BMW’s CEO to unveil new strategy in October

Mercedes has always been their biggest rival, obviously. But Audi and Lexus are posing threats that would have been unthinkable 15 years ago. This will definitely be interesting.

The biggest threat to any European automaker is the Euro/$US exchange rate, not another automaker. Japanese automakers offer high quality products, but their clearest advantage is the easy ability to undercut the price of luxury European automakers in the biggest sales market, the USA. The price disadvantage only looks more bleak into the future, when North America is no longer the biggest automobile market.

BMW is wisely looking ahead at future large vehicle markets (China, India) and realizing that it currently has few customers who could ever afford what BMW currently manufacturers. Sad to say, but the future automobile landscape will be distinguished by urban cheap minicars -- not luxury touring cars.

BMW and Audi especially are doing quite well in China. The A6L is a huge seller.

Yes, China is a promising market for all automakers. BMW stated at the Shanghai auto show in April this year that it sold a total of 10,177 cars (inlcuding the Mini brand) in the first quarter of 2007. (According to Reuters, VW sold 202,623 and GM sold 291,588 in the first quarter).

Clearly BMW's sales figures there compared to Europe and North America are miniscule. With continued strong growth, BMW may eventually make most of its profits from China, but that's a long time down the road. Today, the profit margins of European marques are taking a beating in the USA.

By the way, S4cabriofoxone, BMW produces 3- and 5-series models in partnership with Brilliance China Automotive in Shenyang. If it didn't, then there little chance it could sell more than a handful of vehicles in China with a positive profit margin.

clarification - VW and GM sales figures above are for the China market only, comparing apples-to-apples with the BMW figure.

That means BMW sold about 3.5% the number of cars that GM did in China, and 5.0% of VW's sales. China is buying economy cars, not luxury touring cars.

There is no doubt that BMW will remain sustainably profitable. I just hope that their new strategy includes making beautiful cars. I believe Audi has done that, and that's why Audi cas captured my interests, even though I currently own 3 (pre-Bangle) BMWs (and love 'em).