Are "Swiss Army Knife" Vehicles BETTER or WORSE Than PURE Offerings?

That depends on your $, your garage space, your access to areas/tracks where you can use these pure vehicles. I would need a large warehouse to put every pure vehicle I want. We had a BMW e39 M5 for 12 years (sold in 2012 - wish I hadn't sometimes) which was one of those Swiss army knifes and I loved it. Never took it to a track but some late nights/early monrings in the mountains were lots of fun, it was a great vehicle to go to the show or a nice restaurant in and it was a great cross country machine. On the other hand if I had that warehouse and access to the right places to drive I would have had some Ferraris (and other race oriented exotics) for the track, Jeep/Land Rover Defender for the mountains, Rolls Royce for the dinner/show, Alpina B6 for cross country drives and Tesla 3 performance to get groceries.

While there are good, fast driving sports cars that entertain, are there any pure sports cars anymore? Computer assistance, multiple driving modes, forced air (turbos, superchargers), etc etc are common in all sports cars as well as the M5 to which you speak. To me all cars are like all my friends, each one has a unique personality, skill set and style. Finding the friend or the car you most want to spend time with for a specific activity is rewarding when you get it right, painful when you don't.

If I recall, I believe MD is a fan of the Miata as a pure sports car ;)

First - Regular line BMWs do not have interiors that compare even remotely to a ROlls Royce - maybe some switch gear - but people who suggest this have never been inside a real Roller.

Noting that for the overwhelming majority of people - cars are really Transportation Appliances - since top speed performance is not an issue - the SUV/Cuv is simply the culmination of the all-purpose vehicle - and they are simply Raised Station Wagons that can carry the odd large parcel - or a part of the BBALL team - and still go to the Opera at night. Pure Performance cars always had their NICHES - and for a while made inroads into the mainstream - but in reality their extra cost at the high end limited their markets to rich people - where the GTI's of the world sold like hotcakes for a while - but as the generation current moves to family life- they are less desirable.

However - for a particular purpose - these cookie cutters cannot really compete with Purpose Produced Vehicles - For Pure Luxury the Rolls, Maybach, and Bentley will not be approached by lesser vehicles. For pure Performance - the Exotics still rule - and all you need are DEEP POCKETS. THe shame is - those who actually have the really DEEP POCKETS to afford these things - generally are getting too old to appreciate them anymore

I've driven plenty of Rollers and it's clear as day if you've been in the new M5, M760i, etc. that lessons are being learned.

Especially when you compare against previous BMW interiors, which have never been particularly special.

While you might spend the same total amount of money on two distinct vehicles, the expenditure doesn't stop there. You have twice the insurance (maybe more than double, maybe a little less with multi-car discount) and twice the maintenance. So overall cost of two vehicles could be much more than the single, more costly "Swiss Army Knife" version.

If you can't afford the insurance or the maintenance, you can't afford the cars.

I think you need both. My Telluride loaner is a great do everything, but it is no Z06 and the Z06 is no Telluride.

What are the target customers buying?

Most major automakers can build a 95%-100% replica of the current M5. Not every major automaker would be able to sell it. The swiss-army-knife type vehicles exists b/c these customers are buying them.

When you go above the $50k price mark, I would assume the overall pool of potential customers decreases generally. How many $120k M5's will be sold?

This is a corporate budget & finances question. BMW knows their own brand perception. They'll sell 100k SAK vehicles so their more "pure" models can still be developed & sold at "reasonable" pricing.

What about Teslas that can outrun a 911 Turbo, tow one million tons, are safer than sitting in your living room and soon will cure cancer just by driving it?

As the Swiss army knife of cars I would guess that cancer cure part would involve cutting it out in addition to the driving??

The true "Swiss Army Knives" of the automotive world are performance SUVs/Trucks.