By on January 3, 2012

Low cost cars? Who needs them. BMW’s CFO Friedrich Eichiner thinks that the premium segment is where the growth is. Eichiner projects the global auto market to go basically sideways by growing 4 percent in 2012. He expects the premium segment to grow twice as fast at 8 percent. That according to an interview given to Munich’s Süddeutsche Zeitung today. Of course that growth is not spread evenly around the world. Eichiner predicts that the European car market will remain flat this year. Growth potential is seen in the U.S. and China.

“In the future, we will increasingly produce where the growth is,” says Eichiner. A decision for a new factory in Brazil should be made in a few weeks. New plants in South America, India and China are being studied.

Get the latest TTAC e-Newsletter!

41 Comments on “BMW: The Rich Will Get Richer...”


  • avatar
    darkwing

    If he’s only referring to the premium segment, not premium cars, then I guess BMW’s continuing their strategy of saturating the bottom of the class. Four-banger 5 Series for all!

  • avatar
    Tstag

    He’s right look at the weakest European player in the sector, JLR. They are making a health profit, have litterally just released plans to double capactity at one plant and build a new engine factory in the West Midlands. Range Rover has sales grow of 20% plus most months it seems and last years profits topped 1 billion pounds.

    Then look at Renault, in the UK market share has fallen dramatically and a full pull back is happening. 2 car makers who typify current trends. Will it last? Depends on the Euro

  • avatar
    TonyJZX

    no whimsical picture?

    is this proof the 1% are getting theirs?

    JLR has particularly strong product. Do they have a weakness in their lineup? Maybe the XK? The Discovery?

    Otherwise they have a heap of desirable metal that belies their weak reliability. But hey, can David Cameron be wrong?

    • 0 avatar
      JJ

      RR Sport is on its last legs too and has over a year more to go and I suppose the same goes for the LR3/4/Discovery. The new iterations of the RR (due this year)/RRS/LR4 and maybe the XK will show if TATA can really pull off managing these premium brands.

      So far they’ve done very well pimping the products that were already in place that go back to Ford and even BMW ownership (in case of the still current RR).

  • avatar
    olddavid

    I was all ready with some sharply pointed comment about the aspirational aspects of the people who buy these cars. Then the reality that apparently they CAN fool all of the people set in. Now I’m just depressed.

  • avatar
    carbiz

    Never underestimate the desire of a bunch of fat old men to impress their underlings and pretend they’re 30 again, nor their proteges to lease as much car as they can’t afford while living in their mommy’s basement.
    Could this be 1786 and could this be France?

  • avatar
    Tstag

    Actually when you think about it not only does all this make Ford’s sales of JLR and Aston Martin look bad. But also it kind of makes you question why so few buyers turned up. Premium seems to be the main area of growth for many car makers now.

  • avatar
    VanillaDude

    BMWs are good cars. Unfortunately, they are driven by people who call their daily possessions by brand. They don’t have phones, they have IPhones or Androids. They don’t have clothes, they have Levis, Abercrombies and Nikes. Their drivers aren’t buying cars, they are buying BMWs.

    I am more important than any brand I consume. So, I don’t wear logos, call outs or brand names. I don’t need a BMW anymore than I need a Prius.

    • 0 avatar
      TonyJZX

      surely then the entire output of germany is classed as BRANDS?

      except Opel of course. Where I am even VW is a luxury brand.

      I like to think of some brands as the ‘anti-brands’. I have no wish to own or drive a GM or Korean product but every so often they make a product so strong…

      • 0 avatar
        VanillaDude

        Everything is a brand. But brand worship is embarrassing, don’t you think? Somehow it has gotten to be embarrassing to select a car from an American company. Or embarrassing to select a car that isn’t guilting you into believing you are destroying the world. How many Prius drivers feel the need to constantly refer to their car as a Prius?

    • 0 avatar
      JJ

      Not all of them of course. I like to think I liked bimmers before I could fully comprehend the meaning of ‘brand’ and ‘premium’. When I was tiny the BMWs of the day were the E30, E34, E32 and later the E36, E39 and E38. I thought they were just goodlooking cars and I enjoyed the fact that they all looked kinda similar but slightly different (and different size).

      Most of the times, ‘brands’ first need to bring some real substance to the market that gives them a core group of enthusiast buyers who really and truly love that product for what it is. Only after that they can start catering to all those people who don’t really care but like to ‘belong’ to the group who has the ‘cool’ stuff. Of course nowadays the lines seem to get blurred sometimes (Audi?).

