BMW Announces Ten Year Plan

09/28/07

BMW Group, after vending a record 1.4 million vehicles in 2006, has announced a strategic change. A broadening of its product line away from the enthusiast niche market was inevitable.

From corporate headquarters in Munich, BMW chairman Norbert Reithofer explained management's plans for expansion. No job or wage cuts for plants in Germany were announced, but a tightening is expected. High wages and a strong Euro currency hurt profits on cars assembled in the home country.

The target is 1.8 million global sales by 2012, and 2 million by 2020. This means expanding worldwide production capacity by 600,000 vehicles, which includes increased volume at the BMW facility in Spartanburg, South Carolina.

To effect the wider marketing plan, a series of new BMWs are planned;

A new entry-level sport/utility vehicle, "X1" around 2012.

An 8 Series four-door coupe, also projected for 2012.

The "Progressive Activity Sedan," a euphemism for a luxury minivan, similar to the Mercedes-Benz R-Class.

Compact SUVs based on the Mini.

A Rolls-Royce coupe version of the Phantom, and a smaller Rolls aimed at the Bentley Continental Flying Spur.

Acquisition plans are on the back burner, and the company has decided not to bid for fire sale assets at Volvo.

Profits from BMW's financial services division, which turns good money on leasing, are expected to grow, as Mr. Reithofer attempts to mollify shareholders focused on short-term returns.

Bavarian Motor Works is among the world's most successful car companies, but I am skeptical about this broader plan.

I didn't hear anything about improved quality or better customer service. Just next quarter's share prices and dividend.