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BMW has successfully set the benchmark for prestige motoring since the 1980s, creating a standard now fiercely contested by other manufacturers such as Mercedes, Lexus and Audi. Meanwhile, the group has diversified. Having pulled the plug on a disastrous 1990s dalliance with Rover, the group now offers only the enormously successful relaunched Mini at the lower end of its range, and ultra-prestige Rolls-Royce marque at the top. Just as important has been the expansion of the core BMW marque with new models including the entry-level 1 series and the hugely popular X-series SUV range. It is the only volume automobile manufacturer to concentrate exclusively on the premium passenger car sector. This has allowed performance to soar, largely unencumbered by the continuing drag effect of the struggling European mass-market automobile sector. BMW Group celebrated its 100th anniversary in 2016.
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Interbrand's Best Global Brands survey ranked BMW as the world's #11 brand in 2016, with an estimated brand value of $41.5bn, narrowly behind Mercedes-Benz and a little further behind Toyota. Millward Brown's Brandz survey 2016 ranked BMW as the world's #33 brand, with an estimated value of $26.8bn, the #2 car brand ahead of Mercedes but also behind Toyota. Both surveys use different measurement criteria.
BMW ranks high among the world's most respected automobile manufacturers. With the major exception of its disastrous involvement with Rover during the 1990s, the company has rarely put a foot wrong since its relaunch in the 1970s. Having built its core business into one of the industry's most desirable brands, it then repeated the trick with Mini, while also effortlessly extending the BMW marque into new motoring segments. It is the only volume automobile manufacturer to concentrate exclusively on the premium passenger car sector.
The group felt the impact of the 2008/9 economic downturn, with volumes sliding from a high of 1.50m vehicles in 2007 to a low of 1.29m in 2009. That effectively marked a return to pre-2005 levels. However, it was followed by strong recovery during 2010, allowing the group to set new records for sales every year from 2011 to 2017. For the latter year, combined deliveries of BMW, Mini and Rolls Royce rose 4% to a record 2,463,526 vehicles. Strong growth in Europe and Asia, especially China, was offset by further weakness in the US, where volumes slumped by almost 4%, after a 10% decline the year before. China extended its lead as the group's single biggest market with sales of almost 595k cars, up over 15% year-on-year. BMW was the #2 luxury brand in that country in 2016, narrowly ahead of Mercedes-Benz but below top-seller Audi. In 2018, BMW increased its stake in its local manufacturing joint venture in China to 75%. The US slipped back to 354k units, while Germany and Great Britain achieved volumes of 299k and 242k units respectively.
Best-selling brand is of course BMW itself. Unit sales topped 2m cars for the first time in 2016. However, that wasn't enough to protect the brand's 11-year lead in the overall luxury automobile segment. It was overtaken for the first time since 2005 by arch-rival Mercedes-Benz (which sold 2.08m units to BMW's 2.0m). Sales continued to rise in 2017, reaching 2,088,283 cars, but still below Mercedes. The BMW marque extends across three divisions, manufacturing automobiles, motorcycles and engines. The group has unveiled a series of new passenger car models since 2004. First up was the new BMW 6 series sports coupe, followed by a new compact BMW 1 hatchback series (targeting the VW Golf among other models), and there were also a number of extensions to existing lines including the X3 smaller SUV, and new X6.
This aggressive launch policy has had a powerful effect on sales, allowing BMW to overtake traditional rival Mercedes for the first time in annual sales in 2005. The company has scored a significant success with an expanding range of SUVs under the X-series banner. Its collection now extends to four models, compact, mid-size, full-size and the new sub-compact X1 introduced towards the end of 2009. Combined sales of what are now five X-series models were almost 645k units in 2016, led by the X1 at 220k. Yet the core of BMW is still provided by the 3-series, still the overall top-seller at 412k units in 2016. The 5-series contributed a further 331k units, while entry level 1-series slipped back to 176k, overtaken by the 2-series at 196k. The portfolio is rounded out by mid-level 4-series, top of the range 7 series luxury sedan, sporty 6 series coupe and Z4 performance sportscar.
