Mini Is Feeling Mighty As U.S. Market Motors Its Way
July 23, 2008

By Dale Buss

BIRMINGHAM, Mich. -- Even the developments in the U.S. auto market this summer -- disastrous as they have been for the Big Three and even Toyota - have a flipside. It's called Mini.

The BMW AG-owned, British-built lineup has been taking advantage of its unique positioning as the American market's only all-small, all-premium car brand to post a 34-percent sales increase over a year ago.

Given the anticipated intensification of these market trends, and the quickening pace of the company's product introductions, executives of Mini USA believe that they can build quickly and significantly on the success they've already enjoyed.

 

"What's going on in the market right now [isn't] all $4-a-gallon gasoline," Jim McDowell, vice president of Mini USA, said at a press gathering here. "The world is moving in our direction. Societal shifts in the United States - and $4-a-gallon gas is certainly one of them - are causing people to re-evaluate their life choices. That is creating demand for new types of products."

 

Electric With Possibility

Mini is only too happy to try to fulfill as much of that demand as possible. So the brand plans to launch an all-electric car on American roads in limited numbers by next summer.

McDowell said that the company wants to have "real customers" driving an electric Mini by "about this time next year." The "real customers" comment seemed aimed in part at speculation Mini would simply be leasing the initial electric versions to hand-selected individuals in an automotive version of a beta test.

It's too early to say whether the first batch of electric Minis would only be fielded in California, where OEMs face uniquely strict mandates to sell zero-emissions models. McDowell didn't indicate the possible driving range of the electric Mini. He said BMW and Mini executives also are discussing his desire to have a diesel-powered Mini in the U.S. market.

McDowell also said that the brand would like to have as many as six models in the U.S. market in coming years. Mini already planned to introduce its fourth variant, a so-called crossover, though he didn't specify when. The company hasn't released the new model's specs yet, but McDowell underscored his promise that it would be "immediately identifiable" as a Mini.

"It won't be high off the ground," he said. "The way the Mini drives is real important, and we wouldn't sacrifice that."

Market Moving Mini's Way

Clearly, Americans' rush to Mini vehicles has much to do with the crunch of gasoline prices. "People are trading in F-150s and Hummers for Minis," McDowell said. But as they do, he said, more American consumers are getting comfortable - as their European counterparts long have been - with the idea of a powerful engine in a small package.

McDowell said that Mini's recent vibrant growth has stemmed from four basic types of new buyers: suburban commuters being prompted by gas prices to downsize; "efficiency-oriented" consumers who "can afford gas but feel like idiots" buying it to fill their big vehicles; "altruistic" buyers who want to benefit the planet by going small; and a patriotic group who want to buy a Mini or other small vehicle as a way of trying to strike back at world oil markets.

"Even by the end of 2007, we had sold 2.5 times more than our business plan called for" in Mini's first five years in the U.S. market, McDowell said.

Mini's U.S. sales surge - to 26,400 vehicles during the first half of this year, including a 25-percent increase in June - also has been attributable to the arrival of a new model early this year, Clubman. The largest Mini already accounts for about 20 percent of U.S. sales, McDowell said, while the staple hardtop Mini accounts for most of the rest. Convertible sales are only a trickle, he said, because Mini is phasing out the current version in favor of a new one to be introduced next year.

Crunch at Dealerships

Partly for that reason, Mini's 82 U.S. dealers currently have only about a four-day supply of Mini vehicles. But McDowell said about 80 percent of them are configure-to-order units. East Coast customers can get a Mini about three weeks after they order their built-to-order vehicle.

About half of Mini's U.S. dealers are in some phase of expansion right now, the executive said. Mini also plans to add 13 to 15 new U.S. dealers by 2010, especially in fast-growing metro areas where the company needs more representation, or in fill-in markets where the distances between existing Mini outlets are too great.

While all Minis now are made in the U.K., McDowell said that the company "should be open-minded about where Minis are built" as the brand continues to expand. And he said it "would be an advantage" in currency-exchange terms to have manufacturing capacity in the United States or elsewhere. When Mini introduces its crossover, he said, it will be built by Magna Steyr in Austria.

Edmunds.com analysis has shown that a significant number of Mini "considerers" have cross-shopped the brand against the 1 Series, the BMW brand's smallest offering - and, of course, a corporate cousin. But McDowell said that isn't a big concern. "There are real differences" between the two vehicles, he noted, "and most people will fall on one side or the other."

No Comparison

The biggest brands consumers match against Mini, he said, are Honda, Volkswagen and Scion; many also consider the Toyota Prius as well. "But about half of Mini considerers don't seriously consider anything else," McDowell said. "They're not making a decision about economic requirements but because it's the car for them."

Another illustration of their emotional connection, McDowell said, is that many Mini owners like the brand's "idiosyncrasies," such as the fact that the hood-release lever is on the right side of the passenger compartment because Minis are British-made. He also said that "about one-third of our customers name their Minis.

"We're not the best car for most people but we're the perfect choice for some, and their number is growing," McDowell said. "We'll never be a volume player. But I think we can always hold onto our premium positioning."

 

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