At dinner David’s uncle mentioned that perhaps BMW is becoming too mainstream; too different from the stylish trends of the past. It was mentioned that people appeal to 300 series BMW’s as they serve as “goal cars”, just a little more expensive than an every-day consumer car such as a Honda Civic and seen as more prestigious. This type of consumer is currently a huge factor in floating the brand. There is little value to wiggle with under the 300 series for dealers and the margin is small. Higher margins come with more expensive cars and the 700 series boasts $6-7 thousand in wiggle room. David’s uncle mentioned that BMW is looking to route back to their signature luxury, which can be seen in their new 750i. Some of the features are rather interesting, but judge for yourself.
For just $5,750 the sixth generation of BMW’s mightiest sedan boasts a writing table in the back seat made of burnished aluminum. BMW looks back to class and luxury and incorporates an ashtray, a less frequently seen feature in mo
dern times. The body is carbon-fiber reinforced, shaving almost 200 pounds off the previous model. Under the hood sits two options of turbocharged engines: a 4.4-liter V8 or a 6.6-liter V12. The most significant upgrades come with four-corner air suspension with upgrades increasing isolation from the asphalt below. With the Autobahn package, for just $4100, the consumer is offered high-speed upgrades and comfort for speeds far above U.S regulations. This upgrade includes rear-wheel steering, GPS input about upcoming terrain, and a handful of other luxury features. While the engine behind the chrome nostrils in this BMW can compete directly with a Rolls-Royce Phantom, the price tag sits at a base of $97,400 with optional upgrades sky rocketing the price from there. Perhaps BMW is indeed falling out of mainstream designs and going back to their roots. The 750i is certainly unique and not for the everyday commuter.
I also remember Professor Smitka explaining that there is a fine line between gaining a larger marketshare and hurting the reputation of your brand. It was explained that BMW has possibly gone too far in trying to expand their brand to the lower price range market. Because of this they have somewhat hurt their image as a luxury brand, so now they are trying to reinforce their image as a luxury producer. This is what I thought he meant when he explained that BMW was trying to move back to their previous ways as luxury car producers.
I could see BMW potentially buying out a smaller auto-manufacturing company that targets the middle-market to both preserve their name as a luxury car brand, but also to expand their reach in the market and take advantage of the profits to be had in the middle market. This strategy would be taking a straw from GM’s hat and creating more of diversified portfolio to offer customers a wider range of products and protect against financial crises.
BMW actually did buy out MINI in hopes of accomplishing this, Murray. My cousin was reassigned to work with MINI dealers in the midwest and has found that the market here for such small cars is trying; the largest car the MINI makes, either the clubman or countryman I’m not sure which, is still not very large compared to traditional sedans. MINI’s cars would do better in a climate where gas was more expensive than it is now, however Americans in particular are demanding larger cars. Perhaps in a climate when light-trucks are not the best-selling cars MINI will be able to establish itself as a sporty, small car company, akin to Fiat.
David, do you perhaps know why Americans are particularly demanding larger cars? If you don’t, does anyone else have any thoughts?