In 2011, the group unveiled plans for a line of hybrid and fully electric vehicles under a new sub-brand, BMW i. The first was the i3 "Megacity", a four-seater pure-electric city car launched in 2013. The i* sports sedan followed in 2014. However, volumes remain very small, still under 30k cars in 2016. The i sub-brand is also used as the umbrella for a range of "premium mobility" information services, such as apps supplying real-time traffic and parking information. In 2013, the group signed a partnership agreement with Toyota to develop joint initiatives in sustainable mobility.
BMW M is the group's long-established racing division, producing enhanced racing editions of the group's mainstream BMW models.
In 2007, the group opened BMW Welt, an ultra-luxurious heritage museum and car delivery centre, at its Munich headquarters. In 2005, the group announced its debut in Formula 1 racing, following acquisition of a majority stake in Swiss Team Sauber, now BMW Sauber. Four years later, however, it announced plans to pull out of that sport after a disastrous showing in the 2008/09 season.
In addition, BMW owns the Mini brand, the only asset it kept from the old Rover Group, which BMW owned for six painful years between 1994 and 2000. In its current form, the Mini is almost entirely a BMW creation - the first of the new designs did not go into full production until a year after BMW had sold off the rest of Rover. The redesigned car, still manufactured in the UK, mainly at Cowley and Swindon, made its debut in Europe in 2001 and arrived in the Americas and Asia Pacific region in 2002. It marked an important new development for BMW, giving the group the first small car in its portfolio, with prices starting at under £12,000 (€18,000 or $19,000).
The Mini is available in a number of different variants. Most of these differ according to engine size or a choice of hard-top or convertible. However the first full variant, the new Mini Clubman, was introduced in 2007. It features extended length, a van-style double-door boot (instead of a hatchback) and an additional quarter-size passenger door for easy access to the back seat. Another recent addition is the Mini Countryman, described by the company as a crossover "sports activity vehicle", and launched in 2010. Based on the Clubman design, but slightly longer again, it features 4x4 all-wheel drive and five seats instead of four. Several additional models launched in 2012 and 2013, including an adapted version of the Countryman, known as the Paceman, the Mini Coupé and Mini Roadster. The Mini John Cooper Works sub-brand is a range of high-performance, racing versions of standard models. The whole model range underwent a complete redesign during 2010. In 2008, the group agreed an alliance with Fiat's Alfa Romeo unit to cooperate on certain technical initiatives including components and joint platforms for new cars. The group also unveiled a move in a different direction in 2010 with the launch of the first Mini-branded two-wheel scooters, a junior partner to the BMW Motorcycle range.
The new Mini has proved a remarkable success for BMW, performing well ahead of initial expectations. Sales grew consistently between 2001 and 2005, peaking at almost 200,430 vehicles before falling back in 2006 as a result of a production shortfall caused by rebuilding works at Mini's UK factory. That was a preparation for the freshened second generation design launched towards the end of that year. Sales have continued to rise since then, breaking the 300k level for the first time in 2012 before setting a new record of over 305k units in 2013. Volumes for 2014 slipped back marginally to 302,183 cars ahead of a model change, before accelerating again to a new high of 371,881 for 2017. The US is Mini's single biggest market, followed by the UK. Some way behind is Germany, followed by Japan, France and Spain.
The BMW and Mini brands are both available through DriveNow, a carshare scheme jointly run with German rental service Sixt. It now operates in eight European markets including Germany, the UK, Italy and Belgium. A similar service operates in three US cities as ReachNow.
The ultra-luxury Rolls-Royce automobile marque came under BMW's control from January 2003. Sales almost trebled in 2010, and have continued to increase, topping 4k for the first time in 2014. The figure for 2017 was 3,362 cars.
Another division, BMW Motorrad, is Europe's leading major manufacturer of motorcycles. Apart from a temporary slump in 2009 and 2010, sales have remained over 100,000 units each year since 2006, setting a new record every year since 2010. Sales for 2017 hit a new high of 164,153 units. It is the market leader in the medium and heavyweight segments in Europe. Germany is the division's most significant territory, followed by the US, France, Italy and Spain. The group acquired Swedish motorcycle brand Husqvarna in 2008, but the business was sold on once again in 2013 (to Pirer of Austria) so that BMW can concentrate solely on its own-brand bikes.
