BMW Shareholder Quandt Forms Holding Company

News | October 22nd, 2008 by 30

Let me start first by showing you an article published in Bloomberg two days ago: German billionaire Stefan Quandt formed a Societas Europaea holding company …

Let me start first by showing you an article published in Bloomberg two days ago:

German billionaire Stefan Quandt formed a Societas Europaea holding company and may transfer his stake in Bayerische Motoren Werke AG to the new concern, Financial Times Deutschland reported, citing a spokesman.
Aqton SE is designed to help acquire and administer shares in companies related to the auto industry, the newspaper said, citing the unidentified spokesman for Quandt.
Still, there are no plans to transfer any of Stefan Quandt’s 17.4 percent stake in BMW to Aqton this year, the newspaper said, citing the spokesman.
Quandt shifted almost 1.86 million shares in BMW to a holding company called Stefan Quandt GmbH & Co. KG fuer Automobilwerte on Oct. 8, according to statements issued by the carmaker a week late.

 

This is a proactive move by BMW (more so it’s shareholders – the Quandts) to ultimately protect itself from the recent Porsche acquisition of a controlling stake in Volkswagen. In my mind, it makes sense for BMW and Mercedes to group together their resources and brands in a more-or-less unpredictable economy when you’re staring down a new rival with the resources and sheer size of the VW/Porsche Group.

Consider that with the merger, that puts Porsche, VW, Bugatti, Bentley, Audi, SEAT, Skoda, Lamborghini and a number of other smaller companies under one umbrella, sharing resources, R&D and as such reducing overall costs in all individual brands. This will permit the VW/Porsche group to compete in practically every market niche in the world with practically no other company rivaling them for both personal and commercial vehicles.

That is unless BMW and Mercedes-Benz stop their eternal pissing match and cooperate with each other. With a holdings group over both BMW and Daimler you incorporate BMW, Mercedes-Benz, Daimler, a stake in McLaren, MINI, Rolls Royce, Maybach, Smart, etc. into one group thus allowing the Quandt holdings company to match or almost meet a VW/Porsche challenge in individual vehicle niches.

Think of the possibility of the cost savings in just the Formula One program alone if BMW and McLaren-Mercedes were to cooperate and share technologies? It would reduce the $350 to $450 million spent in R&D and team management expenses incurred while allowing the companies to become more competitive against Ferrari or Renault. It would also allow better structuring between brands like BMW and Mercedes-Benz or Rolls Royce and Maybach. Thus maybe you’d see less direct model-to-model competition or at least cost savings between line-ups.

My guess is the Quandts want, along with others highly vested in the German and world car industry, to find a way to keep from VW eating up the marketplace through volume and buying power. By forming an automotive holdings group they can insure strength in numbers and face competition head-on from one angle versus facing competition in multiple. If the Quandt’s automotive holdings group does buy into Daimler then Stefan Quandt has just become the new Ferdinand Piech of the car industry. Piech is the man responsible for bringing Volkswagen and Porsche back together after it was in split in a post-World War II era.

Stand by for more updates, Horatiu is working on getting more information.

  • http://www.bmwblog.com JakeC

    Interesting. I would be all for it as long as it was mutually beneficial and did not dilute the BMW brand.

    - J

  • Gragop

    @JakeC:

    It will be beneficial. Think of this as one of those holding companies that owns multiple luxury lines/brands such as Lous Vuitton or Cote. Their commodity is essentially the projection of and supply of luxury and upscale vehicles. Therefore, if this happened I think you would see more of a push for the Mercedes and BMW vehicles to compliment each other rather than cannibalize sales by being more competitive.

    Keep in mind, this ISN’T A MERGER deal rather a holdings company would own controlling stakes under one parent company versus having multiple shareholders own stock in both companies. Essentially you’ll consolidate the spending on BMW and Mercedes in key areas of R&D, marketing costs, racing program costs, etc. It’s more of a corporate structuring deal than BMW and Mercedes becoming a combined entity.

