By on May 23, 2014

BMW-2-Series-Active-Tourer

In roughly 50 words, author Nassim Taleb neatly summarizes the answer to every essay ever penned about how “Car Company X Has Lost Its Way”.

Speaking about our higher education system and its flaws, Taleb writes

“This is the natural evolution of every enterprise under the curse of success: from making a good into selling the good, into progressively selling what looks like the good, then going bust after they run out of suckers and the story repeats itself …”

From Honda to BMW to Lamborghini, it’s difficult to look around and not see examples of this phenomenon at work. On the other hand, there is Lotus, a company that has arguably avoided this trap, while also avoiding any semblance of profitability. But I don’t have the benefit of context and life experience compared to many of the B&B.

Personally, I think that the vehicle above is most symbolic of what Taleb is describing: a front-drive BMW minivan wearing an “M Sport” appearance package. Is there anything further from the platonic ideal of “The Ultimate Driving Machine”?

But I also want your opinion. I want to hear who has fallen into this trap, who had avoided it, who is most in danger and why this is complete and utter BS. Post your reply in the comments.

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110 Comments on “QOTD: Nassim Taleb Sums Up The Problem With Our Favorite Car Makers...”


  • avatar
    alsorl

    Very true when speaking of BMW. Nice looking highly engineered autos. But they have just skyrocketed in price with decreasing reliability. And the average person cannot tell one model from the next. Very homogeneous in design.

    • 0 avatar
      Maymar

      Skyrocketed in price compared to when? For the hell of it, a ’91 318i sold for $20,300, which apparently works out to an inflation adjusted $34,200, while a ’91 525i sold for $34,900 (which works out to about $59k today).

      • 0 avatar
        DrSandman

        Not to pick a fight, but is that a like-vs-like comparison? Today’s BMW doesn’t even come with heated seats, and a color other that white/black is extra. Today’s Toyonda-Fordolet-KoreaInc cars come with much more standard equipment.

        My point is that for the same money, other manufacturers include way more equipment now than in ’91, while BMW seems to still have the same build-list that they used back then.

        Equipping a modern BMW like an “inferior” competitor (to anyone who doesn’t wake up happy to drive to work…) costs about 30% more. ($30k Optima is equipped “LIKE” a $42 BMW — but for VERY different kinds of cars…)

        • 0 avatar
          Maymar

          Trying to compare the value proposition of 20+ year old cars is a little difficult (TrueDelta doesn’t stretch that far back, sadly), although a quick look suggests a base 318i had similar features to a ’91 Sonata GLS (which sold for $13-14k). Admittedly, the Hyundai lagged behind a little for safety features (no available airbag or ABS, which were standard on the BMW), but other than that, nothing stands out on the BMW as being particularly special for being standard.

        • 0 avatar
          sgeffe

          Agreed–I can walk out of my Honda dealer (and I did with the little hottie in my avatar) with a $35K car that has more standard equipment (including such luxuries as Adaptive Cruise Control and LED lighting) than the base 3-er at $5K more. (Can’t even get a lousy BACKUP CAMERA in the Beemer without running up the tab!)

          And that Honda V6 will launch like a rocket, yet cruise at 80+ with the A/C blasting in the mid-30s while running on regular pump gas and two oil changes a year.

          Not to excuse Honda–they lost the plot in the mid-aughts if not before, and have only started to get it back. Hopefully they’ve learned from their mistakes. (Acura excepted — they’ve got a ways to go! Give the ILX a redo that betrays less of its Civic roots, make the RLX a TRUE flagship and not just a super-duper-sized Accord, and make sure the new TLX practically OOZES quality, and they’ll have a start.)

      • 0 avatar
        hgrunt

        You’d be surprised how many people do not factor inflation into historic cost comparisons.

        I have a ’91 318is, myself. The $34,200 adjusted dollars that it cost new, is right around what a 2014 228i with M Sport package is going to sticker at. The 228i doesn’t weigh 2400lbs, but it makes twice the amount of power and gets better gas mileage.

    • 0 avatar
      Victor

      Up to a point, yes. The point being, BMW still sells those good products. They have not turned into a fraud of its former self. It is embarrassing to see this perfect example DK pointed out, but then you see the i8 and suddenly BMW still has its mojo.

      And let’s not forget where BMW has been in the past. This is a company that once proudly produced the Isetta.

      • 0 avatar
        cpthaddock

        Some good points Victor. The challenge BMW faces today is very different from the ones it faces when it was building Isetta’s, the the Neue Klasse or the 2002. When viewed from this perspective it’s fair to cut them some slack for not having the same laser focus they had 30 years ago.

