business. In the year 2003 the BMW Group will consistently continue its product and market offensive, introducing the new BMW 7 Series as well as the MINI brand into the overseas markets outside Europe. To meet substantial demand expected also in 2003, the BMW Group plans to work additional shifts at the various plants. In all, 28 additional shifts have already been agreed for this purpose with the Works Council at the BMW plants in Munich and Regensburg.
And in response to significant demand for the new BMW 7 Series, special production activities are also planned at the Dingolfing plant. The BMW Groups positive trend in the German market continued once again in 2001. With the overall market showing a slight decline, 245, 848 (previous year: 240, 574) BMW and MINI cars were delivered to customers. Amounting to 240, 910 units, sales of BMW cars once again reached the very high figure achieved in the previous year and was supplemented by approximately 4, 938 MINI One and Cooper models delivered to customers in Germany. BMW Group sales continued to grow also in other major car markets in the year 2001: Great Britain recorded sales of 80, 228 BMW cars (+ 17. 4 per cent, previous year 68, 349 units) and 10, 643 MINIs, Italy was up to 46. 015 BMW cars (+ 4. 9 per cent, previous year 43, 861 units) and 3, 015 MINIs, France showed sales of 35, 514 BMW cars (+ 4. 8 per cent, previous year 33, 884 units) and 2, 000 MINIs, Spain reported a sales figure of 29, 715 BMW cars (+ 7. 7 per cent, previous year 27, 586 units) and 1, 025 MINIs, Belgium increased to 23, 740 BMW cars (+ 6. 1 per cent, previous year 22, 371 units) and 745 MINIs, South Africa recorded a sales volume of 19, 174 BMW cars (+ 20. 0 per cent, previous year 16, 255 units), and Switzerland reported a sales volume of 14, 576 BMW cars (+ 15. 8 per cent, previous year 12, 588 units) plus 588 MINIs.
The BMW brand also showed outstanding performance in the Asian markets, in some cases achieving very high growth rates confirming the potential of these markets: Japan accounted for 35, 777 BMWs (- 0. 4 per cent, previous year 35, 928 units), China saw sales of 5, 742 BMWs (+ 51. 2 per cent, previous year 3, 797 units), South Korea reported a sales volume of 2, 717 BMW cars (+ 67. 1 per cent, previous year 1, 626 units), and the new BMW Subsidiaries established in early 2001 in the Philippines and Indonesia accounted for sales, respectively, of 500 BMW cars (+ 96. 9 per cent, previous year 254 units) and 2, 749 BMWs (+ 13. 7 per cent, previous year 2, 418 units). The BMW Group revealed the new flagship of the new 7 Series, the 760 Li. The long- wheel base version is powered by a 12 -cylinder developing maximum output of more than 300 kW or 408 bhp. The new BMW 7 Series sets new standards in its class in terms of dynamic performance and motoring comfort. Together with the innovative, intuitive i Drive control concept and through its revolutionary design, the new BMW 7 Series has already established its position as the world benchmark right at the top of the luxury performance segment. The car is unique in terms of new engine technology and a larger, much stiffer body for the fourth-generation of BMWs biggest-volume model.
BMW is definitely a unique company, which success is built upon exclusivity. However, why is it unique though? The answer is that while its cars are exclusive they are produced in large volumes. Moreover, BMW is a dream. Even though it is not the most expensive and not the most ultimate car in the world still BMW is what almost every person would like to drive. It is hard to tell exactly why; however, it is suggested that BMW first off is a great brand.
BMW AG is a successful company because it succeeds on every level.
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