Editorial: Is BMW becoming General Motors?

Featured Posts, Interesting | April 22nd, 2010 by 25
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Alex Roy, of Gumball 144 and The Driver Fame and JF Musial of Fast Lane Daily and The Smoking Tire have a hypothesis to make …

Alex Roy, of Gumball 144 and The Driver Fame and JF Musial of Fast Lane Daily and The Smoking Tire have a hypothesis to make about our favorite Bavarians: That BMW has become or is in the process of transforming into the next General Motors.

Their points center around the idea that BMW has grown its model line to proportions that rival GM, perhaps in its worst days, when it had a model line that allows, between different divisions, cannibalization of sales from each other. Additionally, the pair hypothesize that BMW has not made a truly compelling car since those that existed during the 2000 to 2001 model years.

Before I continue – as a fellow car enthusiast – Mr. Roy’s and Mr. Musial’s enthusiast credibility are impeccable with Alex owning 3 E39 M5′s and an E24 M6 with JF being heavily involved in multiple, highly noteworthy automotive websites and car news VODs. However, while they are certainly knowledgeable of current events in the car industry, I have to respectfully disagree with their point that BMW is becoming the next General Motors.

Editorial: Is BMW becoming General Motors?

To their question – are their current BMW’s you would rather own over their previous generations – I can only point to cars such as the outgoing E60 M5 or current 335i for cars that are soon-to-be future classics. As a reflection of the E60 M5′s ability I can point to the article published by Autocar in 2005 that compared the Ferrari F430 to the then-new M5.

Editorial: Is BMW becoming General Motors?

A $80,000 sedan toppling a $200,000 mid-engined Italian thoroughbred in the overall appeal category?

No easy feat.

Sliding down the pricing scale of Bavarian Motors you have the 335i. The twin-turbocharged sedan has proved a incredibly compelling car at a reasonable pricing point. 300HP on-tap, as fast as the outgoing E46 M3 and even more comfortable to boot.

Editorial: Is BMW becoming General Motors?

Additionally, the 335i has been a car which as been a tuner’s dream and has littered the highways and canyons of the ever-flourishing Southern California car scene with highly tweaked 3′s. Not to mention the 335i has an exhaust note potent enough to match the popularity it has enjoyed worldwide. In looking back at the history of BMW – the only turbocharged bimmer to stack the 335i against is the 2002tii. It’s too early to call the 335i the “modern 2002tii” but damn if it doesn’t make a compelling case and we haven’t even mentioned the 335d!

Need another example of an incredible current BMW that is a driver’s car?

Try out the F01 750i – imagine an E38 740i but better – the F01 7 Series is quite a driver’s car and delivers in spades all of the perks and comforts you’d expect from a true 7 Series. The F01 7 does what the E65 could not which is providing a true soul successor to the E38. Would I take one in a heartbeat? The answer is a resounding yes – nothing better is available for dispatching both corners and corporate competition.

Editorial: Is BMW becoming General Motors?

On to the point regarding model bloat – I would actually tend to agree with Alex and JF – BMW’s model line, in the United States, has grown tremendously – more so in the last decade that it has in BMW’s history since the early 1970′s. In 2001, BMW had a seemingly modest, 6 model line-up of the 3, 5, 7, Z, and X5 Series(assuming the Z3 and Z8 compete in separate segments and the M cars are part of their respective class). Since 2001, the Series count has jumped up to 10 individual models, assuming the X6 and 5 GT are vehicles unto themselves outside of the existing X and 5 Series models. That is a tremendous amount of growth in only a decade – 67% growth by our count.

I can easily see where conclusions are drawn that this is model bloat. However, I don’t see how this could draw parallels to General Motors. GM is evolving back into a wonderful, competitive company – one that is hopefully right-sized for the current market. However, GM, for a number of years if not decades, has been a company plagued by poorly chosen models, high operating and overhead costs and a roster of cars, in the U.S. market, that have been subject to sales cannibalization – when actually deemed competitive.

In the days of Oldsmobile, Cadillac, Chevrolet, Pontiac, Buick and GMC – for a few years including the one trick pony pony, Hummer had models abound that reached an almost incestuous levels. General Motors built car and SUV platforms that would be shared across the majority of their lines, alter exterior and interior design and options packages only slightly then sell the cars at somewhat staggered pricing points. With a marketplace that gradually developed a need for niche vehicles and GM’s models, which already seemed to promote sales cannibalization across their various brands ( Please read John Delorean’s On A Clear Day You Can See GM for further in-depth comment on this) General Motors found that an SUV-rich portfolio and bastardized model platforms that were already uncompetitive in their own right was a deadly formula. So, you have the same model across 2 or 3 brands that were only slightly spread apart and proved to be poor choices when you examine costs, unit profitability and then how that relates to the overall appeal of their products.