        Still, I do shake my head when I see they’re able to make the i3 attractive in it’s own odd way while simultaneously churning out a highly derivative looking me-too Subaru Forester clone (looking at you, X1)

  • avatar
    SCE to AUX

    This saying is true when an enterprise views its customers as ‘suckers’.

    • 0 avatar
      alsorl

      I can see the leadership at BMW laughing everyday at the fools purchasing there products.

    • 0 avatar
      Landcrusher

      Isn’t it still true when the seller doesn’t realize they are suckers? Corporate cultures can be really mind numbing. There will often be a large amount of people fooling themselves about how great they are. Then, when they realize they aren’t, they somehow turn on the people who have been trying to fix the very problem they were ignoring. Often this leads to bankruptcy before than finding the way back.

  • avatar
    Jeff Waingrow

    What Taleb’s talking about is something like the Peter Principle, so-called, where things progress to an eventual point of incompetence (or rip-off). You see this in all realms. A restaurant eventually succumbs to its own success. There are lots of sayings that cover much the same ground such as “a bridge too far”. Gamblers are notorious for pushing their luck and believing their own wonderfulness. All this is fine, but may I suggest that this Taleb observation is nothing compared to what he writes in his landmark book, “The Black Swan” where he shows how investors (and others) are undone by rarely occurring, highly unpredictable but potentially cataclysmic events, which he terms “black swans”. The term derives from the fact that until one black swan had been discovered, the term swan always included the fact that they are white. Just think of all the black swans that proved the eventual undoing of automobile manufacturers and/or their leaders.

    • 0 avatar
      CoreyDL

      “rarely occurring, highly unpredictable but potentially cataclysmic events, which he terms “black swans”.”

      Also, “the reason why insurance exists.”

      • 0 avatar
        stuki

        I believe Taleb intended black swans to mean uninsurable (at least by normal means. Loyds’ betting is a bit different) events. Insurance requires some idea of a probability distribution of the event to be insured against. Black Swans “new” observations. Such as, if it was suddenly discovered that cumulative CO2 emissions into the atmosphere at the level reached tomorrow, would immediately triple the force of gravity. No insurer would have reserves to cover all the falling structures.

        • 0 avatar
          CoreyDL

          Catastrophic coverage exists for just such events. There are insurance companies which specialize in it.

        • 0 avatar
          Jeff Waingrow

          No, actually what he meant was that the insurance company hadn’t imagined the particular (and totally unlikely) event or occurrence that proved so costly that it put the insurer at great risk of becoming insolvent, and at the very least, forced it to raise rates quickly to compensate. The point of “black swan” is that it’s something that hadn’t normally been contemplated. It’s an event at the very far end of the bell curve, what Taleb calls a “fat tail”.

    • 0 avatar
      wumpus

      First, the Peter principle has been replaced with the Dilbert Principle: those most compentant can’t be promoted. They are needed to get actual work done. Only those who can’t/won’t do their jobs can be promoted.

      The principle involved is the “lemon economy” or possibly “gresham’s law”. The idea is that once you have a strong brand, that the brand is what sells and not the product. At that point, all you need to do is market the Hell out of the brand, and anything extra spent on the product is wasted. To be honest, the only way to avoid this is where the CEO/President/guy running the company is the founder (or otherwise has a very long view, see Ford/Toyoda family members). Hired guns are more than happy to show the profits of selling high branded low quality items for a bunch of quarters, giving themselves heaping bonuses, and running before/when it all hits the fan (with golden parachutes, natch).

      * The lemon economy is slightly different, but deals with the fact that once buyers can not accurately determine value (because they assume that good brands mean good products), they will not buy the higher value product.

  • avatar
    mitchw

    One thing to keep in mind is that auto makers operate under heavy government regulation. Higher safety and mileage standards have given us hammerhead hoods, computerized throttles and all manner of nannies. They simply don’t get to make all the product decisions, and haven’t for some time.

    I simply don’t consider today’s cars to be the same thing I grew up with. They are much better consumer products, but no one gets my no nanny, stick shifting, cable throttled Civic from me. But you bet I want those airbags.

    BMW’s piped in engine sounds take the cake, though.

    • 0 avatar
      CoreyDL

      I agree we can blame regulation for homogenization of product, but your example of piped-in engine noise, and my example of extreme infotainment, are things we CAN blame on the automakers.

      They’re choosing to focus on those silly things instead of how the cars actually drive. But maybe that’s what the majority of consumers want. -sadface-

      • 0 avatar
        redav

        In a recent conversation with a coworker who has a MyFord touch system produced his comment of: “It’s amazing how you see something and think that it will be awesome and so useful, but when you’ve had it for a while, it really doesn’t do what you think or want, and you’d be happier without it.”

