Empire BMW – Part 1

Featured Posts, Interesting | April 30th, 2013 by 17
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We all know they manufacture cars, but just how vast is the BMW Empire and how diversified is their portfolio? Welcome to part 1 of …

We all know they manufacture cars, but just how vast is the BMW Empire and how diversified is their portfolio?

Welcome to part 1 of a 3 part series where we take a look at what makes the BMW Group one of the most successful companies in the world. Then, we throw in a dash of history for good measure and discuss the various companies that operate under the BMW umbrella as well as some of their strategic investments and programs that they operate.

Let’s begin.

Empire BMW   Part 1

According to the global branding consultancy firm Interbrand and their latest rankings, BMW ranks 12th on the global stage. To formulate this ranking, Interbrand looked at three distinct indicators, specifically:

  • Financial performance
  • Role of a brand in the purchase decision process
  • Strength of the brand

Keep in mind this ranking is not limited to just automotive manufacturers, but looks at companies from a wide gamut of sectors. Also worth noting is that there are only 2 other automobile manufacturers in this ranking that lead BMW. Toyota (10th) and Mercedes-Benz (11th).

Statistics aside, automobile companies are branching out and investing their money in other areas other than the automobile itself. Why is that? Some people think it’s all just a mass marketing machine designed to implant company X in your long-term memory for quick recall. Sponsorships of certain sports come to mind. Think Rolex Cup or Red Bull. Some companies are investing in carbon fiber manufacturing plants while others are trying to construct a seamless and worry-free buying experience through strategically built financial service programs designed to actually get you IN their cars in the first place.

With that said, lets explore BMW and all of their current programs and services that fall under their umbrella as well as their overall company involvement in various fields. Some of these may be obvious, but you might be surprised by others.

BMW Motorrad

Empire BMW   Part 1

Most everyone knows BMW makes cars, but they also manufacture 2-wheeled machines designed to carve up the road and slap a giant grin on your face. BMW started manufacturing motorcycle engines back in 1921 for other motorcycle companies. It seems befitting that a company whose name translates to “Bavarian Motor Works” had and still continue to have engines as their primary focus. Two years later in 1923, BMW introduced their very own motorcycle. The BMW R32. The engine in the R32 used a cutting edge boxer design, and included a recirculating wet sump oiling system which was superior to that of other motorcycle engine manufacturers at the time.

Today, we know BMW motorcycles as being fast, safe, high-tech and extremely versatile machines that can be seen anywhere from the race tracks of Moto GP, to the deserts of the Dakar Rally or even down the street or on the highway. They have even been used to film documentaries and expeditions such as the Long Way Round series featuring Ewan McGregor and his best friend Charley Boorman. Their documentary has them taking their BMW provided R1150GS Adventure all-terrain motorcycles across a 19,000-mile journey which starts in London, UK and ends in New York, USA.

BMW Motorrad manufactures a variety of motorcycles to fit every rider’s style and preference. From the Enduro to the Sport to the interesting E-Scooter, many claiming them to be the “Ultimate Riding Machines.” I personally wouldn’t mind a new S 1000 RR with the red, white and blue livery.

MINI

Empire BMW   Part 1

The British icon of the 1960’s penned by Sir Alex Issigonis and introduced by the British Motor Corporation (BMC) the Mini reached cult status across the globe. Leaving its imprint and legacy on everything from being considered a working mans car to rally racing and even movies. Enthusiasts and collectors of the car are still to this day preaching its awesomeness.

Still, history tells us that uncertainty for the Mini Cooper, for the brand and its survivability was always questioned. Giving credence to this is the fact that the license for the brand was sold to the Italian company Innocenti in 1971 and then later on in 1973 sold to Spanish company Authi (Automoviles de Turismo Hispano-Ingleses) both manufacturing their own version of the Mini.

Fast forward to the 90’s where Mini belongs to what was then known as the Rover Group. The Rover Group has several brands under its umbrella and in 1994 BMW purchases the Rover Group whole. Come the year 2000 BMW decides to sell off some brands due to massive losses incurred by Rover. In this sell-off, BMW sells the MG and Rover brands to a new British consortium by the name of Phoenix. Land Rover on the other hand was sold to the Ford Motor Company. The only brand left was Mini, which BMW held on to having laid out a strategic plan for it.