Not a good combination.

That said, BMW has yet to have issues of new products cutting into existing model lines. In fact, they’ve been quite decisive about what models will sell in what markets. With the 5 Series Touring being an underwhelming sales performer, that model has been dropped in favor of the 5 Series GT within the United States. Whatsmore, instead of allowing model bloat, models are regulated appropriately in various markets dependent upon the demands of said marketplace thus market needs are determined before cars are sold or manufactured to alleviate potential sales losses.

Editorial: Is BMW becoming General Motors?

Additionally, BMW develops internal systems and engine lines that transcend most of the series range – allowing for a more cost effective approach to their products as a whole. We asked BMW about this same point while at their headquarters last November and the answer we received was simple: BMW are able to bring to market newer, more unique vehicles by using platform, parts and systems sharing to reduce manufacturing and development costs. Case in point is the 5 Series GT which was described to us as a 7 Series chassis with a steel backpack.

Are cars like the 5 GT relevant?

Time will tell but you can rest assured that if BMW can successfully build cars like the 5 GT and maintain strong profit margins per unit then you can be guaranteed that cars like the E92 M3 will continue to find their place on the roads and tracks around the world.

Editorial: Is BMW becoming General Motors?

  • badger

    i saw this a few days ago, its pretty interesting.

  • http://www.facebook.com/profile.php?id=675895685 Christiaan Conover

    We talked about this last night on RoundelTable. They raise some excellent points in that video, much as it’s hard to acknowledge the brand we love so much is moving toward a brand with such a rough decent. I’m really hoping they get back on track with their core mission and avoid the pitfalls of the big guys, American and foreign.

    • Andrew

      I don’t think they’ve really gotten off-track to be honest. BMW has consistently been building great cars beyond 2001 – still class leaders. I think the overall feeling is that driving feel has begun to evaporate from all cars, BMW or not, due to the growing inclusion of electronics between the driver and the asphalt.

  • Russell

    Volkswagen-Audi Group is the new GM – no question. Platform sharing in ways never contemplated before, and cannabalisation not just between brands but within. Want a hot Golf? Sure, take the GTI, or the R32, or the Scirocco, and that doesn’t count the Audi S3, the Seat Leon and Seat Toledo sport variants, or the Skoda Octavia R – all of which are basically a Golf GTI under the skin.
    The group plays in every market from the small cheap Skoda Fabia to the Veyron, and they’re even starting platform sharing between Bugatti and Bentley, Audi and Lamborghini, Bentley and Audi, and now with the release of the A1, there is an Audi version of every VW from the Polo to the Phaeton, even large and small SUVs. BMW remains an independent company with a 3 brands with relatively tiny levels of component sharing, let alone platform sharing.
    Even Toyota/Scion/Daihatsu/Subaru are more GM like than BMW

    • Andrew

      I absolutely agree with you on the rampant platform sharing with VW.

      You didn’t even mention that Porsche’s best seller, the Cayenne, is built off of the Touareg chassis.

      • XC

        I agree too. The other very important thing is BMW’s quality, I mean, built quality. VW products differ dramatically between models, and I think that cheapens the premium brands. BMW quality is the same even in the 1 series. And GM’s quality… well… no comments.

  • Giom

    Andrew, I agree with everything you counter in your article. Also Russels’ piece above has great merits.

    What I don’t understand, is where this idea comes from. In general, when you listen to ppl talking about BMW, it tends to sound like BMW is loosing their edge. I don’t understand where this paradigm is coming from!

    If nothing else, BMW is not only playing the market game right in the present, but also – perhaps more so – in the future. The BMW VED for example.

    They’re a pro-active company that is able to think on their feet and is hitting the market place with bullseyes all the time (even if the perception is different).

    I don’t think anybody else could have done better with Rolls Royce than BMW has – Mini too. This prooves that BMW is a thinking company. From the pinnicle of motoring to one of the smallest segments, they’re doing it right – AND making money.

    We must not forget this… the world population is growing at a remarkable rate. It is inevitable that model ranges would grow – and evolve, ie. 5 series GT.

    Why they did this piece for BMW and not the VW group is beyond me…

  • Plamen

    I agree only that BMW should have developed a competitor of SLR and R8 (actualy this in not AUDI ,this is Lambo and Audi is VW)…I think in order to be competative and grow into the market you need to create sustainable cars because the life has changed and AUDI is going to understand this very soon. I like the design of the new 7 -the best in class…also 3 coupe,X5,X6,X1, the new 5 is amazing car with tipical BMW design,Z4 is just lol:),6 series is great,1 st series coupe- I don’t think there is such a car on the market …closed to the 70′s design of 2002….BMW today cannot be BMW from yesterday..it should be BMW attached to it’s history …we live in diff world now and the market has changed as I said.