        Extreme infortainment is exactly that. It’s the ‘ooh, shiny,’ the new cell phone with the latest features. Car makers add this crap because it does cause people to buy their cars, and until the general public wises up to the game, they will keep pumping them out. I hope that we get with the program and reject such nonsense features before it’s too late to go back.

        • 0 avatar
          danio3834

          While that’s certainly true about MFT, truly usable systems like the 8.4 Uconnect don’t get tiresome. I had a car with it, and the new one doesn’t. I truly miss the utility and ease of use of that system.

          What this proves that gimmicks for the sake of gimmickery are pointless and consumers will eventually reject them. When the features are practical and improve the ownership of the vehicle in meaningful ways, people will embrace them. It’s amazing how two systems who’s intent was the same fail and succeed though differences in execution.

        • 0 avatar
          Lorenzo

          The general public will never wise up, unfortunately. Noisy, shiny crap will always grab the eye.

  • avatar
    TonyJZX

    i hate to say this but there’s still some pretty “true to history” BMWs

    BMW 316i sedan
    looks like your classic 3 sedan
    sure it only has 134hp and 160 odd lb/ft but it pushes the bodyshell to 60 in 9 seconds with a 6 spd manual

    not that anyone would buy it in this format but it channels the 2002

  • avatar
    Morea

    Popularity (and the money that comes with it) ruins most things in the end, that is, it removes the essence that made them great in the first place.

    BMWs have become very popular.

    • 0 avatar
      CoreyDL

      Spoken like a true hipster. Have a PBR, on me!

      • 0 avatar
        Morea

        I just pray you and I don’t like the same things Corey!

        • 0 avatar
          CoreyDL

          LOL.

          Hey, I have excellent taste. And no I do not drink PBR!

          • 0 avatar
            bball40dtw

            Life is too short for beer that is not excellent.

          • 0 avatar
            danio3834

            Life’s too short to not drink a beer that’s offered to you.

          • 0 avatar
            bball40dtw

            Danio-

            You got me there. If I go to a party and all they have is Miller Lite, that’s what I’ll be drinking. I will not purchase a macrobrew unless necessary. For Example: If the Labbat guy is walking by my seats at a baseball game, I’m buying from him. The craft beer line at Comerica Park is ridiculous.

          • 0 avatar
            danio3834

            I once had VIP tickets to a 4 day rock festival which included all you can drink beer. The catch was we had to choose from Miller Lite or Miller Lite. Oh how we gorged on that swill.

          • 0 avatar
            bball40dtw

            So much Miller. What concert was that? The first year I went to a rock festival in Latrobe, PA, they gave away free Rolling Rock all day.

  • avatar
    Erikstrawn

    This is why branding is such a poor descriptor of value, either for the company or its products. GM relied too heavily on branding, and look where it got them.

  • avatar
    LALoser

    Agreed 100%. I have witnessed this with suppliers in my industry. Three have risen to the top of material and service, only to become bloated and unfocused. It started when owners/GM’s isolated themselves using layers of “yes-men” and believing their own press releases. Even in my main martial art system that I used to teach, the guy who started the school started opening branches, selling franchises, and became centered on everything being a profit center and marketing. He has lost a lot of creditability and had instructors and schools leave..but don’t try to tell him that, he has people looking after all things. Meanwhile a few of us are being certified in Israel. Competition in the making.

    • 0 avatar
      Lorenzo

      It’s just about every industry that goes through that cycle, exactly what Taleb is talking about. Since beer was mentioned above, the biggest selling beer in 1945 was Schaefer. It grew too big, had trouble keeping up with orders and started cheapening the beer to stay competitively priced. It was overtaken by Budweiser in 1970, and shrank until it was taken over by the owner of Pabst, who bought and shuttered dozens of beer labels. The same thing happened to Budweiser, to the point that the Busch family sold out to InBev. It happens to car nameplates, but not the parent companies. The surviving big three car makers have periodic ups and downs but haven’t followed the zenith to crash model – yet.

  • avatar
    ajla

    Cadillac. I don’t think any brand has had such an inconsistent existence.

  • avatar
    Pch101

    This is a variant of Yogi Berra’s “Nobody goes there anymore. It’s too crowded,” except that Berra probably grasped the irony inherent to his own comment.

    Taleb gets this one wrong. Goods and services evolve over time, as do those who demand them. The “lost its way” comments are usually uttered by the traditionalist fanboys who don’t like the evolution, even though increasing sales make it obvious that there are others who obviously do.