    As stated above, it will be a deal more to protect themselves in a weak market against what’s quickly becoming the biggest automotive company in the world. Ferry Porsche is smiling in his grave today as Ferdinand Piech( head of VW and Chairman of Porsche – I think) as Piech has returned his family to a powerful position in the automotive world. Also – Piech is a grandson of Ferry Porsche and was born to Ferry Porsche’s daughter so he’s got a personal stake in seeing the success of Porsche and VW.

  • Brookside

    Rather than diluting the BMW brand, this only financially strengthens it by propping up an extra tier of financial walls around BMW.
    Look at it another way…this is as if the Quandts extended a protective perimeter past BMW to extend to allied companies that do business with the company by pulling them closer into the structure of the corporation.

    What is so incredible is that we’ve watched 2 companies, Porsche and BMW, who were regarded as boutique specialized brands 15 years ago climb to the top of the corporate heap today. Truly remarkable.

  • Gragop

    @Brookside:
    exactly!

  • http://www.bmwblog.com Horatiu B.

    Andrew brings up good points and he is spot on in his analysis, but also keep in mind that there are many cons to have such a holding as well.

  • Gragop

    Yeah – guess I forgot to incorporate the down side of this too. oops!

  • Giom

    Thanks for all the info guys. This is all greek to me…lol.

    About the down sides -care to elaborate on those?

    Thanks!

  • Gragop

    @Giom:

    So of the down sides I see are that joint cooperation may push the Mercedes further up market while BMW levels off where it is as a more direct sport luxury competitor while Benz would be a mid-range luxury brand between Maybach and then BMW. That could also mean any advanced R&D spending and technology will more than likely first go to Mercedes before BMW would derive benefit of it.

    So in one hand, you see that the strength in numbers can be mutually beneficial to BMW and Merc while on the other you see the stronger, independent brand grow weak as the weaker brand(Mercedes) grows stronger. I’m speaking in terms of financial abilities, not quality or opinion of their products. So the down side being we see BMW somewhat restricted in it’s abilities to grow under this holdings company.

  • http://www.bmwblog.com JakeC

    Bingo! I do not want BMW to be restricted in it’s abilities to grow and expand. I do see the upside as the ability to cut R&D costs, and racing program costs. And as alluded to earlier some parts sharing. http://www.carmagazine.co.uk/News/Search-Results/Industry-News/BMW-and-Merc-to-join-forces/
    http://www.carmagazine.co.uk/News/Search-Results/Industry-News/BMW-Mercedes-alliance-the-latest-news/

    - J

  • Gragop

    @JakeC:

    Yeah, I think BMW should be well-protected as a brand as Brookside mentioned. If it were to happen, I think the Quandts would be very hands-on with BMW and probably do a lot to keep the brand growing.

    Herbert Quandt has owned BMW or a stake in it since the 1920′s/1930′s until the Nazis forced BMW into their industrial war machine. After 1945, BMW was eventually handed back to Quandt by the allies and after a few years of struggling, BMW started down the successful path we find it on today. I think, for that kind of history, the Quandt’s would be extremely protective of the brand overall as, in some ways, it’s the legacy of their family.

    Everything I listed as potential bad reasons for why the deal shouldn’t be done is hypothetical. My biggest concern with a holdings company of that nature is that it would end up just like the Daimler-Chrysler merger from the 1990′s. Both companies would walk away, ultimately weaker, and have little to show for it aside from possible brand dillution.

  • Auday

    @Gragop

    AFAIK, The Quandts became major shareholders in BMW after 1959 when Herbert (the father) saved the company from falling into Daimler-Benz hands, they had 30% before that and he increased it to 50% after he put his faith in the company and its workforce. I don’t even think they had any stakes in it before WW2. So the Allies didn’t “handed it back to the Quandt’s” as you put it.

    while I like to see BMW continues success, I also would like to see the essence of the Brand stays as it is. From our point of view as enthusiasts, what’s the point of a super successful BMW corporation if their success comes from expanding into businesses that have nothing to do with BMW brand as we know it. BMW is a company at the end and they will do everything they could to be successful in business, that’s understandable, but their reputation as a sport saloon brand and their wide range of enthusiasts is their biggest booster in selling their new cars although their cars are shifting gradually away from the definition and essence of the real BMWs of the 70s and 80s. The new moves might push it further away from that. BMW has an engineering heritage that goes from generation to another but the balance between the engineering and technology departments on one side and the financial and marketing departments on the other will be the thing to watch, so far I think the second is winning.

