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Has BMW Become A Victim Of Its Own Success?
If there were an award for last year's most profitable premium brand, it would be an unequivocal victory for Mercedes-Benz.

After cutting Chrysler loose, profits at Daimler, Mercedes' parent, have shot upward like an untethered balloon. None of its rivals could keep up.

There was a surprise in last year's results, though. Audi's profit margin topped BMW's. And Audi accomplished the feat without a financial arm of its own. Parent company Volkswagen handles the brand's leasing and financing.

BMW's comparatively bad showing demonstrates just how right CEO Norbert Reithofer has been in pursuing drastic cost reductions. Anyone who continually sells more cars without making more money is heading in the wrong direction.

BMW's results can be excused only partly by rising raw material prices. In the United States, BMW has become a victim of its own success. The weak dollar most hurts the import company selling the most in the United States.


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Has BMW Become A Victim Of Its Own Success?



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ForeignerForeigner - 3/25/2008 2:54:21 PM
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Spellchecker should enable his grammar checker, as well. Toyotas (as in the plural of Toyota) should have no apostrophe. I'm German, and I know that.

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ForeignerForeigner - 3/25/2008 3:08:17 PM
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0to600to60 - 3/25/2008 3:16:20 PM
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I dont get the problem with Lexus being a luxury branch of Toyota. If they kept the toyota name plate on it and priced it the same, there would still be buyers. A camry feels way different than an ES. Who the F^%! cares if Toyota happens to make the brand. Am I a fan of Toy/Lex? NO! Does it annoy me when ppl degrade Lexus because they are a division of a brand that makes cars at a lower price point? YES! They could have put a Nissan badge on my Infiniti and I still would have bought it. I may get a Maxima or choose to purchase a Morano even though it isnt an infiniti. Likewise, if the BMW 3 had a VW badge on it. It would still be a great car and worth the money. Likewise Lexus is... Get over it being owned by Toyota!

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sholemonsholemon - 3/25/2008 3:17:22 PMView My AgentSpace
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Oooh, spellchecker got pwned by Foreigner

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JRobUSCJRobUSC - 3/25/2008 3:42:43 PM
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I hate to burst your bubble but in several categories the BMWs are pretty close to being the most expensive cars in the class to lease. The 3-Series is more than everything but the brand new MB C-Class. The 5-Series and E-class are more than everythingelse in the class. The X5 is more than everything unless you include the much more expensive Range Rover. The 6-Series and X3 don't really have comparable competition, though the X3 is more than an RDX. I've seen the X6 lease numbers, it's going to be stratospherically high. Pretty much the only car that's a "deal" right now is the 7-Series because it's being replaced in 7 months, so comparatively speaking it's got a great lease. But that's pretty much par for the course with ALL manufacturers when you're phasing out a model. I remember when the CL and S-class were getting replaced, I saw dealers advertising $25k off MSRP. So yeah, if you've been looking for a 7-Series it's a good time to lease one. But I would hardly call deals on $1000/mo cars an indicator of everyone being able to afford a BMW.

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Bmw8terBmw8ter - 3/25/2008 8:43:46 PM
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Spellchecker001, do you always use text book translation?

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bmwman1963bmwman1963 - 3/25/2008 2:41:37 PMView My AgentSpace
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Thumbs up Spellchecker001!!!!!

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KeyserSozeKeyserSoze - 3/25/2008 2:55:49 PM
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The problem with BMW is having an x6 and X5 competing in a parrallel market @ the same time just rolling of new models and platforms coupled with endless powerterains! It just does not make sense.



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kthorkthor - 3/25/2008 4:42:32 PM
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"It just does not make sense."

What doesn't make any sense is your post. You offered up both a nonsensical sentence and absurd content. BMW has class leading models, inovative designs and technology, and the most award-winning and enjoyable engines in the business.