      Anyway, case in point; I’ve read a study once that said 4 in 5 BMW 1-series driver are not aware that their leased whip is RWD. So one could argue they just buy the badge. However, would that badge appeal exist in the first place if it weren’t for that 1 in 5 that wouldn’t want to drive anyhing else?

    • 0 avatar
      carguy

      VD: This seems to be a continuation of your previous sweeping generalizations and pigeonholing people by the cars they choose to drive. Its also more than slightly ironic that, given your rant against brand obsessed BMW owners, you are the one that seems to be dispensing absolute brand based personal judgements. It’s OK if some folks may prefer to wear Levis, but to dismiss all people just because they drive a particular brand of car seems somewhat anti-social or even worse.

      • 0 avatar
        VanillaDude

        It is OK to wear Levis – but it is not OK to refer to them as Levis. They are jeans. Referring to a product by it’s brand name is juvenile. I find BMW drivers to do this to a pitiful degree. While these drivers are not the only ones to do this, we are discussing BMWs here.

    • 0 avatar
      VanillaDude

      I provide a valuable service to BMW’s marketing department with my comments. Their image is a fine one, and snotty to boot. They obviously know this or they wouldn’t have made the comments above. My comments affirm their belief that they are attractive to many consumers based entirely on image. If they would produce a vehicle that enhances their image, I will let them know that too.

      They have found their vein of gold, and are mining it. In times like these – good for them.

      • 0 avatar
        carguy

        Incorrect VD – it is perfectly OK to prefer one brand over another due to the particular qualities that it offers. However, it is ignorant and anti-social to pass sweeping and negative personal judgments on people based solely on the brand of car they drive (or pants they wear).

      • 0 avatar
        darkwing

        It certainly sounds like VD only looks down on brands he can’t afford, doesn’t it? Interesting.

      • 0 avatar
        jmo

        It certainly sounds like VD only looks down on brands he can’t afford, doesn’t it?

        Bing! An elaborate justification for explaining why life didn’t work out quite as well as he’d hoped.

    • 0 avatar
      FromaBuick6

      @VanillaDude: I kinda doubt that the brand-conscious BMW-driving tools you’re so offended by are wearing Levi’s, or Nike and probably not Abercrombie, either. Any brand that sells for under $100 bucks and/or Joe Public has heard of is entirely too gauche for the stereotypical BMW driver…

      More importantly, who cares? Since when is brand identity exclusive to the Eurosnob crowd? How many good old boys only buy Chevys and are never seen without their Bass Pro Shops hat?

      And if you think Levi’s are the exclusive realm of the upwardly mobile, you’re either overly cheap or a relic from 1963. I’ve bought nothing but Levi’s for years and the most I’ve ever paid for them is 35 bucks. They hold up better than the trash from Walmart and come in styles that look just as good as the designer stuff that costs 5 times as much.

      I also have an iPhone and am somewhat ashamed to admit that I’ve shopped at Abercrombie, but then again I drive a 10 year old econobox. People’s priorities vary greatly. Don’t make broad generalizations and don’t judge a book by its cover.

    • 0 avatar
      Athos Nobile

      I’ve heard people from big companies saying that people can be “defined” or “classified” by the brands of products they use… when explaining the importance of a creating a personal brand.

      Are you sure that VD belongs to the past, when I heard the above BS just 6 months ago?

    • 0 avatar

      VD, in parts of the country, any soft drink is “a Coke”. Kleenex and Xerox (and Kotex) are brands that have become genericized and so have Levis to a certain extent.

      I do machine embroidery so I’m not going to put down logo apparel. To be honest, you have to admire Nike and Lacoste for getting people to pay to wear their brands.

      What’s funny is that the folks that are impressed by the brands you mentioned probably aren’t familiar with really exclusive brands. If I could afford four figures on a suit, it’d be made by a bespoke Saville Row suitmaker like Steven Hitchcock, not something by Armani.

      http://www.thesavilerowtailor.co.uk/blog/

      I find it a little unsettling that esoteric marques that were once the domain of car enthusiasts are now aspirational status symbols. There was a time when you had to explain that Lotus was a car, that no, there is no Italian car company with either the name Alfred or Romero.

