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Brave new world

It could be argued that BMW is setting new standards in how far a premium carmaker can to push boundaries. The proof, however, is in the pudding, as Nargess Shahmanesh-Banks finds out.

The original 7 hailed the start of a new and bold design statement. It's replacement has settled for more subtle changes

BMW has forecast record profits this year as it announced a 6.8 per cent in increase in revenues for the full year. The Bavarian premium carmaker has reported full-year sales of €44.3bn ($57.40bn) compared with €41.5bn last year in-line with its own expectations, but slightly shy of some market forecasts. Worldwide unit sales for the Group rose 9.4 per cent to 1.21 million vehicles and sales in the US, Germany and the UK rose by as much as 6.9 per cent, 10.8 per cent and 9 per cent respectively.

"The US is now our company's largest single market," boasts Helmut Panke, chairman. "Nowhere else in the world do we sell as many cars as in the US." The big boss adds that BMW has met all its targets for the year and expects record profits in 2005. Although he has mentioned that the recent rise in raw material costs (see Automotive Engineer leader …) and currency effects could have some impact on full-year profit growth this year.

Upward sales

Worldwide, over 1.2 million BMW, Mini and Rolls-Royce cars were sold, a small increase from 1.1 million in the previous year. The BMW brand passed the millionth mark for the first time in the company's history, with 1,023,575 vehicles sold exactly. This is an increase of 10.3 per cent compared with the previous year.

The Mini is still proving to be as popular as its launch over three years ago, with sales rising by 4.5 per cent from last year. "Mini now shows a good and steady pattern of development not expected by all observers outside of the BMW Group. Particularly in the US there were some doubts as to whether our premium brand in the small car segment really had a future. But now I believe these latest figures will convince the last sceptics once and for all," says Panke.

As far as the ultra-premium Rolls-Royce brand is concerned, 792 Phantoms were delivered to customers last year, compared to 300 the previous year, which is incidentally the highest level reached by the brand in 14 years.

BMW boss, Panke is confident about prospects for the year 2005. "We will continue to increase sales of the BMW Group after the record year 2004," he says.

Extending family ties

The last couple of years have been exceptionally busy ones for BMW in terms of product launches. First came the new, and to some, brave styling, followed by successful entry into three new market segments with the 1 Series, the X3 and the 6 Series.

"2004 was a crucial year to us in our product and market initiative. In the course of the year we expanded into segments new to the BMW Group with a whole range of new models," says Panke.

Since launching the X5 SUV in 1999, over 433,000 units have been sold worldwide with retail last year amounting to 105,000. Panke admits that the X5 is an ongoing story of success for BMW.

Despite its mixed critical reception, since its market launch in January 2004, the smaller X3 mini-SUV has been a relative success with over 92,000 units sold. "These two models alone [the X3 and X5] amount to a total retail volume of more than 197,000 units delivered to customers. Just for comparison, an estimated overall number of roughly 270,000 SUVs was registered here in the state of Michigan in 2004," says Panke. "That means that if we had sold all of our X3s and X5s in Michigan, three out of four SUV registered in 2004 would have been of our BMW brand."

By the end of the year over 21,000 6 Series cars were delivered to customers, of these around 12,000 were coupés and under 9,000 convertibles. Already over 39,000 entry-level 1 Series, available only since September, have been sold. Sales of the most popular of the BMW range, the 3 Series, also developed successfully, though the anticipation of the arrival of the new model slowed down sales. With the larger 5 Series, the BMW Group achieved sales of nearly 230,000 units, representing an increase of as much as 23.8 per cent over the previous year.

"Our product portfolio and our international presence are more comprehensive than ever before. We will resolutely continue to utilise further market potential available to us in the future too," says Panke.

He continues: "Thanks to the BMW Group's current product initiative, our product portfolio covers a broader range today than ever before. The new products we launched in 2004, for example the 6 Series, the X3 and the Mini Convertible, are now available in full for the first time this year. In the X3 and the model update of the X5 we also presented a world premiere, the intelligent all-wheel system xDrive, which sets new standards in traction and agility. This spring the world-best all-wheel drive will also be available in a BMW saloon, the BMW 525xi and 530xi."

Three years after its debut BMW has announced the first details of a mid-life revision of the controversially-designed 7 Series, due for launch in spring 2005. Receiving a range of new engines, interior fine-tuning and exterior styling enhancements, the new luxury car promises to build on the global success of the car that broke the mould and set a new agenda in the luxury sector.

Other models are also on the agenda, most notably there are reported plans for a BMW MPV. The decision was made following nearly two years of studying the market's potential. The company will decide before June which of several concept vehicles will form the basis of the project. "We have now moved beyond the 'whether'. It's definitely coming in some form," teases Panke.

Rumours have it that two models are under consideration: one based on BMW's already shown RFK1 (Function, Space Concept) concept vehicle, based on the 3 Series, and the other on the RFK2, a larger vehicle based on the 5 Series. The RFK1-based vehicle is conceived as a premium competitor in the market for smaller MPVs, while the RFK2 would be closer in size to the Renault Espace.

Whichever is chosen, BMW is expected to use for its underpinnings the four-wheel-drive SUV versions of the 3 and 5 series, the X3 and X5 built at Spartanburg in North Carolina, US.

The International Group

New markets are as crucial as new products. "Our most significant highlight in 2004 was the official start of BMW Group production in China, where we build the 3 Series and 5 Series for the Chinese market in a joint venture together with [China] Brilliance, our local partner," boasts the BMW boss.

He admits that an expanding EU has opened up doors for BMW especially in Eastern Europe. Examples are the establishment of a new subsidiary in Hungary in May 2004.

"Looking at the automotive industry as a whole, we see that worldwide BMW Group customer deliveries outperformed not only the overall market, but also the premium segments as a whole," says Panke.

He continues: "The progress we have made in our market initiative has further strengthened our global position. In 2005 the BMW Group has a more international foundation than ever before. At the same time we are consistently capitalising on new market potentials, and this year we will benefit from our greater presence in young, emerging markets, particularly in Asia and Eastern Europe."