  • Plamen

    Hey Guys,

    I KNOW WHY THESE TWO FELLOWS ARE SPREADING THIS OPENION…THEY JUST LIKE THE CLASSIC CARS MOST THEN THE NEW ONES…THEY LIKE RETRO CARS. i LIKE RETRO BMW OLSO …BUT I WOULD LOVE TO HAVE AT LEAST 5 MODELS OF BMW AT PRESENT-THE BEST OF THE BEST AS FOLLOWS:X5,X6,Z4,3 COUPE,A NEW 5,1 COUPE,7 SERIES,ALL M MODELS…TELL IF i’M WRONG?

  • Alan

    the most sillyest wrong thing.BMW makes worlds best cars and Gm makes the worst cars . gm was only sold in USA now they dont even in there. there isnt a single american car that can go throgh a corner not in a straight too you may mention viper or …. but if you put a giant engine in a LADA it will go fast in a straight and GM are the worst in Quality , durability , reliability , and uncomfortable . that is why they are a little bit cheap to buy . name a car of them that is good in any thing they should be compared to LADA’s . i would prefer to buy a 1960 bmw 5 series than buying any GM cars . i mean they have no good history no good reputation no value no nothing they just make a box on 4 wheels . no gm car have won any award no best selling …. I love america so so much but GM is an insult for USA . if they say what dont you like about america I would say CARS . and IM not saying all these with no experience i drove other cars and my dad bought a tahoe for a while which was barely going on-road and it should go off road . and GM made all those proportion and other stuff to say that they have all these cars and stuff like that I mean they have chevy tahoe and gmc yukon which are the same (just waste of time) but BMW for example they want to make FWD but they will not make current BMW’s FWD because of all that history … GERMAN cars first , JAPANESE second , GM and all americans last .I mean japanese want to be better than german they dont care about americans cause they already are better and GM and americans just want to make money and cars ……..

    • XC

      Besides with their Chevrolet Suburban/GMC Yukon XL that is preferred by thugs and ‘official’ bad guys, GM is just plain scary.

  • Babken

    BMW is the most prestigious premium brand and will stay as it FOREVER. I can’t respect people who make such ignorant comments.

  • Jordan

    I really have to disagree with everything here. BMW is not even close to becoming the next GM!

    If you did want to say that about a German manufacturer you’d have to go to the VW Group…. with parts and platform sharing. But even then, that’s hardly what GM did!

    I don’t even know how they could compare BMW to GM because GM had about a dozen brands under them, and the majority were all competing against each other! BMW Group has 3 companies if I’m not mistaken, BMW, Mini and Rolls-Royce. All of them are in completely different markets! GM made 1 van, 1 car, etc, and then copied it 5 times and re-badged it so that EACH GM brand would have it’s own van, car, etc. Ever heard of the Pontiac Montana, the Chevy Uplander, the Buick Terraza, the Saturn Relay??? You would think they’re 4 completely different vehicles, especially since they’re from different companies AND different names. Well, they’re the exact same vehicle!! That is one of the major reasons why GM went down. Ford was the only company that didn’t need a bailout and they were still sharing parts extensively with Mazda and other manufactures. So sharing parts isn’t really the problem, doing what GM did is the problem!

    BMW is VERY far from being GM!

    • Jordan

      I just finished watching the video… the black jacket dude (didn’t really bother to learn his name!) says in response to “what killed GM?”… “too many brands… too big… too bloated… wrong cars, wrong time, exactly what we’re talking about!”

      WHAT?! These guys are terribly misinformed! And the M1 “supercar”… I hope they’re correct that it’s coming but from everything I’ve been reading the new “M1″ is a 1 series, not a supercar. It would be nice if it was the 135M and then BMW made a true M1…. time will tell! Then they start babbling about how Audi has TDI tech and used that for their road cars and completely ignore BMWs racing background and current racing programs.

      Regarding how they says Audi is consistent across their brand by offering AWD on all their vehicles…. well that’s also their downfall as it prevents them from letting any one vehicle stand out. Sure they’ve got the RS models but any true RWD sports car?… sorry mate! Head to your nearest BMW dealer for that!