    • 0 avatar
      ajla

      Well, not every automotive evolution has led to sustained, increased sales and chasing after after every niche possible has rarely been a winning strategy.

      • 0 avatar
        Morea

        Fight regression to the mean.

      • 0 avatar
        Pch101

        “Well, not every automotive evolution has led to sustained, increased sales and chasing after after every niche possible has rarely been a winning strategy.”

        I don’t recall saying that every business decision makes sense or that every niche should be pursued. But the fanboys almost always get it wrong because they argue based upon an appeal to tradition, instead of what makes sense.

        • 0 avatar
          ajla

          I think you are too hard on the “fanboys” of the world. It is possible to understand (and even agree with) a business decision but still find no personal joy in its occurrence.

          • 0 avatar
            Pch101

            “It is possible to understand (and even agree with) a business decision but still find no personal joy in its occurrence.”

            “Lost its way” would suggest that the accuser thinks that it was a bad idea. The fanboy’s notion of what constitutes a “bad idea” is usually rooted in tradition, not the present or realistic expectations for the future.

    • 0 avatar
      brenschluss

      “Taleb gets this one wrong. Goods and services evolve over time, as do those who demand them. The “lost its way” comments are usually uttered by the traditionalist fanboys who don’t like the evolution, even though increasing sales make it obvious that there are others who obviously do.”

      Well, Taleb wasn’t talking about cars when he said that, he was talking about higher education.

      You’re right that evolution is necessary, and also that “fanboys” are usually the most resistant to such, but some brands are built on ephemeral traits. When these are lost, even if the product is objectively better by every measure, people who liked your stuff because of what you’ve taken away will be upset.

    • 0 avatar
      TW5

      Might be true for the sportcar segment. For instance, Porsche ditching air-cooling and moving the engine towards the center of the 911. However, evolution does not really describe the rest of the industry. Using the Porsche example, the Cayenne and Panamera are pure profit-taking brand dilution.

      • 0 avatar
        George Herbert

        Or not.

        A Cayenne at rest is a luxury SUV. In motion, it’s a Porsche.

        It’s possible to make SUVs that would be too big to handle well; the limit’s somewhere larger than that.

      • 0 avatar
        Pch101

        “Profit taking” and “brand dilution” are largely contradictory ideas. If the brand was being eroded, then profits should be falling with them.

        • 0 avatar
          Landcrusher

          If you look at tech, you will see rising margins and falling market share correlate with failure on a regular basis. At the peak of profit, the brand has already been slaughtered and carcass is being eaten. See DEC, Compaq, Sun, etc. Often enough, lots of people are taking their money at the expense of the long term welfare of the company.

          Besides that, are you denying that you can’t sell out a brand for great short term profit? Fashion seems to be an ever repeating story of rising profits from reduced exclusivity trading off prestige for great increases in volume until the brand is seen very few places between the studio and the sale rack.

          • 0 avatar
            Pch101

            The tech and automotive industries have very little in common with each other. Trying to use tech to understand automaking will only mislead and confuse matters.

          • 0 avatar
            Landcrusher

            Trying to mislead and confuse? Where does that come from? My intent was none of that, only to show examples where your statement didn’t seem to hold.

            Is it your position that an automotive company can’t make the same mistakes I described? Or, that they never have?

          • 0 avatar
            Pch101

            Tech won’t help you to understand automotive. The examples don’t work.

            Porsche is doing quite nicely. There’s no indication at all that the Cayenne hurts the brand. If anything, it’s the opposite: the Cayenne is carrying the rest of the business.

          • 0 avatar
            Landcrusher

            I disagree that automotive is so specific that lessons from other sectors can’t apply, but I’ll drop it.

            More importantly, is it your position that automotive companies can’t make the mistakes I described? (Yes, I asked that before, but you badly dodged it).

          • 0 avatar
            Pch101

            Automotive is similar to other manufactured goods and consumer products. It’s tech that is the outlier: there is more fixed cost structure, which makes tech companies more volatile. Tech doesn’t compare well to other industries, automotive or otherwise.

            Any brand can be adversely compromised, but Porsche is a lousy example to use.

            The Cayenne is a winner for Porsche. The purists may not like it, but the Cayenne allows Porsche to build the other cars that the traditionalists want. The 911 is a halo car, but it’s the Cayenne that pays the bills.

          • 0 avatar
            Landcrusher

            Okay, I still don’t see why you keep bringing up Porsche, but it’s apparent you aren’t that committed to your earlier statements as you appeared to be.

            The reality is that auto brands can trade brand value for short term gains, just that fanboys aren’t good judges of when that is occurring.