  • Gragop

    @Auday:

    My bad, I hadn’t checked my research before I posted and it kicked me in the ass! I was confusing the companies Quandt owned before/during WW2 with BMW.

    As for the analysis – yes, I’d say BMW is a much more profit-driven company than ever before. Or at least they appear to be.

  • L1ndja

    OK first of all i absolutely HATE MERCEDES and from my side of view i cant see what BMW could benefit from this? What can Mercedes give to BMW?-nothing it would only make Mercedes cars better while the BMW cars would stay like they are they wouldnt get anything out of this Bmw doesnt need Mercedes but Mercedes needs Bmw.
    Bmw can alone that coorporation of “VW Audi Porsche Seat Skoda Lambo etc”

  • Lee

    @L1ndja:
    That’s a little short-sighted and fanboyistic, don’t you think?

    A LOT of automotive companies have benefited from Merc’s R&D. While I’m not a Merc fan myself, you can’t discount their influence on the automotive industry simply because you don’t like them.

    I dislike their products too, but you have to give them credit where credit is due.

    BMW can’t take out VW, Audi, nor the rest of the VAG (PAG now?) alone. VW is vying for dominance in the global market. BMW and Merc aren’t even in the picture.

    VW’s worldwide production in 2007: 6,346,222
    Mercedes: 2,096,977
    BMW: 1,541,503

    I hate blind fanaticism, even if it’s a brand I happen to like.

  • Auday

    @Lee “I hate blind fanaticism, even if it’s a brand I happen to like.”

    I hate that too, and this site as great it is, has some of that religious BMW fanaticism unfortunately.

    However, to your comment, for us the enthusiasts, we dont really care if BMW is taking VW or Toyota production place, Actually we might hope that it doesn’t. Quality, Sporty, Fun,….etc is not the same as quantity of sells. BMW will benefit from Mercedes technology and viceversa, but the move for example of taking Mercedes V12 and use it in BMW 7 is not what I want to hear. For me the BMW 7 is written off since the E65, so I dont really care much, but if we keep seeing this trend we might end up with an AMG/M car being produced in both companies with different face features and different logos.

  • Lee

    @Auday:
    I understand what you’re saying 100%. I don’t want Merc parts in my BMW either.

    But to completely blow off Merc’s contributions to the automotive industry simply because you prefer another company’s product is absolutely ridiculous. To say that BMW can financially “take on” VW/Audi/Porsche/SEAT/Skoda/Lambo/etc on it’s own is nothing short of idiotic. They’re not even in the same league, and I’m okay with that personally. I’m glad I don’t drive a VW. But you have to at least open your eyes and realize what BMW’s place in the automotive industry actually is, and it’s certainly not giving VW a run for its money any time soon (nor should they).

  • Gragop

    @Auday:

    Yeah – to me if you take away a BMW inline 6 engine and replace it with a V6 or Merc-sourced engine the the car has pretty much lost all appeal to me.

    As for the production place. I do care about that as an enthusiast. I want a firm that’s focused on quality product that’s interesting to look at and even more enjoyable to drive. If I wanted to drive a car by a company hell-bent on the bottom line and total domination I’d own a Toyota or VW. As it is, I’m happy to pay a premium for a BMW – it feels justified, but I don’t want to see one on every street corner nor do I want to worry about the platform sharing dillution that plagued the Daimler Chrysler Merger. BMW need be very careful where and how they implement parts/ knowledge from soon-to-be-related sources.

  • Lee

    @Gragop:
    I don’t see the BMW I6 engine going anywhere… at least it had better not (BMW take this as my formal warning: drop the I6 and you’re dropping at least one customer from your consumer base).

    Although if they did start “sharing” technology, it would make my job a little easier in a few years as we work on both BMWs and Mercs.

  • http://www.bmwblog.com Horatiu B.

    Can I just say that you guys left some of the best comments? :)

    @Lee: They did start sharing a lot of the technologies, like the hybrid system and now they are sharing many other parts.

  • Gragop

    @Lee: Oh I know, I was posing a hypothetical question. But yes, if the I6 engine disappears I’m buying a damn Prius.