In addition, BMW has interests in financial services. BMW Financial Services provides car-related leasing and insurance services, mostly in Germany and the US. More recently it has set itself up as a fully-fledged bank, offering credit cards, checking and savings accounts, primarily aimed at existing BMW customers in Germany. In 2006, it began offering a similar range in the UK, including BMW/Mini credit cards in partnership with American Express, savings products in partnership with Newcastle Building Society, and general insurance in partnership with RBS. Those offers were largely phased out as a result of the global financial turmoil of 2008. Bavaria Wirtschaftsagentur is a specialist insurance group with operations in Germany and Ireland.
Until recently, the group also controlled Softlab, one of Germany's leading IT consulting and systems integration firms, specialising in banking, insurance and industrial software and systems. BMW first took a stake in 1987 and bought the company outright in 1992. Softlab changed its name to Cirquent in 2007, and a year later BMW sold a 73% stake in the business to NTT of Japan. It retains a minority holding. Industrial computer business Kontron was sold in 1999.
After peaking at just over €56.0bn in 2007, group revenues fell back over the following two years in the wake of the global recession, touching a low of €50.7bn for 2009. The recovery since then has been close to spectacular, with steep increases in revenues each year.
For 2014, group revenues rose by almost 6% to a best-ever €80.40bn, the fifth consecutive year of record performance. Net income was up 9% to €5.82bn, also a best ever result. Automobile manufacturing contributed revenues of €75.17bn. Motorcycles generated a further €1.68bn, with the remainder from financial services. BMW Group celebrated its centenary with another year of record growth in 2015. Revenues were up almost 15% to €92.2bn, while pretax profits beat €9bn for the first time. Net profit rose 10% to €6.4bn. For 2016, revenues rose 2% to €94.16bn, while net profit was up 8% to €6.91bn.
The group delivered its 8th consecutive year of revenues and profits in 2017, with revenues of €98.68bn, while net profit jumped 26% to €8.71bn as a result of a significantly lower tax rate. Automotive revenues rose 2.5% to €88.6bn, while the motorcycle business jumped 10% to €2.28bn. A further Automotive revenues rose 1% to €86.42bn, while the motorcycle business added 4% to €2.07bn. The best growth came from financial services, up 8% to €25.68bn.27.57bn came from financial services.
Norbert Reithofer succeeded Joachim Milberg as chairman of the company's supervisory board in 2015. Stefan Quandt is one of four deputy chairmen. He and his sister Suzanne Klatten are the children of Herbert Quandt. Their mother Johanna Quandt died in 2015 at the age of 89. They control around 47% of BMW's equity, as well as various other businesses. Klatten is also sole owner of German pharmaceutical group Altana. They are Germany's richest family, with wealth estimated at almost $50bn in 2015 by Forbes magazine.
BMW began life during the First World War as an airplane manufacturer, Rapp Motorenwerke. Founder Karl Rapp's main interest was aircraft, and more specifically the engines that powered them. However he renamed the business Bayerische Motoren Werke (or Bavarian Engine Works) at the end of the war, and introduced the company's now-familiar logo at the same time, a stylised representation of an aircraft propeller. Flying became a major preoccupation of the 1920s, as pilots and manufacturers set out to top each other's records for speed or distance. In 1927 alone, pilots flying BMW-powered planes broke 27 world records. As a sideline, BMW began to develop its engines for land speed also and in 1923 launched its first motorcycle. This proved a lucrative add-on business, and after the company rescued failing auto maker Fahrzeugwerke Eisenach in 1928 it began to manufacture cars as well. The first BMW automobile was the compact Dixi 3/15, launched in 1929.
The auto business flourished during the 1930s, fuelled by the new high speed autobahns commissioned by the Hitler government. To coincide with the Berlin Olympics in 1936, the company launched its hugely successful BMW 328 sports car, which subsequently became a regular winner in European motor-races. However, as the prospect of war grew, BMW turned its attention back to aero engines, commissioning two new factories in 1937. Car production was halted altogether after the start of World War II, although the company continued to make motorcycles, mostly for military use. In 1944, the company was closely involved in the development of the first jet engines, and was involved in the design and production of the V1 and V2 rockets. As a result, BMW factories were a key target for Allied bombing, and were destroyed in 1945.