          • 0 avatar
            Pch101

            “I still don’t see why you keep bringing up Porsche”

            I was responding to the claim above that “Cayenne and Panamera are pure profit-taking brand dilution.” Earning a profit is a good sign, not bad.

          • 0 avatar
            Landcrusher

            Ah, I think TW5 makes a good point actually. Cayenne as brand dilution is certainly an arguable position either way. Time may or may not show if the brand was diluted or not, but I doubt it will ever be correct to say it was a bad decision either way.

    • 0 avatar
      Kenmore

      What Pch said.

      Maintaining something considered noble and pure by early adopters does not grow a business. Selling heaps to average people does.

      • 0 avatar
        Landcrusher

        It depends though. If you lose the plot by changing to a water cooled engine, then PCH is right. Adding a minivan isn’t losing the plot either.

        OTOH, if the next 3 rides and handles like a Lexus, the fanboys will have a point. BMW would be risking its future. If it rides and handles like an Accord, it better come with an accord like price or it won’t matter how much profit they could make by selling out, their days would be numbered.

        • 0 avatar
          05lgt

          I haven’t driven the last 2 years 3′s, but according to the reviews I’ve read they wish they handled like a GS. Great motor, sad steering and handling. If you’ve driven both, I’d like to hear another comparison.

    • 0 avatar
      stuki

      I honestly think this of not too many things Taleb gets right. He’s basically saying that in the beginning, in order to thrive, the only asset a business has to lure customers, is the quality of it’s product. While over time, they can instead start relying on not just the quality of current product, but rather the accumulated quality of current AND HISTORICAL products, aka their brand.

      Most people who wants to buy a reliable car, look to the Japanese. Back when Japanese cars were “Jap Crap”, every sale had to be earned with every new model. While nowadays, at least part of it can be taken for granted. Toyota simply won’t lose sales to Chevy over reliability, as long as a new model is not substantially worse.

      In higher ed, this phenomenon is further enhanced by credentialism. “the guy’s git a Ph.D., he must be smart”, is accentuated by, “if we don’t hire the Ph.D., over the dropout who seems smarter, we may be setting ourselves up for a lawsuit later….”

      In car terms, Porsches and BMWs are still reliably the “best handling” cars in tests, no matter, no matter how badly they get slapped around by RX7s, Z06s and GTRs in objective numbers……

  • avatar
    schmitt trigger

    Very true the comment about the Peter Principle. It happens to individuals, it happens to organizations, it also happens to governments.

  • avatar

    I’m just floored we’re having a discussion about Taleb on a car blog! What’s next? Equating Prisoner’s Dilemma as a means for GM to maximize the tangible utility of its recall strategy?

    Just proves yet again that TTAC has the best insight and discussion of any car site. Meanwhile Autoblog is gushing over teh BMW Alpina B6, which is the typical pseudo-good Taleb mentions for suckers with more money than common sense.

  • avatar
    DeeDub

    So, entropy.

  • avatar
    bullnuke

    Volkswagen comes to mind for me. I started buying them in the early ’70s; 2 Type 1′s, 3 Type 2′s, 1 Scirroco, 1 Dasher and 1 Fox. All but 3 bought new. They’d start and run every day. They returned great fuel mileage for the time. The only things that broke were the window winder handles. The only dealer service I ever received was replacing a clutch in one of the Type 2′s. Good fit and finish. Put over 100k miles on each (the Fox over 200k) Fell out of love with the brand right around 1989 when I bought the Fox. The Brazilian Fox was built Beetle-like (no frills, tight and reliable) while everything else offered that year was pretty grim – the other models felt more loose, “GM-like” and cheaply assembled. I’ve walked the lots and test driven several at Volkswagen dealers every year or so since and they still seem rather cheaply designed and assembled and over-priced for what you get. Volkswagen seems to have started losing their way during the leap from air-cooled to water-cooled in the USA and doesn’t seem to really care.

    • 0 avatar
      SoCalMikester

      google “volkswagen group” and look at all the brands under that umbrella… 10, including MAN trucks and ducati motorcycles. damn. and owned 50.7% by Porsche’s holding company, which probably explains some of their R&D and budgeting decisions

  • avatar
    Victor

    Lamborghini is living its heyday if you come to think. Better build quality and reliability than ever. Great designs, strong sales in emerging and traditional markets. Lamborghinis of yore were great posters, but terrible and almost suicidal to drive. And deeply unreliable.

    The glaring example of Mr. Taleb’s theory would be Porsche. I am very surprised nobody said anything about Porsche here so far. The Panamera is the single most backwards car ever, a bloated thing that was sadly supposed to look like a 911.

    • 0 avatar
      PrincipalDan

      Was at the local Carmax last weekend. Sitting in the indoor showroom was a used Panamera and a 911. In a freaking Carmax.

