100 years on, where will BMW go next? – The Economist
THE ride, handling and all-round appeal of BMW’s 3 Series, a sporty saloon car, makes it a benchmark for other vehicles of its type. The German firm, which celebrates its centenary on March 7th, has also become a benchmark for success in the motor industry. The world’s biggest maker of premium-priced cars is well run, has grown steadily and made profits consistently for years. But as the beer flows and the oompah bands parp at the huge party thrown at its headquarters in Munich, BMW’s bosses may be scratching their heads about how to stay ahead of the pack.
BMW began life in 1916 assembling aircraft engines. Restrictions on Germany’s planemaking after the first world war encouraged it to diversify, first into motorbikes, and then in 1923 into making its first car. In 1933 it launched the 303 (pictured above), ancestor to today’s 3 Series, and the first BMW to feature the distinctive double kidney-shaped front grille. Though stylish and technically advanced, BMW’s pricey models at first sold in small quantities. At the end of the 1950s sales of motorbikes, on which the company still relied, faltered as cars from mass-market firms hit the roads. Only an investment by the Quandt family, which controls BMW to this day, saved it from a humiliating takeover by Daimler.
Rather than joining the mass market, BMW, along with its German counterparts, Daimler’s Mercedes marque and VW’s Audi, all but cornered the worldwide market in expensive high-performance saloons. By 1990 global sales of the “Ultimate Driving Machine” hit half a million cars a year. However, in 1994 BMW took a wrong turn. Its purchase of Rover Group, an ailing British maker of both premium and mass-market cars, was a disaster. In 2000, having failed to turn Rover around, it decided to sell most of the group.
Since then it has been upwards pretty much all the way, with sales now at 2m cars a year. BMW has confounded its rivals by managing to maintain an image of luxury and exclusivity even as it has introduced an ever-broader range of entry-level cars at prices comparable with the top of the mass-market firms’ ranges. For example, a clever reinvention of the Mini brand, retained from Rover, gives it a vehicle for drivers without the means to buy a BMW 1 Series, which in turn fits the budgets of those who cannot afford a 3 Series. BMW, unlike Volkswagen, was also early in spotting the craze for SUVs, and now makes them in all sorts of shapes and sizes. It even offers a people-carrier, the 2 Series Active Tourer.
Having filled every imaginable niche, however, its growth seems to be slowing as it struggles to imagine new ones. Mercedes may overtake BMW by unit sales this year, as a slick re-styling of its models wins over buyers seeking an alternative to BMW’s more staid designs. Jaguar Land Rover, Volvo and other premium carmakers are also competing harder than they used to. Mass-market brands such as Ford and Citroën are pouring resources into “premiumising” some of their models, in a drive for bigger margins. And the slowdown in China, hitherto a hugely profitable market, has hurt BMW disproportionately hard.
Even so, BMW’s bosses are entitled to clunk their steins together and slap each other heartily on the back. The firm has got where it is mainly through an unswerving commitment to producing excellent cars. Down the years a few of its model launches—such as a recent GT version of its 5 Series executive saloon—have underwhelmed somewhat. But so far at least, there have been no stinkers. Not bad for a centenarian.