Immediately after the war, the company was prohibited from manufacturing engines by the Allied occupation forces, and spent three years making kitchen equipment instead. Finally in 1948 BMW was allowed to restart production of motorbikes, with cars following in 1950. The first post-war automobile, the 501 Sedan, was launched in 1951 but it proved a disaster, too luxurious and expensive for the still-impoverished German market. The tiny Isetta bubble car launched in 1955 was a modest success, and the company subsequently tested a few sports models, but its debts spiralled rapidly. By the end of the decade BMW was close to collapse. Arch-rival Daimler-Benz offered to take the factory over but said it would drop the BMW name in favour of its own Mercedes marque. The company tried to attract interest from foreign manufacturers such as Ford and General Motors but with little success.
Rescue came from industrial heir Herbert Quandt. His father Guenther had acquired Varta, the German manufacturer of automobile batteries in the 1920s, and later invested in BMW and other businesses. In 1960, Herbert Quandt funded a buyout of BMW by its management and staff in return for a 46% stake. Following a revival of the business in the 1960s with a range of mid-price family models, Quandt appointed Eberhard von Kuenheim as managing director of BMW in 1970. Von Kuenheim was the architect of the group's subsequent repositioning as a maker of prestige automobiles, in direct competition with Daimler-Benz. In 1972, the company launched the premium BMW 5 series to coincide with the second Berlin Olympics. The same year, it opened its first overseas factory, in South Africa. In 1973, BMW set up in France and made its first inroads into the US. But the real breakthrough came with the launch of the 3 series in 1975, followed by the luxury 7 series in 1977. Both targeted the affluent business market, making the label "Made in Germany" a status symbol for the first time. The economic boom of the 1980s sealed BMW's success, particularly in the US, where "Beamers" became the archetypal yuppie status symbol.
By 1990, the year East and West Germany were reunited, BMW was producing more than 500,000 cars and 30,000 bikes a year. The company also teamed up with Rolls Royce to manufacture jet engines. By 1993, with the announcement of plans to build the company's first factory in the US, the group was operating at peak strength, and was itching to diversify. A year later, Von Kuenheim's successor Bernd Pischetsrieder announced the £800m acquisition of Rover Group, the UK's last major motor manufacturer which controlled a collection of brands including Rover, MG, Land Rover and Mini (see Rover Group profile for more). This appeared to be a huge boost for BMW, almost doubling the group's car production. But within a year, performance at Rover had slumped. In 1995, the company slipped from breakeven to a loss of over £150m. In 1996 BMW more than doubled annual investment in the company to £500m and installed an experienced BMW veteran as chief executive. The following year, after a modest improvement in Rover's sales, investment was increased by a further £700m, but sales continue to fall during 1998.
BMW's chairman met with fierce criticism from both shareholders and senior managers, led by sales and marketing director Wolfgang Reitzle, for continuing to back Rover. Finally, after a tense, day-long board meeting in February 1999, both Pichetsrieder and Reitzle were forced to resign in order to heal the damaging divisions within the company. In fact, the true size of the problem didn't emerge until a month later, when BMW finally unveiled a loss for the year at Rover of £645m, more than seven times worse than the previous year.
It was a disappointing conclusion to what had otherwise been a good year for BMW. The company's own cars and motorcycles set new records in sales and profitability in 1998, despite a downturn in key Asian markets. Better still, BMW had beaten Volkswagen in a race to win another British carmaker, Rolls Royce. VW outbid BMW for the Rolls Royce and Bentley car manufacturing business, which it acquired from Vickers for £480m, but apparently failed to realise that the Rolls Royce name and logo were only held under license by Vickers, and in fact still belonged to a separate company, the engine manufacturer Rolls-Royce plc. Rolls-Royce sold the automobile license to BMW for £40m, forcing VW to surrender control of the marque to BMW at the end of 2002.