    Also – to play Devil’s Advocate, I’m sure most Mercedes Enthusiasts would agree that they have issue with this move.

  • Lee

    @Gragop:
    I’m sure they don’t want to see Bimmer parts in their luxo-boxes either. Two different markets, despite how the general public tends to lump them in together.

    And I don’t know that BMW going away from the I6 would be enough for me to consider a Prius. I don’t even thing a gun pointed at my head would get me to buy one of those things.

  • adood84

    You guys got to remember although I hate Merc and I am a huge fan , I wouldn’t mind if BMW and Merc shared the same , window motors , light bulbs, radiator , coolant reservoir, brake fluid reservoir, engine fan …etc all those non essential parts that could be common in a car and wouldn’t affect the feel of the car . It is a fact that it would be cheaper to order for example 1000 window motors than 100 so I hope this will help reduce some of the costs on these common parts .

    What I dont want to see is BMW being restricted in R&D … etc and Merc having the upper hand because the way I see it BMW has brought alot of innovation and that is one of the marks of BMW : fast, good handling , and innovative cars that’s why they call it the ultimate driving machine

  • Tom

    @Gragop:

    On the top there will be Rolls Royce not Maybach ,which is almost dead right now and ,if it survive, it will be below , then BMW and Mercedes on the same level , and then Mini probably along with Project-i , and then Smart .

  • Tom

    One important thing , this is not a fusion ( BMW with Mercedes ) , it only means that these companies will have the same owner . If they can benefit from this situation and at the same time staying true independent competitors , then it is win-win situation for these companies and for the customers.

  • Mathis

    @ Horatiu

    Well they agreed on the cooperation, but I don’t think as of today BMW & Mercedes share any parts yet. As ADOOD84 wrote maybe the window motors on the 2012 new 3 series will be similar to the ones in a new Merc. But these cooperation agreements although signed in 2008 will take their time to implement. I mean they will not change all the parts in the middle of a model year suddenly. Next time maybe when a facelift is scheduled or when they start working on a new model like the next 1 series and the next A & B Class they will coordinate things and use similar parts.

    I am sure both firms are aware that exchanging 6 Cylinder engines is an absolute no-go -> not just for BMW but for Merc as well.

  • Auday

    Door Panels and and Door handles PLEASE!!!! Other than maybe the two tons door handles of the Egyptian Temples on 2000BC, I think BMW has the worst door handles ever.

    Someone asks BMW to get those from Mercs!!

    Stereo?! my M-Roadster, a convertible with very stiff suspension that by default has lots of chassis shocks and jitters with a CD player that skips worse than Celine Dion in a live concert, didnt anyone tell them that sport cars with stiff suspension need an anti-skip CD player that you could find in a cheap KIA.
    iDrive? …. I’ll leave this to the iDrive owners, non of my cars have iDrive, but I have to say that the E46 Nav is not my favourtie, I’d rather use Garmin,… but the new google based iDrive might solve the problem.

    Anyway these cosmetics could be outsourced from Mercs, but keep the best of BMW in BMW, engine, chassis, suspension, and of course overall platfrom design.

  • Kay

    You guys are kidding. There’s no way VW/Porsche/Audi/Lambo/ etc would drive the BMW & Mercedes Benz out of the global market. Why hasn’t Ferrari been bought over? Why hasn’t Nissan been bought over? Well, I know Mercedes Benz is financially and technologically strong. So is BMW. This is competition. Porsche, Audi, Lambo etc are all using VW technology and finances. I know a lot of Emirs and Kings and other ceremonial heads, and even the German goverment won’t let Mercedes go down.

  • future_thinker

    one of my friend told me that Tn Hj Ramdan Karnawi owned about 40% of BMW..this is ridiculous!! he know nothing about BMW..

  • Mathis

    @ Kay – inform yourself a bit better Ferrari has been bought – its part of the Fiat company maybe not 100% but at least to a large degree. Same goes for Nissan – Nissan is not independent! Nissan & Renault merged a few years back.

    Otherwise I agree that BMW & Mercedes are here to stay.

  • michael

    i hv shares but i dnt knw hw to check on them.plz help

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