BMW4me4everBMW4me4ever - 3/25/2008 3:00:21 PMView My AgentSpace
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The problem is that BMW has been on an unbelieveable tear in the last 5 to 10 years. Profits have been up tremendously. Also, BMW has 10 new models coming out in the next year. That is alot of cars and the R&D costs are going to be huge. BMW will not be as profitable this year. It will take a year or so before they are back on track, so to speak.


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KeyserSozeKeyserSoze - 3/25/2008 3:16:15 PM
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BMW like all automotive companies needs to have a downscale brand to cushion a financial blow!

I have never understood the 1 series and the price justification. That is Golf/Rabbit Ford/Focus opel Astra/OPC territory and why the 1 series is marketed as a premium car is just bizzare, because cars in this class are just as good and in some cases better than the 1 series?

Deboost me!

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JRobUSCJRobUSC - 3/25/2008 3:32:17 PM
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this whole price issue with the 1-Series is getting old fast. Again, the 128i is less than a G37, and the 135i is the same, maybe a hair more, despite being a much better performer. That's the competition for the car, period. That's why it exists. As long as they are price competitive with that one model, the 1-Series will be just fine. The point of the 1-Series isn't to "put a BMW in every garage", it's not supposed to be cheap. BMW has Mini for people who need $20k cars, and there's no reason to cannibalize their own success by pricing Minis and 1's against each other. The point of the 1-Series is to give buyers in that $30-40k price category the ability to get a BMW coupe instead of an Infiniti coupe. End of story. So everyone whining that the 1-Series is too expensive, even though it's priced directly in line with its only competitor, give it a rest already. Obviously the point of the car is lost on you.


nybimmernybimmer - 3/25/2008 3:44:29 PM
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Why don't we wait and see how the 1-Series performs in the marketplace? Nobody can predict the future.

I think that, after a small intial bit of excitement, the 1-series will die on the vine for many of the reasons noted above.

Granted it is a 5 door hatchback (I mean station wagon!) but the A3 languishes on dealer lots...or perhaps Audi doesn't support them b/c they would lose money on them due to the currency issues?

The A3 is not doing well in the marketpalce, the 318ti did not do well in the marketplace 10yrs ago, the MB C230 hatchback didn't do well...I don't expect the 1-series to do well in the US either.


JRobUSCJRobUSC - 3/25/2008 3:56:18 PM
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nybimmer, every car you just mentioned is a hatch, which Americans typically don't buy. Coupes and convertibles typically do pretty well though, especially when they're not in high supply. I don't think BMW will have much trouble selling all 13500 1-Series models they're bringing over this year, considering they usually sell that many 3-Series models in one month.


mscottc1mscottc1 - 3/26/2008 9:46:43 AM
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-1, as you wish.


johnsmitnyjohnsmitny - 3/25/2008 5:58:47 PM
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I don't know... I think what's hurting BMW is their design. The interior is excellent quality, etc. but don't you think it is a bit bland compared to other luxury car makers? The front of the 3, X5, X3 and interiors all look the same... just different types of vehicle shapes and driving styles, same with Audi (but I don't know how their sales are doing)

I think the Cadillac CTS is doing really well because it is the only vehicle in the Cadillac lineup to stray away from the original "Cadillac" interior (flat panel with a bunch of buttons)

And look at Lexus and Mercedes-Benz, they offer variety throughout their line-up (exterior excluded). That's why they are so successful I think.

I am thinking that the next-gen of the 5 and 7 series will help boost BMW sales since they are generally always "over-the-top" in terms of design, etc. But I will be disappointed if they use the same interior and exterior headlight design as the X3, X5, current 3 and 5 series, etc.

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bmwdrvrbmwdrvr - 3/25/2008 9:42:33 PM
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what does great sales, low profits have to do with desighn, the 3 series, x3, and 5 series are certainly the best selling cars in their class. and the only slow seller is the z4 so styling is not the issue


no1listensanywayno1listensanyway - 3/25/2008 7:00:26 PMView My AgentSpace
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It aint easy being at the top.