As a result of its Rover troubles, other international auto manufacturers were now beginning to put pressure on the Quandt family to sell BMW, forcing its new chairman Joachim Milberg to look for additional ways to cut costs. In 1999, the group threatened to shift Rover production from the UK to Hungary unless the British government invested additional financial support. This led to some hardball negotiating between BMW and the government, but the German group ultimately got its extra funding. However the deal was delayed for months when EU regulators insisted on investigating the validity of BMW's threat to shift the business. Meanwhile Rover's sales continued to fall. BMW's patience finally ran out in March 2000 when another record year for the BMW marque was cancelled out by a catastrophic fall in sales at Rover. In a second marathon board meeting, a year after the removal of Pischetsrieder and Reitzle, three further board members were ousted and BMW confirmed it would sell both Rover and sister brand Land Rover.
Even this deal seemed doomed. Negotiations with the preferred bidder, investment group Alchemy Partners, stalled over terms. Finally rival bidder Phoenix acquired Rover's factory at Longbridge for just £10, and BMW effectively loaned Phoenix a further $500m towards redundancies and restructuring. BMW retained ultimate ownership of the brandname but agreed to license it to Phoenix for at least seven years. Land Rover was sold separately to Ford for a rather more lucrative €3bn. BMW kept hold of Mini, the only redeeming feature from its six unhappy years as the owner of Rover. A year later the new Mini launched successfully in Europe later that year, receiving general acclaim for its stylish redesign.
The Mini was originally conceived as a British equivalent to the Volkswagen, a "people's car" which would appeal to the hearts and pockets of ordinary people. Another major consideration was the return of petrol rationing in the wake of the Suez crisis of 1956, which led to a sudden spike in sales of small imported "bubble cars", and a slump in sales of larger models. The project was initiated in 1957 by Leonard Lord, chairman of what was then the British Motor Corporation. It was assigned to Alec Issigonis, the designer and engineer who had also been responsible for creating BMC's very popular Morris Minor a decade earlier. A key feature of the new car's design was its clever sideways-mounted engine and front-wheel drive, which allowed the maximum amount of floor space to be allocated to the passenger compartment. For ease of use, the compact hatchback boot was designed with hinges at the bottom rather than the top, so that it could be left open for driving if necessary.
The first cars went on sale in 1959. Virtually the same design was marketed under BMC's two main brands of Austin and Morris, as the Austin Seven and Morris Mini-Minor respectively. Separately, a more powerful version of the car was commissioned from racing engineer John Cooper, originally as a limited edition. Introduced to the general public in 1961, it was sold as the Mini Cooper, and quickly earned itself a reputation for pluck and endurance as a result of its showing in a series of racing rallies.. Another alternative model was the Austin Countryman (or Morris Mini Traveller), introduced in 1960. It featured wood framing on the exterior (as well as distinctive green paint job) and double doors at the back instead of the hatchback boot.
Eventually the dual identity of Austin and Morris was abandoned, but not until 1969. By that time, the Mini had attracted even greater fame as one of the most widely recognised symbols of the new "swinging" London. It was popularised by actors and fashion models, and its status was greatly enhanced in 1969 by a starring role in comedy crime movie The Italian Job. The climax of the film featured a spectacular bank robbery in the crowded streets of Milan, performed by a fleet of stunt-driven Mini Coopers. Also in 1969 the company, now British Leyland, introduced another new design variant, the extended-length Mini Clubman.
Over the next 30 years, the Mini continued to be one of the declining British motor industry's most enduring cars. A series of further variants were produced by British Leyland and its various successor companies. However, Leyland itself shrank to become the Austin Rover Group in the 1980s, and then simply Rover Group. In 1994, the business was acquired by BMW. The iconic status of the Mini had been one of Rover Group's key selling points, and BMW soon began to consider a full relaunch of the brand featuring a new design which reflected the heritage of the Mini but gave it a fresh and modern new look. The project was placed in the hands of Frank Stephenson, an experienced BMW engineer who had also worked on the launch of company's X5 SUV. A prototype design was unveiled in 1997, but execution of the new design was consistently delayed by the severe financial problems experienced by the rest of the Rover business. In the mean time, production of the original Mini continued - the last of the old models came off the production line in 2000. The new Mini was finally launched the following year to a rapturous response. In a neat update of its 1960s heritage, a remake of the Italian Job movie was released in 2003, in which the heist was pulled off by a team of new Minis.
Last full revision 5th June 2017
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