  • avatar
    AMC_CJ

    Do rich people really drive BMW’s? Or are they perceived to do so.

    How many of the cars out there are actually leases? I’m fairly certain a lot. They can’t afford the out-right car payments to ownership, but they can afford a $400/month lease on a bare bones 3-series.

    • 0 avatar
      JJ

      I see this argument a lot on here, but I don’t buy it. What’s the point of being rich if you’re not going to buy a nice car, a comfortable house, go on a sweet vacation every once in a while, simply just spend the cash?

      In order to be rich usually you have to put in a lot of effort and why would you do that if you’re not going to reap the rewards of your work. I think that’s the principle the republicans base their whole economic theory on (which is one of the things I agree on with them btw, but let’s not go there any further).

      Of course rich people buy bimmers/Mercs/Jags/Ferrari or maybe Lexus if they’re boring. The (really) rich guy in the 10 y/o Camry is an exception to the rule IMO.

      • 0 avatar
        azmtbkr81

        Most of the truly rich people I know are also extremely cheap and refuse to spend money on depreciating assets like luxury cars.

        I hate to feed into the stereotypes but most owners of 1, 3 and to a lesser extent 5 series BMWs seem to be 20 and 30 somethings who need such a car to secure a spot in their respective social circles.

        How do they afford such vehicles? Wealthy parents, easy lease terms, and living at home. It would be interesting to know what percentage of entry level luxury car buyers are stretching their finances to afford them…

        I am not casting judgement; I know quite a few people who make use of the same techniques buy new off-road tires for their Jeeps or turbos upgrades for their WRXs which is the same type of behavior in the end.

      • 0 avatar
        geeber

        People get rich in different ways. Some people inherit it, some people snag a high-paying job and some people start a company and grow it. From my experience, people in the first two groups are more likely to want to “look rich.”

        Also, just because someone is driving a pickup doesn’t mean that he or she is a tightwad. Some versions of the F-150 and Silverado are not cheap, and they aren’t inexpensive to run in a time of $3.50-a-gallon gasoline.

      • 0 avatar
        JJ

        @geeber

        In my perception it’s the latter the two groups. Heirs sometimes feel guilty about spending the family capital on luxury items, particularly ones that everyone else can see them rock. Also they may not have the talents themselves to renew their source of wealth when it starts to run a little dry so they’re careful not to spend it on frivoulous stuff (better spend it on education for children/grandchildren).

        People don’t usually get rich by landing a highly paid job. Ok in the US there are some ivy league schools that land you an almost certain X-hundred K a year (more than enough to rock a bimmer of course) provided the study is in a sensible field of study and some topmanagers may take down a few million when they’re 55+ years old but this is a small group.

        I think business owners are the ones most likely to flaunt their wealth, as I think they should (well not flaunt for the sake of flaunting, but if they want to provide some guys that work for premium brands with a job by buying a bunch of their expensive stuff I’d say go for it).

      • 0 avatar
        jmo

        Most of the truly rich people I know are also extremely cheap and refuse to spend money on depreciating assets like luxury cars.

        What income level are you looking at? And it’s about income level not assets. $10 million in 3 month T-bills generates no income.

      • 0 avatar
        jmo

        People don’t usually get rich by landing a highly paid job.

        You forget about stock options and grants and other equity participation, which often come with high paid jobs.

    • 0 avatar
      fvfvsix

      I’d say that people I’ve encountered that I’d consider rich are just as likely to drive a bare bones 3-series as they are to own an F150… usually, it’s both, and owned outright. You really can’t assume that nobody except a social climber would want a stripper 3 series.

      • 0 avatar
        slance66

        I bought a used 328xi. Maybe I’m a social climber, but that wasn’t why I bought it. I liked the handling and quality of construction. I wanted AWD. I liked the size for my family of 3. The current Accord was too big, same with the Mazda 6. I looked at the TSX and that was my second choice. The G35/37 was too powerful with hair trigger throttle response, and had horrid mileage. The Maxima was nice, but too expensive (new, didn’t like the old one). Same with a used Lexus G350, the 3 series was 6 grand less with a better CPO program. If I could have a third family car, it would probably be an F150.

  • avatar
    slance66

    This has nothing to do with “the rich”. There are not nearly enough rich to buy all the luxury cars out there, let alone $40K minivans and non luxury SUVs.