      And I agree the E46 (which I currently own) is a fantastic car and I’m really “attached” to it. If I could fault BMW for anything, I would say they’ve gone “a little” soft… very little! compared to their early days. I personally would want a E92 M3 over the E46 M3, however one of my friends, another BMW fan, would take the E46 any day. So I agree BMW does need to add a bit of spice in to their brand…. and they are! The new M1(135M), the 335is, the Z4is, the M3 GTS, their GT3 cars. I don’t know for sure but I think it’s safe to say Audi doesn’t have a racecar for sale to private teams. BMW does!… and so does Lamborghini, and Ferrari, and a few others.

    • Jacob Haynes

      I totally agree with you on this one because like I said they are two totally different leauges!!!

  • XC

    I I absolutely disagree with Alex Roy and JF Musial… their arguments are not consistent, lack depth and at the end the GM comparison is just weak. Besides, like it or not, BMWs post 2001 models have sold very very well. At the end, everything a brand does translates into sales. And definitively VW is the next GM.

  • InvincibleM5

    I don’t even see things that made BMW to be the next GM but I do see VW to be the next GM. Agree or not, the fact is a fact that BMW is still going strong.

  • Auday

    Andrew, while I personally disagree with most of what they said and I think BMW is far from being the next GM, I kind of agree that lot’s of prev-gen BMWs are better cars than the current gen.
    You used HP as a way to compare BMWs and IMO that is unfair, otherwise Mercs are always better cars because they usually have higher HP. I drive a 6spd 06 M3 with Comp Package, and before I bought this car (used) 2 years ago I considered a 335i (although I hate Turbo’s but I also hate to make pre-judgments, so I had to try it first) and that car was not even close to the M3E46, …on paper maybe but it’s apple to orange when you drive it. I then considered pushing it a bit with some extra money and get the E92M3 so I tried it, and I have to say it was a great car especially the engine, but then going back to E46M3 it was truly something special when you drive it there is something in it that got lost in the E92M3 mainly the steering wheel and the roughness

    Now if you compare the E39M5 vs the E60M5 the gap is even much bigger, I dont care if Autocar puts some eye catching title article to show how fast the E60M5 is, it is NOT a Ferrari it doesnt feel like a Ferrari and it doesnt handle like a Ferrari, well neither the E39M5, however the E39M5 is so much fun to drive and well balanced car in all aspect, it is the best 4 door car ever IMO, while the E60M5 is way too compromised and it does feel like a big heavy car a feeling that the E39M5 hides with it’s superb suspension and direct steering. Although I have to say that the S85 is a great high-revving peaky engine and I would take it over the V8 S62 anytime, but it’s the right engine in the wrong car.

    the trend follows those two examples, BMW is compromising their cars for more comfort, more number figures, fuel consumption, attracting mainstream, and above all cost… many might argue that this the right thing for them to do and I wouldn’t debate that but the outcome of it is that older BMWs are better less compromised BMWs when it comes to the apsects that defined BMW as a different brand and number one aspect is driver’s involvement and feedback, or in another word the pure fun of driving “freude am fahren”
    Look for Evo Mag 2007 article titled “The greatest M car ever” they took all M cars from M1 to M3E92 and have a multi-driver combined verdict, I kinda agree with them totally.

  • Jacob Haynes

    I don’t think this is possible because they are two totally different leauges!

  • anon

    The next GM was Toyota.

  • http://www.facebook.com/profile.php?id=100000043833745 Arash Kamangeer

    I think thinking BMW is going to be the next GM is a bit too big fantasy.
    GM made around 9 million cars before it missed up,..i think bmw barely makes 1,5 million cars.

    and un Mercedes that thinks about profits only,..i a 4 billion dollars in profit bmw makes around 1,4 billion i guess.

    the next GM will be TOYOTA or VW . Im sure of it.

  • Lou

    I’m afraid that I agree with the notion that BMW has in recent years begun to make some of the same mistakes that G.M. has made in the past. Too many models with too many similarities and nothing to make them stand out from the competition. The G.T. line in particular suffers from an identity crisis. B.M.W. is (much like G.M.) trying to make something for everyone and risks appealing to no one.

  • EMPOWER

    russell you saved me alot of time. well said. car people know the difference between BMW’S and audi’s. I did not bother read this article the head what a waste of time is bmw the new g m. bmw may have neclected its core brand abit. but dont forget why that is.
    Lokk what they have done with Rolls Royce and MINI. now these brand are up and running, they can concentrate on its core brand. look at the new 6 4 door. has gm ever made a car like that.
    the vw group is a great busines model because all there brands us the same platforms but are in different parts of the prince range so not much cannibalising.
    But im not an investor i am a buyer and i want to buy the best. thats why i love bmw’s.
    would a rolex have the same value if it was made of sekonda parts

  • EMPOWER

    mercedes made a loss of 3 billion last year i dont know where you get your facts from

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