You only have to look at the debacle that is DaimlerChrysler's Smart city car project to realise how masterful BMW has been in guiding its Mini premium small car to financial success.
Until DaimlerChrysler took an axe to the Smart project earlier this year -- dumping the Forfour four-seater, the roadster, and spiking the planned SUV -- the ill-fated city car had notched up losses of an eye-watering $6.1 billion since its birth in 1998. Only the original two-seat ForTwo car remains. Margins on Smarts approached a negative 50 percent as sales targets of 200,000 a year (73,700 in 2005) failed to materialise.
Investment banker Morgan Stanley estimated that each time a buyer pocketed the keys of a new Smart, DaimlerChrysler lost $5,100.
The little Mini designed by BMW meanwhile has made money right from its inception in 2001, and the latest iteration which goes on sale in Europe in November, and follows in the U.S. next month, is also expected to show steady profit progression.
According to Frankfurt, Germany-based investment banker Dresdner Kleinwort, Mini earned net income of $148 million in 2003 for its owners BMW, progressing steadily to $185 million in 2005 and is likely to reach $260 million in 2007.
BMW, which plucked the Mini brand from the rubble of the financial disaster of its ownership of Britain's Rover group, started off with a modest sales target of 100,000 a year which quickly became 120,000, and accelerated to 200,000 in 2005.
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