      That’s like having Costco sell pawned Rolexes at the jewelry case.

      • 0 avatar
        Kaosaur

        *opens his trenchcoat* “Yo, you want watches? I got that Folex”

      • 0 avatar
        brenschluss

        Costco’s a bad analogy, since they’ll happily sell you a new Rolex if you get there at the right time (grey market, but not fake,) and their store brand is solidly upmarket.

        Yes, I do get defensive about my favorite wholesale store.

        To your actual point, I’ve seen a couple 996s and quite a few Boxters on BHPH lots. But, If you brought a Panamera back to 1995, it would be a f*cking spaceship, an unparalleled technical triumph that probably would even look novel enough in its environs to pass for interesting rather than misshapen. So, it’s a better car while it’s working, but everyone still wants a 993.

        • 0 avatar
          SoCalMikester

          and they get lawsuits from selling grey market, but its the middlemen/wholesalers that contact costco offering them a great deal on legit stuff.

          one time they got a great buy on oakleys (in the late 90s when people wanted them) from a middleman.

          oakley found out and sent people to every warehouse to buy whatever stock was on hand.

  • avatar
    TW5

    Taleb’s comments are accurate for luxury marques, but not for mainstream brands, imo. Luxury brands build brand potency and exclusivity, then they dilute to expand sales and profitability. The high-volume mainstream vehicles have the opposite problem. They do their job faithfully for decades, then they get an eye for the luxury market or specialty vehicles. They go upscale or they start using equipment that doesn’t really mesh with the mainstream marketplace. Consumers fall for it, then weep uncontrollably when Icarus falls back to earth. VW is a good example, though, Honda also fits the description somewhat.

    • 0 avatar
      SoCalMikester

      mainstream brands are meant to drive their customers upmarket. you like our corolla? try a camry! like that? try an avalon! like that? try a lexus!

      maybe the 460 is the icarus? idk,

  • avatar
    Mark Stevenson

    Funny thing is if BMW took about 3 inches out of the greenhouse height, automotive journalists would love it, front-wheel drive or not.

    COMPACT BMW WAGON M SPORT? YES. YES. YES. YES.

    • 0 avatar
      carguy

      Most couldn’t tell the difference but that won’t stop people from whining about how it un-BMW. Yet the Mini Cooper S is a lot more fun to drive than most BMW RWD offerings. This is not an argument of actual difference as much as one of expectation.

      • 0 avatar
        JRobUSC

        thank you. BMW seems to be graded on some kind of unfair curve — instead of being compared to other brands, they’re being compared to what people think BMW “should be”. Has anyone here driven that front wheel drive 2-Series Active Tourer? I haven’t. Nor have I driven the upcoming front wheel drive X1, or the inevitable front wheel drive 1-Series sedan. But they’re all based on the new Mini, and BMW seems to have successfully cracked the code to making dynamic, excellent handling front wheel drive cars with Mini, so I don’t understand why everyone is so quick to hate on BMW for applying the same formula to their cars. Is there any reason to believe they can’t? Especially when Audi doesn’t seem to get any flak for selling A1′s, A2′s, and Q3′s (and S-Line, S, and RS models to boot), and Benz is more than happy to take your money for an A-class or B-class, with or without AMG Sport Package or even a real AMG. Apparently BMW is supposed to abandon those markets and let their competitors gain marketshare and profits because, well, because they’re BMW, I guess. That seems to be the overriding justification behind the vitriol. Sorry, but I don’t agree. If they can make those models, and make them good, then they should make them. Simple as that. Because it allows them to actually build the cars all those brand hating enthusiasts say they actually want.

        • 0 avatar
          Luke42

          It’s because they charge extra for BMWness. So, BMWness is mandatory, whatever that is.

          When they start charging Toyota prices, they can be graded on the same curve. And you may be surprised by how harsh that curve is.

          • 0 avatar
            JRobUSC

            They’re charging the same money as Audi and Benz. I don’t see a picture of an A1 S-Line up there, or an A140 Bluetec with AMG package. Front wheel drive or not, if BMW can make a competitively priced 1-series sedan or mpv or whatever, that drives and handles like a BMW, why should they be held to a different standard and not be allowed? They’re supposed to cede markets and profits to their biggest competitors “because they’re BMW”? That doesn’t make sense. Not offering what your customers want to buy and letting them buy it from your competition instead is a pretty foolish way to run a business, and only a fool would complain if a company they liked was smart enough not to run their business that way.

