The BMW and Hyundai Rumored Engine Development Pact

This is a bit of a puzzler to me. Last year BMW announced it’s 500cc cylinder capacity range of engines. Both gas and diesel engines that share 40% of their components between fuel type and 60% of their components within fuel type across 3, 4, and 6 cylinder configurations.

BMW has really raised the bar for the competition with its EfficientDynamics program. The menage a trois of turbocharging, direct fuel injection, and Double VANOS with Valvetronic is the cutting edge for engine technology. BMW can make variants of these groups of engines from 1.2 or so liters to over 3 liters if need be.

And that is why I’m puzzled at the rumors of a cooperative venture with Hyundai to develop engine technology. Yes Hyundai can provide capital to fund research and Hyundai stands to gain from working with BMW. Hyundai has worked with German suppliers in the past, including Bosch, so there is some familiarity with similar parts/processes for engine management.

But above and beyond the funding, how would BMW gain from this joint development. Is there a smaller class of engines that is in the works?

Mercedes-Benz and BMW Joint EV Research

News reports have surfaced saying that Daimler and BMW will be working on urban EVs together. It would appear that what is actually happening is that both companies are contributing to a development effort being undertaken by the Technische Universitaet Muenchen (TUM) to create an urban EV in a 20 HP/900 pound (without battery) vehicle. At that weight and HP, I expect the vehicle to be about as quick as the auto-rickshaws seen in India (not quick at all).

That’s not exactly a joint venture, but BMW can contribute to light weight material construction given its work with CFRP Resin Transfer Molding. Carbon fiber is a key enabler of light weight in EVs, but the question is at what cost. Producing the base carbon fiber threads is energy intensive. The other issue is availability of the material for large scale construction. Currently CFRP is being used in airliners (the Boeing 787 Dreamliner is an example of large scale CFRP construction), but building airplanes in the odd 100s and 200 numbers consumes much less material than building hundreds of thousands or millions of cars using CFRP.

BMW in Emerging Markets

Having been in Bangalore for two weeks plus now it becomes apparent that as income levels rise in India the demand for premium vehicles will rise with it. It’s interesting to see 3 series and 5 series BMWs on the streets of Bangalore, they dwarf the Hyundai i10s, Suzuki Swifts, and particularly the Tata Nano’s (that resemble nothing less than Stan Mott’s famous – or rather, infamous – Cyclops).

The problem with driving a BMW in Bangalore is the utter lack of joy to be had driving in this metropolitan area. The speeds are low (thanks to the ubiquitous speed bumps), the near misses are measured by the meter not mile, and roads are asked to handle many more vehicles than they were designed for. It seems to be nearly impossible to sell a car meant for driving in a city that doesn’t reward the act of driving.

That begs the question that are the emerging markets then home for some of the A & B class FWD BMWs. Possibly – and offering a premium, decent driver, in both the A & B class segments makes sense in a market like Bangalore’s. For one thing, those classes of cars fit the situation better, both in terms of what the infrastructure can handle and the current economic conditions.

But there is the future to consider and if what I’ve learned of the income potential of the software engineers (that are clustered in Bangalore), you can whet their appetite for 3ers and 5ers with a decent entry model. This market will boom and within the next twenty years. Especially when the world breaks out of its current economic doldrums.

And as income rises in India and a solid middle class becomes entrenched, look for more attention to be paid to the desires of a middle class society. And that includes addressing the current state of transportation in the city.

It is the Indian and Chinese markets that could push BMW sales well beyond the two million mark in the next half century. To ignore these markets is to place your future in peril. The best advice for any car company would be to paraphrase Horace Greeley, “Go east, young man!”. Those that are in these markets have taken steps to ensure survival, those that haven’t have already failed.