    This has everything to do with the combination of automotive leasing and the new longevity of cars. Then add longer factory warranties and better CPO programs for the luxury brand. BMW thrives because most of the “rich” lease them and then ordinary people buy them as CPOs. Yes, people like me cross shop a new Focus with a used 3 series. A new Camry with leather and V6 will run more than a CPO 328i, and will generally have a shorter warranty out the door.

    Back when cars were lucky to last 8 years without rusting or requiring major service, this strategy was impossible. The prevalence of leases ensures a steady flow of lightly used cars, which otherwise wouldn’t exist. I see a lot of young guys in their 20′s who are not close to rich, but who buy a 328, an Infiniti G, an A4, or at the least a TSX or older TL. Older folks buy a used ES350, C-class or E350. Those people aren’t even considering buying those cars new, they’re choosing an ES350 used vs a Camry, Accord or Sonata new.

  • avatar
    fred schumacher

    Before the financial crash, luxury cars made up 20% of the new car market. This was an unsustainable percentage. Middle class income has been stagnant for 30 years, necessitating the need for greater debt load for a luxury car purchase. Those days are gone.

    I predict that the strongest car markets in the future will be for vehicles above $40k and below $20k. The rich are increasing their wealth and can afford luxury vehicles. The middle class will begin to gravitate toward the lower end of the price scale as they realize they can no longer take on more debt with no increase in income in sight.

  • avatar
    sfdennis1

    The rich keep getting richer while the majority live off leftovers, crumbs and cast-off scaps? Yup, sounds like the current reality…”Let them eat cake” and all…well, at least until the revolution comes….tick, tick, tick…(Ok I’m kidding, sorta)

    Of course, the world’s problems aren’t BMW’s to solve, and since they have shareholders to think of…I guess us car fans of modest budgets can look forward to drooling over BMW’s new “genius” premium niche product, a ‘Rolls Phantom Luxury Touring Hatch’ a la 5-Series GT? Can’t hardly wait!

    And Tata Nanos for the rest of us, yipee!

    • 0 avatar
      acuraandy

      Tata Nanos if we are lucky. More like, ‘Oh, you have a 15mi commute to go to work to feed tour family, well, you are a Brogrozie American dick, and we’re not going to give you any gasoline’ (from a Chinese soldier)’.

      ”Let them eat cake” and all…well, at least until the revolution comes….tick, tick, tick…(Ok I’m kidding, sorta)”

      I hope you’re wrong man. But I don’t think you are…

    • 0 avatar

      The economy is not a zero sum game. Envy is not an appealing trait.

      • 0 avatar
        sfdennis1

        Yeah, not so much envy as it is disgust…at our Robber-Baron style economic and tax policies, and the outrageous and corrosive effect that unchecked corporate power has exerted over our political process.

        Envy? Eh, maybe some, but I’ve got a roof over my head, food on the table, gas in the tank, etc etc. In my days, I’ve definitely helped to make some rich men richer, and managed to pay my own bills (mostly)in the process.

        But there are many millions of others who are far worse off, and far angrier than I. Tick, tick, tick….I just call it as I see it.

        Kudos to BMW for chasing the market, and the cash. Again, can’t wait for the “Rolls Touring Hatchback GT”. They’ll lap it up in China and the Mid-East.

      • 0 avatar
        darkwing

        It’s pretty telling, actually — in both of these little rants, the only thought you can be bothered to spare for the poor is your inane “tick, tick, tick” comment, which really just translates to “gee, I hope those troglodytes will do my dirty work for me!”

        So, in the end, all that formulaic ranting about “the system” just comes down to envy. You’re just another loser drooling over someone else’s money, because you’re too lazy and entitled to make your own.

        Yawn.

  • avatar
    SuperCarEnthusiast

    All valid points; but it remains true that what you drive is who you are in society.

    A new BMW 5 series for example shows to the world that you are in the upper middle class status. A new Bentley is sign that you are rich – millionaire.

    People need to feel that they are somebody. Nobody wants to be consider a nobody in today’s society. Sure their are people with no class like Warren Buffett who most people think is a goofball and drives around in a 2004 era Lincoln. When you go to a cafe or a social event; you want respect and when they valet park your car; they know you are somebody with your new BMW 5 series. Sure I might be living beyond my means but I have status and that what counts!


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Authors

  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Matthias Gasnier, Australia
  • Tycho de Feyter, China
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Faisal Ali Khan, India