  • avatar
    cdnsfan27

    BMW seems to be the favorite whipping boy on this site, some of it deserved as they push a lot of overpriced, questionable vehicles for the brand that calls itself the “ultimate driving machine”. The proliferation of models to cover every niche, sub-niche and sub-sub-niche has seriously diluted the R&D available for its core models. The quest to beat MB for the luxury car title has led to some questionable decisions. Having said that they do still have some good cars including the spiritual successor to my trusty 1981 318(no i), 4 sp stick and roll up windows and that is a base 320i with a 6 speed stick and the M-Sport package. Good luck finding one at a dealership though…special order only.

    • 0 avatar
      Morea

      Well, BMW does have a robust racing program. For me at least that washes away many of their sins. If they have to sell FWD minivans to fund racing then by all means they can “M Sport appearance package” to their hearts’ content!

      • 0 avatar
        B.C.

        If they raced the FWD minivans they’d shut me up completely.

        • 0 avatar
          Morea

          If it would sell more minivans they would!

          • 0 avatar
            Morea

            Announcing the 2015 BMW 225i Aktivtourer Masters (B2AM) Series.

            Rules:

            1) Drivers must be middle-aged Moms (Note, there is a 2 child minimum).

            2) Drivers must be the ex-wife of either an orthodontist or a corporate attorney.

            3) Drivers must have blonde hair. (Note, bleaching IS allowed).

            4) Two way communication between the driver and the pit will be by cell phone only.

            5) During pit stop driver must pump her own gas.

            6) Sponsors will consist solely of local youth soccer clubs and My Child is an Honor Student, Inc.

            7) All tracks will be suburban street circuits.

            Am I missing anything?

  • avatar
    Landcrusher

    Slightly off topic, but the biggest problem with BMW is the dealers. And, it’s such a wide spread and well known problem that you can’t really blame the dealers. BMWNA is doing something, and has been for decades, that has gotten them to this point. They really need to change their systems. In the meantime, Audi is happy to pick up all the people they burn.

  • avatar
    LambourneNL

    Here in the Netherlands, Volvo has been advertising new cars by referring to their “iconic station wagons” heritage, which I took to mean the rear wheel drive generations.

    It’s almost like they’re saying “we know we used to be better”.

  • avatar
    ccd1

    Another concept is at work here: diversification. Diversification, well executed, minimizes risk while maintaining profitability. Applied to car makers, this mean that a minimal diversity in offerings is required to insulate you from the collapse of any one market segment. A good example is Porsche expanding into SUVs. Bemoan it all you want, but Porsche likely would not be here today without that diversification.

    The other challenge to any product manufacturer is the tension between brand and commodity. A commodity must compete on the basis of price with generally razor thin margins. A brand can command a premium based on perceived “value” of its name.

    So the trick is diversifying your product line to protect yourself from market shifts between segments while maintaining your “brand.” In other words, when does diversification turn into brand dilution.

    • 0 avatar
      hgrunt

      Absolutely true.

      Another great example is Audi/VW’s platforms. It allows them to create new models with minimal cost and tooling changes, to fill as many niches as they can, from the A4L in China, to the Tiguan in the US.

    • 0 avatar
      SoCalMikester

      if theyd had to do an SUV on their own, the R&D might have killed them. but since they have audi and VW clones, the cost was spread. IMO, VAG has TOO many brands, and are starting to look like vintage GM.

      They should divest, and stick to VW/Audi/Porsche/Bentley, and also keep either skoda or seat (whichever is more profitable) for their budget euro rides. and bring the damn UP to the states already, at a decent price. and the Amarok! Skip the phaeton unless its going to be really good and no more than maybe $10k over a loaded passat.

  • avatar
    George B

    Sometimes car manufacturers lose their way because they give their customers what they say they want. Problems occur when what dealers want falls outside of the core competency of the brand. For example, Honda reliability suffered when they added V6 engines and heavier vehicles like the Odyssey to their vehicle lineup. Honda can react to improve the interior of the Civic within a year after launch and fix “too small” or “too big” Accords in the following generation. Core competency vehicles. In contrast, Odyssey transmission problems persisted across vehicle generations and I doubt Honda will ever make a competitive pickup truck. Similarly, core competency at making moderate-price FWD sedans doesn’t quite stretch enough for Acura to sell cars at luxury car prices.

    • 0 avatar
      SoCalMikester

      honda doesnt do BOF/RWD, and thats what “real truck” buyers want. their transmission screwup was just that. they know how to do FWD V6, but what WAS the deal with those trannies anyway?

  • avatar

    Starbucks.

    But in fact, they just changed their target market. It used to be people who really loved coffee. Now it’s a general fast food place full of pastries and dessert drinks, at the expense of the really good coffee. People like me now find good coffee at indies, like Barismo in the Boston area, Vivache in Seattle, and a host of others all over the land.

