BMW Outlines Strategy; Hints at New Models and Possible Fourth Brand
September 27, 2007

BMW CEO Norbert Reithofer held a highly anticipated press conference in Munich Thursday to outline the German luxury maker’s strategic plan for the future. That plan includes global sales increases, substantial spending cuts, aggressive financial targets, U.S. production increases, more alliances, and the possible establishment of a fourth brand.

In a nutshell, the automaker’s plan includes:

* increasing worldwide sales to 1.8 million cars and SUVs by 2012 and more than 2 million by 2020;

* cutting spending by $8.5 billion (U.S.) by 2012;

* improving profitability to better compete with Mercedes-Benz;

* boosting U.S. production by 71 percent to 240,000 vehicles by 2012 as a hedge against the declining U.S. dollar versus the Euro. BMW’s Spartanburg, South Carolina, plant now produces 140,000 vehicles a year;

* buying more U.S. parts, also to offset currency fluctuations;

* increasing Mini production to 260,000 vehicles per year;

* boosting China sales to 44,000 vehicles a year from 30,000;

* maintaining its status as an independent company while looking for more strategic alliances where there are “synergies and efficiencies;”

* possibly establishing a fourth brand.

A Fourth Brand

Reithofer confirmed a fourth brand could join BMW, Mini and Rolls-Royce in the future. Beyond that Reithofer only hinted about what that fourth brand would be. It would not, he insisted, be established in the next 12 months.

But he hinted that it could be a brand established with a strategic partner where the automaker could find “synergies and efficiencies.” He used as an example BMW, an expert on rear-drive, possibly partnering with a front-drive expert. He discussed cars smaller than the 1 Series and Mini, for emerging markets. He talked about BMW’s existing partnerships, including those with France’s PSA, its three-way cooperative with General Motors and Daimler-Chrysler for two-mode hybrids and its newly established partnership with Daimler on hybrids and powertrains.

It sounds like he’s got something firm in mind but isn’t telling. “You see me smiling,” he teased at the press conference and listening via Web cast.

New Models From Current Portfolio

In terms of future models, Reithofer said BMW will grow "via new models from our existing brand portfolio."

He added: "In order to focus on capital efficiency, we will further continue to make our product decisions based on derivative utilization as well as on modular systems."

He was specific in some cases and vague in others. Through 2012, he confirmed BMW will:

* build the BMW X1, an extension part of the X family that now includes the Concept X6;

* produce the four-door Gran Turismo based on the CS concept study unveiled at the Shanghai auto show;

* produce a third variant of the Rolls-Royce Phantom, that being a coupe that will slot below the Phantom in size and price;

* create Mini models in the sports activity vehicle segment.

Reithofer's comment said BMW had decided against "a space-functional concept" that was to be like a 7 Series with a tall roof to compete with Mercedes-Benz's R-Class. BMW now is looking at something smaller.

"It will be replaced by a fundamentally altered concept. What I am talking about here is a new segment. We currently call the concept Progressive Activity Sedan or PAS for short. Expect this concept to introduce its own interpretation of the sedan and to surprise you with intelligent features."

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