Is The Basic Business Model That BMW Based Itself Upon Doomed For Failure?

They were in the past -> BMW Isetta , BMW 600 .

So why not again .

Most of BMWs cars sold in Europe aren't big-engined and thirsty like they sell in the US and Mideast. BMW can expect to sell less "powerful" of their models to compensate.

this is a stupid article

lots of 'what ifs' there.

facts: bmw has suffered below average declines in sales volume and profit margins relative to its competitors.

so, one could make the case that the brand's consistent product attributes are actually what has enabled it to endure better than others.

But its direct competition (Audi and Mercedes) have both fared better IIRC. Mercedes is a global powerhouse vs. BMW's US- and Euro-centric philosophy, while ironically Audi's miniscule sales in the US have been its saving grace. A lack of focus on the US market, which is the market that has been hit hardest, is what has made the Audi brand successful this year. Their sales are up WW, as well as their profits.

Thanks for an excellent post, 009

BMW's woes are indicative of the rest of the economy. Nobody is immune to the troubling financial virus.

But hopefully, those reading the article will learn a few things about the overall economy:
(1) No matter how expensive your luxury cars, SUVs are; most of those customers finance their vehicles. And if the residual values are steadily dropping, that means leasing costs rise considerably, making monthly payments rise as wll.
(2) Not all luxury car buyers have good credit. And thus so, they have relied on the fact that they can purchase many things with cash...but not everything. They may have disposable income, but after their lease ends, they're gonna want something a little newer. Having to pay more for a lease than purchasing means that they may just buy --- but the terms will be like 48-72 months. They won't be back in the dealership for a while. And their Trade-In will be valued quite low at that time also.
(3) While in Europe, you can get a the top model with a small engine, the same isn't so in other markets (read USA). Most people will opt to buy/lease a smaller car with a small engine instead of getting a big, slower car with a small engine.
(4) The declining health of the economy means that most people's desire to purchase the most expensive vehicle they can has definitely been put on hold. The average, blue-collar worker who is fortunate enough to afford a BMW (or any other luxury vehicle) and may not consider it and instead purchase a sporty version of something less expensive.

One of BMW's challenges is they are losing very loyal customers like me. I have owned over twelve BMW's in the past twenty years, but am done with them unless they change their ways. I've had 740's, m3's, 540's and everything in between.

I don't like GM transmissions in my cars, nor run-flat-tires that are lousy and expensive. I think BMW has lost its way with way too much technology, poor products(the five series is so uninspiring) and cost. Also I can't keep them past warranty as my risk and cost are way too high to do so.

Maybe someday they will wake up and listen, but I doubt it.

lol this whole post sounds falsified as a person that has had more than BMW and own 2 right now a 04 545i, and 99 Z4 m coupe, this is bogus. BMW cars are more reliable now than they have ever been, the build quality is better as well, and yet you say talk about them as if they are trash. No one makes anyone buy a certain car, and to have 12 and all of sudden now they arent good enough is a lie. GM for the record doesnt make transmissions they have suppliers that do,much like many other automakers which have suppliers that build their transmissions, not to mention if you have owned so many BMW cars, for so long and something so foolish was an issue than you wouldnt have ever bought one. Its rediculous another focus on BMW article, as if they are the only one leasing cars, and another foolish post that has no logic

Startingover -
You are so right. The GM transmissions (installed on the x28i's across the board and in the last gen 3-series) and run flat tires are really lousy.

My 328i cab is 18 months old and I've had to replace 2 tires already b/c the run-flats, in fact did get flat - in 1 case stranding me. With no spare, I was screwed.

I won't take the car on a long trip (luckily I have 2 other cars - MB's with real spare tires) and I won't buy another BMW until they ditch the run flats.

The GM autobox on my 328 hunts for gears and since it has 'lifetime fill' transmission fluid - it should fail like clockwork at about 62,000 miles, just after the warranty is up. The plastic water pump should explode right on schedule after that.

Anybody who is interested in issues with older BMWs should subscribe to "Bimmer" magazine www.bimmer-mag.com it is a wealth of honest info about the high points and the low points of BMW's.

I love the driving experience of my 328i cab but there are too many issues that give me pause when considering to buy another.

The subtle point this article fails to mention is that if the vast majority of BMW owners lease their cars and turn them in at the 3 year - 40,000 mile mark, they have not experienced the maintenance/build issues that crop up at about 60,000 miles. BMW might not have such a great relationship with its customers after all.

:-(

Nybimmer and startingover:
If you manned up and got the 6MT instead of the slushbox, this wouldn't be an issue. There is nothing wrong with using your left foot when driving. It's what enthusiasts do.

I really hadn't thought about the GM connection, but now I'm wondering - does my 2008 X5 have a GM transmission? I know that some BMW models do, and GM has had a good reputation for its automotics for a long time. But, besides the various cheap interior parts and the weak sounding "thunk" of the driver's door, the thing that bothers me most about my X5 is that it often seems to be in too high a gear at low speeds, when you head into a corner. I never expected it to be perfect, but I never thought there would be any performance issues with this car.

As for having the right model mix for the times - each line should offer models with less equipment and smaller engines. Problem is, of course, there's less profit in these models.

lol no company has ever said economy doesnt affect them thats a lie, and makes no sense. That was the reasoning by them not producing certain models, let alone reducing exports and BMW has said that....where do you people get this stuff

There is one thing I learnt in this business; never underestimate BMW, they have got enough cash to buy Fiat, PSA or launch their own low Co2 emitting brand to bring their average corporate rating down.
Anyhow, with an average premium of €500 to €1,500 Co2 Penalty tax in Europe (who knows about the US?), they simply have enough brand equity in these particular segments to pass it on to customers.
This tax might backfire and actually make BMW Co2 emitting vehicles more desirable by their target customer group.

When the current strongest player in the industry -- Toyota, has its credit rating downgraded, you know things are bad.

Every car manufacturer is feeling the effects of global economic slowdown (or meltdown). Not just BMW. Premium car companies are especially vulnerable. That includes the VW/Audi and the Daimler group, cause in a sense they all follow pretty much the same business script.

The bottom line is fuel-efficiency is now, and for the foreseeable future, the name of the game. These usually mean smaller models, and unfortunately smaller margins as well.

Entry-level models will become a lot more significant. This is something BMW and Benz don’t particulary specialize in...at the moment. But, for their survival they’re gonna have to become really good at it. Brand image be damned!