With no less than 8 Mini variants to choose today, from the small reinvented original 2-door Mini Cooper to the more practical Clubman all the way up to the 4-door SUV-like Countryman, the brand has not only survived but is thriving under BMW ownership. I can’t imagine what my daily commute would be like in a John Cooper Works edition!

Rolls-Royce

Empire BMW   Part 1

BMW’s are luxurious, no doubt about that. But what happens when you pair German engineering and precision with British luxury and opulence? Royalty on wheels, that’s what. The crowning of this royal subsidiary forged between Rolls-Royce and BMW is not all that different from any normal royal joining nowadays. Full of interesting speculation, courts and allegations, juicy and outlandish deals and very, very large numbers.

Side note, Bentley, the other high-end British luxury automotive brand hit by the Wall Street Crash of 1929 was purchased by Rolls-Royce Limited in 1931 for the sum of £125,000. Also, note that both Bentley and Rolls-Royce manufactured airplane engines at some point in their history.The relevance of this information will become evident in a little bit.

The year was 1998 and the owners of both Bentley and Rolls-Royce, then Vickers, decided to sell the company. BMW was the frontrunner buyer since they were already supplying, wait for it, engines as well as other components for both Bentley and Rolls-Royce vehicles. In a surprising twist, BMW’s final offer of £340 million was bested by Volkswagen’s offer of £430 million.

This is where it gets really interesting.

A stipulation in the company ownership documents of Rolls-Royce plc (public limited company) which is the aero engine manufacturing division stated that, should the automotive division of Rolls-Royce be sold, Rolls-Royce plc would retain key trademarks of the company such as the name and logo. Rolls-Royce plc decided to license to BMW and not Volkswagen due to some recent join business ventures that the two companies were involved in. For the licensing of the name as well as the “RR” logo BMW paid a total of £40 million. This was considered by many to be a bargain price since without the name, which is arguably the most valuable asset, Volkswagen was at a great disadvantage to BMW.

Empire BMW   Part 1

And the plot thickens.

Volkswagen purchased the rights to the “Spirit of Ecstasy” hood ornament as well as the shape of the trademark grille, however, because they didn’t have the rights to the Rolls-Royce name or logo, Volkswagen was missing some key components and therefore could not build the cars. BMW also was missing the rights to the grille design as well as to the famous “Spirit of Ecstasy” hood ornament.

Although the situation favored BMW, both companies came to an eventual agreement. VW later said they only really wanted Bentley because Bentley was moving twice as many vehicles as Rolls-Royce. The deal reached by both companies resulted in BMW not only supplying VW with engines but also grant them the rights to use the names for 5 years. However, starting with January 1st 2003, all collaborative interactions would cease, VW would only build Bentley automobiles and only BMW would have the right to not only name but also build “Rolls-Royce” cars exclusively.

In any case, Rolls-Royce has been enjoying great success as a subsidiary of the BMW Group. With the recently unveiled Wraith to complement the Phantom and the Ghost, things are looking bright for the luxury brand. Lastly, an interesting coincidence that can be traced in all 3 companies is the fact that they all had/have roots in aviation.

That’s it for Part 1 of the Empire BMW series. Next week in Part 2 we’ll be diving even further into the BMW universe and explore some interesting fields of work that they engage in. Thanks for reading and remember to share your thoughts below!

 

  • Ninong

    Volkswagen paid £430 million for Rolls-Royce and Bentley and ended up getting only Bentley. It was only when Rolls-Royce plc refused to hand over the rights to the Rolls-Royce name and the RR logo to VW that VW realized how much they had overpaid. To make matters worse, BMW informed VW that they would stop providing the engines and other components for Rolls-Royce and Bentley cars within 12 months if they could not come to an agreement. That caused orders for both cars to plunge.

    On the day that VW and BMW reached a final agreement, BMW’s stock rose and VW’s stock went down. It was clear that VW had lost out to their bitter rivals, BMW. Now BMW has a state-of-the-art manufacturing facility at Goodwood and VW is stuck with the aging factory in Crewe… and they still don’t own what they thought they paid for.

    • EuroM3

      How the hell would you know where that money went and what the two manufacturers agreed upon once they did decide to reach an agreement. Just because the internet says that VW proposed a higher bid doesn’t necessarily mean that its what was paid especially due to the issues with RR plc and BMWs refusal to provide parts and engines for Bentley AND RR. That money could have been used for a number of things. For example the fact the two brands were built under VW until early 2000s while BMW continued to provide engines, meaning that most of the profits went to VW group. During that time BMW was building the new plant and VW could have done the same thing, but being VW all they cared about is pumping out as many cars as they could. That’s what they are good at, simple as that.

