BMW: Imitation is the Greatest Form of Flattery

Here is the fact driving every executive in the global auto business today: the demographic profile of every society will mature in the next 30 years.

With an aging world running short of fuel, sporty cars are fading. Luxury cars will be an important high margin opportunity.

For Bavarian Motor Works (BMW), this means expanding its presence in the upper strata without alienating its existing customer base.

BMW, with just 3% of the US market, must become Lexus-like to grow. This despite the often imitated style leadership of the Bangle designed 7-series BMWs.

This does not mean a mass market vehicle, just a more profitable company.

You Can't Always Get What You Want

The traditional sports car enthusiast niche market will decry the Ultimate Driving Machine's progression toward softer and rounder Toyota influenced lines. Recent experiments with technology (i-Drive), and restyling (Bangle-butt), are attempts at this transition.

At this level, the competition (Acura, Alfa Romeo, Audi, Infiniti, Jaguar, Lexus, Mercedes-Benz, Porsche, Saab, Volvo) allows little room for error. Staying on top of the luxury car pyramid requires more than just a great product, it must deliver the emotional, intangible feeling customers seek.

The difficulties at Mercedes following the Chrysler takeover are not lost on BMW, which only Toyota rivals as the industry's highest performer.

This is a luxury car brand more resilient than any other, with slow but steady sales growth and brand recognition.

Starting at the upper end of each class, and then adding pricey options, delivers the industry's top profit margins for BMWs. Only Porsche does better.

Unlike many other builders, big profits are made on the 3 Series, the entry level.

A Clockwork Orange

An entrepreneurial culture and excellent labor relations, unusual in Germany, attract designers and engineers. These are invited to mix with financial and marketing people to brainstorm in a creative atmosphere.

This makes BMW flexible and quick, and able to produce the brand coherence I regard as necessary in the future. It might be a little rounder, but few people will say "is that the new Hyundai?"

One look at a late model BMW, any series, and you immediately know what it is.

This instant recognition is a big part of the ownership experience. And the coherent product identity allows the company to shorten the product development cycle relative to competitors.

Commercially successful since the 1970's, 47% held by a wealthy European family, and consistently profitable, BMW is not going away. Residuals and resale values are near the top of the list.

The i-drive control knob fiasco lowered Initial Quality Survey ratings and drew the ire of Consumer Reports. This allowed Lexus to pull slightly ahead in the quality reputation race.

The run flat tire debacle is perhaps the main blemish on the BMW quality record. Thousands of buyers of Bimmers have been very disappointed with the durability and replacement costs of run flat tires. See story linked at bottom.

I'm A Believer

BMW is known for an evolving product line with great quality.

In the J.D. Power and Associates 2006 Customer Retention Study, BMWs ranked 4 out of 37 makes. An impressive 56.5% of those surveyed returned to purchase another vehicle.

In my opinion, repeat buyers are the strongest indicator of overall quality.

A substantial majority of cars are made to order: no sales bank here. Always a technology leader, the Bavarian Motor Works power plant is among the most modern. The touring motorcycles are the worlds finest, but are priced out of the mass market. The company has committed significant research funds to hydrogen.

The US has around 340 dealerships and maybe 70 MINI dealerships.

Despite the negative responses to the new styling and idrive control, BMWs have never been better.

The only problem texas-cars-and-dealerships.com has is the option pricing system that can run these cars to near double the base price.

Those who cannot really afford this (like me) might consider the many standard features packaged on Acuras.

But if you got it, a new BMW is one of the best ways to flaunt it.

News-Blog Updates for BMW

09/28/07 BMW Announces Ten Year Plan