Today, I thought I would discuss this little conundrum BMW has gotten itself in.
I was able to spend sometime this weekend with some friends discussing the finer things in life; cars, fences and window blinds (please keep reading, in all seriousness this really has to do with cars). I am blessed to have friend ‘s that share my passion for cars, though we all have some what different tastes. Some like US built cars and trucks, others Japanese and of course German engineered marvels. During this discussion (the car portion) the one thing that I could not get out of my mind was how BMW has not learned from the past or from other ‘s mistakes.
GM has taken a severe hit in the past few years as has Ford and Chrysler. These companies had grown to be enormous entities with many models in every possible niche market available. Anyone remember that hot rod convertible pickup with the Corvette motor in it that Chevy was selling a few years ago? Was that something that really needed to be made and mass produced? You catch my drift. In the quest for global dominance and to take over the known universe these companies all lost sight of reality, good products with style and quality are what sell.
BMW in my opinion is now on this same self-destructive course. They seem not to understand or know when to say when. They are in the process of expanding their lineup into areas that they need not go. Are they really going to sell enough of the PAS to justify the R&D costs let alone the marketing…. oh that is right they are trying to achieve greater economies of scale and break sales records at the same time. With all of these new models and the ever expanding used car market there will be a million BMWs floating around.
That is the next part of the problem, if they continue to sell cars in increasing numbers by watering down the brand will BMW still be a strong marquee? Will 10 year old Johnny still dream of driving his first BMW, or since there are so many BMWs (including a great supply of pre-owned) Johnny sees them as what everybody drives (like a Camry) and decides he wants something that drives almost as nice but also wants it to be different. Up steps Jaguar (the new models being released are huge steps in the right direction) and the Italian Alfa Romeo. Part of the reason for the return of Alfa to the US is the exact scenario, they see an opening in the market where BMW once stood, the sporting/luxury niche with some flair.
I am a huge fan of the BMW product and understand the frustrations they have with being independent and not having the ability to reach economies of scale as others so easily can. I do not think branching out into niche markets and producing more cars is the answer. Porsche is a prime example of not needing to produce a lot of cars to make money, just making great cars and building in profit.
I hope BMW can self correct before they follow the footsteps of the “Big 3 “.
As noted today by Left Lane News, BMW is having a difficult time reaching cost cutting goals and is being strapped by rising materials costs. This is just the issue they have been trying to prevent; have they already lost the battle before the majority of niche vehicles reaches the market?
What are your thoughts, we would love to hear them!