      • Ninong

        All of the media reports at the time said VW paid £430 million for Rolls-Royce Motors Cars. As I assume you know, Rolls-Royce plc was separated from Rolls-Royce Motor Cars back in 1971 when the British government had to save the car division from bankruptcy. In that agreement, Rolls-Royce plc was granted rights to the Rolls-Royce name and logo in the event that the motor car division was ever sold in the future. Rolls-Royce plc sold the rights to the Rolls-Royce name and the logo to BMW for £40 million.

        VW negotiated with Vickers, the owners of the motor car division. In fact, they cut a deal with them the night before Vickers was supposed to announce acceptance of BMW’s offer of £340 million. That was a complete surprise to both BMW and Rolls-Royce plc. They couldn’t believe that VW would want to buy Rolls-Royce Motor Cars without owning the rights to the name and the logo. I don’t know if it’s true or not but what I heard at the time was that VW was unaware that Rolls-Royce plc would automatically become owners of the name and the logo in the event Rolls-Royce Motor Cars was ever sold. Rolls-Royce plc manufactures aircraft engines and has had nothing to do with Rolls-Royce Motor Cars since 1971. BMW had been supplying engines and other components to Vickers since 1993.

        Surely you remember how the deal was struck don’t you? Do you remember who signed the agreement? As a refresher for some of the others without your inside knowledge, it was signed by Ferdinand Piech of VW, Bernd Pischetsrieder of BMW and the leaders of both major German political parties at the time — Chancellor Helmut Kohl, a Christian Democrat, and Gerhard Schröder, a Social Democrat, who would take over from Kohl in October. Some said at the time that the German government forced them to come to an agreement for the good of the country.

        http://www.nytimes.com/1998/07/29/business/international-business-bmw-to-get-rolls-royce-after-all-by-acquiring-the-name.html

        • EuroM3

          So if the media reports something it makes it true? You don’t
          know what actually went down behind closed doors and how that money was distributed or if VW Group was refunded some of it because VW would not let £90 million just walk out the door so that money was used for something, which in this case probably was for engines and parts the next 4 years. Either way, BMW had the advantage in this deal since the beginning and obviously VW
          Group is not too broken up about it nor anybody else for that matter. The only people who are still butt hurt about this deal and angry at BMW are hardcore VW fans who can’t forget about it to this day. If you are one of those people I would suggest you find a VW fan page where you can express your feelings and frustrations
          towards BMW, because in case you haven’t noticed this is a BMWBLOG so I don’t understand why would you be on this page in the first place.

          • Ninong

            Hahaha! VW??? Really? I have only driven BMW’s for the past 35 years! I find it hilarious that VW was so royally screwed in that deal.

            By the way, it wasn’t just the NY Times that reported the story at the time. It was all over the pages of the Automotive News!

          • EuroM3

            This whole deal was against VW since the beginning and most shareholders already favored BMW anyway even if their bid was much lower. If anyone screwed VW in this deal it was VW themselves.

          • empower

            they could make a film about it vw walked right into the trap it could of been Mercedes but they backed out of the bidding. maybe they knew that bmw was in bed with both rolls royces. the car company plus the aero company. bmw was getting back to its roots and was working on a jet engine with rolls royce. the two companies were supply engines to there countries to try and defeat each other end up teaming up and pulling a fast one over hitlers baby

  • FRED

    is a gigantic monster company full of success….

  • TheBingoBalls

    To this day, I find the whole VW/BMW & Rolls Royce story fascinating.

  • Lemonjelly

    Great read guys, fantastic comments.

  • fredyschiftan@aol.com

    To think 49% belongs to the Family Quandt !!! I still believe that under their control BMW is what it is today, they make good decisions ….. and not just like VW selling in masses

    • http://twitter.com/jamesbachici James Bachici

      Interesting you should bring that up! Next week in Empire BMW Part 2, you’ll be able to see more corporate jousting between BMW and VW.

  • Cooldude

    You guys do such good articles!

    • http://www.bmwblog.com Horatiu B.

      Thank you again. And thanks for reading us.

    • http://twitter.com/jamesbachici James Bachici

      Thank you for your reading and support!

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