    Unfortunately, the indie-equivalent car brands, like Saab and Volvo, can’t survive on their own.

    • 0 avatar
      05lgt

      What about Mazda? They’ve been selling a 2 seat RWD roadster for 25 years, added lightness across the line, and targeted improved ICE efficiency over what is sometimes called vaporware here. I’ve never owned one, but Mazda may well be the automotive version of PDX’s Sterling Roasters or Seattle’s Vivache.

      • 0 avatar

        Yes I agree. Mazda is a good example of a company doing everything right. Unfortunately the buying is public is mostly too ignorant to notice. They have been nicely profitable the last few years though.

        • 0 avatar
          SoCalMikester

          the 2 is cute, i love the miata, am curiously fascinated by the 5 and the 6 seems a good value. the 3 is underrated and a good pick too.

          do they make a JDM minitruck they can bring here?

    • 0 avatar
      05lgt

      @David, now I need to go out for coffee. I blame you.

      • 0 avatar

        I have to agree with you about Mazda. I just wish the RX-8 could have worked out. (There’s no way to make a rotary get decent gas mileage–if you want to read why, email me at holzmandc at outlook.com.

        I just finished my second espresso for the day. two more to go.

        • 0 avatar
          George Herbert

          I drive my RX-8 at 18 delivered mpg. I consider it a fun tax.

          Yes, there are better mpg good handling cars out there, but 6’4.5″…

        • 0 avatar
          05lgt

          I dropped into my favorite coffee shop, and they wouldn’t sell any because of a boil water warning. I said espresso is steam, should be just fine, and they said they were being cautious. From a business perspective, of course it’s not worth the risk of a jury being bamboozled, but it felt stupid all the same. And I’m jonesing.

          • 0 avatar

            I was once watching Kitchen Nightmares, the show where Gordon Ramsey tries to turn around restaurants. Their spy cameras caught a cook taking a dropped french fry off of the floor and tossing it in the fryer.

            Hot oil in a deep fryer should be hot enough to kill any bacteria. Would you eat that french fry?

          • 0 avatar
            05lgt

            I most likely have.

  • avatar
    SoCalMikester

    costco has signs in their breakroom that say something along the lines of “we must strive to maintain our culture and identity”, so at least someone has a clue.

    i think its going to be pretty hard to do as years pass though.

  • avatar

    It’s a nice coincidence that Derek brought this up. Yesterday I was getting my hair cut and beard trimmed and my barber, Jeff, who was originally from the USSR had the good sense to use the barbering skills he learned in the Russian army and set up shop in one of the few subcultures where men still wear their hair short and get regular haircuts, an orthodox Jewish neighborhood. It’s hard to book a chair on a Friday, which is why I was there yesterday. His wife Ellen also cuts hair and they’ve done well. America, what a country!

    He knows I write about cars and he started asking me about the Porsche Macan. He’s a big man and he likes expensive SUVs. It might have been his Cayenne in the parking lot. I told him that it’s an Audi Q5 with different engines, transmissions and maybe a little better driving dynamics.

    If I’m not mistaken, the Cayenne is Porsche’s best selling vehicle. I’d bet that if you surveyed Cayenne and Panamera owners and asked them which car represents the Porsche brand better *to them*, their own car or a 1955 Porsche 550 Spyder, a vast majority would pick their own car.

  • avatar
    hgrunt

    I think sometimes we just get used to perceiving a brand a certain way and get a little upset when that perception is challenged. I avoid the trap by trying to think about the whole picture holistically, from manufacturing logistics to market perception.

    Regarding expectations, In the BMW community, when I used to frequent the forums, people balked at the idea of a non-I6 BMW and many 3-series reviews I’ve read since the E30, say the the new car it’s predecessor and often call it heavier, larger, less sporty, more complex and less tactile. In this respect, it’s more of the same.

    Regarding brand perception, in the US, where BMW is a premium brand of sporty-looking RWD cars, it the fwd thing with the M-sport badge probably won’t be sold. However, in other markets, brand perception can be different from ours. BMW’s slogan in the UK and many English-speaking markets is “Sheer Driving Pleasure,” as opposed to the one we get. If a BMW-badged FWD car drives sportier than the competition, it still fits that perception and ultimately meets the expectation of that particular market.

    • 0 avatar
      SoCalMikester

      yeah, i get sheer driving pleasure out of my 2006 scion xA, because it has a pretty small but bulletproof 1.5 liter engine. low profile 17″ wheels/tires, and it handles nice.

      its fun to drive a slow vehicle fast!


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