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iamdabest1iamdabest1 - 3/25/2008 8:36:43 PM
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i just went shopping and can give you pretty accurate figures.
all nicely equipped ( coupes are 50-75 more per month)

328xi 500 a month with 2 k out of pocket.
335xi 620 """"""""""""""""""""""""""""
535xi 725 """"""""""""""""""""""""""""
750li 850 """"""""""""""""""""""""""""

my cousin just got an M5 90k MSRP $1228 a month with $5500 out of pocket.

brother in law just got an infiniti 2008 g35x sedan 0 out of pocket 500.00 a month ( 38k msrp)
thats basically same price as 328xi per month but nothing down, like 75 more horsepower, rear camera, and 10gig hard drive.
bmw's dont come that cheap if you ask me.

the absolute worst deals where i live ( queens new york) are audi's.

an S4 which is in its last year is $800 per month !!
S5 which is HOT now is like $900 per month !
i love audi's but the leases where i live suck nuts.

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dwatsondwatson - 3/25/2008 8:53:04 PM
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They need to cut back on volume of cars manufactured. It's simple economics. Produce less cars and make higher profits.

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huu76huu76 - 3/26/2008 12:49:03 AM
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Damn I'm good.

To all the posers, BMW Canada is only charging 1.0% financing on used models. Why buy a new badge when you can get a used one for even cheaper now?

Good for MB, their profit should do even better now that they're starting to offer more value in their C-class.
Audi pricing is starting to overlap too much with VW, or is it vice-versa? Could be a problem soon.

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JRobUSCJRobUSC - 3/26/2008 8:47:05 AM
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Huu, do you ever actually apply logic to the things you say before you say them?

First, having a good finance rate on preowned cars keeps them moving off dealer lots rather than stacking up. That keeps the resale values higher, which in turns keeps new car values higher and keeps the manufacturer from having to incentivize those sales.

Second, the finance rate BMW is offering in Canada is partly to stop Canadians from buying used BMWs in the U.S. because they're less expensive here and the exchange rate is so favorable. So many Canadians were coming over and buying BMWs in the U.S. in fact that the Canadian dealers and government got together and made up new rules for importation and registration that cost the customer money when they get back with their U.S. car, and now there's a class action lawsuit pending over it.


huu76huu76 - 3/26/2008 12:49:39 AM
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I think BMW has become a victim of their own stupidity (and arrogance).

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JRobUSCJRobUSC - 3/26/2008 8:48:19 AM
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of course you do, Huu knows all. No arrogance on your part, none at all, no sir. Just a straight shooter with middle management written all over him, that's our Huu.


mscottc1mscottc1 - 3/26/2008 10:45:02 AM
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Huu has become a victim of his own stupidity and arrogance.


M53RM53R - 3/26/2008 2:55:09 PMView My AgentSpace
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He has always been a victim, ever since I joined. Keep selling 'em I hate BMW shirts ;)


huu76huu76 - 3/26/2008 7:24:22 PM
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JRrob,
Really? I suppose BMW doesn't realize the real profit is in financing.
Inflating the residual value of the car so any yuppie/fob can lease one is really screwing over their pre-owned market too (such short-term thinking).
However, if they really wanted to keep cross-border shopping, they'd drop their prices (5% over 5 years will net you approx a 20% return on the sticker price so you're better off cutting $500-1000 from the sticker). Nice excuse though.
I'm for sure arrogant, the real problem is that I'm right 99% of the time.

Toyota Canada charges 6% on the Camry and up to 8.5% on the Tundra (BMW asks for 3.9). I wonder why Toyota doesn't try and stop people from hopping over the border? They've even stated nationally they'll honour the warranty on American cars.
In Canada, used car financing is generally over 6% for most makers.

I just like to point out all of BMW's shortcomings to their legions of sheep who think all they need is a badge on any crap car.

I wonder how much of Rolls Royce is left? Perhaps BMW can sell it and post another one time profit to cook their books and tell the shareholders all's well.

Let the good times roll BMW and bring on the SAT, CAV, CAT and the LMNOP. More car "niches" that nobody asked for.

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